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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 2003
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to _________

Commission file number 1-7898  

LOWE'S COMPANIES,  INC.

(Exact name of registrant as specified in its charter)

NORTH CAROLINA	56-0578072
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1605 Curtis Bridge Road, Wilkesboro, NC	28697
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code	(336) 658-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

x Yes o No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

CLASS
Common Stock, $.50 par value OUTSTANDING AT SEPTEMBER 5, 2003 785,754,069

21

TOTAL PAGES

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LOWE'S COMPANIES, INC. - INDEX -
			Page No.
PART 1 - Financial Information
	Item 1.    Financial Statements
		Consolidated Balance Sheets - August 1, 2003 (Unaudited),
		August 2, 2002  (Unaudited) and January 31, 2003	3
		Consolidated Statements of Current and
		Retained Earnings (Unaudited) - three and six months
		ended August 1, 2003 and August 2, 2002	4
		Consolidated Statements of Cash Flows (Unaudited) -
		six months ended August 1, 2003 and August 2, 2002	5
		Notes to Consolidated Financial Statements  (Unaudited)	6-9
		Independent Accountants' Report	10
	Item 2.    Management's  Discussion and Analysis of Financial Condition and		11-16
		Results of Operations
	Item 3.    Quantitative and Qualitative Disclosures about Market Risk		17
	Item 4.    Controls and Procedures		17
PART II - Other Information
	Item 4.    Submission of Matters to a Vote of Security Holders		18
	Item 6(a). Exhibits		19
	Item 6(b). Reports on Form 8-K		19
	Signature		20
	Exhibit Index		21

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Lowe's Companies, Inc. Consolidated Balance Sheets In Millions, Except Par Value Data
			(Unaudited)  August 1, 2003	(Unaudited)  August 2, 2002	January 31, 2003
Assets
	Current assets:
	Cash and cash equivalents		$        1,550	$      1,487	$        853
	Short-term investments		137	48	273
	Accounts receivable - net		199	201	172
	Merchandise inventory		4,652	3,987	3,968
	Deferred income taxes		67	106	58
	Other assets		226	182	244
	Total current assets		6,831	6,011	5,568
	Property, less accumulated depreciation		10,955	9,260	10,352
	Long-term investments		116	14	29
	Other assets		172	142	160
	Total assets		$ 18,074	$ 15,427	$ 16,109
Liabilities and Shareholders' Equity
	Current liabilities:
	Short-term borrowings		$          -	$        50	$       50
	Current maturities of long-term debt		73	44	29
	Accounts payable		2,612	2,106	1,943
	Employee retirement plans		40	75	88
	Accrued salaries and wages		246	258	306
	Other current liabilities		1,502	1,235	1,162
	Total current liabilities		4,473	3,768	3,578
	Long-term debt, excluding current maturities		3,684	3,733	3,736
	Deferred income taxes		524	312	478
	Other long-term liabilities		20	11	15
	Total liabilities		8,701	7,824	7,807
	Shareholders' equity:
	Preferred stock - $5 par value, none issued		-	-	-
	Common stock - $.50 par value;
	Shares Issued and Outstanding
	August 1, 2003	785
	August 2, 2002	780
	January 31, 2003	782	392	390	391
	Capital in excess of par		2,116	1,949	2,023
	Retained earnings		6,865	5,263	5,887
	Accumulated other comprehensive income		-	1	1
	Total shareholders' equity		9,373	7,603	8,302
	Total liabilities and shareholders' equity		$  18,074	$  15,427	$ 16,109
See accompanying notes to unaudited consolidated financial statements.

