<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-8207
THE HOME DEPOT, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
IRS No. 95-3261426
(I.R.S. Employer Identification No.)
2727 Paces Ferry Road, Atlanta, Georgia
(Address of principal executive offices)
30339-4089
(Zip Code)
Registrant's telephone number, including area code: (404) 433-8211
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $.05 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[X]
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates of the Registrant on April 3, 1995 was $19,491,388,444. The
aggregate market value was computed by reference to the closing price of the
stock on the New York Stock Exchange on such date. For the purposes of this
response, executive officers and directors are deemed to be the affiliates of
the Registrant and the holding by nonaffiliates was computed as 442,986,101
shares.
The number of shares outstanding of the Registrant's Common Stock as of April
3, 1995 was 475,254,023 shares.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's proxy statement for its Annual Meeting of
Stockholders, to be held May 31, 1995, which will be filed pursuant
to Regulation 14A within 120 days of the close of Registrant's
fiscal year, is incorporated by reference in answer to Part III of
this report but only to the extent indicated herein. In addition,
pages 14 through 30 and the inside cover page of The Home Depot,
Inc.'s 1994 Annual Report to Stockholders is incorporated by
reference in answer to Items 6, 7 and 8 of Part II and Item 14(a)
of Part IV of this report.
PART I
Item 1. BUSINESS
The Home Depot, Inc., including its subsidiaries ("The Home
Depot" or "Company") is the leading retailer in the home
improvement industry. It operates "warehouse style" stores which
sell a wide assortment of building materials and home improvement
products. At fiscal year end, the Company had 340 stores in 28
states and 3 Canadian provinces, with an aggregate total of
approximately 35,133,000 square feet of selling space. Such stores
average approximately 103,000 square feet of enclosed space per
store, with an additional 20,000 to 28,000 square feet of garden
center and storage space. The Company's corporate offices are
located at 2727 Paces Ferry Road, Atlanta, Georgia 30339-4089,
telephone number (404) 433-8211.
The Home Depot's operating strategy stresses providing a broad
range of merchandise at competitive prices and utilizing highly
knowledgeable service oriented personnel and aggressive
advertising. Company-employed shoppers regularly check prices at
competitors' operations to ensure that The Home Depot's low
"Day-In, Day-Out" warehouse prices are competitive within each
market.
Since a majority of the Company's customers are individual
homeowners, many of whom may have limited experience in
do-it-yourself ("D-I-Y") projects, management considers its
employees' knowledge of products and home improvement techniques
and applications to be very important to its marketing approach and
its ability to maintain customer satisfaction. Many D-I-Y
customers take advantage of "how-to" classes offered in The Home
Depot stores.
Another segment of the Company's business activity is the
buy-it-yourself ("B-I-Y") customers. The B-I-Y customer chooses
products, makes the purchase and contracts with others to complete
or install the project. The Home Depot also devotes significant
marketing, advertising and service efforts toward attracting
professional remodelers and commercial users.
Products
Management estimates that during the course of a year, a
typical store stocks approximately 40,000 to 50,000 product items,
including variations in color and size. Each store carries a wide
selection of quality and nationally advertised brand name
merchandise. The table below shows the percentage of sales of each
major product group for each of the last three fiscal years.
However, these percentages may not necessarily be representative of
the Company's future product mix due, among other things, to the
effects of promotional activities associated
<PAGE>
with opening additional stores. Also, newly opened stores did not operate
through a complete seasonal product cycle for all periods
presented.
<TABLE>
<CAPTION>
Percentage of Sales
Year Ended Year Ended Year Ended
Feb. 2, Jan. 31, Jan. 29,
1993 1994 1995
<S> <C> <C> <C>
Product Group
Plumbing, heating, lighting
and electrical supplies 27.3% 27.6% 27.9%
Building materials, lumber,
floor and wall coverings 34.1 34.2 34.0
Hardware and tools 12.8 13.0 13.1
Seasonal and
specialty items 14.8 14.5 14.5
Paint and Other 11.0 10.7 10.5
100.0% 100.0% 100.0%
</TABLE>
The Company sources its merchandise from approximately 8,000
vendors worldwide, of which no single vendor accounts for as much
as 10 percent of purchases. The Company is not dependent on any
single vendor. A substantial majority of merchandise is purchased
directly from manufacturers, thereby eliminating costs of
intermediaries. Management believes that competitive sources of
supply are readily available for substantially all its products.
Marketing and Sales
Management believes a number of the Company's existing stores
are operating at or above their optimum capacity. In order to
enhance market penetration over time, the Company has adopted a
strategy of adding new stores near the edge of the market areas
served by existing stores. While such a strategy may initially
have a negative impact on the rate of growth of comparable
store-for-store sales, management believes this "cannibalization"
strategy increases customer satisfaction and overall market share
by reducing delays in shopping, increasing utilization by existing
customers and attracting new customers to more convenient
locations.
The Home Depot has continued to introduce or refine a number
of merchandising programs during fiscal 1994. Key among them is
the Company's ongoing commitment to becoming the supplier of first
choice to an assortment of professional customers, primarily small-
scale remodelers, carpenters, plumbers, electricians and building
maintenance professionals. The Company has reacted to the needs of
this group by emphasizing commercial credit programs, delivery
services, new merchandising programs and more efficient shopping
through the Company's Store Productivity Improvement program.
The Company continued a Company-wide roll-out of an enlarged
garden center prototype. These centers which are as large as
28,000 square feet, feature 6,000 to 8,000 square foot house plant
enclosures ("HPE") or covered selling areas providing year round
selling opportunities as well as a significantly expanded product
assortment. By the end of fiscal 1994, the prototype
<PAGE>
was in place in at least 244 stores. By the end of fiscal 1995, these
enlarged centers should be in most of the Company's stores.
The organization of the merchandising group was revamped
during fiscal 1994 to be more efficient and responsive to
customers' needs. Under the new structure, both product line
merchandisers and regional merchandisers report to division
merchandise managers who have responsibility for broad product
categories, such as construction, decor, repair and season-
lawn/garden.
The Company's installed sales program is available in 332
stores in 70 markets and is planned to be in all of the Company's
stores over the next year. There are approximately 3,400 installed
sales vendors who, as independent, licensed contractors, are
authorized to provide services to customers. This program targets
the B-I-Y customer, who will purchase an item but either does not
have the desire or ability to install the item.
During the past year, the Company has continued its marketing
effort to support its sponsorship of the 1994 and 1996 Olympic
Games and the U.S. Olympic teams' participation at those games. In
fiscal 1994, the Company unveiled a program to help pave the
Olympic Park in Atlanta with engraved bricks, and hired athletes to
work in its stores and offices while they train for the Olympic
Games. The Company's growing partnership with 29 key suppliers in
the United States and 26 in Canada is providing significant
financial support for the sponsorship.
During fiscal 1994, the Company also announced its sponsorship
of the Paralympic Games, which will follow the 1996 Summer Games in
Atlanta. Support of the Paralympic Games is symbolic of the
Company's commitment to better serve those of its associates and
customers with disabilities.
In January 1994, the Company opened its second Expo(R) Design
Center in Atlanta, Georgia. The Expo stores, located in San Diego
and Atlanta, enabled the regional merchandising staff to test a
variety of upscale interior design products and services. Due to
strong customer acceptance of its Expo stores, the Company plans to
add Expo stores in Westbury, New York, and in Dallas, Texas, during
1995. The Expo stores offer approximately 125,000 square feet of
selling space plus 5,000 square feet of climate controlled garden
centers.
During 1994, the Company also opened additional food service
facilities in certain stores. These facilities are an extension of
the Company's commitment to total customer satisfaction, and are
designed to provide customers and employees with a convenient place
to eat. The Company believes customers with limited amounts of
time to complete their shopping, especially customers with small
children, may spend more time in the store if fast food is
available on site. The food service providers vary by market.
On February 28, 1994, the Company acquired a 75 percent
interest in the Aikenhead's Home Improvement Warehouse
("Aikenhead's") chain in Canada. This 75 percent interest was
purchased from the Molson Companies Limited ("Molson"). The
Company has the right to
<PAGE>
acquire Molson's remaining 25 percent
interest beginning in 2000. The Company is the managing partner of
this partnership which operates as The Home Depot Canada.
During fiscal 1994, the Company began developing plans to open
stores in Mexico. Although the Company has begun building
relationships with key suppliers in Mexico, entry into this market
will be cautious and slow. On a long-term basis, however, it is
anticipated that success in Mexico could lead to more opportunities
throughout Central and South America.
The CrossRoads(tm) store format, announced during fiscal 1994,
will carry building and home improvement supplies sold at
traditional Home Depot stores, as well as a broad assortment of
products and services for farmers and ranchers. By combining its
traditional customer base with the markets in farming and ranching
communities, the Company anticipates being able to penetrate
hundreds of smaller markets that might not otherwise have supported
Home Depot stores.
The first CrossRoads store is expected to open in Quincy,
Illinois during the summer of 1995, with stores in Waterloo, Iowa
and Columbia, Missouri expected to also open during the year. The
average CrossRoads store is expected to encompass more that 100,000
square feet, plus additional outside selling space of approximately
100,000 square feet.
"The Home Depot", the "Homer" advertising symbol and various
private label brand names under which the Company sells a limited
range of products are service marks, trademarks or trade names of
the Company and are considered to be important assets of the
Company.
Information Systems
Each store is equipped with a computerized point of sale
system, electronic bar code scanning system, and a mini-computer.
These systems provide efficient customer check-out with an
approximate 90 percent of scannable products, store-based inventory
management, rapid order replenishment, labor planning support, and
item movement information. In fiscal 1994 faster registers were
introduced as well as a new check approval system and a new receipt
format to expedite credit card transactions. Store information is
communicated to home office and divisional office computers via a
satellite and land-based communications network. These computers
provide corporate financial and merchandising support systems.
The Company is constantly assessing and upgrading its
information systems to support its growth, reduce and control
costs, and enable better decision-making. The Company continues to
see greater efficiency as a result of its electronic data
interchange (EDI) program. Currently, over 400 of the Company's
highest volume vendors are participating in the EDI program. A
paperless system, EDI electronically processes orders from stores
to vendors, alerts the store when the merchandise is to arrive and
transmits vendor invoice data.
<PAGE>
In fiscal 1994, the Company introduced phone centers to serve
its customers who call to inquire about pricing and availability of
merchandise. By adding experienced sales associates to a phone
bank to answer calls quickly and efficiently, weekly phone sales
have increased. Without the necessity of responding to phone
calls, the sales associates can better concentrate on serving in-
store customers.
In fiscal 1994, stores were outfitted with Electronic Article
Surveillance ("EAS") detectors that trigger an alarm if a person
exits the store with merchandise that has been affixed with an EAS
label that has not been desensitized at the cash register. The
system is proving to be a deterrent to theft, with many stores
reporting reductions in shoplifting offenses.
The Company also operates its own television network and
produces training and informational programs that are transmitted
to stores via the communications network.
Employees
As of fiscal year end, The Home Depot employed
approximately 67,000 persons, of whom approximately 4,800 were
salaried and the remainder were compensated on an hourly basis.
Approximately 83 percent of the Company's employees are employed on
a full-time basis. In order to attract and retain qualified
personnel, the Company seeks to maintain salary and wage levels
above those of its competitors in its market areas. The Company's
policy is to hire and train additional personnel in anticipation of
future store expansion.
The Company has never experienced a strike or any work
stoppage, and management believes that its employee relations are
satisfactory. There are no collective bargaining agreements
covering any of the Company's employees.
Competition
The business of the Company is highly competitive, based
in part on price, location of store, customer service and depth of
merchandise. In each of the markets served by the Company, there
are several other chains of building supply houses, lumber yards
and home improvement stores. In addition, the Company must
compete, with respect to some of its products, with discount
stores, local, regional and national hardware stores, warehouse
clubs, independent building supply stores and to a lesser extent,
other retailers.
Due to the variety of competition faced by the Company,
management is unable to precisely measure the Company's market
share in its existing market areas. Management, however, believes
that the Company is an effective and significant competitor in
these markets.
<PAGE>
Executive Officers
The following provides information concerning the
executive officers holding positions in the Company and/or its
subsidiaries.
BERNARD MARCUS, age 65, has been Chairman of the Board of
Directors and Chief Executive Officer ("CEO") of The Home Depot
since its inception in 1978; and is, together with Mr. Arthur M.
Blank and Mr. Kenneth G. Langone (a director of the Company), a co-
founder of the Company. Mr. Marcus serves on the Board of Directors
of Wachovia Bank of Georgia, N.A., National Service Industries,
Inc. and the New York Stock Exchange, Inc. Mr. Marcus is a member
of the Advisory Board and Board of Directors of the Shepherd Spinal
Center in Atlanta, as well as a Vice President and member of the
Board of The City of Hope, a charitable organization in Duarte,
California. Mr. Marcus is also a member of Emory University's Board
of Visitors.
ARTHUR M. BLANK, age 52, has been President, Chief Operating
Officer ("COO") and a director of The Home Depot since its
inception in 1978; and is, together with Mr. Bernard Marcus and Mr.
Kenneth G. Langone, a co-founder of the Company. Mr. Blank serves
as Chairman of the Board of Trustees of North Carolina Outward
Bound School, a non-profit corporation; serves on the Board of
Trustees of Emory University; the Board of Councilors of the Carter
Center of Emory University; and the Board of Directors of Cox
Enterprises, Inc., Post Properties Inc. and Harry's Farmers Market,
Inc.
RONALD M. BRILL, age 51, has been Executive Vice President and
Chief Financial Officer ("CFO") of the Company since March 1993.
Mr. Brill joined The Home Depot as its Controller in 1978, was
elected Treasurer in 1980, Vice President-Finance in 1981, Senior
Vice President and CFO in 1984, and elected as a director in 1987.
Mr. Brill serves on the Board of Directors of AutoFinance Group,
Inc.; the Board of Trustees of the Atlanta Jewish Federation; the
Board of Trustees of Woodruff Arts Center; the Board of Directors
of the High Museum of Art; and the Governing Board of Woodward
Academy.
BILL HAMLIN, age 42, has been Executive Vice President-
Merchandising since April 1994. Mr. Hamlin joined the Company in
1985 as a merchandiser and was promoted to Vice President-
Merchandising (West Coast) in 1988 and President-Western Division
in 1990.
JAMES W. INGLIS, age 51, has been a director of the Company
since 1993. Mr. Inglis has been Executive Vice President-Strategic
Development since April 1994. Mr. Inglis joined The Home Depot in
1983 as a merchandiser and was shortly thereafter promoted to
Senior Merchandiser and then promoted to Vice President-
Merchandising (West Coast) in 1985, and Executive Vice President-
Merchandising in 1988. Mr. Inglis serves as endowment chairman
for the City of Hope's hardware and home improvement industry
group.
STEPHEN BEBIS, age 42, has been President of The Home Depot
Canada since February 1994 when the company acquired a 75 percent
interest in the operation formerly known as
<PAGE>
Aikenhead's. Mr. Bebis
joined The Home Depot in 1984 as a merchandiser. Prior to joining
Aikenhead's in 1990, Mr. Bebis was Vice President-Merchandising for
the Mid-South Division of The Home Depot.
BRUCE W. BERG, age 46, has been President-Southeast Division
since 1991. Mr. Berg joined the Company in 1984 as Vice President-
Merchandising (East Coast) and was promoted to Senior Vice
President (East Coast) in 1988.
W. ANDREW McKENNA, age 49, has been President-Midwest Division
since August 1994. Mr. McKenna joined The Home Depot in 1990 as
Senior Vice President-Corporate Information Systems.
LARRY M. MERCER, age 46, has been President-Northeast Division
since 1991. Mr. Mercer joined the Company in 1979 as an Assistant
Store Manager and after serving as a Store Manager was promoted to
Regional Manager of the Central Florida Region in 1983. Mr. Mercer
was then promoted to Vice President-Store Operations (East Coast)
in 1987.
HARRY PIERCE, age 36, has been President-Western Division
since April 1994. Mr. Pierce joined the Company in 1984 as an
Assistant Store Manager and later became an associate merchandiser
in 1985. After serving several years as a merchandiser both in
Atlanta and in the Northeast, Mr. Pierce was promoted to Manager-
Merchandising Information Systems in 1990. In 1992, Mr. Pierce
joined the Company's Western Division as Vice President-
Merchandising.
DENNIS J. RYAN, age 48, has been President of the CrossRoads
Division since January 1995. Mr. Ryan joined the Company in 1985
as a building materials merchandiser and became Vice President-
Merchandising in 1988. Mr. Ryan was then promoted to Senior Vice
President-Merchandising in 1992.
BRYANT W. SCOTT, age 39, has been President of the Expo Design
Centers Division since March 1995. Mr. Scott began his career with
The Home Depot in 1980 as a store associate. Since then he has
served in a variety of positions and most recently served as Vice
President-Merchandising for the Southeast Division, located in
Tampa, Florida.
MARSHALL L. DAY, age 51, has been Senior Vice President-
Finance since March 1993. Mr. Day joined the Company in 1986 as
Controller, was promoted to Vice President-Controller in 1988 and
Vice President-Finance in 1989.
<PAGE>
Item 2. PROPERTIES
The following table illustrates the Company's store
locations by state in the United States and province in Canada as
of the end of fiscal year 1994:
<TABLE>
<CAPTION>
Number of Stores
State in State
-----------------------------------------------------------
<S> <C>
Alabama 2
Arizona 11
California 76
Connecticut 7
Florida 55
Georgia 18
Idaho 1
Illinois 6
Louisiana 7
Maryland 7
Massachusetts 11
Michigan 5
Nevada 3
New Hampshire 3
New Jersey 13
New Mexico 2
New York 16
North Carolina 10
Oklahoma 4
Oregon 3
Pennsylvania 7
Rhode Island 1
South Carolina 5
Tennessee 7
Texas 33
Utah 3
Virginia 5
Washington 7
--------------------------------------------
Subtotal 328
Number of Stores
Canadian Provinces in Province
Ontario 8
British Columbia 2
Alberta 2
--------------------------------------------
Subtotal 12
--------------------------------------------
TOTAL 340
============================================
</TABLE>
<PAGE>
At fiscal year end, The Home Depot had stores located in
28 states, with approximately 53 percent being concentrated in
California, Georgia, Texas and Florida. Although new store
openings for fiscal 1994 occurred primarily in existing markets,
the Company continued its geographic expansion by opening stores in
a number of new markets in fiscal 1994 -- Boise, Idaho; Chicago,
Illinois; Detroit, Michigan; Albuquerque, New Mexico; upstate New
York; Winston-Salem, North Carolina; Tulsa, Oklahoma; Eugene,
Oregon; eastern Pennsylvania; Columbia, South Carolina; and Salt
Lake City, Utah.
