<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 28, 1996
- 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 30339-4089
(Address of principal executive offices) (Zip Code)
(770) 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.
$0.05 par value 478,834,000 Shares, as of May 16, 1996
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
APRIL 28, 1996
Page
Part I. Financial Information:
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS -
Three-Month Periods
Ended April 28, 1996 and April 30, 1995. . . . . . . . . . 3
CONSOLIDATED CONDENSED BALANCE SHEETS -
As of April 28, 1996 and January 28, 1996. . . . . . . . . 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
Three-Month Periods
Ended April 28, 1996 and April 30, 1995. . . . . . . . . . 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>
<TABLE>
PART I. FINANCIAL INFORMATION
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Data)
<CAPTION>
Three Months Ended
April 28, April 30,
1996 1995
------------ ------------
<S> <C> <C>
Net Sales $ 4,362,215 $ 3,568,962
Cost of Merchandise Sold 3,142,285 2,571,441
--------- ---------
Gross Profit 1,219,930 997,521
Operating Expenses:
Selling and Store Operating 816,009 665,977
Pre-Opening 12,859 12,535
General and Administrative 72,100 64,856
--------- ---------
Total Operating Expenses 900,968 743,368
--------- ---------
Operating Income 318,962 254,153
Interest Income (Expense):
Interest and Investment Income 4,126 4,200
Interest Expense (2,329) (2,238)
--------- ---------
Interest, Net 1,797 1,962
--------- ---------
Earnings Before Income Taxes 320,759 256,115
Income Taxes 125,740 98,350
--------- ---------
Net Earnings $ 195,019 $ 157,765
========= =========
Earnings Per Common and
Common Equivalent Share $ 0.41 $ 0.34
========= =========
Dividends Per Share $ 0.05 $ 0.04
========= =========
Weighted Average Number of
Common and Common Equivalent Shares 480,187 477,320
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
<CAPTION>
April 28, January 28,
1996 1995
ASSETS ---------- -----------
- - ------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 48,172 $ 53,269
Short-Term Investments 27,958 54,756
Receivables, Net 270,647 325,384
Merchandise Inventories 2,530,332 2,180,318
Other Current Assets 63,315 58,242
--------- ---------
Total Current Assets 2,940,424 2,671,969
Plant and Equipment, at cost 5,220,928 4,968,895
Less: Accumulated Depreciation
and Amortization (553,698) (507,871)
--------- ---------
Net Property and Equipment 4,667,230 4,461,024
Long-Term Investments 13,831 25,436
Notes Receivable 59,110 54,715
Cost in Excess of the Fair Value
of Net Assets Acquired 87,658 87,238
Other 61,121 53,651
--------- ---------
$ 7,829,374 $ 7,354,033
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,232,048 $ 824,808
Accrued Salaries and Related Expenses 197,273 198,208
Sales Taxes Payable 154,871 113,066
Other Accrued Expenses 328,812 242,859
Income Taxes Payable 143,342 35,214
Current Installments of Long-Term Debt 2,188 2,327
--------- ---------
Total Current Liabilities 2,058,534 1,416,482
Long-Term Debt, excluding current installments 297,834 720,080
Other Long-Term Liabilities 140,680 115,917
Deferred Income Taxes 37,923 37,225
Minority Interest 84,592 76,563
Stockholders' Equity:
Common Stock, par value $0.05. Authorized:
1,000,000,000 shares; issued and outstanding
- 478,684,000 shares at April 28, 1996 and
477,106,000 shares at January 28, 1996 23,933 23,855
Paid -in Capital 2,453,789 2,407,815
Retained Earnings 2,750,184 2,579,059
Cumulative Translation Adjustments (1,335) (6,131)
Unrealized Loss on Investments, Net (41) (47)
--------- ---------
5,226,530 5,004,551
Less: Notes Receivable from ESOP 16,226 16,539
Shares Held in Employee Benefit Trust 493 246
--------- ---------
Total Stockholders' Equity 5,209,811 4,987,766
--------- ---------
$7,829,374 $ 7,354,033
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(In Thousands) Three Months Ended
April 28, 1996 April 30, 1995
-------------- --------------
Cash Provided from Operations:
<S> <C> <C>
Net Earnings $ 195,019 $ 157,765
Reconciliation of Net Earnings to
Net Cash Provided by Operations:
