<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
XX SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1995
______________
- OR -
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission file number 1-8207
THE HOME DEPOT, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3261426
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2727 Paces Ferry Road Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
(404) 433-8211
(Registrant's telephone number, including area code)
__________________________________________________
(Former name, former address and former fiscal year, if changed
since last report.)
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
$.05 par value 476,083,855 Shares, as of May 19, 1995
Page 1 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
April 30, 1995
Page
Part I. Financial Information:
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS -
Three-Month Period Ended
April 30, 1995 and May 1, 1994................................. 3
CONSOLIDATED CONDENSED BALANCE SHEETS -
As of April 30, 1995 and January 29, 1995...................... 4
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS - Three-Month Period Ended
April 30, 1995 and May 1, 1994................................. 5
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS........................................... 6
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition...................................................... 7-9
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders... 10
Item 6. Exhibits and Reports on Form 8-K...................... 10
Signature Page................................................. 11
Index to Exhibits.............................................. 12
Page 2 of 12
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PART I. FINANCIAL INFORMATION
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended
April 30, 1995 May 1, 1994
<S> <C> <C>
Net Sales $3,568,962 $2,872,129
Cost of Merchandise Sold 2,571,441 2,063,372
Gross Profit 997,521 808,757
Operating Expenses:
Selling and Store Operating 665,977 519,389
Pre-opening 12,535 9,713
General and Administrative 64,856 51,891
Total Operating Expenses 743,368 580,993
Operating Income 254,153 227,764
Interest Income (Expense):
Interest and Investment Income 4,200 8,397
Interest Expense (2,238) (8,567)
Interest, Net 1,962 (170)
Earnings Before Income Taxes 256,115 227,594
Income Taxes 98,350 87,860
Net Earnings $ 157,765 $ 139,734
Earnings Per Common and
Common Equivalent Share $ .34 $ .31
Dividends Per Share $ .04 $ .03
Weighted Average Number of
Common and Common
Equivalent Shares 477,320 453,976
See accompanying notes to consolidated condensed financial statements.
</TABLE>
Page 3 of 12
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<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<S> <C> <C>
(In Thousands) April 30, January 29,
1995 1995
----------- -------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 48,675 $ 1,154
Short-Term Investments, including current
maturities of long-term investments 73,290 56,712
Accounts Receivable, Net 229,154 272,225
Merchandise Inventories 1,995,032 1,749,312
Other Current Assets 58,604 53,560
Total Current Assets 2,404,755 2,132,963
Property and Equipment, at cost 4,088,839 3,747,268
Less: Accumulated Depreciation and Amortization (383,203) (350,031)
Net Property and Equipment 3,705,636 3,397,237
Long-Term Investments Held Available for Sale 82,976 98,022
Notes Receivable 50,133 32,528
Cost in Excess of the Fair Value of Net
Assets Acquired, Net 91,025 88,513
Other 31,899 28,778
$6,366,424 $5,778,041
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $1,016,049 $ 681,291
Accrued Salaries and Related Expenses 224,188 192,151
Sales Taxes Payable 103,391 101,011
Other Accrued Expenses 230,119 208,377
Income Taxes Payable 93,656 8,717
Current Installments of Long-Term Debt 31,472 22,692
Total Current Liabilities 1,698,875 1,214,239
Convertible Subordinated Debt --- 804,985
Commercial Paper 10,000 100,000
Long-Term Debt, excluding current installments 87,133 78,384
Other Long-Term Liabilities 74,049 67,953
Deferred Income Taxes 18,445 19,258
Minority Interest 60,170 50,999
Stockholders' Equity:
Common Stock - 475,366,000 shares outstanding
at 04/30/95 and 453,365,000 shares
outstanding at 01/29/95 23,768 22,668
Paid-in Capital 2,350,252 1,526,463
Retained Earnings 2,076,767 1,937,284
Cumulative Translation Adjustments (514) (10,887)
Unrealized Holding Loss on Investments (666) (1,495)
4,449,607 3,474,033
Less Notes Receivable from ESOP 31,609 31,810
Less Shares held in Employee Benefit Trust 246 ---
Total Stockholders' Equity 4,417,752 3,442,223
$6,366,424 $5,778,041
See accompanying notes to consolidated condensed financial statements.