The Company made its initial entry into the midwest region
of the United States through the region's two largest markets,
Chicago, Illinois and Detroit, Michigan in fiscal 1994. By the
close of fiscal 1994, the Company had opened 11 stores in the
region. The Midwest division is expected to be one of the fastest
growing divisions for the next several years. Approximately 16 new
stores are scheduled for 1995, and by the end of 1998, the Company
expects approximately 112 stores to be open.
The Home Depot Canada commenced operations with 7 stores
operated previously by Aikenhead's. The Home Depot Canada built an
additional 5 stores during fiscal 1994, for a total of 12 stores at
fiscal year end. Approximately 9 additional new stores are planned
for a total of 21 by the end of fiscal 1995.
From the end of fiscal 1989 to the end of fiscal 1994, the
Company increased its store count by an average of approximately 24
percent per year (from 118 to 340 stores) and increased the total
store square footage by an average of approximately 28 percent per
year (from 10,424,000 to 35,133,000 total square feet). The Home
Depot expects to continue to increase its store count in both
existing and selected new markets on a basis consistent with its
previously stated policy of not exceeding a maximum growth rate of
new stores of approximately 25 percent per year in the U.S. The
Home Depot took advantage of recent competitive opportunities
during the 1994 fiscal year despite this stated policy. During
fiscal 1994, the Company opened 70 new stores, acquired seven
stores, closed one and relocated nine existing stores, including
the opening of 16 additional stores in the Northeast division, 19
additional stores in the Southeast division, 11 in the Midwest
division, 19 additional stores in the Western division and 5 stores
in Canada. During fiscal 1995, the Company anticipates opening
approximately 91 new stores: 24 in the Southeast, 20 in the
Northeast, 18 in the West, 15 in the Midwest, nine in Canada, two
Expo stores and three CrossRoads stores, plus relocations of nine
existing stores. New stores average approximately 102,000 square
feet with an additional 15,000 to 28,000 square feet of outside
selling and storage area.
Of the Company's 340 stores, 67 percent are owned
(including those owned subject to a ground lease) consisting of
approximately 23,644,000 square feet and 33 percent are leased
consisting of approximately 11,489,000 square feet. In recent
years, the relative percentage of new stores which are owned has
increased. The Company prefers to own stores because of the
greater operating control and flexibility, generally lower
occupancy costs and certain other economic advantages of owned
stores. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Capital
Resources."
<PAGE>
The Company's executive, corporate staff and accounting
offices occupy approximately 511,000 square feet of leased space in
several locations in Atlanta, Georgia. The Company has acquired
land in Atlanta, Georgia and has commenced construction of
replacement office facilities. The office facilities will be
completed in stages to coincide with the end of various lease terms
and space requirements. The Company occupies an aggregate of
209,600 square feet, of which 77,600 square feet is owned and
132,000 square feet is leased, for divisional offices located in
Atlanta, Georgia; Fullerton, California; South Plainfield, New
Jersey; Schaumberg, Illinois; Tampa, Florida; and Scarborough,
Ontario, Canada.
The Company utilizes 2,171,000 square feet of warehousing
and distribution space of which 188,000 is owned and 1,983,000 is
leased. The Company also recently announced plans to acquire an
approximately 1.4 million square foot facility in Savannah, Georgia
for an international distribution center. Imported products will
be staged in the distribution center pending shipment to the
stores.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the Company is a party or to which any of its property is the
subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders
during the fourth quarter of the fiscal year ended January 29,
1995.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Since April 19, 1984, the Common Stock of the Company has
been listed on the New York Stock Exchange under the symbol "HD".
The table below sets forth the high and low sales prices of the
Common Stock on the New York Stock Exchange Composite Tape as
reported in The Wall Street Journal and the quarterly cash
dividends declared per share of Common Stock during the periods
indicated.
<PAGE>
<TABLE>
<CAPTION>
Cash
Price Range * Dividends
Low High Declared *
<S> <C> <C> <C>
Fiscal Year 1993
First Quarter ended May 2, 1993 $39.63 $50.50 $.0225
Second Quarter ended August 1, 1993 41.13 47.00 .0300
Third Quarter ended October 31, 1993 35.00 47.25 .0300
Fourth Quarter ended January 30, 1994 36.50 44.25 .0300
Fiscal Year 1994
First Quarter ended May 1, 1994 $37.13 $44.63 $.0300
Second Quarter ended July 31, 1994 39.63 46.38 .0400
Third Quarter ended October 30, 1994 39.75 46.25 .0400
Fourth Quarter ended January 29, 1994 44.13 48.25 .0400
Fiscal Year 1995
First Quarter (through April 3, 1995) $42.88 $49.75 $.0400
____________________________
<FN>
* On April 13, 1993, the Company effected a four-for-three stock
split, in the form of a stock dividend, with respect to the shares
of Common Stock issued and outstanding on March 24, 1993. The
prices in the table set forth above have been adjusted by the
Company to give effect retroactively to such stock split.
Dividends declared also have been adjusted to give effect to the
stock split.
</FN>
</TABLE>
The Company paid its first cash dividend on June 22, 1987,
and has since paid dividends in each quarter. Future dividend
policy will depend on the Company's earnings, capital requirements,
financial condition and other factors considered relevant by the
Board of Directors.
Number of Record Holders
The number of record holders of The Home Depot's Common
Stock as of April 3, 1995 was 63,336 (without including individual
participants in nominee security position listings).
Item 6. SELECTED FINANCIAL DATA
Reference is made to information for the fiscal years
1989-1994 under the heading "Ten Year Selected Financial and
Operating Highlights" contained in the Company's Annual Report to
Stockholders for the fiscal year ended January 29, 1995, which
information is incorporated herein by reference.
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Reference is made to information under the heading
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" contained in the Company's Annual Report to
Stockholders for the fiscal year ended January 29, 1995, which
information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to information under the headings
"Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Stockholders' Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated
Financial Statements" and "Independent Auditors' Report" contained
in the Company's Annual Report to Stockholders for the fiscal year
ended January 29, 1995, which information is incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by
reference from the information in Registrant's proxy statement
(filed or to be filed pursuant to Regulation 14A) for its Annual
Meeting of Stockholders to be held May 31, 1995, except as to
biographical information on Executive Officers which is contained
in Item I of this Annual Report on Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by
reference from the information in Registrant's proxy statement
(filed or to be filed pursuant to Regulation 14A) for its Annual
Meeting of Stockholders to be held May 31, 1995.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by Item 12 is incorporated by
reference from the information in Registrant's proxy statement
(filed or to be filed pursuant to Regulation 14A) for its Annual
Meeting of Stockholders to be held May 31, 1995.
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by
reference from the information in Registrant's proxy statement
(filed or to be filed pursuant to Regulation 14A) for its Annual
Meeting of Stockholders to be held May 31, 1995.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements are filed herewith by
incorporation by reference from pages 17 through 30 of the
Registrant's Annual Report to Stockholders for the fiscal year
ended January 29, 1995, as provided in Item 8 hereof:
- - Consolidated Statements of Earnings for the fiscal years ended
January 29, 1995, January 30, 1994 and January 31, 1993.
- - Consolidated Balance Sheets as of January 29, 1995 and January
30, 1994.
- - Consolidated Statements of Stockholders' Equity for the fiscal
years ended January 29, 1995, January 30, 1994 and January 31,
1993.
- - Consolidated Statements of Cash Flows for the fiscal years ended
January 29, 1995, January 30, 1994 and January 31, 1993.
- - Notes to Consolidated Financial Statements.
- - Independent Auditors' Report.
2. Financial Statement Schedules
All schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last
quarter of the fiscal year ended January 29, 1995.
<PAGE>
(c) Exhibits
Exhibits marked with an asterisk (*) are hereby
incorporated by reference to exhibits or appendices previously
filed by the Registrant as indicated in brackets following the
description of the exhibit.
3.l Restated Certificate of Incorporation of The Home Depot, Inc., as amended.
* 3.2 By-Laws, as amended [Form 10-K for the fiscal year ended
February 3, 1991, Exhibit 3.2]
* 4.1 $300,000,000 Credit Agreement dated as of November 2, 1994
among The Home Depot, Inc., the Banks Listed Therein and
Wachovia Bank of Georgia, N.A., as Agent (without exhibits).
[Form 10-Q for the fiscal quarter ended October 30, 1994,
Exhibit 10]
*10.1 Investment Banking Consulting Contract dated April 17, 1985
between Invemed Associates, Inc. and the Registrant. [Form 10-K
for the fiscal year ended February 2, 1992, Exhibit 10.1]
*10.2 +Corporate Office Management Bonus Plan of the Registrant
dated March 1, 1991. [Form 10-K for the fiscal year ended February
2, 1992, Exhibit 10.2]
*10.3 +Employee Stock Purchase Plan, as amended. [Appendix A to
Registrant's Proxy Statement for the Annual Meeting of Stockholders
held May 31, 1995]
10.4 +Senior Officers' Bonus Pool Plan, as amended.
*10.5 +The Home Depot Employee Stock Ownership Plan and Trust, as
amended. [Form 10-K for the fiscal year ended January 29, 1989,
Exhibit 10.7]
*10.6 +The Home Depot, Inc. 1991 Omnibus Stock Option Plan.
[Appendix A to Registrant's Proxy Statement for the Annual
Meeting of Stockholders held May 22, 1991]
*10.7 +Executive Medical Reimbursement Plan, effective January 1,
1992. [Form 10-K for the fiscal year ended January 31, 1993,
Exhibit 10.7]
10.8 +The Home Depot ESOP Restoration Plan.
11 Computation of Earnings Per Common and Common Equivalent Share.
13 The Registrant's Annual Report to Stockholders for fiscal year
ended January 29, 1995. Only those portions of said report which
are specifically designated in
<PAGE>
this Form 10-K as being incorporated
by reference are being electronically filed pursuant to the
Securities Exchange Act of 1934.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution of Form 10-K
Annual Report have been granted and are filed herewith as follows:
Power of Attorney from Frank Borman.
Power of Attorney from Berry R. Cox.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from James W. Inglis.
Power of Attorney from Donald R. Keough.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule.
+Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14(c) of
this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant, The Home Depot,
Inc., has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Atlanta, and
State of Georgia on this 17th day of April, 1995.
THE HOME DEPOT, INC.
By: /s/ Bernard Marcus
-----------------------------------
(Bernard Marcus, Chairman of the Board,
Chief Executive Officer and Secretary)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Registrant, The Home Depot, Inc., and in the
capacities and on the dates indicated.
Signature Title Date
/s/ Bernard Marcus Chairman of the
- ------------------------ Board, Chief April 17, 1995
(Bernard Marcus) Executive
Officer and Secretary
(Principal Executive Officer)
/s/ Arthur M. Blank President,
- ------------------------ Chief Operating Officer April 17, 1995
(Arthur M. Blank) and Director
/s/ Ronald M. Brill Chief
- ------------------------ Financial Officer, Executive April 17, 1995
(Ronald M. Brill) Vice President
and Director (Principal
Financial and
Accounting Officer)
*
- ------------------------ Director April 17, 1995
(Frank Borman)
<PAGE>
*
- ------------------------ Director April 17, 1995
(Berry R. Cox)
*
- ------------------------ Director April 17, 1995
(Milledge A. Hart, III)
*
- ------------------------ Director April 17, 1995
(James W. Inglis)
* Director April 17, 1995
- ------------------------
(Donald R. Keough)
*
- ------------------------ Director April 17, 1995
(Kenneth G. Langone)
* Director April 17, 1995
- ------------------------
(M. Faye Wilson)
* The undersigned, by signing his name hereto, does hereby
sign this report on behalf of each of the above-indicated
directors of the Registrant pursuant to powers of attorney,
executed on behalf of each such director.
By:/s/ Bernard Marcus
-----------------------------
(Bernard Marcus, Attorney-in-fact)
<PAGE>
EXHIBIT INDEX
3.1 Restated Certificate of Incorporation of The Home Depot, Inc.,
as amended.
10.4 Senior Officers' Bonus Pool Plan, as amended.
10.8 The Home Depot ESOP Restoration Plan.
11 Computation of Earnings Per Common and Common Equivalent Share.
13 The Registrant's Annual Report to Stockholders for the fiscal year
ended January 29, 1995. Only those
portions of said report which are specifically
designated in this Form 10-K as being incorporated
by reference are being electronically filed pursuant to the
Securities Exchange Act of 1934.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution
of this Form 10-K Annual Report
have been granted and are filed herewith as
follows:
Power of Attorney from Frank Borman.
Power of Attorney from Berry R. Cox.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from James W. Inglis.
Power of Attorney from Donald R. Keough.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule. [Filed Electronically with S.E.C. Only]
RESTATED CERTIFICATE OF INCORPORATION OF THE HOME DEPOT, INC., AS AMENDED
(Originally incorporated on June 29, 1978
under the name M. B. Associates Incorporated)
FIRST: The name of the corporation (which is herein referred
to as the "Corporation") is The Home Depot, Inc.
SECOND: The address of the Corporation's registered office in
the State of Delaware is 1209 Orange Street, in the City of
Wilmington, in the County of New Castle. The name of its registered
agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage ln any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware.
Without limiting in any manner the scope and generality of the
foregoing, it is hereby provided that the Corporation shall have
the following purposes, objects and powers:
To manufacture, purchase or otherwise acquire, invest in, own,
pledge, sell, assign and transfer or otherwise dispose of, trade,
deal in and deal with, any and all goods, wares, merchandise and
personal property relating to home improvement services, materials,
products, devices, manuals, audio-visual aids, tools and any and
all products related thereto of every kind and description.
To do all and everything necessary, suitable and proper for
the accomplishment of any of the purposes or the attainment of any
of the objects or the furtherance of any of the powers hereinbefore
set forth, either alone or in association with other corporations,
firms or individuals, and to do every other act or acts, thing or
things incidental to or growing out of or connected with the
aforesaid powers or any part or parts thereof, including, without
limitation, the acquisition and operation of businesses exclusively
or partially engaged in providing home improvement services,
materials, products, devices, manuals, audio-visual aids, tools,
and related products or services to consumers.
The business or purpose of the Corporation is from time to
time to do any one or more of the acts and things hereinbefore set
forth, and it shall have power to conduct and carry on said
business, or any part thereof, and to have one or more offices, and
to exercise any or all of its corporate powers and rights, in the
State of Delaware, and in the various other states, territories,
colonies and dependencies of the United States, in the District of
Columbia, and in all or any foreign countries.
<PAGE>
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and
purposes and shall not be deemed to exclude by inference any
powers, objects or purposes which the Corporation is empowered to
exercise, whether expressly by force of the laws of the State of
Delaware now or hereafter in effect, or impliedly by the reasonable
construction of said laws.
FOURTH: The total number of shares of stock which the
Corporation will have authority to issue is 1,000,000,000, all of
which shall be shares of Common Stock of the par value of five
cents ($.05) each.
FIFTH: The name and mailing address of the sole incorporator
is as follows:
Kenneth G. Langone c/o INVEMED ASSOCIATES INCORPORATED
375 Park Avenue
New York. New York 10022
SIXTH: 1. The business and affairs of the Corporation shall
be managed by or under the direction of a Board of Directors
consisting of not less than three nor more than fifteen directors,
the exact number of directors to be determined from time to time by
resolution adopted by affirmative vote of a majority of the entire
Board of Directors. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board of
Directors. At the meeting of stockholders at which this Article is
adopted, Class I, II and III directors shall be elected to serve
until the 1987, 1986 and 1985 annual meetings of stockholders,
respectively.
2. At each annual meeting of the stockholders beginning with
1985, successors to the class of directors whose term expires at
that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but
in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however,
to prior death, resignation, retirement, disqualification or
removal from office. Any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled
by a majority of the Board of Directors then in office, and any
other vacancy occurring in the Board of Directors may be filled by
a majority
<PAGE>
of the directors then in office, although less than a
quorum, or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his
predecessor.
3. No person (other than a person nominated by or on behalf
of the Board of Directors) shall be eligible for election as a
director at any annual or special meeting of stockholders unless a
written request that his or her name be placed in nomination is
received from a stockholder of record by the Secretary of the
Corporation not less than 30 days prior to the date fixed for the
meeting, together with the written consent of such person to serve
as a director.
4. Except to the extent prohibited by law, the Board of
Directors shall have the right (which, to the extent exercised,
shall be exclusive) to establish the rights, powers, duties, rules
and procedures that from time to time shall govern the Board of
Directors and each of its members, including without limitation the
vote required for any action by the Board of Directors, the
determination by resolution of the Board of Directors of the
officers of the Corporation and their respective titles and duties,
the determination by resolution of the Board of Directors of the
manner of choosing the officers of the Corporation and the terms of
their respective offices, the determination by resolution of the
Board of Directors of the terms and conditions under which the
Corporation shall exercise the powers granted to it as of January
I, 1984 by Section 145 of the Delaware General Corporation Law, as
such powers may exist from time to time after January 1, 1984, and
that from time to time shall affect the directors' power otherwise
to manage the business and affairs of the Corporation; and,
notwithstanding any other provision of this Certificate of
Incorporation to the contrary, no by-law shall be adopted by
stockholders which shall interpret or qualify, or impair or impede
the implementation of, the foregoing. Any inconsistency between, on
the one side, a document which implements the provisions of this
paragraph 4 and sets forth the rights, powers, duties, rules and/or
procedures governing the Board of Directors and, on the other side,
any by-law or other corporate document shall be construed in favor
of the document setting forth such rights, powers, duties, rules
and/or procedures.
5. No action shall be taken by stockholders of the
Corporation except at an annual or special meeting of the
stockholders of the Corporation. Except to the extent, if any,
otherwise required by law, a special meeting of the stockholders of
the Corporation may be called only by the Chairman of the Board of
Directors, the President or the Board of Directors of the
Corporation.