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Lowe's Companies, Inc. Consolidated Statements of Current and Retained Earnings (Unaudited) In Millions, Except Per Share Data
	Three Months Ended				Six Months Ended
	August 1, 2003		August 2, 2002		August 1, 2003		August 2, 2002
Current Earnings	Amount	Percent	Amount	Percent	Amount	Percent	Amount	Percent
Net Sales	$  8,773	100.00	$  7,488	100.00	$  15,984	100.00	$  13,958	100.00
Cost of Sales	6,126	69.83	5,286	70.59	11,099	69.44	9,833	70.45
Gross Margin	2,647	30.17	2,202	29.41	4,885	30.56	4,125	29.55
Expenses:
Selling, general and administrative	1,431	16.31	1,233	16.47	2,746	17.18	2,374	17.01
Store opening costs	27	0.31	24	0.31	47	0.29	60	0.43
Depreciation	185	2.11	153	2.04	364	2.28	299	2.14
Interest	45	0.51	46	0.62	93	0.58	93	0.67
Total expenses	1,688	19.24	1,456	19.44	3,250	20.33	2,826	20.25
Pre-tax earnings	959	10.93	746	9.97	1,635	10.23	1,299	9.30
Income tax provision	362	4.13	279	3.73	618	3.87	486	3.48
Net earnings	$    597	6.80	$     467	6.24	$    1,017	6.36	$     813	5.82
Weighted average shares outstanding - Basic	784		779		783		778
Basic earnings per share	$   0.76		$    0.60		$   1.30		$    1.05
Weighted average shares outstanding - Diluted	804		800		803		799
Diluted earnings per share	$    0.75		$    0.59		$    1.27		$    1.02
Retained Earnings
Balance at beginning of period	$   6,288		$   4,812		$   5,887		$   4,482
Net earnings	597		467		1,017		813
Cash dividends	(20)		(16)		(39)		(32)
Balance at end of period	$   6,865		$   5,263		$   6,865		$   5,263
See accompanying notes to unaudited consolidated financial statements.

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Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions
		Six Months Ended
		August 1, 2003	August 2, 2002
Cash Flows from Operating Activities:
	Net Earnings	$    1,017	$    813
	Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities:
	Depreciation and Amortization	373	308
	Deferred Income Taxes	37	(6)
	Loss on Disposition/Writedown of Fixed and  Other Assets	15	9
	Stock-based Compensation Expense	15	-
	Tax Effect of Stock Options Exercised	10	13
	Changes in Operating Assets and Liabilities:
	Accounts Receivable - Net	(27)	(35)
	Merchandise Inventory	(684)	(376)
	Other Operating Assets	18	15
	Accounts Payable	669	391
	Employee Retirement Plans	(48)	15
	Other Operating Liabilities	285	481
	Net Cash Provided by Operating Activities	1,680	1,628
Cash Flows from Investing Activities:
	Decrease (Increase) in Investment Assets:
	Short-Term Investments	192	16
	Purchase of Long-Term Investments	(247)	(2)
	Proceeds from Sale/Maturity of Long-Term Investments	99	-
	Increase in Other Long-Term Assets	(28)	(16)
	Fixed Assets Acquired	(1,010)	(910)
	Proceeds from the Sale of Fixed and Other Long-Term Assets	44	15
	Net Cash Used in Investing Activities	(950)	(897)
Cash Flows from Financing Activities:
	Net Decrease in Short-Term Borrowings	(50)	(50)
	Repayment of Long-Term Debt	(17)	(29)
	Proceeds from Stock Options Exercised	73	67
	Cash Dividend Payments	(39)	(31)
	Net Cash Used in Financing Activities	(33)	(43)
Net Increase in Cash and Cash Equivalents		697	688
Cash and Cash Equivalents, Beginning of Period		853	799
Cash and Cash Equivalents, End of Period		$         1,550	$         1,487
See accompanying notes to unaudited consolidated financial statements.

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Lowe's Companies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Basis of Presentation - The accompanying Consolidated Financial Statements (unaudited) have been reviewed by independent certified public accountants and, in the opinion of management, they contain all adjustments necessary to present fairly the financial position as of August 1, 2003, and August 2, 2002, the results of operations for the three and six months ended August 1, 2003 and August 2, 2002, and cash flows for the six months ended August 1, 2003 and August 2, 2002.

These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Lowe's Companies, Inc. (the "Company") Annual Report on Form 10-K for the fiscal year ended January 31, 2003. The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Note 2: Earnings Per Share - Basic earnings per share ("EPS") excludes dilution and is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average shares of common stock as adjusted for the potential dilutive effect of stock options and convertible notes at the balance sheet date. The dilutive effect of the assumed conversion of the $580.7 million Senior Convertible Notes, issued in October 2001, has been excluded from diluted earnings per share for the three and six months ended August 1, 2003 and August 2, 2002 because none of the conditions that would permit conversion had been satisfied during the period. The calculation is detailed below (in millions, except per share data):

		Three Months Ended		Six Months Ended
		August 1, 2003	August 2, 2002	August 1, 2003	August 2, 2002
Net earnings		$     597	$    467	$     1,017	$    813
Weighted average shares outstanding		784	779	783	778
Basic earnings per share		$    0.76	$    0.60	$    1.30	$    1.05
Net earnings		$    597	$    467	$    1,017	$    813
Tax-effected interest expense attributable to 2.5% convertible notes		3	3	5	5
Net earnings assuming dilution		$   600	$    470	$   1,022	$    818
Weighted average shares outstanding		784	779	783	778
Effect of potentially dilutive securities:
	2.5% convertible notes	16	16	16	16
	Employee stock option plans	4	5	4	5
Weighted average number of common shares assuming dilution		804	800	803	799
Diluted earnings per share		$    0.75	$    0.59	$    1.27	$    1.02

Note 3: Property - Property is shown net of accumulated depreciation of $2.8 billion at August 1, 2003, $2.3 billion at August 2, 2002 and $2.5 billion at January 31, 2003.