</TABLE>
Page 4 of 12
<PAGE>
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
April 30, 1995 May 1, 1994
-------------- -------------
Cash Provided from Operations:
<S> <C> <C>
Net Earnings $ 157,765 $ 139,734
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 39,313 28,374
Increase in Accounts Payable
and Accrued Expenses 388,753 318,635
Increase in Merchandise Inventories (243,521) (210,977)
Increase in Income Taxes Payable 90,179 59,029
Increase in Receivables, Net 40,119 5,057
Other 20,949 6,734
Net Cash Provided by Operations 493,557 346,586
Cash Flows From Investing Activities:
Capital Expenditures (347,345) (260,246)
Payment for Purchase of Partnership Interest --- (161,548)
Proceeds from Sale of
Short-Term Investments, Net 4,773 88,142
Purchase of Long-Term Investments (6,912) (46,997)
Proceeds from Maturities of
Long-Term Investments 1,882 6,916
Proceeds from Sale of Long-Term Investments --- 161,197
Proceeds from Sale of Property and Equipment 10,145 12,697
(Advances) Repayments of Advances Secured by
Real Estate, Net (14,411) 21,104
Net Cash Used in Investing Activities (351,868) (178,735)
Cash Flows From Financing Activities:
Repayments of Obligations for Commercial Paper (90,000) ---
Proceeds from Sale of Common Stock, Net 14,664 13,515
Cash Received from ESOP 201 ---
Principal Repayments of Long-Term Debt (522) (287)
Shares Purchased for Employee Benefit Trust (246) ---
Cash Dividends Paid to Stockholders (18,282) (13,515)
Net Cash (Used In) Provided by
Financing Activities (94,185) (287)
Effect of Exchange Rate Changes on Cash 17 ---
Increase in Cash and Cash Equivalents 47,521 167,564
Cash and Cash Equivalents, Beginning of Period 1,154 99,997
-------------- --------------
Cash and Cash Equivalents, End of Period $ 48,675 $ 267,561
See accompanying notes to consolidated condensed financial statements.
</TABLE>
Page 5 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
Basis of Presentation
The accompanying consolidated condensed financial statements
have been prepared in accordance with the instructions to Form
10-Q and do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of management,
all adjustments (consisting of normal reoccurring accruals)
considered necessary for a fair presentation have been included.
These statements should be read in conjunction with the
consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended
January 29, 1995, as filed with the Securities and Exchange
Commission (File No. 1-8207).
2. Redemption of Convertible Notes
On February 28, 1995, the Company announced its decision to redeem,
on March 31, 1995, all of its outstanding 4.5%
Convertible Subordinated Notes due June 15, 1997 (the "Notes")
at a redemption price of $1,016.75 (which includes premium and
interest) per $1,000 principal amount of Notes. The Notes were
convertible into Common Stock at the rate of one share for each
$38.75 principal amount of Notes owned. All of the Notes were
converted to Common Stock. Beginning in the second fiscal
quarter of 1994, the Notes had a dilutive effect on earnings per
share and accordingly, the Company has reported earnings per
share for the first fiscal quarter of 1995 assuming the Notes
had converted at the beginning of the accounting period.
Page 6 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The data below reflect 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
Three Months Ended Increase (Decrease)
<S> <C> <C> <C>
April 30, May 1, in Dollar Amounts
1995 1994 Three Months
Selected Consolidated
Statements of Earnings Data
Net Sales 100.0% 100.0% 24.3%
Gross Profit 27.9 28.1 23.3
Operating Expenses:
Selling and Store Operating 18.7 18.1 28.2
Pre-Opening .3 .3 29.1
General and Administrative 1.8 1.8 25.0
Total Operating Expenses 20.8 20.2 27.9
Operating Income 7.1 7.9 11.6
Interest Income (Expense):
Interest and Investment Income .1 .3 (50.0)
Interest Expense - (.3) (73.9)
Interest, Net .1 - (1,254.1)
Earnings Before Income Tax 7.2 7.9 12.5
Income Taxes 2.8 3.0 11.9
Net Earnings 4.4% 4.9% 12.9%
Selected Consolidated Sales Data
Number of Customer
Transactions 84,624,000 70,859,000 19.4%
Average Amount of
Sales Per Transaction $ 42.17 $ 40.53 4.0
Weighted Average
Weekly Sales Per
Operating Store $791,000 $796,000 (0.6)
Weighted Average Sales
Per Square Foot $ 396 $ 409 (3.2)
</TABLE>
Page 7 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
RESULTS OF OPERATIONS
Sales for the first quarter of fiscal 1995 increased 24% to $3,568,962,000
compared to sales of $2,872,129,000 for the first quarter of fiscal 1994.