6. No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, change or repeal any of the
provisions of this Article SIXTH, unless the amendment effecting
such amendment, alteration, change or repeal shall receive the
affirmative vote of the holders of eighty percent (80%) of all
shares of stock of the Corporation entitled to vote in the election
of directors, considered for the purposes of this Article SIXTH as
one class; provided that this paragraph 6 shall not apply to, and
such eighty percent (80%) vote or consent shall not be required
for, any amendment, alteration, change or repeal unanimously
<PAGE>
recommended to the stockholders by the Board of Directors of the
Corporation if each of such directors is a person who would be
eligible to serve as a continuing director as hereinafter defined
in paragraph 7 of this Article SIXTH.
7. As used in paragraph 6 of this Article SIXTH, (a) the term
"continuing director" shall mean either a person who was a member
of the Board of Directors of the Corporation elected by the
stockholders of the Corporation prior to the time that an "other
entity" acquired in excess of ten percent (10%) of the stock of the
Corporation entitled to vote in the election of directors, or a
person recommended to succeed any continuing director by a majority
of continuing directors; (b) the term "other entity" shall include
any corporation, person or other entity (other than the
Corporation, any of its subsidiaries or a trustee holding stock for
the benefit of employees of the Corporation or its subsidiaries, or
any one of them, pursuant to one or more employee benefit plans or
arrangements) and any other entity with which it or its "affiliate"
or "associate" (as defined below) has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of stock of the
Corporation, or which is its "affiliate" or "associate" as those
terms are defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934 as in effect
on January 1, 1984, together with the successors and assigns of
such persons in any transaction or series of transactions not
involving a "public offering" of the Corporation's stock within the
meaning of the Securities Act of 1933, provided that "other entity"
does not include any one or any group of more than one of the
persons who were directors of the Corporation as of January 1,
1984, or any one or any group of more than one continuing director
(as defined above); (c) an other entity (as defined above) shall be
deemed to be the beneficial owner of any shares of stock of the
Corporation which such other entity has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise; and (d) the outstanding shares
of any class of stock of the Corporation shall include shares
deemed owned through application of clause (c) above but shall not
include any other shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options, or otherwise.
8. A majority of the continuing directors shall have the
power and duty to determine for the purposes of this Article SIXTH
on the basis of information known to them whether (a) such other
entity beneficially owns more than ten percent (10%) of the
outstanding shares of stock of the Corporation entitled to vote in
the election of directors, (b) an other entity is an "affiliate" or
"associate" (as defined above) of another, or (c) an other entity
has an agreement, arrangement or understanding with another.
SEVENTH: The Board of Directors shall have power to make,
alter or repeal the by-laws of the Corporation, except as may
otherwise be provided in the by-laws.
EIGHTH: 1. The affirmative vote or, if permitted under this
Certificate of Incorporation, consent of the holders of eighty
percent (80%) of all shares of the Corporation entitled to vote in
the election of directors, considered for the purposes of this
Article EIGHTH as one class, shall be required for the adoption or
authorization of (i) a business
<PAGE>
combination (as hereinafter
defined) with any other entity (as hereinafter defined) if, as of
the record date for the determination of stockholders entitled to
notice thereof and to vote thereon, or, if so permitted, consent
thereto, such other entity is the beneficial owner, directly or
indirectly, of more than twenty percent (20%) of the outstanding
shares of stock of the Corporation entitled to vote in the election
of directors, considered for the purposes of this Article EIGHTH as
one class, or (ii) a proposed dissolution of the Corporation or a
proposed amendment of the Certificate of Incorporation of the
Corporation which would either change the entitlement of the
holders of shares of Common Stock of the Corporation to vote in the
election of directors or would authorize the Corporation to issue
either shares of capital stock (other than shares of its Common
Stock) or bonds, debentures or other obligations, which, if issued,
would or could be entitled to vote in the election of directors if,
as of the record date for the determination of stockholders
entitled to notice of and to vote on or, if so permitted, consent
to such proposed dissolution or such proposed amendment, an other
entity (as hereinafter defined) is the beneficial owner, directly
or indirectly, of more than twenty percent (20%) of the outstanding
shares of stock of the Corporation entitled to vote in the election
of directors, considered for the purposes of this Article EIGHTH as
one class; provided that such eighty percent (808) voting
requirement shall not be applicable to the adoption or
authorization of a business combination if:
(a) The cash, or fair market value of other consideration, to
be received per share by holders of shares of any class of capital
stock of the Corporation in such business combination bears the
same or a greater percentage relationship to the market price of
such shares of capital stock immediately prior to the announcement
of such business combination as the highest per share price
(including brokerage commissions and/or soliciting dealers' fees)
which such other entity has theretofore paid for any of such shares
of capital stock already owned by it bears to the market price of
such shares of capital stock immediately prior to the commencement
of acquisition of such shares of capital stock by such other
entity;
(b) The cash, or fair market value of other consideration, to
be received per share by holders of shares of any class of capital
stock of the Corporation in such business combination is not less
than the highest per share price (including brokerage commissions
and/or soliciting dealers' fees) paid by such other entity in
acquiring any of its holdings of such shares of capital stock
(c) After such other entity has acquired such greater-than-
twenty percent (20%) interest and prior to the consummation of such
business combination: (i) such other entity shall have taken steps
to ensure that the Corporation's Board of Directors included- at
all times representation by continuing director(s) (as hereinafter
defined) proportionate to the stockholdings of the Corporation's
stockholders not affiliated with such other entity (with a
continuing director to occupy any resulting fractional board
position); (ii) such other entity shall not have acquired any newly
issued shares of capital stock, directly or indirectly, from the
Corporation (except upon conversion of securities acquired by it
prior to obtaining such greater-than-twenty percent (20%) interest
or as a result of a pro rata stock dividend or stock
<PAGE>
split); and
(iii) such other entity shall not have acquired any additional
shares of the Corporation's outstanding capital stock or securities
convertible into capital stock except as a part of the transaction
which results in such other entity acquiring such greater-than-
twenty percent (20%) interest; and
(d) Such other entity shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder) of
any loans, advances, guarantees, pledges or other financial
assistance or tax credits provided by the Corporation.
The provisions of this Article EIGHTH shall also apply to a
business combination with any other entity which at any time has
been the beneficial owner, directly or indirectly, of more than
twenty percent (20%) of the outstanding shares of stock of the
Corporation entitled to vote in the election of directors,
considered for the purpose of this Article EIGHTH as one class,
notwithstanding the fact that such other entity has reduced its
shareholdings below twenty percent (20%) if, as of the record date
for the determination of stockholders entitled to notice of and to
vote on or, if so permitted, consent to the business combination,
such other entity is an "affiliate" of the Corporation (as
hereinafter defined).
2. As used in this Article EIGHTH, (a) the term "other
entity" shall include any corporation, person or other entity
(other than the Corporation, any of its subsidiaries or a trustee
holding stock for the benefit of employees of the Corporation or
its subsidiaries or any one of them, pursuant to one or more
<PAGE>
employee benefit plans or arrangements) and any other entity with
which it or its "affiliate" or "associate" (as defined below) has
any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or
disposing of stock of the. Corporation, or which is its "affiliate"
or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect on January 1, 1984, together with
the successors and assigns of such persons in any transaction or
series of transactions not involving a "public offering" of the
Corporation's stock within the meaning of the Securities Act of
1933, provided that "other entity" does not include any one or any
group of more than one of the persons who were directors of the
Corporation as of January 1, 1984, or any one or any group of more
than one continuing director (as defined below), (b) an other
entity (as defined above) shall be deemed to be the beneficial
owner of any shares of stock of the Corporation which such other
entity has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise;
(c) the outstanding shares of any class of stock of the Corporation
shall include shares deemed owned through application of clause (b)
above but shall not include any other shares which may be issuable
pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise; (d) the term, "business
combination" shall include any merger or consolidation of the
Corporation with or into any other corporation, or the sale or
lease of all or any substantial part of the assets of the
Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of
any assets (except assets having an aggregate fair market value of
less than $5,000,000) of, any other entity; (e) the term
"continuing director" shall mean either a person who was a member
of the Board of Directors of the Corporation elected by the
stockholders of the Corporation prior to the time that an other
entity acquired in excess of ten percent (10%) of the stock of the
Corporation entitled to vote in the election of directors, or a
person recommended to succeed any continuing director by a majority
of continuing directors; and (f) for the purposes of subparagraphs
l(a) and (b) of this Article EIGHTH the term "other consideration
to be received" shall mean capital stock of the Corporation
retained by its stockholders (other than such other entity) in the
event of a business combination with such other entity in which the
Corporation is the surviving corporation.
3. A majority of the continuing directors shall have the
power and duty to determine for the purposes of this Article EIGHTH
on the basis of information known to them whether (a) such other
entity beneficially owns more than ten percent (108) or twenty
percent (20%) of the outstanding shares of stock of the Corporation
entitled to vote in the election of directors, (b) an other entity
is an "affiliate" or "associate" (as defined above) of another, (c)
an other entity has an agreement, arrangement or understanding with
another, or (d) the assets being acquired by
<PAGE>
the Corporation, or any subsidiary thereof, have an aggregate fair
market value of less than S5,000,000.
4. No amendment to the Certificate of Incorporation of the Corporation-
shall amend, alter, change or repeal any of the provisions of this
Article EIGHTH, unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative vote or
consent of the holders of eighty percent (80%) of all shares of
stock of the Corporation entitled to vote in the election of
directors, considered for the purposes of this Article EIGHTH as
one class; provided that this paragraph 4 shall not apply to, and
such eighty percent (80%) vote or (if permitted under this
Certificate of Incorporation) consent shall not be required for,
any amendment, alteration, change or repeal unanimously recommended
to the stockholders by the Board of Directors of the Corporation if
all of such directors are persons who would be eligible to serve as
"continuing directors" within the meaning of paragraph 2 of this
Article EIGHTH.
5. Nothing contained in this Article EIGHTH shall be
construed to relieve any other entity from any fiduciary obligation
imposed by law.
6. The provisions of this Article EIGHTH shall not apply to:
(a) The adoption or authorization of any business combination
described in paragraph 1 of this Article EIGHTH if the Board of
Directors of the Corporation shall have approved by resolution a
memorandum of understanding with the other corporation, person or
entity with whom such business combination is proposed prior to the
time that such other corporation, person or entity shall have
become a beneficial owner of five percent (5%) or more of the
outstanding shares of any class of capital stock of the Corporation
entitled to vote in the election of directors: or
(b) The adoption or authorization of any business
combination, proposed dissolution or proposed amendment described
in paragraph 1 of this Article EIGHTH, if such business
combination, proposed dissolution or proposed amendment is
approved, prior to its adoption or authorization by the
stockholders of the Corporation, by a resolution of the Board of
Directors of the Corporation which is approved by at least two-
thirds of those members of the Board of Directors of the
Corporation who are not, at the time of their approval, involved
with and/or representing an other entity which, at such time, is
the beneficial owner, directly or indirectly, of more than twenty
percent (20%) of the outstanding shares of stock of the Corporation
then entitled to vote in the election of directors.
NINTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General
<PAGE>
Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
<PAGE>
SENIOR OFFICERS' BONUS POOL PLAN, AS AMENDED
The performance goals contained in the Senior Officers' Bonus Pool Plan (the
"SOBP") as adopted by the Compensation Committee of the Board of Directors of
The Home Depot, Inc. (the "Company"), a committee of outside directors (the
"Committee") will govern the award of annual bonuses to Mr. Bernard Marcus,
Chief Executive Officer of the Company (the "CEO") and Mr. Arthur M. Blank,
Chief Operating Officer of the Company (the "COO"), who are the designated
eligible participants.
Moreover, pursuant to the applicable provisions of the Omnibus Budget
Reconciliation Act of 1993 ("OBRA"), the U.S. Department of the Treasury could
limit the Company's federal tax deduction for compensation paid to its senior
officers to $1 million each, unless compensation in excess of this amount is
based on the achievement of performance goals and eligibility requirements.
The SOBP qualifies as performance-based compensation and all sums paid
thereunder should be deductible by the Company. In 1993, the SOBP allowed the
CEO and the COO collectively to earn a bonus based on 1.25% of the Company's
earnings up to $54 million and 2.0% of earnings above $54 million (before
being adjusted for the bonus pool and income taxes) up to a maximum amount of
$4 million. In order to comply with a "safe harbor" under proposed
regulations adopted under OBRA, the Committee has revised the SOBP to allow
the CEO and the COO collectively to earn a bonus equal to 10% of the Company's
earnings in excess of a threshold amount as established by the Committee (the
"Earnings Threshold"), subject to an annual maximum established by the
Committee. The Earnings Threshold for fiscal 1995 is equal to $604,501,000,
which is approximately equal to the Company's net earnings for fiscal 1994.
Monies payable from the SOBP are to be shared by the CEO and COO at the ratio
of 50% each. For fiscal 1995, the maximum amount awardable under the SOBP
is $4 million; however, the actual benefits to be paid under the SOBP
are not presently determinable.
Prior to awarding any cash bonuses for the 1994 fiscal year and all subsequent
years covered by the SOBP, the Committee will evaluate the performance of the
Company to certify that the performance goals have been met.
THE HOME DEPOT
ESOP RESTORATION PLAN
<PAGE>
THE HOME DEPOT
ESOP RESTORATION PLAN
Effective as of the 1st day of January, 1994, The Home Depot,
Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Controlling Company"), hereby
establishes The Home Depot ESOP Restoration Plan.
BACKGROUND AND PURPOSE
A. Background. The Controlling Company sponsors The Home
Depot Employee Stock Ownership Plan ("the "ESOP"), an employee
stock ownership plan qualified under Sections 401(a) and 4975(e)(7)
of the Internal Revenue Code of 1986, as amended (the "Code").
B. General Purpose. The primary purpose of the Plan is to
provide additional retirement income to certain key executive
employees of the Controlling Company and its affiliates that are
participating companies in the Plan, in order to reduce the impact
of certain provisions of the Code that limit the maximum benefits
that may accrue under the ESOP. In particular, the Controlling
Company intends for the Plan to at least partially offset the
effects of the maximum compensation limitation under Code Section
401(a)(17), by providing the amount of supplemental retirement
income specified in the Plan.
C. Type of Plan. The Plan constitutes an unfunded,
nonqualified deferred compensation plan that benefits certain
designated employees who are within a select group of key
management or highly compensated employees.
STATEMENT OF AGREEMENT
To establish the Plan with the purposes and goals as
hereinabove described, the Controlling Company hereby sets forth
the terms and provisions as follows:
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 Account. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Administrative Committee . . . . . . . . . . . . . 1
1.3 Allocation Date. . . . . . . . . . . . . . . . . . .1
1.4 Beneficiary. . . . . . . . . . . . . . . . . . . . 1
1.5 Board. . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Code . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Company. . . . . . . . . . . . . . . . . . . . . . 1
1.8 Company Stock. . . . . . . . . . . . . . . . . . . .1
1.9 Controlled Group . . . . . . . . . . . . . . . . . 1
1.10 Controlling Company. . . . . . . . . . . . . . . . 1
1.11 Disability . . . . . . . . . . . . . . . . . . . . .2
1.12 Effective Date . . . . . . . . . . . . . . . . . . 2
1.13 Eligible Employee. . . . . . . . . . . . . . . . . .2
1.14 Employee . . . . . . . . . . . . . . . . . . . . . .2
1.15 ERISA. . . . . . . . . . . . . . . . . . . . . . . 2
1.16 ESOP . . . . . . . . . . . . . . . . . . . . . . . .2
1.17 Participant. . . . . . . . . . . . . . . . . . . . 2
1.18 Participating Company. . . . . . . . . . . . . . . .2
1.19 Plan . . . . . . . . . . . . . . . . . . . . . . . 2
1.20 Plan Year. . . . . . . . . . . . . . . . . . . . . 3
1.21 Section 401(a)(17) Limitation. . . . . . . . . . . 3
1.22 Stock Unit . . . . . . . . . . . . . . . . . . . . .3
1.23 Surviving Spouse . . . . . . . . . . . . . . . . . 3
1.24 Trust or Trust Agreement . . . . . . . . . . . . . 3
1.25 Trustee. . . . . . . . . . . . . . . . . . . . . . 3
1.26 Trust Fund . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . .4
2.1 Eligibility. . . . . . . . . . . . . . . . . . . . 4
2.2 Participation. . . . . . . . . . . . . . . . . . . .4
2.3 Cessation of Eligibility and Participation . . . . 4
<PAGE>
ARTICLE III PARTICIPANTS' ACCOUNTS; BENEFITS AND CREDITING . . 5
3.1 Participants' Accounts . . . . . . . . . . . . . . 5
(a) Establishment of Accounts. . . . . . . . . .5
(b) Nature of Contributions and Accounts . . . .5
3.2 Benefit Amount . . . . . . . . . . . . . . . . . . 5
(a) Account Balance. . . . . . . . . . . . . . 5
(b) Amount Credited. . . . . . . . . . . . . . 5
(c) Crediting of Stock Units . . . . . . . . . 6
(d) Cash Dividends . . . . . . . . . . . . . . .6
(e) Adjustments for Stock Dividends and Splits .6
(f) Value of Account . . . . . . . . . . . . . .6
(g) Value of Company Stock . . . . . . . . . . .7
3.3 Vesting. . . . . . . . . . . . . . . . . . . . . . 7
3.4 Notice to Participants of Account Balances . . . . .7
3.5 Good Faith Valuation Binding . . . . . . . . . . . .8
3.6 Errors and Omissions in Accounts . . . . . . . . . .8
ARTICLE IV PAYMENT OF ACCOUNT BALANCES . . . . . . . . . . . .9
4.1 Benefit Payments . . . . . . . . . . . . . . . . . 9
(a) General Rule Concerning Benefit Payments . .9
(b) Timing of Distribution . . . . . . . . . . .9
4.2 Form of Distribution . . . . . . . . . . . . . . . 9
4.3 Beneficiary Designation. . . . . . . . . . . . . . 10
(a) General. . . . . . . . . . . . . . . . . . 10
(b) No Designation or Designee Dead or Missing 10
4.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V CLAIMS . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Claims . . . . . . . . . . . . . . . . . . . . . . 11
(a) Initial Claim. . . . . . . . . . . . . . . 11
(b) Appeal . . . . . . . . . . . . . . . . . . 11
(c) Satisfaction of Claims . . . . . . . . . . 11
<PAGE>
ARTICLE VI SOURCE OF FUNDS; TRUST . . . . . . . . . . . . . . 12
6.1 Source of Funds. . . . . . . . . . . . . . . . . . 12
6.2 Trust. . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII ADMINISTRATIVE COMMITTEE . . . . . . . . . . . . . 13
7.1 Action . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Rights and Duties. . . . . . . . . . . . . . . . . 13
7.3 Compensation, Indemnity and Liability. . . . . . . 14
ARTICLE VIII AMENDMENT AND TERMINATION . . . . . . . . . . . 15
8.1 Amendments . . . . . . . . . . . . . . . . . . . . 15
8.2 Termination of Plan. . . . . . . . . . . . . . . . 15
ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 16
9.1 Taxation . . . . . . . . . . . . . . . . . . . . . 16
9.2 No Employment Contract . . . . . . . . . . . . . . 16
9.3 Headings . . . . . . . . . . . . . . . . . . . . . 16
9.4 Gender and Number. . . . . . . . . . . . . . . . . 16
9.5 Assignment of Benefits . . . . . . . . . . . . . . 16
9.6 Legally Incompetent. . . . . . . . . . . . . . . . 16
9.7 Governing Law. . . . . . . . . . . . . . . . . . . 17
<PAGE>
ARTICLE I
DEFINITIONS
For purposes of the Plan, the following terms, when used with
an initial capital letter, shall have the meaning set forth below
unless a different meaning plainly is required by the context.
