<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 August 3, 1997
- 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)
2455 Paces Ferry Road N.W. Atlanta, Georgia 30339-4024
(Address of principal executive offices) (Zip Code)
(770) 433-8211
(Registrant's telephone number, including area code)
2727 Paces Ferry Road, Atlanta, GA 30339-4024
(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 730,025,818 Shares, as of August 20, 1997
PAGE 1 OF 13
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
August 3, 1997
Page
Part I. Financial Information:
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS -
Three-Month and Six-Month Periods
Ended August 3, 1997 and July 28, 1996 3
CONSOLIDATED CONDENSED BALANCE SHEETS -
As of August 3, 1997 and February 2, 1997 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
Six-Month Periods
Ended August 3, 1997 and July 28, 1996 5
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition......................7 -10
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature Page 12
Index to Exhibits 13
PAGE 2 OF 13
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
August 3, July 28, August 3, July 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales $6,550,221 $5,292,917 $12,207,495 $9,655,132
Cost of Merchandise Sold 4,749,517 3,856,022 8,854,997 6,998,307
Gross Profit 1,800,704 1,436,895 3,352,498 2,656,825
Operating Expenses:
Selling and Store Operating 1,098,214 901,407 2,112,794 1,717,066
Pre-Opening 13,879 10,143 26,918 23,002
General and Administrative 101,142 80,108 198,747 152,208
Total Operating Expenses 1,213,235 991,658 2,338,459 1,892,276
Operating Income 587,469 445,237 1,014,039 764,549
Interest Income (Expense):
Interest and Investment
Income 14,256 2,833 24,234 6,959
Interest Expense (10,853) (405) (21,692) (2,734)
Interest, Net 3,403 2,428 2,542 4,225
Minority Interest (5,144) (3,301) (7,219) (3,651)
Earnings Before Income
Taxes 585,728 444,364 1,009,362 765,123
Income Taxes 227,850 174,190 392,650 299,930
Net Earnings $ 357,878 $ 270,174 $ 616,712 $ 465,193
Earnings Per Common and
Common Equivalent Share $ 0.48 $ 0.37 $ 0.83 $ 0.64
Dividends Per Share $ 0.05 $ 0.04 $ 0.09 $ 0.07
Weighted Average Number of
Common and Common
Equivalent Shares 763,514 723,669 761,336 722,076
</TABLE>
See accompanying notes to consolidated condensed financial statements.
PAGE 3 OF 13
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
August 3, February 2,
1997 1997
ASSETS
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 473,258 $ 146,006
Short-Term Investments 435,090 412,430
Receivables, Net 399,661 388,416
Merchandise Inventories 3,196,919 2,708,283
Other Current Assets 90,443 54,238
Total Current Assets 4,595,371 3,709,373
Property and Equipment, at cost 6,731,581 6,149,816
Less: Accumulated Depreciation
and Amortization (851,578) (712,770)
Net Property and Equipment 5,880,003 5,437,046
Long-Term Investments ---- 8,480
Notes Receivable 26,097 39,518
Cost in Excess of the Fair
Value of Net Assets Acquired 83,554 86,540
Other 77,139 60,753
$10,662,164 $ 9,341,710
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,573,822 $ 1,089,736
Accrued Salaries and Related
Expenses 286,379 249,356
Sales Taxes Payable 164,576 129,284
Other Accrued Expenses 396,463 322,503
Income Taxes Payable 57,761 48,728
Current Installments of Long-Term
Debt 4,497 2,519
Total Current Liabilities 2,483,498 1,842,126
Long-Term Debt, excluding
current installments 1,262,180 1,246,593
Other Long-Term Liabilities 174,421 134,034
Deferred Income Taxes 66,297 66,020
Minority Interest 102,847 97,751
Stockholders' Equity:
Common Stock, par value $0.05.
Authorized: 1,000,000,000 shares;
issued and outstanding -
729,973,000 shares at 8/3/97
and 720,773,000 shares at
2/2/97 36,499 36,038
Paid-In Capital 2,586,255 2,511,081
Retained Earnings 3,961,143 3,406,592
Cumulative Translation Adjustments (6,960) 2,173
Unrealized Loss on Investments, Net (847) (168)
6,576,090 5,955,716
Less: Shares Held in Employee
Benefit Trust 862 530
Deferred Compensation
Plans 2,307 ----
Total Stockholders' Equity 6,572,921 5,955,186
$10,662,164 $ 9,341,710
</TABLE>
See accompanying notes to consolidated condensed financial statements.