Depreciation and Amortization 52,973 39,313
Increase in Receivables, Net 49,213 40,119
Increase in Merchandise Inventories (348,348) (243,521)
Increase in Accounts Payable and
Accrued Expenses 556,022 388,753
Increase in Income Taxes Payable 111,786 90,179
Other 8,370 11,778
-------- --------
Net Cash Provided by Operation 625,035 484,386
-------- --------
Cash Flows From Investing Activities:
Capital Expenditures (279,083) (347,345)
Proceeds from Sales of Property and Equipment 5,396 10,145
Sales and Maturities of Short-Term
Investments, Net 38,408 4,773
Purchase of Long-Term Investments --- (6,912)
Proceeds from Maturities of Long-Term
Investments --- 1,882
Advances Secured by Real Estate, Net 2,051 (14,411)
-------- --------
Net Cash Used in Investing Activities (233,228) (351,868)
-------- --------
Cash Flows From Financing Activities:
Repayments of Commercial Paper Obligations (421,570) (90,000)
Repayments of Notes Receivable from ESOP 313 201
Principal Repayments of Long-Term Debt (823) (522)
Proceeds from Sale of Common Stock, Net 42,499 14,664
Shares Purchased for Employee Benefit Trust (247) (246)
Cash Dividends Paid to Stockholders (23,894) (18,282)
Minority Interest Contributions to Partnership 6,847 9,171
-------- --------
Net Cash Provided by Financing Activities (396,875) (85,014)
-------- --------
Effect of Exchange Rate Changes on Cash (29) 17
Increase (Decrease) in Cash and Cash Equivalents 5,097 47,521
Cash and Cash Equivalents at Beginning of Period 53,269 1,154
-------- --------
Cash and Cash Equivalents at End of Period $ 48,172 $ 48,675
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
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
recurring 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
28, 1996, as filed with the Securities and Exchange Commission (File No.
1-8207).
<PAGE>
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
Increase(Decrease)
Three Months Ended in Dollar Amounts
April 28, April 30, Three
1996 1995 Months
----------- ---------- ----------------
Selected Consolidated
Statements of Earnings Data
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 22.2%
Gross Profit 28.0 27.9 22.3
Operating Expenses:
Selling and Store Operating 18.7 18.7 22.5
Pre-Opening 0.3 0.3 2.6
General and Administrative 1.7 1.8 11.2
---- ----
Total Operating Expenses 20.7 20.8 21.2
Operating Income 7.3 7.1 25.5
Interest Income (Expense):
Interest and Investment Income 0.1 0.1 (1.8)
Interest Expense - - 4.1
---- ----
Interest, Net 0.1 0.1 (8.4)
Earnings Before Income Taxes 7.4 7.2 25.2
Income Taxes 2.9 2.8 27.8
---- ----
Net Earnings 4.5% 4.4% 23.6
Selected Consolidated Sales Data
Number of Transactions 104,209,000 84,624,000 23.1
Average Amount of
Sale Per Transaction $ 41.86 $ 42.17 (0.7)
Weighted Average
Weekly Sales Per
Operating Store $ 782,000 $ 791,000 (1.1)
Weighted Average
Sales Per Square Foot $ 387 $ 396 (2.3)
</TABLE>
<PAGE>
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 1996 increased 22% to $4,362,215,000
compared to attributable to new stores (441 at the end of the first quarter of
fiscal 1996 compared to 359 at the end of the first quarter of fiscal 1995) and
a comparable store-for-store sales increase of 3%.
Gross profit as a percent of sales was 28.0% for the first quarter of fiscal
1996 compared to 27.9% for the comparable period of fiscal 1995. The gross
profit increase as a percent of sales resulted primarily from delays and changes
in merchandise mix resulting from late Spring weather in many markets.
Operating expenses as a percent of sales decreased to 20.7% for the first
quarter of fiscal 1996 compared to 20.8% for the first quarter of fiscal 1995.
Selling and store operating expenses as a percent of sales were 18.7% for both
the first quarter of fiscal 1996 and fiscal 1995. Pre-opening expenses as a
percent of sales were 0.3% for both the first quarter of fiscal 1996 and
fiscal 1995. General and administrative expenses as a percent of sales were
1.7% for the first quarter of fiscal 1996 compared to 1.8% for the first quarter
of fiscal 1995. This decrease as a percent of sales was due to the Company's
continuing focus on controlling costs.