1.1 Account shall mean, with respect to a Participant or his
Beneficiary, the total dollar amount, value and/or number of Stock
Units evidenced by the last balance posted in accordance with the
terms of the Plan to the account record established for such
Participant or Beneficiary.
1.2 Administrative Committee shall mean the administrative
committee of the ESOP, or such other committee as shall be
appointed by the Board to administer the Plan.
1.3 Allocation Date shall mean the last day of each Plan
Year.
1.4 Beneficiary shall mean, with respect to a Participant,
the person(s) designated or otherwise determined in accordance with
Section 4.3 to receive any death benefits that may be payable under
the Plan upon the death of the Participant.
1.5 Board shall mean the Board of Directors of the
Controlling Company. In the event the Plan provides that the
Controlling Company shall act, such action shall be taken by the
Board unless the Board has authorized and directed the
Administrative Committee or other person or entity to act in its
stead.
1.6 Code shall mean the Internal Revenue Code of 1986, as
amended.
1.7 Company shall mean, collectively, the Controlling Company
and each of the other Participating Companies.
1.8 Company Stock shall mean the $.05 par value per share
voting common stock of the Controlling Company.
1.9 Controlled Group shall mean all of the companies that are
either (i) members of the same controlled group of corporations
(within the meaning of Code Section 414(b)), or (ii) under common
control (within the meaning of Code Section 414(c)), with the
Controlling Company.
1.10 Controlling Company shall mean The Home Depot, Inc., a
Delaware corporation with its principal place of business in
Atlanta, Georgia.
<PAGE>
1.11 Disability shall mean, with respect to a Participant, his
disability as provided under the terms of the ESOP.
1.12 Effective Date shall mean January 1, 1994, the date that
the Plan initially shall be effective; provided, for purposes of
ERISA, the Plan shall be established on the date it is approved by
the Board.
1.13 Eligible Employee shall mean, for a Plan Year, an
individual:
(a) Who is a member of a select group of highly
compensated or key management Employees of the Company;
(b) Who participates in and receives allocations under
the ESOP for such Plan Year; and
(c) Whose Compensation for such Plan Year exceeds the
Section 401(a)(17) Limitation.
The Administrative Committee shall determine, from time to time and
in its sole discretion, which Employees satisfy said criteria, and
the Administrative Committee's determination shall be binding.
1.14 Employee shall mean an individual who is considered an
employee of the Company for purposes of the ESOP.
1.15 ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended.
1.16 ESOP shall mean The Home Depot Employee Stock Ownership
Plan, an employee stock ownership plan qualified under Code
Sections 401(a) and 4975(e)(7) and sponsored by the Controlling
Company, and all amendments thereto.
1.17 Participant shall mean any individual who has been
admitted to, and has not been removed from, participation in the
Plan pursuant to the provisions of Article II.
1.18 Participating Company shall mean, individually, the
Controlling Company and each of its affiliates that is a
participating company in the ESOP, unless the Board or
Administrative Committee has specifically excluded such a company
from participation in the Plan.
1.19 Plan shall mean The Home Depot ESOP Restoration Plan as
contained herein and all amendments hereto. The Plan is intended
to be an unfunded, nonqualified deferred compensation plan covering
certain designated Employees who are within a select group of key
management or highly compensated Employees.
<PAGE>
1.20 Plan Year shall mean the 12-consecutive-month period
ending on December 31 of each year.
1.21 Section 401(a)(17) Limitation shall mean the limitation
imposed under Code Section 401(a)(17) that establishes, subject to
cost-of-living adjustments, a maximum amount of compensation that
can be taken into account for any year under a retirement plan
qualified under Code Section 401(a).
1.22 Stock Unit shall mean an accounting entry on a
Participating Company's books, that is equal in value at any time
to the current fair market value of one share of Company Stock, and
that represents an unsecured obligation of the Participating
Company to pay that amount to a Participant in accordance with the
terms of the Plan. A Stock Unit shall not carry any voting,
dividend or other similar rights and shall not constitute an option
or any other right to acquire any equity securities of the Company.
1.23 Surviving Spouse shall mean, with respect to a
Participant, the person who is treated as married to such
Participant under the laws of the state in which the Participant
resides. The determination of a Participant's Surviving Spouse
shall be made as of the date of such Participant's death.
1.24 Trust or Trust Agreement shall mean the separate
agreement or agreements between the Participating Companies and the
Trustee governing the creation of the Trust Fund, and all
amendments thereto.
1.25 Trustee shall mean the party or parties so designated
from time to time pursuant to the terms of the Trust Agreement.
1.26 Trust Fund shall mean the total amount of Company Stock,
cash and other property held by the Trustee (or any nominee
thereof) at any time under the Trust Agreement.
<PAGE>
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility.
Each Eligible Employee for a Plan Year shall be eligible
to participate in the Plan for such Plan Year.
2.2 Participation.
Each Eligible Employee for a Plan Year shall actively
participate in the Plan (that is, shall be an active Participant)
for such Plan Year only if (i) his employment, with the Company,
all other members of the Controlled Group and any other company
that the Administrative Committee designates for purposes of the
Plan as an affiliate of the Company, does not terminate prior to
the March 1 succeeding such Plan Year, and (ii) he completes such
forms and provides such data, if any, as may be required by the
Administrative Committee as a precondition of participation in the
Plan. Such forms and data may include, without limitation, the
Eligible Employee's acceptance of the terms and conditions of the
Plan and the designation of a Beneficiary to receive any death
benefits payable hereunder.
2.3 Cessation of Eligibility and Participation.
If during a Plan Year an individual ceases to satisfy any
of the criteria that qualified him as an Eligible Employee, or if
his employment, with the Company, all members of the Controlled
Group and any other company that the Administrative Committee
designates for purposes of the Plan as an affiliate of the Company,
ceases for any reason prior to the March 1 immediately succeeding
such Plan Year, his active participation (that is, his status as an
active Participant) in the Plan shall cease commencing with and for
such Plan Year; provided, such employee shall remain an inactive
Participant in the Plan until the earlier of (i) the date the full
value of his Account (if any) is forfeited and/or paid in
accordance with the terms of the Plan, or (ii) the date he again
becomes an Eligible Employee and qualifies under Section 2.2 to
actively participate in the Plan. During the time that an employee
is an inactive Participant in the Plan, his Account shall continue
to be adjusted for cash dividends and changes in Company Stock as
provided in Sections 3.2(d) and (e).
<PAGE>
ARTICLE III
PARTICIPANTS' ACCOUNTS; BENEFITS AND CREDITING
3.1 Participants' Accounts.
(a) Establishment of Accounts. The Administrative
Committee shall establish and maintain, on behalf of each
Participant, an Account. Each Account shall be credited with the
amount of Stock Units described in Section 3.2. Each Account of a
Participant shall be maintained until the value thereof has been
forfeited and/or paid to or on behalf of such Participant or his
Beneficiary.
(b) Nature of Contributions and Accounts. The Stock
Units credited to a Participant's Account shall be represented
solely by bookkeeping entries, and no moneys or other assets shall
actually be set aside for such Participant. Except as provided in
Article VI, all payments to a Participant under the Plan shall be
made from the general assets of the Company. The Administrative
Committee or the Board shall allocate the total liability to pay
benefits under the Plan among the Participating Companies in such
manner and amount as the Administrative Committee or the Board (as
applicable) in its sole discretion deems appropriate. Any assets
which may be acquired by a Participating Company in anticipation of
its obligations under the Plan shall be part of the general assets
of such Participating Company. A Participating Company's
obligation to pay benefits under the Plan constitutes a mere
promise of such Participating Company to pay such benefits, and a
Participant or Beneficiary shall be and remain no more than an
unsecured, general creditor of such Participating Company.
3.2 Benefit Amount.
(a) Account Balance. A Participant's accrued benefit
under the Plan at any time shall be equal to the value of his
Account balance; provided, as described in Section 3.3 and Article
IV, only the portion of a Participant's Account balance that is
vested shall be payable to him.
(b) Amount Credited. For each Plan Year, each active
Participant shall have credited to his Account an amount equal to
the difference between:
(i) the value of the shares of Company Stock that
would have been allocated to his account under the ESOP as a
result of Company contributions (exclusive of forfeitures)
actually made to the ESOP for such Plan Year, if the maximum
dollar limit applied to the definition of "compensation" under
the ESOP was $1 million rather than the Section 401(a)(17)
Limitation; and
(ii) the value of the shares of Company Stock
actually allocated to his account under the ESOP for such Plan
Year as a result of Company contributions actually made to the
ESOP for such Plan Year;
<PAGE>
provided, the value of the shares of Company Stock to be credited
to a Participant's Account under this section for a Plan Year, when
aggregated with the value of Company Stock and other assets
allocated to the Participant's account under the ESOP for such Plan
Year as a result of (i) Company contributions actually made to the
ESOP for such Plan Year and (ii) forfeitures allocated for such
Plan Year, may not exceed the dollar or percentage limits
established for annual additions under Code Section 415 (that is,
for 1994, $30,000 or 25 percent of Form W-2 compensation) and, to
the extent such maximum limit would be exceeded, the amount
otherwise to be credited to a Participant's Account hereunder shall
be reduced.
(c) Crediting of Stock Units. The amount determined
pursuant to subsection (b) hereof for a Participant for a Plan Year
shall be credited to his Account as of the March 1 immediately
succeeding such Plan Year and shall be expressed in terms of whole
and fractional Stock Units. The number of Stock Units credited to
a Participant's Account for a Plan Year shall be determined by
dividing (i) the amount determined for him in subsection (b) hereof
for such Plan Year, by (ii) the per share fair market value of
Company Stock on the Allocation Date for such Plan Year.
(d) Cash Dividends. For Stock Units that have been
credited to a Participant's Account on or before a record date for
Company Stock cash dividends and that remain credited to his
Account through the corresponding dividend payment date, the
Administrative Committee shall credit to such Participant's Account
a dollar amount equal to the amount of cash dividends that would
have been paid on his Stock Units if each Stock Unit constituted
one share of Company Stock. Such dollar amount then will be
converted into a number of Stock Units equal to the number of full
and fractional shares of Company Stock that could have been
purchased, at fair market value on the dividend payment date, with
such dollar amount.
(e) Adjustments for Stock Dividends and Splits. In the
event of any subdivision or combination of the outstanding shares
of Company Stock, by reclassification, stock split, reverse stock
split or otherwise, or in the event of the payment of a stock
dividend on Company Stock, or in the event of any other increase or
decrease in the number of outstanding shares of Company Stock,
other than the issuance of shares for value received by the Company
or the redemption of shares for value, the number of Stock Units
credited to a Participant's Account shall be adjusted upward or
downward, as the case may be, to reflect the subdivision or
combination of the outstanding shares. The amount of increase or
decrease in the number of Stock Units in such event will be equal
to the adjustment that would have been made if each Stock Unit
credited to a Participant's Account immediately prior to the event
constituted one share of Company Stock.
(f) Value of Account. The value of a Participant's
Account as of any date shall be equal to the product of (i) the
number of Stock Units credited to his Account as of such date (as
determined in accordance with the preceding subsections), and (ii)
the per share fair market value of Company Stock on such date.
<PAGE>
(g) Value of Company Stock.
(i) For all purposes under the Plan for which the
value of Company Stock must be determined as of any particular
date as of which Company Stock is trading on the New York
Stock Exchange, the fair market value per share of Company
Stock on such date shall be the closing price of Company Stock
on the New York Stock Exchange on such date. If, for any
reason, the fair market value per share of Company Stock
cannot be ascertained or is unavailable for a particular date,
the fair market value of Company Stock on such date shall be
determined as of the nearest preceding date on which the fair
market value can be ascertained pursuant to the terms hereof.
(ii) For all purposes under the Plan for which the
value of Company Stock must be determined as of any particular
date on which Company Stock is not trading on the New York
Stock Exchange but on which Company Stock is trading on
another national securities exchange in the United States, the
fair market value per share of Company Stock shall be the
closing price of the Company Stock on such national securities
exchange on such date. If Company Stock is trading on such
other national securities exchange in the United States on
such date but no sales of shares of Company Stock occurred
thereon, the fair market value per share of Company Stock
shall be the closing price of the Stock on the nearest
preceding date. If on any particular date a public market
shall exist for Company Stock but Company Stock is not trading
on a national securities exchange in the United States, then,
if Company Stock is listed on the National Market List by the
National Association of Securities Dealers, Inc. (the "NASD"),
the fair market value per share of Company Stock shall be the
last sale price for such shares reflected on said market list
for such date, and if Company Stock is not listed on the
National Market List of the NASD, then the fair market value
per share of Company Stock shall be the mean between the bid
and asked quotations in the over-the-counter market for such
shares on such date. If there is no bid and asked quotation
for Company Stock on such date, the fair market value per
share of Company Stock shall be the mean between the bid and
asked quotations in the over-the-counter market for such
shares on the nearest preceding date. If the fair market
value per share of Company Stock cannot otherwise be
determined under this section as of a particular date, such
value shall be determined by the Administrative Committee, in
its sole discretion, based on all relevant available facts.
3.3 Vesting.
Stock Units credited to a Participant's Account shall
vest in accordance with the same vesting schedule and service,
and/or based on the same events, as provided in the ESOP.
3.4 Notice to Participants of Account Balances.
At least once for each Plan Year, the Administrative
Committee shall cause a written statement of a Participant's
Account balance to be distributed to the Participant.
<PAGE>
3.5 Good Faith Valuation Binding.
In determining the value of the Accounts, the
Administrative Committee shall exercise its best judgment, and all
such determinations of value (in the absence of bad faith) shall be
binding upon all Participants and their Beneficiaries.
3.6 Errors and Omissions in Accounts.
If an error or omission is discovered in the Account of
a Participant or in the amount credited to a Participant's Account,
the Administrative Committee, in its sole discretion, shall cause
appropriate, equitable adjustments to be made as soon as
administratively practicable following the discovery of such error
or omission.
<PAGE>
ARTICLE IV
PAYMENT OF ACCOUNT BALANCES
4.1 Benefit Payments.
(a) General Rule Concerning Benefit Payments. In
accordance with the terms of subsection (b) hereof, if a
Participant's employment, with the Company, all other members of
the Controlled Group and any other company that the Administrative
Committee designates for purposes of the Plan as an affiliate of
the Company, terminates for any reason including his death, he (or
the Beneficiary or Beneficiaries designated by such Participant in
his latest beneficiary designation form filed with the
Administrative Committee) shall be entitled to receive a
distribution of the value of the vested number of Stock Units
credited to the Participant's Account, determined as of the last
day of the calendar quarter immediately preceding the date payment
of such distribution is to be made. For purposes of this
subsection, the "date payment of such distribution is to be made"
refers to the date established for such purpose by administrative
practice, even if actual payment is made at a later date due to
delays in valuation, administration or any other procedure.
(b) Timing of Distribution.
(1) If a Participant's employment terminates (i) on
account of retirement on or after he attains age 65, or (ii)
on account of his Disability or death during a Plan Year and
prior to October 1 of that Plan Year, the vested benefit
payable to him or his Beneficiary or Beneficiaries under this
Section shall be distributed as soon as administratively
feasible after the date his employment so terminates.
(2) If a Participant's employment terminates on
account of his Disability or death during a Plan Year and
after September 30 of that Plan Year, the vested benefit
payable to him or his Beneficiary or Beneficiaries under this
Section shall be distributed as soon as administratively
feasible after December 31 of that Plan Year.
(3) If a Participant's employment terminates for
any reason other than the reasons specified in the preceding
paragraphs, the vested benefit payable to him (or his
Beneficiary or Beneficiaries, if he dies after such
termination of employment but before distribution of his
Account) under this Section shall be distributed as soon as
administratively feasible after the last day of the second
calendar quarter following the calendar quarter in which his
employment so terminates.
4.2 Form of Distribution.
The benefit payable to a Participant (or his Beneficiary
or Beneficiaries) under Section 4.1 shall be paid in a single
payment in the form of a number of shares of Company Stock equal to
the whole number of Stock Units credited to his Account, with any
fractional
<PAGE>
Stock Unit being paid, at its fair market value as if it
were a fractional share of Company Stock, in a single-sum, cash
payment.
4.3 Beneficiary Designation.
(a) General. Participants shall designate and from time
to time may redesignate their Beneficiaries in such form and manner
as the Administrative Committee may determine.