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Note 4: Supplemental Disclosure

Supplemental disclosures of cash flow information (in millions):

	Six Months Ended
	August 1, 2003	August 2, 2002
Cash paid for interest (net of amount capitalized)	$      113	$      117
Cash paid for income taxes	474	326
Non-cash investing and financing activities:
Common stock issued to ESOP	-	67
Fixed assets acquired under capital lease	-	4

Note 5: Credit Arrangements - The Company has an $800 million senior credit facility. The facility is split into a $400 million five-year tranche, expiring in August 2006, and a $400 million 364-day tranche, expiring in July 2004, which is renewable annually. The facility is used to support the Company's $800 million commercial paper program and for short-term borrowings. Borrowings made are priced based upon market conditions at the time of funding in accordance with the terms of the senior credit facility. The senior credit facility contains certain restrictive covenants, including maintenance of a specific financial ratio. The Company was in compliance with these covenants at August 1, 2003. Fifteen banking institutions are participating in the $800 million senior credit facility and as of August 1, 2003, there were no outstanding loans under the facility.

In July 2003, the Company terminated a $100 million revolving credit and security agreement with a financial institution, which was scheduled to expire in November 2003. 

Note 6: Comprehensive Income - Total comprehensive income, comprised of net earnings and unrealized holding gains (losses) on available-for-sale securities, was $596.1 and $467.1 million compared to net earnings of $596.6 and $467.1 million for the three months ended August 1, 2003 and August 2, 2002, respectively.  Total comprehensive income was $1,016.7 and $812.8 million compared to net earnings of $1,017.3 and $812.9 million for the six months ended August 1, 2003 and August 2, 2002, respectively.

Note 7: Accounting for Stock-Based Compensation - The Company has three stock incentive plans which are described more fully in Note 9 to the consolidated financial statements presented in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003. Prior to fiscal 2003, the Company accounted for these plans under the recognition and measurement provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. Therefore, no stock-based employee compensation is reflected in fiscal 2002 net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

Effective February 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," prospectively for all employee awards granted, modified or settled after January 31, 2003. Therefore, in accordance with the requirements of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure," the cost related to stock-based employee compensation included in the determination of net income for the three and six months ended August 1, 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123. During the three and six months ended August 1, 2003, the Company recognized compensation expense totaling $10 million and $15 million, respectively, relating to stock options and awards granted in that period, which generally vest over three years.

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The fair value of each option grant is estimated using the Black-Scholes option pricing model.  The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

(In millions, except per share data)
	Three Months Ended		Six Months Ended
	August 1, 2003	August 2, 2002	August 1, 2003	August 2, 2002
Net income, as reported	$    597	$    467	$    1,017	$    813
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards net of related tax effects not reported in net income	(15)	(21)	(31)	(42)
Pro forma net income	582	446	986	771
Earnings per share:
Basic - as reported	$    0.76	$    0.60	$    1.30	$    1.05
Basic - pro forma	$    0.74	$    0.57	$    1.26	$    0.99
Diluted - as reported	$    0.75	$    0.59	$    1.27	$    1.02
Diluted - pro forma	$    0.73	$    0.56	$    1.23	$    0.97

Note 8: Recent Accounting Pronouncements - In November 2002, the Emerging Issues Task Force ("EITF") issued EITF 02-16, 

"Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor." EITF 02-16 provides guidance 

for classification in the reseller's income statement for various circumstances under which cash consideration is received from a vendor by a 

reseller. In addition, the issue also provides guidance concerning how cash consideration relating to rebates or refunds should be recognized 

and measured. This standard became effective for the Company for all vendor reimbursement agreements entered into or modified after 

December 31, 2002.