This sales increase was attributable to new stores (359 at the end of the
first quarter of fiscal 1995 compared to 287 at the end of the first quarter
of fiscal 1994) and a comparable store for store sales increase of 5%. In
addition, inclement weather adversely affected approximately one-third of the
Company's stores during portions of the first quarter of fiscal 1995.
Gross profit as a percent of sales was 27.9% for the first quarter of fiscal
1995 compared to 28.1% for the comparable period of fiscal 1994. This gross
profit decrease as a percent of sales resulted primarily from more emphasis
on building materials, lumber products and floor coverings which are lower
margin categories as well as lower margins in our paint department resulting
from cost increases and departmental sales mix.
Operating expenses as a percent of sales increased to 20.8% the first quarter
of fiscal 1995 compared to 20.2% for the first quarter of fiscal 1994.
Selling and store operating expenses as a percent of sales increased to 18.7%
for the first quarter of fiscal 1995 compared to 18.1% for the comparable
period in fiscal 1994. This increase was attributable to,
among other things, higher store payroll expenses due to staffing for higher
seasonal sales which did not materialize, higher advertising costs as a
percent to sales resulting from lower sales than expected, and higher
expenses associated with three store relocations and other real estate
expenses compared to five relocations in the first quarter of fiscal 1994.
Pre-opening expenses as a percent of sales were 0.3% for both the first
quarter of fiscal 1995 and fiscal 1994. General and administrative expenses
as a percent of sales were 1.8% for both the first quarter of fiscal 1995
and fiscal 1994.
Interest income as a percent of sales decreased to 0.1% for the first quarter
of fiscal 1995 from 0.3% for the first quarter of fiscal 1994. This decrease
was attributable to a lower investment base partially offset by higher
effective yields. Interest expense as a percent of sales decreased to 0%
for the first quarter of fiscal 1995 compared to 0.3% for the first quarter
of fiscal 1994. This decrease was attributable to the conversion of the 4.5%
Convertible Subordinated Notes on March 31, 1995 and higher capitalized
interest due to more stores under construction.
The Company's combined Federal and state effective income tax rate decreased to
38.4% for the first quarter of fiscal 1995 from 38.6% for the comparable period
of fiscal 1994. In the fourth quarter of fiscal 1994, the Company's combined
Federal and state effective income tax rate was adjusted to 38.3% for the
fiscal year. The increase in the rate for the first quarter of fiscal 1995
was due to a higher effective state tax rate and the loss of targeted jobs
tax credits.
Net earnings as a percent of sales decreased to 4.4% for the first quarter of
fiscal 1995 compared to 4.9% for the same period of fiscal 1994. This decrease
was attributable to lower gross profits and higher operating expenses
partially offset by higher net interest income and a lower effective income
tax rate, as described above.
Page 8 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
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.
During the first three months of fiscal 1995, the Company opened 19 stores and
relocated three ofits existing stores. During the remainder of fiscal 1995, the
Company plans to open approximately 72 additional new stores and relocate two
existing stores. Of the planned 91 new stores and five relocations, it is
expected that 88 will be owned and eight will be leased. The Company
currently plans to open approximately 112 new stores and may relocate eight
stores during fiscal 1996. Although some of these locations will be leased
directly, it is expected that many may be obtained through the purchase of
pre-existing leasehold interests, the acquisition of land parcels and the
construction or purchase of buildings during fiscal 1995. While the cost of new
stores to be constructed and owned by the Company varies widely, principally due
to land costs, new store costs (including land, building and fixtures)
are currently estimated to average approximately $12,600,000 per location.
The Company may purchase leasehold interests at varying amounts depending
upon the value of such properties. The cost to remodel (including leasehold
interests) and fixture stores to be leased is expected to average
approximately $4,000,000 per store. In addition, each new store will require
approximately $2,700,000 to finance inventories, net of vendor financing.