(b) No Designation or Designee Dead or Missing. In the
event that:
(1) a Participant dies without designating a
Beneficiary;
(2) the Beneficiary designated by a Participant is
not surviving when a payment is to be made to such person
under the Plan, and no contingent Beneficiary has been
designated; or
(3) the Beneficiary designated by a Participant
cannot be located by the Administrative Committee within 1
year from the date benefits are to be paid to such person;
then, in any of such events, the Beneficiary of such Participant
with respect to any benefits that remain payable under the Plan
shall be the Participant's Surviving Spouse, if any, and if not,
the estate of the Participant.
4.4 Taxes.
If the whole or any part of any Participant's or
Beneficiary's benefit hereunder shall become subject to any estate,
inheritance, income or other tax which the Company (or its agent)
shall be required to pay or withhold, the Company (or its agent, as
applicable) shall have the full power and authority (i) to withhold
and pay such tax out of any monies or other property in its hand
for the account of the Participant or Beneficiary whose interests
hereunder are so affected and/or (ii) to require the Participant or
Beneficiary to pay to the Company (or its agent, as applicable), in
cash or cash equivalent, the amount of any such tax. Prior to
making any payment, the Company (or its agent, as applicable) may
require such releases or other documents from any lawful taxing
authority as it shall deem necessary.
<PAGE>
ARTICLE V
CLAIMS
5.1 Claims.
(a) Initial Claim. Claims for benefits under the Plan
may be filed in writing with the Administrative Committee on forms
or in such other written documents, as the Administrative Committee
may prescribe. The Administrative Committee shall furnish to the
claimant written notice of the disposition of a claim within 90
days after the application therefor is filed. In the event the
claim is denied, the notice of the disposition of the claim shall
provide the specific reasons for the denial, citations of the
pertinent provisions of the Plan, and, where appropriate, an
explanation as to how the claimant can perfect the claim and/or
submit the claim for review.
(b) Appeal. Any Participant or Beneficiary who has been
denied a benefit shall be entitled, upon request to the
Administrative Committee, to appeal the denial of his claim. The
claimant (or his duly authorized representative) may review
pertinent documents related to the Plan and in the Administrative
Committee's possession in order to prepare the appeal. The request
for review, together with written statement of the claimant's
position, must be filed with the Administrative Committee no later
than 60 days after receipt of the written notification of denial of
a claim provided for in subsection (a). The Administrative
Committee's decision shall be made within 60 days following the
filing of the request for review. If unfavorable, the notice of
the decision shall explain the reasons for denial and indicate the
provisions of the Plan or other documents used to arrive at the
decision.
(c) Satisfaction of Claims. Any payment to a
Participant or Beneficiary shall to the extent thereof be in full
satisfaction of all claims hereunder against the Administrative
Committee and the Company, any of whom may require such Participant
or Beneficiary, as a condition to such payment, to execute a
receipt and release therefor in such form as shall be determined by
the Administrative Committee or the Company. If receipt and
release is required but the Participant or Beneficiary (as
applicable) does not provide such receipt and release in a timely
enough manner to permit a timely distribution in accordance with
the general timing of distribution provisions in the Plan, the
payment of any affected distribution may be delayed until the
Administrative Committee or the Company receive a proper receipt
and release.
<PAGE>
ARTICLE VI
SOURCE OF FUNDS; TRUST
6.1 Source of Funds.
Except as provided in this Section and Section 6.2, each
Participating Company shall provide the benefits described in the
Plan from the general assets of such Participating Company. In any
event, each Participating Company ultimately shall have the
obligation to pay all benefits due to Participants and
Beneficiaries under the Plan to the extent liability therefor has
been allocated hereunder to such Participating Company. A
Participating Company may, but shall not be required to, establish
a Trust and may pay over funds from time to time to such Trust (as
described in Section 6.2), and, to the extent that funds in such
Trust allocable to the benefits payable under the Plan by such
Participating Company are sufficient, the Trust assets shall be
used to pay such benefits. If such Trust assets are not sufficient
to pay all such benefits due under the Plan, then such
Participating Company shall have the obligation, and the
Participant or Beneficiary, who is due such benefits, shall look to
such Participating Company to provide such benefits. The
Administrative Committee or the Board shall allocate the total
liability to pay benefits under the Plan among the Participating
Companies in such manner and amount as the Administrative Committee
or the Board (as applicable) in its sole discretion deems
appropriate.
6.2 Trust.
A Participating Company may transfer all or any portion
of the funds necessary to fund benefits accrued hereunder to the
Trustee to be held and administered by the Trustee pursuant to the
terms of the Trust Agreement. Each transfer into the Trust Fund
shall be irrevocable as long as such Participating Company has any
liability or obligations under the Plan to pay benefits, such that
the Trust property is in no way subject to use by such
Participating Company; provided, it is the intent of such
Participating Company that the assets held by the Trust are and
shall remain at all times subject to the claims of the general
creditors of such Participating Company. No Participant or
Beneficiary shall have any interest in the assets held by the Trust
or in the general assets of any Participating Company other than as
a general, unsecured creditor. Accordingly, no Participating
Company shall grant a security interest in the assets held by the
Trust in favor of the Participants, Beneficiaries or any creditor.
<PAGE>
ARTICLE VII
ADMINISTRATIVE COMMITTEE
7.1 Action.
Action of the Administrative Committee may be taken with
or without a meeting of committee members; provided, action shall
be taken only upon the vote or other affirmative expression of a
majority of the committee members qualified to vote with respect to
such action. If a member of the committee is a Participant or
Beneficiary, he shall not participate in any decision which solely
affects his own benefit under the Plan. For purposes of
administering the Plan, the Administrative Committee shall choose
a secretary who shall keep minutes of the committee's proceedings
and all records and documents pertaining to the administration of
the Plan. The secretary may execute any certificate or any other
written direction on behalf of the Administrative Committee.
7.2 Rights and Duties.
The Administrative Committee shall administer the Plan
and shall have all powers necessary to accomplish that purpose,
including (but not limited to) the following:
(a) To construe, interpret and administer the Plan;
(b) To make determinations required by the Plan, and to
maintain records regarding Participants' and Beneficiaries'
benefits hereunder;
(c) To compute and certify to the Company the amount and
kinds of benefits payable to Participants and Beneficiaries, and to
determine the time and manner in which such benefits are to be
paid;
(d) To authorize all disbursements by the Company
pursuant to the Plan;
(e) To maintain all the necessary records of the
administration of the Plan;
(f) To make and publish such rules for the regulation of
the Plan as are not inconsistent with the terms hereof;
(g) To delegate to other individuals or entities from
time to time the performance of any of its duties or
responsibilities hereunder;
(h) To hire agents, accountants, actuaries, consultants
and legal counsel to assist in operating and administering the
Plan.
<PLAN>
The Administrative Committee shall have the exclusive right to
construe and interpret the Plan, to decide all questions of
eligibility for benefits and to determine the amount of such
benefits, and its decisions on such matters shall be final and
conclusive on all parties.
7.3 Compensation, Indemnity and Liability.
The Administrative Committee and its members shall serve
as such without bond and without compensation for services
hereunder. All expenses of the Administrative Committee shall be
paid by the Company. No member of the committee shall be liable
for any act or omission of any other member of the committee, nor
for any act or omission on his own part, excepting his own willful
misconduct. The Company shall indemnify and hold harmless the
Administrative Committee and each member thereof against any and
all expenses and liabilities, including reasonable legal fees and
expenses, arising out of his membership on the committee, excepting
only expenses and liabilities arising out of his own willful
misconduct.
<PAGE>
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendments.
The Controlling Company, through action of the Board or
the Administrative Committee, shall have the right, in its sole
discretion, to amend the Plan in whole or in part at any time and
from time to time; provided, the Administrative Committee may not
amend the Plan to increase the level of benefits hereunder without
Board approval; and, provided further, Section 3.2 (relating to the
amount of benefits to be accrued under the Plan) may not be amended
more frequently than once every 6 months other than to comport with
changes in the Code or ERISA, or rules thereunder. Any amendment
shall be in writing and executed by a duly authorized officer of
the Controlling Company or a member of the Administrative
Committee. An amendment to the Plan may modify its terms in any
respect whatsoever, and may include, without limitation, a
permanent or temporary freezing of the Plan such that the Plan
shall remain in effect with respect to existing Account balances
without permitting any new contributions; provided, no such action
may reduce the amount already credited to a Participant's Account
without the affected Participant's written consent. All
Participants and Beneficiaries shall be bound by such amendment.
8.2 Termination of Plan.
The Controlling Company expects to continue the Plan but
reserves the right to discontinue and terminate the Plan at any
time, for any reason. Any action to terminate the Plan shall be
taken by the Board in the form of a written Plan amendment executed
by a duly authorized officer of the Controlling Company. If the
Plan is terminated, each Participant shall become 100 percent
vested in his Account which shall be distributed in a single
payment of Company Stock and cash, in the manner prescribed in
Section 4.2, as soon as practicable after the date the Plan is
terminated. The amount of any such distribution shall be
determined as of the date such termination distribution is to be
processed. Such termination shall be binding on all Participants
and Beneficiaries.
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 Taxation.
It is the intention of the Company that the benefits
payable hereunder shall not be deductible by the Company nor
taxable for federal income tax purposes to Participants or
Beneficiaries until such benefits are paid by the Company, or the
Trust, as the case may be, to such Participants or Beneficiaries.
When such benefits are so paid, it is the intention of the Company
that they shall be deductible by the Company under Code Section
162.
9.2 No Employment Contract.
Nothing herein contained is intended to be nor shall be
construed as constituting a contract or other arrangement between
the Company and any Participant to the effect that the Participant
will be employed by the Company for any specific period of time.
9.3 Headings.
The headings of the various articles and sections in the
Plan are solely for convenience and shall not be relied upon in
construing any provisions hereof. Any reference to a section shall
refer to a section of the Plan unless specified otherwise.
9.4 Gender and Number.
Use of any gender in the Plan will be deemed to include
all genders when appropriate, and use of the singular number will
be deemed to include the plural when appropriate, and vice versa in
each instance.
9.5 Assignment of Benefits.
The right of a Participant or his Beneficiary to receive
payments under the Plan may not be anticipated, alienated, sold,
assigned, transferred, pledged, encumbered, attached or garnished
by creditors of such Participant or Beneficiary, except by will or
by the laws of descent and distribution and then only to the extent
permitted under the terms of the Plan.
9.6 Legally Incompetent.
The Administrative Committee, in its sole discretion, may
direct that payment be made to an incompetent or disabled person,
whether because of minority or mental or physical disability, to
the guardian of such person or to the person having custody of such
person, without further liability on the part of the Company for
the amount of such payment to the person on whose account such
payment is made.
<PAGE>
9.7 Governing Law.
The Plan shall be construed, administered and governed in
all respects in accordance with applicable federal law (including
ERISA) and, to the extent not preempted by federal law, in
accordance with the laws of the State of Georgia. If any
provisions of this instrument shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
IN WITNESS WHEREOF, the Controlling Company has caused the
Plan to be executed by its duly authorized officer on the 15th day of
March, 1995.
THE HOME DEPOT, INC.
By: /s/ Marshall L. Day
Title: Senior Vice President-Finance
<PAGE>
<TABLE>
THE HOME DEPOT, INC.
Computation of Primary and Fully Diluted Earnings
Per Common and Common Equivalent Share
<CAPTION>
Fiscal Year Ended
--------------------------------
1-29-95 1-30-94 1-31-93
<S> <C> <C> <C>
Primary
- -------
Net earnings applicable
to common and common
equivalent shares $604,501 $457,401 $362,863
======== ========
Tax affected interest expense,
net of interest capitalized
attributable to convertible
subordinated notes 22,580
---------
$627,081
=========
Shares:
Weighted average number of
common and common equivalent
shares assuming average
market price for period 455,173 453,037 444,989
======= =======
Additional shares assuming
conversion of the notes 20,774
-------
475,947
=======
Primary earnings
per common and common
equivalent share $ 1.32 $ 1.01 $ .82
======== ======== ========
Fully Diluted
Net earnings applicable
to common and common
equivalent shares $604,501 $457,401 $362,863
Tax effected interest
expense attributable to
convertible subordinated
notes $ 22,580 $ 18,981 $ 898
-------- -------- --------
$627,081 $476,382 $363,761
======== ======== ========
Shares:
Weighted average number
of common and common
equivalent shares at the
ending market price 455,717 453,037 445,197
Additional shares assuming
conversion of the notes 20,774 20,774 5,208
------- ------- -------
476,491 473,811 450,405
======= ======= =======
Fully diluted earnings
per common & common
equivalent share $ 1.32 $ 1.01 $ .81
======== ========== =========
<FN>
<F1>
(1) Common equivalent shares represent shares granted under three stock
option plans and an employee stock purchase plan. All periods have
been adjusted to reflect the three-for-two and four-for-three stock
split-ups effected in the form of a dividend in July 1992 and April
1993, respectively.
<F2>
(2) The Company's 4 % Convertible Subordinated Notes, issued in 1992, were
common stock equivalents prior to the conversion in March, 1995. For
fiscal year 1994, the 4 % Notes were dilutive and are assumed to be
converted as of the beginning of the accounting period for purposes of
calculating primary earnings per share. In fiscal year 1993, the 4 %
Notes were dilutive but had no impact on earnings per share and
therefore were excluded from the computation of primary earnings per
share. The 4 % Notes were not dilutive for fiscal year 1992.
</FN>
</TABLE>
<TABLE>
<CAPTION>
TEN YEAR SELECTED FINANCIAL AND OPERATING HIGHLIGHTS
5 Year 10 Year
Annual Annual
Compound Compound
Growth Rate Growth Rate 1994 1993 1992 1991 1990(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Earnings Data
Net sales 35.2% 40.0% $12,476,697 $9,238,763 $7,148,436 $5,136,674 $3,815,356
Net sales increase - % - - 35.0 29.2 39.2 34.6 38.3
Earnings before taxes 40.0 43.6 979,751 736,871 575,973 396,120 259,828
Net earnings 40.1 45.6 604,501 457,401 362,863 249,150 163,428
Net earnings increase - % - - 32.2 26.1 45.6 52.5 46.0
Net earnings per share ($) 32.8 36.2 1.32 1.01 .82 .60 .45
Net earnings per share increase - % - - 30.5 23.2 36.7 33.3 40.6
Weighted average number of shares 6.0 6.4 475,947 453,037 444,989 415,997 362,505
Gross margin - % to sales - - 27.9 27.7 27.6 28.1 27.9
Store selling and operating-% to sales - - 17.8 17.6 17.4 18.1 18.2
Pre-opening - % to sales - - .4 .4 .4 .3 .4
General and administrative - % to sales - - 1.8 2.0 2.1 2.3 2.4
Net interest(expense)income-% to sales - - (.1) .3 .4 .3 (.1)
Earnings before taxes - % to sales - - 7.8 8.0 8.1 7.7 6.8
Net earnings - % to sales - - 4.8 5.0 5.1 4.8 4.3
Balance Sheet Data and Financial Ratios
Total assets 38.9% 36.9% $ 5,778,041 $4,700,889 $3,931,790 $2,510,292 $1,639,503
Working capital 27.4 24.8 918,724 993,963 807,028 623,937 300,867
Merchandise inventories 35.6 35.5 1,749,312 1,293,477 939,824 662,257 509,022
Net property and equipment 45.9 46.3 3,397,237 2,370,904 1,607,984 1,254,774 878,730
Long-term debt 26.6 23.6 983,369 874,048 843,672 270,575 530,774
Stockholders' equity 46.4 45.6 3,442,223 2,814,100 2,304,081 1,691,212 683,402
Book value per share ($) 37.1 36.6 7.59 6.26 5.20 4.01 1.93
Long-term debt to equity - % - - 28.6 31.1 36.6 16.0 77.7
Current ratio - - 1.76:1 2.02:1 2.07:1 2.17:1 1.73:1
Inventory turnover - - 5.7x 5.9x 6.3x 6.1x 6.0x
Return on average equity - % - - 19.3 17.9 18.1 18.5 27.6
Statement of Cash Flows Data
Depreciation and amortization 43.8% 49.2% $ 129,609 $89,839 $ 69,536 $ 52,283 $ 34,358
Capital expenditures 42.9 37.4 1,220,180 900,452 437,278 432,198 400,205
Cash dividends per share ($) - - .15 .11 .08 .05 .04
Customer and Store Data
Number of U.S. states 18.5% 16.7% 28 23 19 15 12
Number of Canadian provinces - - 3 - - - -
Number of stores 23.6 27.1 340 264 214 174 145
Square footage at year-end 27.5 30.9 35,133 26,383 20,897 16,480 13,278
Change in square footage - % - - 33.2 26.3 26.8 24.1 27.4
Average square footage per store - - 103 100 98 95 92
Number of customer transactions 29.0 35.7 302,181 236,101 189,493 146,221 112,464
Average sale per transaction ($) 4.8 3.1 41.29 39.13 37.72 35.13 33.92
Number of employees 30.9 32.6 67,300 50,600 38,900 28,000 21,500
Other Data
Average total company weekly sales 35.2% 40.0% $ 239,936 $ 177,669 $ 137,470 $ 98,782 $ 71,988
Weighted average weekly
sales per operating store 9.3 8.2 802 764 724 633 566
Comparable store sales increase-% (2) - - 8 7 15 11 10
Weighted average
sales per square foot ($) (2) 5.9 5.0 404 398 387 348 322
Advertising expense - % to sales - - .5 .5 .5 .7 .9
<FN>
<F1>
(1) Fiscal year 1990 consisted of 53 weeks, all other years reported consisted
of 52 weeks.
<F2>
(2) Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 1990.
<FN>
</TABLE>
<PAGE>
Management's Discussion and Analysis of Results of Operations and
Financial Condition
The data below reflects selected sales data, the percentage
relationship between sales and major categories in the
Consolidated Statements of Earnings and the percentage change
in the dollar amounts of each of the items.