The Company has historically treated volume related discounts or rebates as a reduction of inventory cost and reimbursements of operating 

expenses received from vendors as a reduction of those specific expenses. The Company's accounting treatment for these vendor provided 

funds is consistent with EITF 02-16 with the exception of certain cooperative advertising allowances and in-store service reimbursements 

provided by third parties for which the costs are ultimately funded by vendors. The Company previously treated the cooperative advertising 

allowances and in-store service reimbursements as a reduction of the related expense. Under EITF 02-16, cooperative advertising allowances 

and in-store service reimbursements should be treated as a reduction of inventory cost unless they represent a reimbursement of specific, 

incremental, identifiable costs incurred by the customer to sell the vendor's product. The Company has assessed the historic volume of 

cooperative advertising reimbursements and in-store service reimbursements that have been received in order to determine which of these 

reimbursements would meet the specific, identifiable and incremental criteria outlined under this issue and accordingly, qualify as a direct 

offset to expense. Based on the Company's analysis of the impact on net income, and the administrative cost to identify and track 

reimbursements between those qualifying for expense offset and those requiring inventory cost reduction, the Company has elected to treat all 

cooperative advertising funds and in-store service reimbursements received from vendors as a reduction in the cost of inventory and recognize 

them as a reduction to cost of goods sold when the inventory is sold.  

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The Company estimates that this one time change in accounting will reduce fiscal 2004 EPS by approximately $0.12 per share and fiscal 

2005 EPS by approximately $0.01 per share.  The $0.01 per share impact in fiscal 2005 represents the estimated growth in cooperative 

advertising allowances and in-store service reimbursements from fiscal 2004 to fiscal 2005.  This reflects the cooperative advertising 

allowances and in-store service reimbursements capitalized into inventory in 2005 less the $0.12 impact from 2004 that will be recognized 

in 2005 as the inventory is sold.  There will be no impact on the Company's cash flows or the expected amount of funds to be received from 

vendors.  The earnings impact recognized in fiscal 2004, the fiscal year of the initial implementation of EITF 02-16, will not be recurring in 

subsequent years.  Earnings in these subsequent years would be impacted only by future net changes in cooperative advertising programs 

and in-store service reimbursements.

In April 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No. 149, "Amendment of Statement 133 on Derivative 

Instruments and Hedging Activities." SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative 

instruments embedded in other contracts, and for hedging activities under Statement 133. This Statement is effective for contracts entered into 

or modified after June 30, 2003, except in certain instances stated within SFAS No. 149 and for hedging relationships designated after June 

30, 2003. Management does not believe the initial adoption of this standard will have a material impact on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and 

Equity." SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as 

equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. This Statement is 

effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim 

period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of non public entities. Management does not 

believe the initial adoption of this standard will have a material impact on the Company's financial statements.

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INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders of Lowe's Companies, Inc.  

We have reviewed the accompanying consolidated balance sheets of Lowe's Companies, Inc. and subsidiaries (the "Company") as of 

August 1, 2003 and August 2, 2002, and the related consolidated statements of current and retained earnings for the three-month and 

six-month periods then ended, and of cash flows for the six-month periods ended August 1, 2003 and August 2, 2002.  These interim 

financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants.  A review 

of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial 

and accounting matters.  It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in

the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  

Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements 

for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated 

balance sheet of Lowe's Companies, Inc. and subsidiaries as of January 31, 2003, and the related consolidated statements of earnings, 

shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2003, we expressed 

an unqualified opinion on those consolidated financial statements.  In our opinion, the information set forth in the accompanying consolidated 

balance sheet as of January 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been 

derived.

As discussed in Note 7 to the consolidated interim financial statements, the Company has changed its method of accounting for stock-based 

compensation effective February 1, 2003.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina
August 22, 2003

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the Company's consolidated operating results, liquidity and capital resources during 

the three and six months ended August 1, 2003. This discussion should be read in conjunction with the financial statements and financial 

statement footnotes that are included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

FORWARD-LOOKING STATEMENTS

The Company's quarterly report on Form 10-Q to be filed with the Securities and Exchange Commission talks about the future, particularly 

in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." While the Company believes 

these expectations are reasonable, the Company cannot guarantee them and this should be considered when thinking about statements made 

that are not historical facts. Some of the things that could cause actual results to differ substantially from expectations are:

(1) The Company's sales are dependent upon the general geopolitical environment and economic health of the country, variations in the number 

of new housing starts and existing home sales, the level of repairs, remodeling and additions to existing homes, commercial building activity, 

and the availability and cost of financing. An economic downturn affecting consumer confidence in making housing and home improvement 

expenditures could affect sales because a portion of the Company's inventory is purchased for discretionary projects, which can be delayed.