Interest income as a percent of sales was 0.1% for both the first quarter of
fiscal 1996 and fiscal 1995. Interest expense as a percent of sales was 0% for
both the first quarter of fiscal 1996 and fiscal 1995.
The Company s combined Federal and state effective income tax rate increased to
39.2% for the first quarter of fiscal 1996 from 38.4% for the comparable period
of fiscal 1995. In the fourth quarter of fiscal 1995, the Company's combined
Federal and state effective income tax rate was adjusted to 38.8% for the fiscal
year. The increase in the rate for the first quarter of fiscal 1996 was due to
a higher effective state tax rate.
Net earnings as a percent of sales increased to 4.5% for the first quarter of
fiscal 1996 compared to 4.4% for the same period of fiscal 1995. This increase
was attributable to higher gross profits and lower operating expenses partially
offset by a higher effective income tax rate, as described above.
<PAGE>
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 1996, the Company opened 18 stores and
relocated four existing stores. During the remainder of fiscal 1996, the
Company plans to open approximately 72 additional new stores and relocate three
existing stores. Of the planned 90 new stores and seven relocations, it is
expected that 76 will be owned and 21 will be leased. The Company currently
plans to open approximately 123 new stores, including relocations, during
fiscal 1997. 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 1996. 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 $13,600,000 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 $2,800,000 to finance
inventories, net of vendor financing.
As of April 28, 1996, the Company had $89,961,000 in cash and short-term
investments and $13,831,000 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.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
During the first quarter of fiscal 1996, 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
27. Financial Data Schedule (only submitted to SEC in
electronic format)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
April 28, 1996.
<PAGE>
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/ Marshall L. Day
Marshall L. Day
Senior Vice President
Chief Financial Officer
5/28/96
(Date)
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Description
11.1 Computation of Earnings per Common and Common Equivalent Share
27 Financial Data Schedule
<PAGE>
<TABLE>
Exhibit 11.1
THE HOME DEPOT, INC. AND SUBSIDIARIES
Computation of Earnings
Per Common and Common Equivalent Share
(In Thousands, Except Per Share Data)
<CAPTION>
Three Months Ended
April 28, April 30,
1996 1995
---------- ----------
<S> <C> <C>
Net earnings applicable to common and common
equivalent shares $ 195,019 $ 157,765
Tax effected interest expense, net of
interest capitalized, attributable to
convertible subordinated notes --- 2,415
--------- ---------
$ 195,019 $ 160,180
========= =========
Shares:
Weighted average number of common and
common equivalent shares assuming average
market price 480,187 456,546
Additional shares from conversion of notes --- 20,774
--------- ---------
480,187 477,320
========= =========
Primary earnings per common and common
equivalent share $ 0.406 $ 0.336
========= =========
</TABLE>
(1) Common equivalent shares represent shares granted under the Company s stock
option plans and an employee stock purchase plan.
(2) The Company's 4.5% Convertible Subordinated Notes, issued in 1992, were
common stock equivalents prior to their conversion in March 1995. For the
three months ended April 30, 1995, the Notes were dilutive and,
accordingly, are assumed to be converted as of the beginning of the
accounting period for purposes of calculating earnings per share.
(3) Fully diluted earnings per share is not presented because the impact of a
higher ending market price on weighted average common equivalent shares was
not material for the three month period ended April 28, 1996, and was not
calculated for the three month period ending April 30, 1995, because the
ending price of the stock was lower than the average price.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-02-1997
<PERIOD-END> APR-28-1996
<CASH> 48172
<SECURITIES> 27958
<RECEIVABLES> 270647
<ALLOWANCES> 0
<INVENTORY> 2530332
<CURRENT-ASSETS> 2940424
<PP&E> 5220928
<DEPRECIATION> 553698
<TOTAL-ASSETS> 7829374
<CURRENT-LIABILITIES> 2058534
<BONDS> 297834
0
0
<COMMON> 23933
<OTHER-SE> 5185878
<TOTAL-LIABILITY-AND-EQUITY> 7829374
<SALES> 4362215
<TOTAL-REVENUES> 4362215
<CGS> 3142285
<TOTAL-COSTS> 3142285
<OTHER-EXPENSES> 900968
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1797)
<INCOME-PRETAX> 320759
<INCOME-TAX> 125740
<INCOME-CONTINUING> 195019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195019
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