PAGE 4 OF 13
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Six Months Ended
August 3, 1997 July 28, 1996
<S> <C> <C>
Cash Provided from Operations:
Net Earnings $ 616,712 $ 465,193
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 134,203 109,332
Deferred Income Tax Expense 658 5,239
(Increase) Decrease in Receivables, Net (3,994) 10,459
Increase in Merchandise Inventories (471,565) (335,628)
Increase in Accounts Payable and
Accrued Expenses 649,636 545,634
Increase in Income Taxes Payable 17,574 47,932
Other (11,450) 17,495
Net Cash Provided by Operations 931,774 865,656
Cash Flows Used In Investing Activities:
Capital Expenditures (584,846) (532,354)
Proceeds from Sales of Property and
Equipment 24,438 9,709
Proceeds from Sales of Investments ---- 40,737
Purchase of Investments (64,730) (211)
Proceeds from Maturities of Investments 49,441 25,606
Repayments of Advances Secured by Real
Estate, Net 8,238 11,489
Net Cash Used in Investing Activities (567,459) (445,024)
Cash Flows Used in Financing Activities:
Repayments of Commercial Paper
Obligations, Net ---- (454,000)
Repayments of Notes Receivable from ESOP ---- 5,649
Principal Repayments of Long-Term Debt (36,680) (1,357)
Proceeds from Sale of Common Stock, Net 64,012 55,637
Cash Dividends Paid to Stockholders (65,344) (52,631)
Contributions to Deferred Compensation
Plan Trust (96) ----
Shares Purchased for Employee Benefit Trust (235) (247)
Minority Interest Contributions to
Partnership 1,667 6,380
Net Cash Used by Financing Activities (36,676) (440,569)
Effect of Exchange Rate Changes on Cash (387) (108)
Increase (Decrease) in Cash and Cash
Equivalents 327,252 (20,045)
Cash and Cash Equivalents at Beginning of
Period 146,006 53,269
Cash and Cash Equivalents at End of Period $ 473,258 $ 33,224
</TABLE>
See accompanying notes to consolidated condensed financial statements.
PAGE 5 OF 13
<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 February 2, 1997 filed
with the Securities and Exchange Commission (File No. 1-8207).
2. Joint Venture Agreement with S.A.C.I. Falabella
On June 11, 1997, the Company entered into an agreement formalizing
a joint venture with S.A.C.I. Falabella ("Falabella"), a leading
department store retailer in Chile, to facilitate The Home Depot's
entry into the Chilean market. The Home Depot's controlling share
of the joint venture will be 66.67 percent. The alliance with
S.A.C.I. Falabella is expected to enhance The Home Depot's presence
in the Chilean market, offer attractive real estate opportunities
and provide assistance with, among other things, systems, credit
marketing and distribution logistics.
3. Stock Split
On May 28, 1997, the Board of Directors authorized a three-for-two
stock split, effected in the form of a stock dividend, which was
mailed on July 3, 1997, to stockholders of record on June 12, 1997.
This distribution resulted in a transfer of $12,160,000 to common
stock from paid-in-capital. The accompanying financial statements
and management's discussion and analysis of results of operations
and financial condition, including all share and per share amounts
have been adjusted to reflect this transaction.
4. Maintenance Warehouse Merger
On March 14, 1997, the Company acquired Maintenance
Warehouse/America Corp. ("Maintenance Warehouse") through the
exchange of all the common stock of Maintenance Warehouse for shares
of The Home Depot, Inc. Common Stock. Maintenance Warehouse, which
had sales of approximately $130 million in 1996, is the leading
direct-mail marketer of maintenance, repair and operations products
serving the U.S. building and facilities management market. The San
Diego-based company will continue to operate under its own name as a
subsidiary of the company.
PAGE 6 OF 13
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
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.