<TABLE>
<CAPTION>
Percentage
Increase (Decrease)
of Dollar Amounts
---------------------------
Fiscal Year(1)
----------------------- 1994 1993
1994 1993 1992 vs. 1993 vs. 1992
----------------------------------------------------------------------------
Selected Consolidated Statements of Earnings Data
<S> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 35.0% 29.2%
----------------------------------------------------------------------------
Gross Profit 27.9 27.7 27.6 36.5 29.7
----------------------------------------------------------------------------
Operating Expenses:
Selling and
Store Operating 17.8 17.6 17.4 36.4 30.5
Pre-Opening .4 .4 .4 39.4 36.6
General and
Administrative 1.8 2.0 2.1 24.6 25.8
----------------------------------------------------------------------------
Total Operating
Expenses 20.0 20.0 19.9 35.3 30.1
----------------------------------------------------------------------------
Operating
Income 7.9 7.7 7.7 39.7 28.6
Interest Income (Expense):
Interest and
Investment
Income .2 .6 1.0 (53.2) (9.9)
Interest Expense (.3) (.3) (.6) 17.0 (25.1)
---------------------------------------------------------------------------
Interest, Net (.1) .3 .4 (124.7) 13.7
---------------------------------------------------------------------------
Earnings Before
Income Taxes 7.8 8.0 8.1 33.0 27.9
Income Taxes 3.0 3.0 3.0 34.3 31.1
---------------------------------------------------------------------------
Net Earnings 4.8% 5.0% 5.1% 32.2% 26.1%
===========================================================================
Selected Consolidated Sales Data
Number of Customer
Transactions 302,181,000 236,101,000 189,493,000 28.0% 24.6%
Average Amount of
Sale Per
Transaction $ 41.29 $ 39.13 $ 37.72 5.5 3.7
Weighted Average
Weekly Sales Per
Operating Store $802,000 $764,000 $724,000 5.0 5.5
Weighted Average
Sales Per Square Foot $ 404.04 $ 398.18 $ 386.92 1.5 2.9
============================================================================
<FN>
(1) Fiscal years 1994, 1993 and 1992 refer to the fiscal years ended January
29, 1995, January 30, 1994 and January 31, 1993, respectively.
</FN>
</TABLE>
<PAGE>
Results of Operations
For an understanding of the significant factors that influenced the
Company's performance during the past three fiscal years, the
following discussion should be read in conjunction with the
consolidated financial statements appearing elsewhere in this
annual report.
Fiscal Year Ended January 29, 1995 Compared to January 30, 1994
Sales for fiscal year 1994 increased 35.0% from $9,238,763,000 in
fiscal 1993 to $12,476,697,000. This increase was attributable to,
among other things, 69 new store openings, nine store relocations,
the acquisition of a 75% partnership interest in seven Canadian
stores then known as Aikenhead's Home Improvement Warehouse, an 8%
comparable store-for-store sales increase and full year sales from
the 50 new store openings during fiscal 1993. The percentage
increase in comparable store sales would have been 9% after
excluding all sales from the ten stores in Southern Florida that
were significantly affected by Hurricane Andrew during 1993.
Gross profit as a percent of sales was 27.9% for fiscal 1994
compared to 27.7% for fiscal 1993. This higher gross profit
percentage resulted primarily from changes in merchandise mix
including more decor products and upgraded seasonal merchandise at
higher margins, as well as decreased sales penetrations in lumber
which carries lower margins.
Operating expenses as a percent of sales were 20.0% for both
fiscal 1994 and fiscal 1993. Selling and store operating expenses
as a percent of sales increased to 17.8% in fiscal 1994 compared to
17.6% in fiscal 1993. This increase was attributable to, among
other things, additional costs associated with nine store
relocations during fiscal 1994 compared to six store relocations
during fiscal 1993. The increase in selling and store operating
expenses as a percent of sales was offset by lower general and
administrative expenses as a percent of sales due to cost control
measures and economies from higher sales volumes.
Interest and investment income as a percent of sales decreased
to 0.2% in fiscal 1994 compared to 0.6% during fiscal 1993. This decrease
was attributable to a reduction of investment principal due to
utilization of funds for capital expansion, as well as lower yields
due to shorter maturities on the investment portfolio. Interest
expense as a percent of sales was 0.3% for both fiscal 1994 and
fiscal 1993. Higher interest expense from additional capital leases
was partially offset by higher capitalized interest resulting from
constructing more owned stores than in the previous year.
The Company's combined Federal and state effective income tax
rate was 38.3% for fiscal 1994 compared to 38.2% for fiscal 1993,
before cumulative effect of change in accounting principle. This
increase was attributable to lower tax-advantaged investments. The
Company implemented SFAS 109 "Accounting for Income Taxes" during
fiscal 1993 which reduced the combined Federal and state effective
income tax rate to 37.9% in fiscal 1993.
Net earnings as a percent of sales was 4.8% for fiscal 1994
compared to 5.0% for fiscal 1993, reflecting lower interest income
and a higher effective income tax rate, partially offset by higher
gross profits, as described above. Earnings per share was $1.32 for
fiscal 1994 compared to $1.01 during fiscal 1993.
Fiscal Year Ended January 30, 1994 Compared to January 31, 1993
Sales for fiscal year 1993 increased 29.2% from $7,148,436,000 in
fiscal 1992 to $9,238,763,000. This increase was attributable to,
among other things, 50 new store openings, six store relocations,
a 7% comparable store-for-store sales increase and full year sales
from the 40 store openings during fiscal 1992. The percentage
increase in comparable store sales would have been 8% after
excluding all sales from the ten stores in Southern Florida that
were significantly affected by Hurricane Andrew.
Gross profit as a percent of sales was 27.7% for fiscal 1993 compared
to 27.6% for fiscal 1992. This higher gross profit percentage resulted
primarily from higher vendor volume rebates and changes in merchandise mix,
partially offset by lower margins in highly competitive markets.
Operating expenses as a percent of sales increased to 20.0% in
fiscal 1993 from 19.9% in fiscal 1992. This increase was attributable to,
among other things, higher payroll costs as a percent of sales due to the
implementation of new labor standards that put additional sales hours on the
selling floor, partially offset by lower self-funded insurance reserves and
lower general and administrative expenses as a percent of sales due to cost
control measures.
<PAGE>
Interest income as a percent of sales decreased to 0.6% in
fiscal 1993 compared to 1.0% during fiscal 1992. This decrease was
attributable to a reduction of investment principal due to
utilization of funds for capital expansion, partially offset by a
higher yield on the investment portfolio. Interest expense as a
percent of sales decreased to 0.3% in fiscal 1993 from 0.6% in
fiscal 1992 due to the call for redemption and conversion to equity
of substantially all the Company's 6% Convertible Subordinated
Notes in June, 1992 and due to higher capitalized interest.
The Company's combined Federal and state effective income tax
rate, before cumulative effect of a change in accounting principle,
was 38.2% for fiscal 1993 compared to 37.0% for fiscal 1992. This
increase was attributable to the enactment of the Omnibus Budget
Reconciliation Act of 1993 and to lower tax-advantaged investments.
The Company implemented SFAS 109 "Accounting for Income Taxes" in
the first quarter of fiscal 1993. As a result of this change in
accounting principle, the combined Federal and state effective
income tax rate was 37.9% in 1993.
Net earnings as a percent of sales was 5.0% for fiscal 1993
compared to 5.1% for fiscal 1992, reflecting higher operating
expenses, lower net interest income and a higher effective income
tax rate, partially offset by higher gross profits, as described
above. Earnings per share was $1.01 for fiscal 1993 compared to
$.82 for fiscal 1992 on 2% more weighted average shares outstanding
in fiscal 1993.
Liquidity and Capital Resources
Cash flow generated from store operations provides the Company with
a significant source of liquidity. Additionally, a significant
portion of the Company's inventory is financed under vendor credit
terms.
The Company plans to open approximately 91 new stores and
relocate nine existing stores during fiscal 1995. Of these 100
locations, it is anticipated that approximately 90% will be owned
and the balance will be leased. The Company also plans to open
approximately 122 stores, including relocations, in fiscal 1996.
Although some of these locations may be newly leased, it is
expected that most will be obtained during fiscal 1995 through the
purchase of pre-existing leasehold interests, the acquisition of
land parcels and the construction or purchase of buildings. While
the cost of new stores to be constructed and owned by the Company
varies widely, principally due to land costs, new store costs are
currently estimated to average approximately $12,600,000 per
location. In addition, the Company may purchase leasehold interests
at varying amounts depending on the value of such properties. The
cost to remodel and fixture stores to be leased is expected to
average approximately $4,000,000 per store. Each new store will
require approximately $3,100,000 to finance inventories, net of
vendor financing.
During fiscal 1994, the Company initiated a commercial paper program
which will provide short-term funding needs up to a maximum of $300,000,000
of which $100,000,000 was outstanding as of January 29, 1995. In connection
with the program, the Company entered into a back-up credit facility with a
consortium of banks for up to $300,000,000. The facility expires
November 1, 1997. The facility contains various restrictive
covenants, none of which is expected to impact the Company's
liquidity or capital resources.
On February 28, 1995, the Company announced its decision to redeem
on March 31, 1995, all of its outstanding 41_2% Convertible Subordinated
Notes due February 15, 1997 at a redemption price of $1,016.75 (which includes
premium and accrued interest) per $1,000 principal amount of Notes. The
Notes are convertible into common stock of the Company at the rate
of one share for each $38.75 principal amount of Notes owned. In
light of current market prices of the Company's common stock, it is
expected that the redemption call will result in the conversion of
substantially all of the outstanding principal ($804,985,000) to
equity and, thereby, result in the issuance of approximately
20,774,000 additional shares of common stock.
As of January 29, 1995, the Company had $57,866,000 in cash and cash
equivalents and short-term investments as well as $98,022,000 in long-term
investments. Management believes that its current cash position,
the proceeds from short-term and long-term investments, internally
generated funds, its commercial paper program, and/or the ability
to obtain alternate sources of financing should enable the Company
to complete its capital expenditure programs, including store
expansion and renovation, through the next several fiscal years.
Impact of Inflation and Changing Prices
Although the Company cannot accurately determine the precise effect
of inflation on its operations, it does not believe inflation has
had a material effect on sales or results of operations.
<TABLE>
<CAPTION>
Consolidated Statements of Earnings
The Home Depot, Inc. and Subsidiaries
Amounts in thousands, except per share data
Fiscal Year Ended
January 29, January 30, January 31,
1995 1994 1993
<S> <C> <C> <C>
Net Sales $12,476,697 $9,238,763 $7,148,436
Cost of Merchandise Sold 8,991,204 6,685,384 5,179,368
Gross Profit 3,485,493 2,553,379 1,969,068
Operating Expenses:
Selling and Store Operating 2,216,540 1,624,920 1,245,608
Pre-Opening 51,307 36,816 26,959
General and Administrative 230,456 184,954 147,080
Total Operating Expenses 2,498,303 1,846,690 1,419,647
Operating Income 987,190 706,689 549,421
Interest Income (Expense):
Interest and Investment Income 28,510 60,896 67,562
Interest Expense (note 2) (35,949) (30,714) (41,010)
Interest, Net (7,439) 30,182 26,552
Earnings Before Income Taxes 979,751 736,871 575,973
Income Taxes (note 3) 375,250 279,470 213,110
Net Earnings $ 604,501 $ 457,401 $ 362,863
===========================================
Earnings Per Common and Common Equivalent Share $ 1.32 $ 1.01 $ .82
===========================================
Weighted Average Number of Common and
Common Equivalent Shares 475,947 453,037 444,989
==============================================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Amounts in thousands, except per share data
January 29, January 30,
1995 1994
-------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 1,154 $ 99,997
Short-Term Investments,
including current maturities of
long-term investments (note 7) 56,712 330,976
Receivables, Net 272,225 198,431
Merchandise Inventories 1,749,312 1,293,477
Other Current Assets 53,560 43,720
-------------------------------
Total Current Assets 2,132,963 1,966,601
-------------------------------
Property and Equipment, at cost:
Land 1,167,063 814,440
Buildings 1,311,806 891,755
Furniture, Fixtures and Equipment 634,173 451,789
Leasehold Improvements 273,015 224,933
Construction in Progress 289,157 194,482
Capital Leases (notes 2 and 5) 72,054 41,029
-------------------------------
3,747,268 2,618,428
Less Accumulated Depreciation and Amortization 350,031 247,524
-------------------------------
Net Property and Equipment 3,397,237 2,370,904
Long-Term Investments (note 7) 98,022 281,623
Notes Receivable 32,528 35,470
Cost in Excess of the Fair Value of Net Assets Acquired,
net of accumulated amortization of $8,636 at
January 29, 1995 and $5,788 at January 30, 1994 88,513 19,503
Other 28,778 26,788
===============================
$5,778,041 $4,700,889
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 681,291 $ 521,246
Accrued Salaries and Related Expenses 192,151 167,489
Sales Taxes Payable 101,011 57,590
Other Accrued Expenses 208,377 183,933
Income Taxes Payable 8,717 40,303
Current Installments of Long-Term Debt (notes 2, 5 and 6) 22,692 2,077
--------------------------------
Total Current Liabilities 1,214,239 972,638
--------------------------------
Long-Term Debt, excluding current
installments (notes 2, 5 and 6) 983,369 874,048
Other Long-Term Liabilities 67,953 12,276
Deferred Income Taxes (note 3) 19,258 27,827
Minority Interest (note 9) 50,999 -
Stockholders' Equity (notes 2 and 4):
Common Stock, par value $.05. Authorized:
1,000,000,000 shares; issued and outstanding -
453,365,000 shares at January 29, 1995 and 449,364,000
shares at January 30, 1994 22,668 22,468
Paid-in Capital 1,526,463 1,436,029
Retained Earnings 1,937,284 1,400,575
Cumulative Translation Adjustments (10,887) (121)
Unrealized Loss on Investments, Net (1,495) -
-------------------------------
3,474,033 2,858,951
Less Notes Receivable From ESOP (note 6) 31,810 44,851
-------------------------------
Total Stockholders' Equity 3,442,223 2,814,100
-------------------------------
Commitments and Contingencies (notes 5, 8 and 9)
$5,778,041 $4,700,889
===============================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Unrealized Total
Common Stock Cumulative Loss on Notes Stock-
------------- Paid-in Retained Translation Investments, Receivable holders'
Shares Amount Capital Earnings Adjustments Net from ESOP Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 2, 1992 422,224 $21,111 $1,022,043 $ 666,471 $ - $ - $(18,413) $1,691,212
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 7,053 353 57,971 - - - - 58,324
Tax Effect of Sale of Option Shares
by Employees - - 32,451 - - - - 32,451
Additional Notes Receivable from ESOP,
Net of Repayments of $8,419 (note 6) - - - - - - (33,023) (33,023)
Conversion of 6% Convertible
Subordinated Notes, Net (note 2) 14,308 715 227,346 - - - - 228,061
Conversion of 4-1/2% Convertible
Subordinated Notes, Net (note 2) - - 10 - - - - 10
Net Earnings - - - 362,863 - - - 362,863
Cash Dividends ($.08 per share) - - - (35,817) - - - (35,817)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 1993 443,585 $22,179 $1,339,821 $ 993,517 $ - $ - $(51,436) $2,304,081
===================================================================================================================================
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 5,779 289 76,500 - - - - 76,789
Tax Effect of Sale of Option Shares
by Employees - - 19,708 - - - - 19,708
Cumulative Translation Adjustments - - - - (121) - - (121)
Repayments of Notes Receivable
from ESOP (note 6) - - - - - - 6,585 6,585
Net Earnings - - - 457,401 - - - 457,401
Cash Dividends ($.11 per share) - - - (50,343) - - - (50,343)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, January 30, 1994 449,364 $22,468 $1,436,029 $1,400,575 $ (121) $ - $(44,851) $2,814,100
===================================================================================================================================
Shares Sold Under Employee Stock
Purchase and Option Plans,
Net of Retirements (note 4) 4,001 200 77,720 - - - - 77,920
Tax Effect of Sale of Option Shares
by Employees - - 12,709 - - - - 12,709
Cumulative Translation Adjustments - - - - (10,766) - - (10,766)
Repayments of Notes Receivable
from ESOP (note 6) - - - - - - 13,041 13,041
Conversion of 4-1/2% Convertible
Subordinated Notes, Net (note 2) - - 5 - - - - 5
Unrealized Loss on Investments,
Net (note 7) - - - - - (1,495) - (1,495)
Net Earnings - - - 604,501 - - - 604,501
Cash Dividends ($.15 per share) - - - (67,792) - - - (67,792)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, January 29, 1995 453,365 $22,668 $1,526,463 $1,937,284 $(10,887) $(1,495) $(31,810) $3,442,223
===================================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
The Home Depot, Inc. and Subsidiaries
Amounts in thousands
Fiscal Year Ended
- ---------------------------------------------------------------------------------------------------------------------------
January 29, January 30, January 31,
1995 1994 1993
<S> <C> <C> <C>
Cash Provided From Operations:
Net Earnings $ 604,501 $ 457,401 $ 362,863
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 129,609 89,839 69,536
Deferred Income Tax (Benefit) Expense (2,468) 12,578 5,465
Increase in Receivables, Net (69,023) (36,658) (68,593)
Increase in Merchandise Inventories (405,197) (353,653) (277,567)
Increase in Accounts Payable and Accrued Expenses 280,056 200,977 219,046
(Decrease) Increase in Income Taxes Payable (11,126) 36,143 34,031
Other 8,161 (10,120) (6,639)
- --------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 534,513 396,507 338,142
- --------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital Expenditures, Net of $31,183, $36,294 and $4,765 of
non-cash capital
expenditures in fiscal 1994, 1993 and 1992, respectively (1,100,654) (864,158) (432,513)
Acquisition of Canadian Partnership Interest (161,548) - -
Proceeds from Sale of Property and Equipment 49,718 35,070 5,046
Sale (Purchase) of Short-Term Investments, Net 96,007 14,903 (62,008)
Purchase of Long-Term Investments (94,442) (840,361) (2,029,214)
Proceeds from Maturities of Long-Term Investments 50,251 269,988 212,786
Proceeds from Sale of Long-Term Investments 403,738 929,598 1,132,627
Advances Secured by Real Estate, Net 2,650 5,681 (54,022)
- ---------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (754,280) (449,279) (1,227,298)
- ---------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from Commercial Paper and Long-Term Borrowings 100,000 - 805,000
Cash Loaned to ESOP - - (41,442)
Repayments of Notes Receivable from ESOP 13,041 6,585 8,419
Principal Repayments of Long-Term Debt (2,175) (2,006) (2,133)
Proceeds from Sale of Common Stock, Net 77,926 76,789 58,324
Cash Dividends Paid to Stockholders (67,792) (50,343) (35,817)
Effect of Exchange Rate Changes on Cash (76) - -
- --------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 120,924 31,025 792,351
- --------------------------------------------------------------------------------------------------------------------------
Decrease in Cash and Cash Equivalents (98,843) (21,747) (96,805)
Cash and Cash Equivalents at Beginning of Year 99,997 121,744 218,549
- --------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,154 $ 99,997 $ 121,744
==========================================================================================================================
Supplemental Disclosure of Cash Payments Made For:
Interest (net of interest capitalized) $ 30,537 $ 28,778 $ 26,182
Income Taxes $ 393,915 $ 228,968 $ 169,617
===========================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Note ONE Summary of Significant Accounting Policies
Fiscal Year
The Company's fiscal year is a 52- or 53-week period ending on the
Sunday nearest to January 31. Fiscal years 1994, 1993 and 1992,
which ended January 29, 1995, January 30, 1994 and January 31,
1993, respectively, consisted of 52 weeks.