(2) The Company's expansion strategy may be impacted by environmental regulations, local zoning issues and delays, availability and 

development of land, and more stringent land use regulations than traditionally experienced as well as the availability of sufficient labor to 

facilitate growth.

(3) Many of the Company's products are commodities whose prices fluctuate within an economic cycle, a condition especially true of lumber 

and plywood.

(4) The Company's business is highly competitive, and as it expands into new markets the Company may face new forms of competition, 

which do not exist in some of the markets have traditionally served.

(5) The ability to continue the everyday competitive pricing strategy and provide the products that customers want depends on the Company's 

vendors providing a reliable supply of inventory at competitive prices.

(6) On a short-term basis, weather may affect sales of product groups like nursery, lumber, and building materials.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following discussion and analysis of the results of operations and financial condition are based on the Company's financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Company bases these estimates on historical results and various other assumptions believed to be reasonable, the results of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

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The Company's significant accounting polices are described in Note 1 to the consolidated financial statements presented in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003. Management believes that the following accounting policies affect the more significant estimates used in preparing the consolidated financial statements.

Merchandise Inventory

The Company records an inventory reserve for the loss associated with selling discontinued inventories below cost. This reserve is based on management's current knowledge with respect to inventory levels, sales trends and historical experience relating to the liquidation of discontinued inventory. Management does not believe the Company's merchandise inventories are subject to significant risk of obsolescence in the near-term, and management has the ability to adjust purchasing practices based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns could result in the need for additional reserves. The Company also records an inventory reserve for the estimated shrinkage between physical inventories. This reserve is primarily based on actual shrinkage from previous physical inventories. Changes in actual shrinkage from completed physical inventories could result in revisions to previously estimated shrinkage accruals. Management believes it has sufficient current and historical knowledge to record reasonable estimates for both of these inventory reserves.

Vendor Funds

The Company receives funds from vendors in the normal course of business for a variety of reasons including purchase volume rebates, 

cooperative advertising allowances, and third party in-store service related costs. Volume related rebates are recorded based on estimated 

purchase volumes and historical experience and are treated as a reduction of inventory costs at the time of purchase. Vendor funds received 

as a reimbursement of specific, incremental and identifiable costs are recognized as a reduction of the related expense. Cooperative advertising 

allowances and in-store service reimbursements provided by vendors have historically been used to offset the Company's related expense.  

However, under the guidance set forth in Emerging Issues Task Force (EITF) 02-16 "Accounting by a Customer (Including a Reseller) for 

Certain Consideration Received From a Vendor," cooperative advertising allowances and in-store service reimbursements should be treated 

as a reduction of inventory cost unless they represent a reimbursement of specific, incremental, identifiable costs incurred by the customer to 

sell the vendor's product. The Company has assessed the historic volume of cooperative advertising and in-store service reimbursements that 

have been received in order to determine which of these reimbursements would meet the specific, identifiable and incremental criteria outlined 

under this issue and accordingly, qualify as a direct offset to the related expense. Based on the Company's analysis of the impact on net income, 

and the administrative cost to identify and track reimbursements between those qualifying for expense offset and those requiring inventory 

cost reduction, the Company has elected to treat all cooperative advertising funds and in-store service reimbursements received from vendors 

as a reduction in the cost of inventory and recognize them as a reduction to cost of goods sold when the inventory is sold for all agreements 

entered into or modified after December 31, 2002.  The Company does not expect this accounting change to have a material impact on the 

fiscal 2003 financial statements since substantially all of the cooperative advertising allowance agreements and in-store service reimbursement 

agreements for fiscal 2003 were entered into prior to December 31, 2002.

Self-Insurance

The Company is self-insured for certain losses relating to worker's compensation, automobile, general and product liability claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management's estimates of the aggregate liability for uninsured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to adequately record estimated losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities.

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Stock-Based Compensation

The Company has three stock incentive plans which are described more fully in Note 9 to the consolidated financial statements presented in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003. Prior to fiscal 2003, the Company accounted for these plans under the recognition and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee compensation is reflected in 2002 net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective February 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," prospectively for all employee awards granted, modified or settled after January 31, 2003. Therefore, in accordance with the requirements of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure," the cost related to stock-based employee compensation included in the determination of net income for the three and six months ended August 1, 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123. See Note 7 to the Consolidated Financial Statements in this Form 10-Q for further description and disclosures in accordance with the requirements of SFAS No. 148.