On February 28, 1995, the Company announced its decision to redeem,
on March 31, 1995, all of its outstanding 4.5% Convertible Subordinated
Notes due June 15, 1997 (the "Notes") at a redemption price of $1,016.75
(which includes premium and interest) per $1,000 principal amount of Notes.
The Notes were convertible into Common Stock at the rate of one share for
each $38.75 principal amount of Notes owned. All of the $1,000 Notes were
converted to Common Stock. Beginning in the second fiscal quarter of 1994,
the Notes had a dilutive effect on earnings per share and accordingly, the
Company has reported earnings per share for the first fiscal quarter of 1995
assuming the Notes had converted at the beginning of the accounting period.
As of April 30, 1995, the Company had $121,965,000 in cash and short-term
investments as well as $82,976,000 in long-term investments. In the first
quarter of fiscal 1995, the Company reduced its outstanding borrowings
related to Commercial Paper from $100,000,000 at fiscal year-end to
$10,000,000 due to the maturation of short-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.
Page 9 of 12
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
During the first quarter of fiscal 1995, no matters were submitted to
a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of Earnings per Common and Common Equivalent
Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
April 30, 1995.
Page 10 of 12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE HOME DEPOT, INC.
(Registrant)
By: /s/ Arthur M. Blank
Arthur M. Blank
President
/s/ Ronald M. Brill
Ronald M. Brill
Executive Vice President
Chief Financial Officer
May 26, 1995
(Date)
Page 11 of 12
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THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Description Page
11.1 Computation of Earnings per Common and Common
Equivalent Share.................................. 13
Page 12 of 12
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<TABLE> Exhibit 11.1
THE HOME DEPOT, INC. AND SUBSIDIARIES
<CAPTION>
Computation of Earnings
Per Common and Common Equivalent Share
(In Thousands, Except Per Share Data)
Three Months Ended
April 30, 1995 May 1, 1994
<S> <C> <C>
Primary -------------- --------------
Net earnings applicable to common
to common and common
equivalent shares $157,765 $139,734
Taxes effected interest expense,
net of interest capitalized,
attributable to Convertible
Subordinated Notes 2,415 ---
$160,180 $139,734
Shares:
Weighted average number
of common and common
equivalent shares assuming
average market price for period 456,546 453,976
Additional shares from conversion
of the Notes 20,774 ---
477,320 453,976
Primary earnings per common and
common equivalent share $ .336 $ .308
Fully Diluted
Net earnings applicable to common
and common equivalent shares $ N/A $139,734
Tax effected interest
expense, net of interest
capitalized, attributable to
Convertible Subordinated Notes $ N/A $ 5,260
$ N/A $144,994
Shares:
Weighted average number of common
and common equivalent shares at higher
of ending or average market price N/A 454,068
Additional shares from Convertible
Subordinated Notes N/A 20,774
N/A 474,842
Fully diluted earnings
per common & common
equivalent share $ N/A $ .305
(1) Common equivalent shares represent shares granted under three stock
option plans and an employee stock purchase plan.
(2) The Company's 4% convertible notes, issued in 1992 were common stock
equivalents prior to their conversion in March, 1995. Fully diluted
earnings per share shows the effect on earnings per share assuming
conversion of the 4% convertible notes as of the beginning of the
accounting periods presented.
(3) For the three month period ended April 30, 1995, the ending price of
the stock was lower than the average price and therefore there is no
fully dilutive earnings per share presented.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Home Depot, Inc. 1996 1st Qtr. EXHIBIT 27 FDS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-END> APR-30-1995
<CASH> 48675
<SECURITIES> 73290
<RECEIVABLES> 229154
<ALLOWANCES> 0
<INVENTORY> 1995032
<CURRENT-ASSETS> 2404755
<PP&E> 4088839
<DEPRECIATION> 383203
<TOTAL-ASSETS> 6366424
<CURRENT-LIABILITIES> 1698875
<BONDS> 87133
<COMMON> 23768
0
0
<OTHER-SE> 4393984
<TOTAL-LIABILITY-AND-EQUITY> 6366424
<SALES> 3568962
<TOTAL-REVENUES> 3568962
<CGS> 2571441
<TOTAL-COSTS> 743368
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1962)
<INCOME-PRETAX> 256115
<INCOME-TAX> 98350
<INCOME-CONTINUING> 157765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157765
<EPS-PRIMARY> .34
<EPS-DILUTED> 0
</TABLE>