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Minority interest represents the
minority partner's share of the equity in The Home Depot Canada.
All significant intercompany transactions have been eliminated in
consolidation.
Cash Equivalents
The Company considers all highly liquid investments purchased with
a maturity of three months or less to be cash equivalents. The
Company's cash and cash equivalents are primarily cash equivalents
carried at fair market value and consist of preferred stocks,
commercial paper, money market funds and U.S. government agency
securities.
Investments
Effective January 31, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for
Certain Investments in Debt and Equity Securities," which was
effective for fiscal years beginning after December 15, 1993. The
Company classifies its investments into one of three categories:
trading, held to maturity, or available for sale. Trading
securities, which are bought and held primarily for the purpose of
selling them in the near term, are recorded at fair value with
gains and losses included in earnings. Held to maturity securities,
which are securities that the Company has the ability and the
intent to hold until maturity, are recorded at amortized cost and
adjusted for amortization or accretion of premiums or discounts.
The Company's short-term and long-term investments, consisting
primarily of debt securities, have been designated as being held
available for sale, and accordingly, are reported at fair value.
Unrealized gains and losses on securities classified as available
for sale are reported as a separate component of stockholders'
equity, net of income taxes until realized. The cost of investments
sold is determined using the specific identification method.
Estimated fair values of investments are based on quoted market
prices on the last business day of the fiscal year. A decline in
the market value of any available for sale or held to maturity
security below cost that is deemed other than temporary is charged
to earnings resulting in the establishment of a new cost basis for
the security. In fiscal years 1993 and 1992, the Company valued
its short-term investments, consisting primarily of debt
securities, at amortized cost which approximated market. Certain
long-term investments designated as available for sale were
recorded at lower of amortized cost or market. The Company's
remaining investments classified as held to maturity were valued at
amortized cost.
Merchandise Inventories
Inventories are stated at the lower of cost (first-in, first-out)
or market, as determined by the retail inventory method.
Income Taxes
The Company provides for Federal and state income taxes currently
payable as well as for those deferred because of timing differences
between reporting income and expenses for financial statement
purposes and income and expenses for tax purposes. Targeted jobs
tax credits are recorded as a reduction of income taxes in the year
realized.
Effective February 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting for Income Taxes" and reported the
cumulative effect of that change in the method of accounting for
income taxes in the consolidated statement of earnings for the
first fiscal quarter of 1993, which ended May 2, 1993. SFAS 109
requires an asset and liability approach in accounting for income
taxes and, therefore, required a change from the deferred method
the Company previously used. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS 109, the effect on
deferred tax assets and liabilities of a change in tax rates is
recognized as income or expense in the period that includes the
enactment date.
<PAGE>
Pursuant to the deferred method under Accounting Principles
Board Opinion 11, which was applied in fiscal 1992 and prior
years, deferred income taxes that were reported in different
years for financial reporting purposes and income tax
purposes were recognized for income and expense items using the tax
rate applicable for the year of the calculation. Under the deferred
method, deferred taxes were not adjusted for subsequent changes in
the tax rate.
Depreciation and Amortization
The Company's buildings, furniture, fixtures and equipment are
depreciated using the straight-line method over the estimated
useful lives of the assets. Improvements to leased premises are
amortized on the straight-line method over the life of the lease or
the useful life of the improvement, whichever is shorter. The
Company's property and equipment is depreciated using the following
estimated useful lives:
<TABLE>
<CAPTION>
Life
<S> <C>
Buildings 10-45 years
Furniture, fixtures and equipment 5-20 years
Leasehold improvements 8-30 years
</TABLE>
The cost of purchased software and associated consulting fees
is amortized on a straight-line basis over periods ranging from
three to five years.
Store Pre-Opening Costs
Non-capital expenditures associated with opening new stores are
charged to expense as incurred.
Store Closing Costs
When a store is relocated or closed, estimated unrecoverable costs
are charged to expense. Such costs include the estimated loss on
sale of land and building, the book value of abandoned fixtures,
equipment, leasehold improvements and a provision for the present
value of future lease obligations, less estimated sub-rental
income.
Earnings Per Common and Common Equivalent Share
Earnings per common and common equivalent share are based on the
weighted average number of shares and equivalent shares
outstanding. Common equivalent shares used in the calculation of
earnings per share represent options to purchase shares granted
under the Company's employee stock option and stock purchase plans
and the Company's 4-1/2% Convertible Subordinated Notes due 1997,
issued in 1992. For the 1994 fiscal year, the 4-1/2% Notes are
dilutive and are assumed to be converted as of the beginning of the
accounting period for purposes of calculating earnings per share.
Earnings per share is calculated by dividing net earnings, adjusted
for tax-effected net interest and issue costs on the 4-1/2% Notes,
by weighted average common and common equivalent shares. The
weighted average number of common and common equivalent shares
include shares issuable under the Company's stock plans and the
20,774,000 shares issuable upon conversion of the 4-1/2% Notes. In
fiscal year 1993, the 4-1/2% Notes were dilutive but had no impact
on earnings per share.
The Company's 6% Convertible Subordinated Notes, issued in 1990,
were common stock equivalents prior to their conversion in 1992.
Because shares issuable upon conversion of the 6% Notes were
not dilutive in fiscal 1992, they were excluded from the earnings
per share calculations.
Cost in Excess of the Fair Value of Net Assets Acquired
Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line basis
over a 40-year period. The Company assesses the recoverability of
this intangible asset by determining whether the amortization of
the goodwill balance over its remaining useful life can be
recovered through undiscounted future operating cash flows of the
acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows
using a discount rate reflecting the Company's average cost of
funds.
Employee Stock Ownership Plan
For all shares purchased by the Employee Stock Ownership Plan
(ESOP) prior to December 31, 1992, the Company's contributions to
the ESOP are determined based on the ESOP's cost of the shares
released to the employees. For shares purchased after December 31,
1992, the Company's contributions to the ESOP will be determined
based on the fair value of the shares released to the employees as
of the release date.
<PAGE>
Foreign Currency Translation
The local currency has been used as the functional currency in
Canada. The assets and liabilities denominated in foreign currency
are translated into U.S. dollars at the current rate of exchange
existing at year-end and revenues and expenses are translated at
the average monthly exchange rates. The translation gains and
losses are included as a separate component of stockholders'
equity. Transaction gains and losses included in income are
immaterial.
Recent Accounting Pronouncements
In December 1993, the Accounting Institute of Certified Public
Accountants issued Statement of Position 93-7, "Reporting on
Advertising Costs" (SOP 93-7). Under SOP 93-7, certain advertising
expenditures must be expensed either as incurred or the first time
the advertising takes place. Certain production costs incurred by
the Company are currently amortized over periods not exceeding one
year. While the Company plans to adopt SOP 93-7 in fiscal 1995, it
is not expected to have a significant impact on the Company's
results of operations.
In June 1993, Statement of Financial Accounting Standards
No. 116, "Accounting for Contributions Received and
Contributions Made" (SFAS 116) was issued. SFAS 116
requires companies that make contributions of cash and other
assets, including unconditional promises to give, to not-for-profit
organizations, to recognize expense in the accounting period made.
Under SFAS 116, conditional promises to give should be recognized
when the conditions on which they depend are substantially met.
Results of operations for the Company will not be significantly
impacted when SFAS 116 is adopted by the Company in fiscal 1995.
Reclassifications
Certain balances in prior fiscal years have been reclassified to
conform with the presentation adopted in the current fiscal year.
Note TWO Long-Term Debt
<TABLE>
<CAPTION>
The Company's long-term debt consists of the following (in
thousands):
January 29, January 30,
1995 1994
<S> <C> <C>
4-1/2% Convertible Subordinated Notes,
due February 15, 1997, convertible
into shares of common stock of the Company
at a conversion price of $38.75 per share.
The Notes are redeemable by the Company
at a premium, plus accrued interest, beginning
March 3, 1995. $ 804,985 $804,990
Commercial Paper, with a
weighted average interest rate of 5.9%. 100,000 -
Capital Lease obligations payable in
varying installments through January 31,
2015 (see note 5). 63,225 32,585
7.95% Unsecured Note, payable on September 1,
1995, incurred in connection with the
establishment of a leveraged Employee
Stock Ownership Plan and Trust (see Note 6);
interest is payable semi-annually. 20,000 20,000
Variable Rate Industrial Revenue Bonds, secured
by letters of credit or land, interest
rates averaging 2.7% during fiscal 1994,
payable in varying installments through 1999,
$3,000 payable on December 1, 2010
and $5,200 payable on September 1, 2011. 9,966 10,500
Installment Notes Payable, interest imputed
at rates between 9.5% and 11.5%,
payable in varying installments through 2014. 7,419 7,592
Other 466 458
Total long-term debt 1,006,061 876,125
Less current installments 22,692 2,077
Long-term debt, excluding
current installments $ 983,369 $ 874,048
</TABLE>
On February 3, 1992, the Company issued, through a public
offering, $805,000,000 of its 4-1/2% Convertible Subordinated Notes
at par, maturing February 15, 1997. The Notes are convertible into
shares of common stock at any time prior to maturity, unless
previously redeemed, at a conversion price of $38.75 per share,
subject to adjustment under certain conditions. The Notes are not
subject to sinking fund provisions.
<PAGE>
On February 28, 1995, the Company announced that its outstanding
4-1/2% Convertible Subordinated Notes which had a face value of $804,985,000
would be redeemed on March 31, 1995, at a redemption price of $1,016.75
(which includes premium and accrued interest) per $1,000 principal
amount of Notes. Noteholders have the right through March 21, 1995
to convert their Notes into approximately 25.81 shares of common
stock of The Home Depot, Inc. for each $1,000 principal amount of
Notes at the conversion price of $38.75 per share. Conversion of
all the Notes would result in the issuance of approximately
20,774,000 shares of the Company's common stock.
In January, 1995, the Company established a $300,000,000 Commercial Paper
program supported by a back-up credit facility with a maximum aggregate
principal amount outstanding of $300,000,000. The program expires
November 1, 1997. The Commercial Paper borrowings are classified as
long-term debt as it is the Company's intention to refinance them
on a long-term basis. As of January 29, 1995, the Company was in
compliance with all restrictive covenants.
The 7.95% Unsecured Note related to the ESOP requires, among other things,
that debt shall not exceed 66-2/3% of consolidated assets, net of goodwill
and current liabilities. The Company was in compliance with all
restrictive covenants as of January 29, 1995. The restrictive
covenants related to letter of credit agreements securing the
industrial revenue bonds are no more restrictive than those
referenced or described above.
Interest expense in the accompanying consolidated statements of earnings
is net of interest capitalized of $17,559,000 in fiscal 1994, $13,912,000
in fiscal 1993 and $7,549,000 in fiscal 1992.
Maturities of long-term debt (excluding the 4-1/2% Convertible Subordinated
Notes) are $22,692,000 for fiscal 1995, $3,197,000 for fiscal 1996,
$102,706,000 for fiscal 1997, $2,594,000 for fiscal 1998, and
$2,805,000 for fiscal 1999.
Based on discounted cash flows of future payment streams, assuming rates
equivalent to the Company's current incremental borrowing rate on similar
liabilities, the fair value of the 7.95% unsecured ESOP Note, the Variable
Rate Industrial Revenue Bonds, the Installment Notes, the Capital
Leases, the Commercial Paper, and other notes payable as of January
29, 1995 is $231,649,000. The fair value of the 4-1/2% Convertible
Subordinated Notes as of January 29, 1995, based on the quoted
market price on the last business day of the year, is $986,107,000.
Note THREE Income Taxes
As discussed in Note 1, the Company adopted SFAS 109 as of February
1, 1993. The cumulative effect of this change in accounting for
income taxes, which resulted in a tax benefit of $2,130,000, was
determined as of February 1, 1993 and has been reflected in the
consolidated statement of earnings for the fiscal year ended
January 30, 1994. Prior years' financial statements have not been
restated to apply the provisions of SFAS 109.
<TABLE>
The provision for income taxes from operations consists of the following
(in thousands):
<CAPTION>
Fiscal Year Ended
January 29, January 30, January 31,
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $330,232 $236,888 $181,727
State 47,486 32,134 25,918
- ---------------------------------------------------------------------
377,718 269,022 207,645
- ---------------------------------------------------------------------
Deferred:
Federal (1,875) 10,212 4,413
State (593) 2,366 1,052
- ---------------------------------------------------------------------
(2,468) 12,578 5,465
- ---------------------------------------------------------------------
Total $375,250 $281,600 $213,110
</TABLE>
<PAGE>
The Company's combined state and Federal effective tax rate
from operations for fiscal years 1994, 1993 and 1992, net of
offsets generated by targeted jobs tax credits, were approximately
38.3%, 38.2% and 37.0%, respectively. The 1994 and 1993 fiscal year
effective tax rates include the effect of the corporate Federal tax
rate increase from 34% to 35% enacted into law during the Company's
1993 fiscal year. A reconciliation of income tax expense from
operations at the Federal statutory rate to actual tax expense from
operations for the applicable fiscal years follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
January 29, January 30, January 31,
1995 1994 1993
<S> <C> <C> <C>
Income taxes at Federal
statutory rate $342,913 $257,905 $195,831
State income taxes,
net of Federal
income tax benefit 30,480 22,425 17,800
Other, net 1,857 1,270 (521)
- ----------------------------------------------------------------------------
Total $375,250 $281,600 $213,110
- ----------------------------------------------------------------------------
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities as of January 29, 1995 and January 30, 1994 are as
follows (in thousands):
<TABLE>
<CAPTION>
January 29, January 30,
1995 1994
<S> <C> <C>
Deferred Tax Assets:
Accrued self-insurance
liabilities $ 40,906 $ 26,813
Other accrued liabilities 28,061 16,300
Net deferred tax assets 68,967 43,113
Deferred Tax Liabilities:
Accelerated depreciation (77,061) (62,835)
Other (11,164) (8,105)
Total gross
deferred liabilities (88,225) (70,940)
Net deferred tax liability $(19,258) $(27,827)
</TABLE>
No valuation allowance was recorded against the deferred tax assets
at January 29, 1995, January 30, 1994, or February 1, 1993. The
Company's management believes the existing net deductible temporary
differences comprising the total gross deferred tax assets will
reverse during periods in which the Company generates net taxable
income.
For fiscal years ending before January 31, 1993, deferred
income taxes resulted from differences in the timing of reporting
income and expenses for financial statement and income tax
purposes. The sources of these differences and the tax effect of
each for fiscal 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Accelerated depreciation $12,245
Accrued self-insurance liabilities (9,132)
Other accrued liabilities (574)
Other, net 2,926
Total $ 5,465
</TABLE>
Note FOUR Employee Stock Plans
The Company has stock option plans that provide for the granting of
incentive and non-qualified options to purchase the Company's
common stock to selected key employees, officers and directors.
Under the Employee Incentive Stock Option Plan of 1981,
options for 43,360,692 shares, net of cancellations (of which
41,246,391 had been exercised), have been granted at $.16 to $18.83
per share as of January 29, 1995. Such options may be exercised at
the rate of 25% per year commencing with the first anniversary date
of the grant and expire after five years. The Plan expired on June
1, 1991 and the shares available for grant were carried over to the
1991 Omnibus Stock Option Plan.
<PAGE>
Under the Non-Qualified Stock Option Plan of 1984, options for 679,124
shares, net of cancellations (of which 529,232 had been exercised), have been
granted at $1.53 to $9.86 per share as of January 29, 1995. Such
options may be exercised at varying rates commencing on the third
anniversary date of the grant and expire on the tenth anniversary
date of the grant. The Plan expired on June 1, 1991 and the shares
available for grant were carried over to the 1991 Omnibus Stock
Option Plan.
The provisions of the 1991 Omnibus Stock Option
Plan, which became effective June 1, 1991, authorize a maximum
number of shares available for grant equal to the cumulative number
of shares available the previous year plus one percent of the
number of shares of common stock issued and outstanding at the
beginning of each fiscal year the plan is in effect. Under the 1991
Omnibus Stock Option Plan, options for 6,852,504 shares, net of
cancellations (of which 426,102 had been exercised), have been
granted at $24.50 to $48.94 per share. As of January 29, 1995, the
maximum shares available under this plan for future grants were
30,408,417.
The following summarizes shares outstanding under
the plans at January 29, 1995, January 30, 1994 and January 31,
1993 and changes during the fiscal years then ended (in thousands
of shares):
<TABLE>
<CAPTION>
Fiscal Year Ended
January 29, January 30, January 31,
1995 1994 1993
<S> <C> <C> <C>
Number of option shares
At beginning of year
Outstanding 9,647 12,455 14,750
Exercisable 2,757 4,528 4,576
During the year
Issued 1,981 1,831 3,549
Cancelled 306 332 415
Became exercisable 2,843 2,536 5,381
Exercised 2,631 4,307 5,429
At end of year
Outstanding 8,691 9,647 12,455
Exercisable 2,969 2,757 4,528
Average price per share
Outstanding at
the end of year $30.57 $23.50 $14.89
Exercised
during the year $10.66 $ 7.42 $ 4.99
</TABLE>
In addition, the Company had 2,375,460 shares available for
future grants under the Employee Stock Purchase Plan at January 29,
1995. This plan enables the Company to grant substantially all
eligible employees options to purchase up to 17,137,500 shares of
common stock, of which 14,762,040 shares have been exercised from
inception of the plan, at a price equal to 85% of the stock's fair
market value at the date of grant. Shares purchased may not exceed
the lesser of 20% of the employee's annual compensation, as
defined, or $25,000 of common stock at its fair market value
(determined at the time such option is granted) for any one
calendar year. Employees pay for the shares ratably over a period
of one year (the purchase period) through payroll deductions, and
cannot exercise their option to purchase any of the shares until
the conclusion of the purchase period. In the event an employee
elects not to exercise such options, the full amount withheld is
refundable. During fiscal 1994, options for 1,420,463 shares were
exercised at an average price of $34.72 per share. At January 29,
1995, 821,812 options were outstanding, net of cancellations, at an
average price of $36.68 per share.