OPERATIONS

For the second quarter of fiscal 2003, sales increased 17.2% to $8.8 billion, comparable store sales for the quarter increased 6.9%, and net 

earnings rose 27.8% to $596.7 million compared to last year's second quarter results. Diluted earnings per share were $0.75 compared to 

$0.59 for the comparable quarter of last year.  For the six months ended August 1, 2003, sales increased 14.5% to $16.0 billion, comparable 

store sales increased 3.9%, and net earnings rose 25.1% to $1.0 billion compared to the first six months of fiscal 2002. Diluted earnings per 

share increased 24.5% to $1.27 per share over the same period a year ago. 

The sales increase during the second quarter and first six months of 2003 was primarily attributable to the addition of 11.1 million square feet 

of retail selling space relating to new and relocated stores since last year's second quarter, as well as the increase in comparable store sales.   

Sales in the second quarter benefited from improving weather trends in most of the country.  As weather improved, consumers were able to 

initiate many projects that had been postponed because of poor weather in this year's first quarter.  Both customer traffic and average ticket 

improved significantly throughout the second quarter. 

Several product categories generated above average performance during the second quarter, including building materials, outdoor power 

equipment, windows and walls, fashion lighting, flooring, major appliances, nursery, cabinets and home organization. Millwork, paint and 

hardware performed at approximately the overall corporate average.

Gross margin was 30.2% of sales for the quarter ended August 1, 2003 compared to 29.4% for last year's comparable quarter. Gross margin 

for the six months ended August 1, 2003 was 30.6% versus 29.6% for the first six months of 2002.  The increases in margin rates for the the 

second quarter and first six months of 2003 are primarily due to product mix improvements and lower inventory shrinkage.

Selling, general and administrative expenses ("SG&A") were 16.3% of sales versus 16.5% in last year's second quarter. SG&A increased by 

16.1% compared to the 17.2% increase in sales for the quarter. The leveraging during the second quarter was primarily due to lower bonus 

estimates for fiscal 2003 as compared to fiscal 2002, partially offset by compensation expense relating to stock options recognized in the 

current quarter of approximately $10 million.  During the first six months of 2003, SG&A was 17.2% of sales, versus 17.0% for the same 

period in the prior year.  This de-leveraging was primarily caused by compensation expense relating to stock options recognized in the first six 

months of 2003 of approximately $15 million.
 

-14-

Store opening costs were $27 million for the quarter ended August 1, 2003 compared to $24 million last year. This represents costs associated 

with the opening of 24 stores during the current year's second quarter (22 new and 2 relocated) compared to 22 stores for the comparable 

period last year (21 new and 1 relocated). Charges in the second quarter of 2003 and 2002 for future and prior openings were $4 million and 

$6 million, respectively.  Store opening costs for the six months ended August 1, 2003 were $47 million, compared to $60 million last year.  

These costs were associated with the opening of 45 stores during the first six months of 2003 (43 new and 2 relocated), compared to 68 stores 

during the first six months of 2002 (63 new and 5 relocated). The Company's 2003 expansion plans are discussed under "Liquidity and Capital 

Resources" below.

Depreciation was $185 million and $364 million for the quarter and six months ended August 1, 2003, respectively.  This represents an 

increase of 20.9% and 21.7% over comparable periods last year.  The increase is primarily due to the addition of buildings, fixtures, displays 

and computer equipment relating to the Company's ongoing expansion program, the purchase of all the Company's financing leases and the 

increase in the percentage of owned locations since last year's second quarter. At the end of the current year's second quarter, the Company 

owned 77% of total locations compared to 74% in the prior year's second quarter.

Interest expense was $45 million for the quarter ended August 1, 2003, compared to $46 million last year.  For the six months ended August 1, 

2003 and August 1, 2002, interest expense totaled $93 million.  

The Company's effective income tax rate was 37.8% for the quarter and six months ended August 1, 2003 compared to 37.4% for last year's 

comparable periods. The higher rate during 2003 is primarily related to expansion into states with higher income tax rates.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes the Company's significant contractual obligations as of August 1, 2003.