Note FIVE Leases
The Company leases certain retail locations, office space,
warehouse and distribution space, equipment and vehicles. While the
majority of the leases are operating leases, certain retail
locations are leased under capital leases. As leases expire, it can
be expected that in the normal course of business, leases will be
renewed or replaced. Total rent expense, net of minor sublease
income for the fiscal years ended January 29, 1995, January 30,
1994 and January 31, 1993 amounted to $164,381,000, $137,252,000
and $110,577,000, respectively. Real estate taxes,
<PAGE>
insurance,
maintenance and operating expenses applicable to the leased
property are obligations of the Company under the building leases.
Certain of the store leases provide for contingent rentals based on
percentages of sales in excess of specified minimums. Contingent
rentals for fiscal years ended January 29, 1995, January 30, 1994
and January 31, 1993 were approximately $9,744,000, $8,370,000 and
$6,855,000, respectively.
The approximate future minimum lease payments under capital and operating
leases at January 29, 1995, are as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal year Capital leases Operating leases
<S> <C> <C>
1995 $ 10,411 $ 184,801
1996 10,465 186,131
1997 10,486 176,534
1998 10,628 165,559
1999 10,780 161,801
Thereafter 157,452 1,902,130
210,222 $2,776,956
==========
Less: Imputed interest (146,997)
Net present value of
capital lease obligations 63,225
Less: Current installments (803)
Long-term, excluding
current installments $ 62,422
==========
</TABLE>
On the Consolidated Balance Sheet the long-term and short-term
obligations for capital leases are included in Long-term Debt and
Current Installments of Long-term Debt, respectively. The assets
recorded at January 29, 1995 and January 30, 1994, net of
amortization, in Net Property and Equipment amounted to $68,647,000
and $40,608,000, respectively.
Note SIX Employee Benefit Plans
During fiscal 1988, the Company established a leveraged Employee
Stock Ownership Plan and Trust (ESOP) covering substantially all
full-time employees. At January 29, 1995, the ESOP held a total of
7,558,551 shares of the Company's common stock in trust for plan
participants. The ESOP purchased the shares in the open market with
the proceeds of loans obtained from the Company during fiscal 1992,
1990 and 1989 totaling $81,442,000. Of that amount, the Company
borrowed $20,000,000 during 1988 in a private placement (see note
2), which in turn was loaned to the ESOP for the purpose of
purchasing the shares. The additional $61,442,000 loaned to the
ESOP was funded by cash from operations of the Company. Outstanding
loans totalling $31,810,000 to the ESOP are due and payable to the
Company in varying amounts from 1995 through 2001.
The Company's Board of Directors authorized loans to the ESOP up to
$90,000,000. The Company may advance funds to the ESOP so that the
ESOP may purchase up to an additional $8,558,000 of the Company's
stock in the open market at prices the ESOP deems desirable.
The Company's common stock purchased by the ESOP is held in a
"suspense account" as collateral for amounts loaned by the Company.
The Company makes annual contributions to the ESOP at the
discretion of its Board of Directors which the plan trustee is
required to use to make loan interest and principal payments to the
Company. When the Company commits to make contributions to the
ESOP, a portion of the common stock is released from the "suspense
account" and allocated to participating employees. As of January
29, 1995, 5,296,862 shares had been allocated to participating
employees, 433,295 shares were committed to be released, and
1,828,394 shares were held in suspense by the trustee. Any
dividends on unallocated shares are used to service the ESOP's
debt, to pay expenses of the ESOP, to purchase additional shares of
the Company or to purchase other investments. The unpaid portion of
the ESOP's obligation to the Company is recorded as a reduction of
stockholders' equity. The Company's contributions to the ESOP were
$12,500,000, $6,000,000 and $8,200,000 for the fiscal years 1994,
1993 and 1992, respectively.
<PAGE>
The Company adopted a non-qualified ESOP Restoration Plan in fiscal 1994.
The primary purpose of the Plan is to provide certain employees deferred
compensation that they would have received under the ESOP if not for the
maximum compensation limits under the Internal Revenue Code of 1986, as
amended. The Company plans to establish a "rabbi trust" to fund the
benefits under the ESOP Restoration Plan. Compensation expense for
1994 related to this plan was not significant. Funds to be provided
to the trust will primarily be used to purchase shares of the
Company's common stock on the open market.
Note SEVEN Investments
The Company's investments are all classified as available for sale
and consisted of the following at January 29, 1995 and January 30,
1994 (in thousands):
<TABLE>
<CAPTION>
January 29, 1995 January 30, 1994
------------------------------------------------ -------------------------------------------------
Gross Gross Gross Gross
Amortized unrealized unrealized Fair Amortized unrealized unrealized Fair
cost gains losses value cost gains losses value
------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax exempt notes and bonds $ 95,079 $ - $1,431 $ 93,648 $104,996 $ 482 $ 12 $105,466
U.S. Treasury securities - - - - 61,286 449 18 61,717
U.S. government agency
securities 13,000 - 296 12,704 74,940 157 200 74,897
Commercial paper - - - - 16,496 3 61 16,438
Certificates of deposit - - - - 30,000 - 189 29,811
Corporate obligations 13,900 - 139 13,761 209,903 2,479 211 212,171
Preferred stock 14,998 - 301 14,697 46,831 271 4 47,098
Corporate Asset-
backed securities 6,415 - 127 6,288 61,288 389 320 61,357
Other 13,636 - - 13,636 6,859 35 - 6,894
- -----------------------------------------------------------------------------------------------------------------------------------
157,028 - 2,294 154,734 612,599 4,265 1,015 615,849
- -----------------------------------------------------------------------------------------------------------------------------------
Short-term, including
current maturities of
long-term investments 57,345 - 633 56,712 330,976 2,322 774 332,524
Long-term investments 99,683 - 1,661 98,022 281,623 1,943 241 283,325
- -----------------------------------------------------------------------------------------------------------------------------------
Total $157,028 - $2,294 $154,734 $612,599 $4,265 $1,015 $615,849
</TABLE>
Proceeds from sale of investments available for sale during
the year ended January 29, 1995 were $526,696,000. Gross gains of
$1,638,000 and gross losses of $1,251,000 were realized on those
sales.
Maturities of investment securities classified as available for sale
were as follows at January 29, 1995 (in thousands):
<TABLE>
<CAPTION>
Amortized Cost Fair Value
<S> <C> <C>
Due within one year $ 52,842 $ 52,323
Due after one year through five years 99,683 98,022
Mortgage-backed securities not due
at a single date 4,503 4,389
- ----------------------------------------------------------------------------
$157,028 $154,734
===================================
</TABLE>
<PAGE>
Note EIGHT Commitments and Contingencies
At January 29, 1995, the Company was contingently liable for
approximately $131,896,000 under outstanding letters of credit
issued in connection with purchase commitments.
The Company has litigation arising from the normal course of business. In
management's opinion this litigation will not materially affect the
Company's consolidated results of operations.
Note NINE Acquisition of Interest in Canadian Company
Effective February 28, 1994, the Company entered into a partnership
and, as a result, acquired 75 percent of Aikenhead's Home
Improvement Warehouse which was operating seven warehouse-style
home improvement stores in Toronto, London and Kitchener, Ontario,
Canada. Subsequent to the acquisition, the partnership has opened
five stores which include one store each in Edmonton and Calgary,
Alberta and Toronto, Ontario, and two stores in Vancouver, British
Columbia. At any time after the sixth anniversary of the purchase,
the Company has the option to purchase, or the other partner has
the right to cause the Company to purchase, the remaining 25
percent of the Canadian company. The option price is based on the
lesser of fair market value or a value to be determined by an
agreed-upon formula as of the option exercise date.
The purchase price paid for the 75 percent interest in the Canadian company
was approximately $161,548,000 and was accounted for by the purchase
method of accounting. Accordingly, results of the partnership's
operations have been included with those of the Company from the
date of acquisition. The excess purchase price over the estimated
fair value of the net assets as of the acquisition date of
$66,800,000 has been recorded as goodwill and will be amortized
over 40 years. Proforma results of operations did not have a
significant impact on historical results of the Company and,
therefore, are not presented.
Note TEN Quarterly Financial Data (Unaudited)
The following is a summary of the unaudited quarterly results of
operations for the fiscal years ended January 29, 1995 and January
30, 1994 (in thousands, except per share data):
<TABLE>
<CAPTION>
Net earnings
Percent per common
increase in and common
comparable Gross Net equivalent
Net sales store sales profit earnings share
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended January 29, 1995:
First Quarter $ 2,872,129 7% $ 808,757 $139,734 $ .31
Second Quarter 3,287,036 6% 895,817 178,014 .39
Third Quarter 3,240,050 9% 880,568 140,774 .31
Fourth Quarter 3,077,482 8% 900,351 145,979 .32
-------------------------------------------------------------------------------------
$ 12,476,697 8% $ 3,485,493 $604,501 $1.32
=====================================================================================
Fiscal year ended January 30, 1994:
First Quarter $ 2,180,218 7% $ 601,700 $106,799 $ .24
Second Quarter 2,453,756 9% 661,834 134,504 .30
Third Quarter 2,317,372 6% 626,186 103,418 .23
Fourth Quarter 2,287,417 6% 663,659 112,680 .25
-------------------------------------------------------------------------------------
$ 9,238,763 7% $ 2,553,379 $457,401 $1.01
=====================================================================================
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
The Home Depot, Inc.:
We have audited the accompanying consolidated balance sheets of The
Home Depot, Inc. and subsidiaries as of January 29, 1995 and
January 30, 1994, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended January 29, 1995. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Home
Depot, Inc. and subsidiaries as of January 29, 1995 and January 30, 1994, and
the results of their operations and their cash flows for each of
the years in the three-year period ended January 29, 1995 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
March 10, 1995
<PAGE>
<TABLE>
<CAPTION>
Exhibit 21
List of Subsidiaries of the Registrant
State or
Jurisdiction of
Name of Subsidiary Incorporation d/b/a
------------------ --------------- -----
<S> <C> <C>
Home Depot International, Inc. Delaware
Home Depot U.S.A., Inc. Delaware The Home Depot
Homer III, Inc. Delaware
</TABLE>
Certain subsidiaries were omitted pursuant to Item 601(21)(ii) of Regulation
S-K of the Securities Exchange Act of 1934.
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
The Home Depot, Inc.:
We have audited the accompanying consolidated balance sheets of The
Home Depot, Inc. and subsidiaries as of January 29, 1995 and
January 30, 1994, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended January 29, 1995. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Home
Depot, Inc. and subsidiaries as of January 29, 1995 and January 30, 1994, and
the results of their operations and their cash flows for each of
the years in the three-year period ended January 29, 1995 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
March 10, 1995
<PAGE>
STATE OF NEW MEXICO
COUNTY OF DONA ANA
KNOW ALL MEN BY THESE PRESENTS, that I, Frank Borman, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and
appoint Bernard Marcus and Ronald M. Brill, jointly and severally,
my true and lawful attorneys-in-fact, each with full power of
substitution, for me in any and all capacities, to sign, pursuant
to the requirements of the Securities Exchange Act of 1934, the
Annual Report of the Corporation on Form 10-K for the fiscal year
of the Corporation ended January 29, 1995, and to file the same
with the Securities and Exchange Commission, together with all
exhibits thereto and other documents in connection therewith,
including such as are incorporated therein by reference, and to
sign on my behalf and in my stead, in any and all capacities, any
amendments to said Annual Report, incorporating such changes as any
of the said attorneys-in-fact deems appropriate, hereby ratifying
and confirming all that each of said attorneys-in-fact deems appropriate,
hereby ratifying and confirming all that each of said attorneys-in-fact,
or his substitute or substitutes, may do orcause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 5th day of
April, 1995.
/s/ Frank Borman
-------------------------------------
Frank Borman
BEFORE me this 5th day of April, 1995, came Frank Borman, personally known
to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same ashis true act and deed.
/s/ Patricia M. Frietze
--------------------------------------
NOTARY PUBLIC
State of New Mexico
My Commission Expires: November 22, 1995
<PAGE>
STATE OF TEXAS
COUNTY OF DALLAS
KNOW ALL MEN BY THESE PRESENTS, that I, Berry R. Cox, a director of The
Home Depot, Inc.,a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with full power of substitution, for me
in any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the AnnualReport of the Corporation on
Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto andother documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, any amendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6th day of
April, 1995.
/s/ Berry R. Cox
-----------------------------------
Berry R. Cox
BEFORE me this 6th day of April, 1995, came Berry R. Cox, personally known
to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as his true act and deed.
/s/ Cindy Lou Wolf
-----------------------------------
NOTARY PUBLIC
State of Texas
My Commission Expires: August 24, 1996
<PAGE>
STATE OF TEXAS
COUNTY OF DALLAS
KNOW ALL MEN BY THESE PRESENTS, that I, Milledge A. Hart, III, a director
of The Home Depot, Inc., a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with fullpower of substitution, for me in
any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the Annual Report of the Corporation on
Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto and other documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, anyamendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 10th day of
April, 1995.
/s/ Milledge A. Hart, III
-----------------------------------
Milledge A. Hart, III
BEFORE me this 10th day of April, 1995, came Milledge A. Hart, III,
personally known to me, who in my presence did sign and seal the above
and foregoing Power of Attorney and acknowledged the same as his true
act and deed.
/s/ Jodi L. Patnoe
-----------------------------------
NOTARY PUBLIC
State of Texas
My Commission Expires: June 10, 1995
<PAGE>
STATE OF GEORGIA
COUNTY OF COBB
KNOW ALL MEN BY THESE PRESENTS, that I, James W. Inglis, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with full power of substitution, for me
in any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the Annual Report of the Corporation on
Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto andother documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, any amendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 14th day of
April, 1995.
/s/ James W. Inglis
---------------------------
James W. Inglis
BEFORE me this 14th of April, 1995, came James W. Inglis, personally known
to me, who in my presence did sign and seal the above and foregoing
Power of Attorney and acknowledged the same as his true act and deed.
/s/ Margie Bidwell
---------------------------
NOTARY PUBLIC
State of Georgia
My Commission Expires: August 14, 1998
<PAGE>
STATE OF GEORGIA
COUNTY OF COBB
KNOW ALL MEN BY THESE PRESENTS, that I, Donald R. Keough, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with full power of substitution, for me
in any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the Annual Report of the Corporation on
Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto andother documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, any amendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6th day of
April, 1995.
/s/ Donald R. Keough
---------------------------
Donald R. Keough
BEFORE me this 6th day of April, 1995, came Donald R. Keough, personally known
to me, who in my presence did sign and seal the above and foregoing Power of
Attorney and acknowledged the same as his true act and deed.
/s/ Mary Beth Meeder
---------------------------
NOTARY PUBLIC
State of Georgia
My Commission Expires: January 28, 1996
<PAGE>
STATE OF FLORIDA
COUNTY OF PALM BEACH
KNOW ALL MEN BY THESE PRESENTS, that I, Kenneth G. Langone, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with full power of substitution, for me in
any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the Annual Report of the Corporation
on Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto and other documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, any amendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
April, 1995.
/s/ Kenneth G. Langone
---------------------------
Kenneth G. Langone
BEFORE me this 7th day of April, 1995, came Kenneth G. Langone, personally
known to me, who in my presence did sign and seal the above and foregoing
Power of Attorney and acknowledged the same as his true act and deed.
/s/ Judith A. Irber
---------------------------
NOTARY PUBLIC
State of Florida
My Commission Expires: October 29, 1995
<PAGE>
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
KNOW ALL MEN BY THESE PRESENTS, that I, M. Faye Wilson, a director of
The Home Depot, Inc., a Delaware corporation, do constitute and appoint
Bernard Marcus and Ronald M. Brill, jointly and severally, my true and
lawful attorneys-in-fact, each with full power of substitution, for me in
any and all capacities, to sign, pursuant to the requirements of the
Securities Exchange Act of 1934, the Annual Report of the Corporation on
Form 10-K for the fiscal year of the Corporation ended January 29, 1995,
and to file the same with the Securities and Exchange Commission, together
with all exhibits thereto and other documents in connection therewith,
including such as are incorporated therein by reference, and to sign on my
behalf and in my stead, in any and all capacities, any amendments to said
Annual Report, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6th
day of April, 1995.
/s/ M. Faye Wilson
---------------------------
M. Faye Wilson
BEFORE me this 6th day of April, 1995, came M. Faye Wilson, personally known
to me, who in my presence did sign and seal the above and foregoing Power
of Attorney and acknowledged the same as her true act and deed.
/s/ Carla D. Barlow
---------------------------
NOTARY PUBLIC
State of California
My Commission Expires: June 5, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-29-1995
<PERIOD-END> JAN-29-1995
<CASH> 1,154
<SECURITIES> 56,712
<RECEIVABLES> 272,225
<ALLOWANCES> 0
<INVENTORY> 1,749,312
<CURRENT-ASSETS> 2,132,963
<PP&E> 3,747,268
<DEPRECIATION> 350,031
<TOTAL-ASSETS> 5,778,041
<CURRENT-LIABILITIES> 1,214,239
<BONDS> 983,369
<COMMON> 22,668
0
0
<OTHER-SE> 3,419,555
<TOTAL-LIABILITY-AND-EQUITY> 5,778,041
<SALES> 12,476,697
<TOTAL-REVENUES> 12,476,697
<CGS> 8,991,204
<TOTAL-COSTS> 8,991,204
<OTHER-EXPENSES> 2,498,303
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,439
<INCOME-PRETAX> 979,751
<INCOME-TAX> 375,250
<INCOME-CONTINUING> 604,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 604,501
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