Contractual Obligations	Payments Due by Period
(In millions)	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
Long-term debt (net of discount)	$  3,776	$       51	$       619	$       70	$  3,036
Capital lease obligations	798	60	119	117	502
Operating leases	3,332	221	429	420	2,262
Total contractual cash obligations	$  7,904	$     332	$   1,167	$     607	$  5,800

The primary sources of liquidity are cash flows from operating activities and various lines of credit currently available to the Company. Net cash provided by operating activities was $1.7 billion for the six months ended August 1, 2003 and $1.6 billion for the six months ended August 2, 2002. The primary source of cash provided by operating activities in the current year was net earnings. Working capital at August 1, 2003 was $2.4 billion compared to $2.2 billion at August 2, 2002 and $2.0 billion at January 31, 2003.

The primary component of net cash used in investing activities continues to be new store facilities in connection with the Company's expansion plan. Cash acquisitions of fixed assets were $1 billion and $0.9 billion for the six months ended August 1, 2003 and August 2, 2002, respectively. At August 1, 2003, the Company operated 896 stores in 45 states with 99.7 million square feet of retail selling space, a 12.5% increase over the selling space as of August 2, 2002.

-15-

Cash flows used in financing activities were $33 million and $43 million for the six months ended August 1, 2003 and August 2, 2002, respectively. Cash used in financing activities during the first six months of the current and prior year primarily resulted from short-term debt repayments, scheduled long-term debt repayments and cash dividend payments, offset by proceeds generated from stock option exercises. The ratio of long-term debt to equity plus long-term debt was 28.6%, 33.2% and 31.2% as of August 1, 2003, August 2, 2002 and January 31, 2003, respectively.

The Company has an $800 million senior credit facility. The facility is split into a $400 million five-year tranche, expiring in August 2006 and 

a $400 million 364-day tranche, expiring in July 2004, which is renewable annually. The facility is used to support the Company's $800 million 

commercial paper program and for short-term borrowings. Any loans made are priced based upon market conditions at the time of funding 

in accordance with the terms of the senior credit facility. The senior credit facility contains certain restrictive covenants, including maintenance 

of a specific financial ratio. The Company was in compliance with these covenants at August 1, 2003. Fifteen banking institutions are 

participating in the $800 million senior credit facility and, as of August 1, 2003, there were no outstanding loans under the facility.

In July 2003, the Company terminated a $100 million revolving credit and security agreement with a financial institution, which was scheduled to expire in November 2003. 

The Company's 2003 capital budget is $2.9 billion, inclusive of approximately $181 million of operating or capital leases. Approximately 80% 

of this planned commitment is for store expansion and new distribution centers. Expansion plans for 2003 consist of approximately 130 stores, 

including approximately 5 relocations of older stores. This planned expansion is expected to increase sales floor square footage by 

approximately 15%. Approximately 1% of the 2003 projects will be build-to-suit leases, 19% will be ground leased properties and 

80% will be owned. At August 1, 2003, the Company operated nine regional distribution centers. In February 2003, the Company began 

construction on an additional regional distribution center located in Poinciana, Florida, which is expected to be operational in the third quarter 

of 2004. The Company also expects to open approximately 3 to 5 additional flatbed network facilities in 2003 for the handling of lumber, 

building materials and long-length items.

The Company believes that funds from operations, leases and existing short-term lines of credit will be adequate to finance the 2003 expansion plan and other operating requirements. However, general economic downturns, fluctuations in the prices of products, unanticipated impact arising from competition and adverse weather conditions could have an effect on funds generated from operations and our expansion plans. In addition, the availability of funds through the issuance of commercial paper and new debt could be adversely affected due to a debt rating downgrade or a deterioration of certain financial ratios. There are no provisions in any agreements that would require early cash settlement of existing long-term debt or leases as a result of a downgrade in the Company's debt rating or a decrease in the Company's stock price. Holders of the Company's $580.7 million Senior Convertible notes may convert their notes into the Company's common stock during any period that the credit rating assigned to the notes is Baa3 or lower by Moody's, BBB or lower by Standard & Poor's or BBB or lower by Fitch.

Current Debt Ratings	S&P	Moody's	Fitch
Commercial paper	A1	P2	F1
Senior debt	A	A3	A
Outlook	Stable	Positive	Stable

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RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, the EITF issued EITF 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received 

from a Vendor." EITF 02-16 provides guidance for classification in the reseller's income statement for various circumstances under which 

cash consideration is received from a vendor by a reseller. In addition, the issue also provides guidance concerning how cash consideration 

relating to rebates or refunds should be recognized and measured. This standard became effective for the Company for all vendor 

reimbursement agreements entered into or modified after December 31, 2002. See Note 8 to the Consolidated Financial Statements for 

further description of the estimated impact of EITF 02-16.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS 

No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and 

for hedging activities under Statement 133. This Statement is effective for contracts entered into or modified after June 30, 2003, except in 

certain instances stated within SFAS No. 149 and for hedging relationships designated after June 30, 2003. Management does not believe 

the initial adoption of this standard will have a material impact on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and 

Equity." SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for 

as equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. This Statement is 

effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim 

period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of non public entities. Management does not 

believe the initial adoption of this standard will have a material impact on the Company's financial statements

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Item 3 - Quantitative and Qualitative Disclosures about Market Risk

As discussed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003, the Company's major market risk exposure is the potential loss arising from the impact of changing interest rates on long-term debt. The Company's policy is to monitor the interest rate risks associated with this debt, and the Company believes any significant risks could be offset by variable rate instruments available through the Company's lines of credit. The Company's market risk has not changed materially since January 31, 2003. Please see the tables titled "Long-term Debt Maturities by Fiscal Year" on page 23 of the Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

Item 4 - Controls and Procedures

The Company has designed and maintains disclosure controls and procedures to ensure that information required to be disclosed in its reports 

filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the 

Commission's rules and forms. These controls and procedures are also designed to ensure that such information is communicated to the 

Company's management, including its Chief Executive and Chief Financial Officers as appropriate, to allow them to make timely decisions 

about required disclosures.

The Company's management, including the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness 

of disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based on that evaluation, which was conducted as of the end 

of the period covered by this report on Form 10-Q, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls 

and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries)

required to be included in its periodic SEC filings.  

There has been no change in the Company's internal control over financial reporting during the quarter ended August 1, 2003 that has materially

affected, or is reasonably likely to materially affect, internal control over financial reporting. 

-18-

Part II - OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders

(a) - The annual meeting of shareholders was held May 30, 2003.

(b) - Directors elected at the meeting included: Peter C. Browning, Kenneth D. Lewis and Thomas D. O'Malley

Incumbent Directors whose terms expire in subsequent years are:  Robert L. Tillman, Leonard L. Berry, Paul Fulton, Robert A. Ingram, Dawn E. Hudson, Richard K. Lochridge and Claudine B. Malone

(c) - The matters voted upon at the meeting and the results of the voting were as follows:

(1)	Election of Directors:	FOR	WITHHELD
	Peter C. Browning	690,591,038	21,808,612
	Kenneth D. Lewis	549,929,846	162,469,804
	Thomas D. O'Malley	680,186,912	32,212,738
(2)	Shareholders' proposal concerning global workplace labor standards
	FOR	AGAINST	ABSTAIN
	36,280,781	507,204,443	56,201,427
(3)	Shareholders' proposal concerning the redemption of shareholder rights plan
	FOR	AGAINST	ABSTAIN
	416,338,247	176,803,585	6,542,317
(4)	Shareholders' proposal concerning bylaw amendment
	FOR	AGAINST	ABSTAIN
	165,356,304	426,572,092	7,758,255

-19-

Item 6 (a) - Exhibits

Exhibit 3(ii) - Bylaws of Lowe's Companies, Inc., as amended and restated May 30, 2003

Exhibit 10(iii)(A).1 - Release, Separation and Consulting Agreement - Thomas E. Whiddon

Exhibit 10(iii)(A).2 - Release and Separation Agreement - William C. Warden, Jr.

Exhibit 31(a) - Certification Pursuant Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31(b) - Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32(a) - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the 

Sarbanes-Oxley Act of 2002

Exhibit 32(b) - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the 

Sarbanes-Oxley Act of 2002

Refer to the Exhibit Index on page 21.

Item 6 (b) - Reports on Form 8-K

Current Report on Form 8-K filed May 19, 2003, furnishing under Item 9 thereof the News Release announcing the financial results for the Company's first quarter ended May 2, 2003.

-20-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by

the undersigned thereunto duly authorized.

	LOWE'S COMPANIES, INC.
September 12, 2003 Date	/s/Kenneth W. Black, Jr. Kenneth W. Black, Jr. Senior Vice President and Chief Accounting Officer

-21-

 EXHIBIT INDEX

Exhibit No.	Description
3(ii)	Bylaws of Lowe's Companies, Inc., as amended and restated May 30, 2003
10(iii)(A).1	Release, Separation and Consulting Agreement - Thomas E. Whiddon
10(iii)(A).2	Release and Separation Agreement - William C. Warden, Jr.
31(a)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31(b)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32(a)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32(b)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.