Percentage
Increase
(Decrease) in
Three Months Ended Six Months Ended Dollar Amounts
Selected Consolidated Aug. 3, July 28, Aug. 3, July 28, Three Six
Statements of Earnings Data 1997 1996 1997 1996 Months Months
<S> <C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0% 23.8% 26.4%
Gross Profit 27.5 27.1 27.4 27.5 25.3 26.2
Operating Expenses:
Selling and
Store Operating 16.8 17.0 17.3 17.8 21.8 23.0
Pre-Opening 0.2 0.2 0.2 0.2 36.8 17.0
General and
Administrative 1.5 1.5 1.6 1.6 26.3 30.6
Total Operating
Expenses 18.5 18.7 19.1 19.6 22.3 23.6
Operating Income 9.0 8.4 8.3 7.9 31.9 32.6
Interest Income
(Expense):
Interest and Investment
Income 0.2 0.1 0.2 0.1 403.2 248.2
Interest Expense (0.2) --- (0.2) (0.1) 2579.8 693.4
Interest, Net 0.0 0.1 0.0 0.0 40.2 (39.8)
Minority Interest (0.1) (0.1) (0.0) 0.0 55.8 97.7
Earnings Before
Income Taxes 8.9 8.4 8.3 7.9 31.8 31.9
Income Taxes 3.4 3.3 3.2 3.1 30.8 30.9
Net Earnings 5.5% 5.1% 5.1% 4.8% 32.5 32.6
Selected Consolidated Sales
Data
Number of
Transactions (000's) 148,994 124,840 278,739 229,048 19.3 21.7
Average Amount of Sale
Per Transaction $ 43.71 $ 42.40 $ 43.59 $ 42.15 3.1 3.4
Weighted Average
Weekly Sales
Per Operating
Store (000's) $ 922 $ 911 $ 879 $ 848 1.0 3.7
Weighted Average
Sales Per Square Foot $ 452 $ 450 $ 431 $ 419 0.6 2.9
</TABLE>
PAGE 7 OF 13
<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 second quarter of fiscal 1997 increased 24% to $6,550,221,000
compared to sales of $5,292,917,000 for the second quarter of fiscal 1996.
For the first six months of fiscal 1997, sales increased 26% to
$12,207,495,000 from sales of $9,655,132,000 for the comparable period in
fiscal 1996. The sales increase for both periods was primarily
attributable to new stores (559 at the end of the second quarter of fiscal
1997 compared to 456 at the end of the second quarter of fiscal 1996) and
a comparable store-for-store sales increase of 5% and 8% for the second
quarter and first six months of fiscal 1997, respectively. Management
believes that the comp sales comparison for the second quarter of fiscal
1997 was negatively impacted by higher than normal sales during the second
quarter of fiscal 1996. Pent-up demand materialized from a late start to
the 1996 spring season.
Gross profit as a percent of sales was 27.5% for the second quarter of
fiscal 1997 compared to 27.1% for the comparable period of fiscal 1996. The
increase for the quarter was primarily attributable to product line reviews
which resulted in lower cost of goods in certain product categories, other
merchandising initiatives, product mix changes, as well as lower and more
stable lumber costs. For the first six months of both fiscal 1997 gross
profit as a percent of sales was 27.4% compared to 27.5% for the comparable
period of fiscal 1996.
Operating expenses as a percent of sales decreased to 18.5% for the second
quarter of fiscal 1997 from 18.7% for the same period of fiscal 1996.
Selling and store operating expenses as a percent of sales decreased to
16.8% for the second quarter of fiscal 1997, from 17.0% for the second
quarter of fiscal 1996. The decrease for the second quarter was
attributable to, among other things, lower net advertising expenses due to
higher cooperative participation from vendors, lower store relocation costs
(estimated unrecoverable costs for one future store relocation was expensed
in the second quarter of fiscal 1997 compared to expenses for three store
relocations in the second quarter of fiscal 1996), and lower insurance
expense as a percent of sales resulting from favorable claims experience
for the Company's self-funded insurance programs. Also, the Company
incurred one-time expenditures related to the Olympic Games during the
second quarter of fiscal 1996. For the first six months of fiscal 1997
operating expenses as a percent of sales were down to 19.1% from 19.6% for
the same period of fiscal 1996. Selling and store operating expenses, as a
percent of sales, decreased to 17.3% for the first six months of fiscal
1997 from 17.8% for the first six months of fiscal 1996. The decrease as a
percent of sales for the first six months of fiscal 1997 was partially
attributable to the high comparable store-for-store sales increase for the
first quarter of fiscal 1997. In addition, lower utilities and facility
maintenance expenses as a percent of sales resulted from milder weather in
the first quarter and expenses for net advertising, store relocations,
insurance costs, and one-time Olympic expenses were lower as a percent of
sales as described above.
Pre-opening expenses as a percent of sales were 0.2% for both the second
quarter and first six months of fiscal 1997 and fiscal 1996. The Company
opened 23 new stores in the second quarter of fiscal 1997 compared to 15
new stores and one relocation in the second quarter of fiscal 1996.
General and administrative expenses as a percent of sales were 1.5% for
both the second quarters of fiscal 1997 and fiscal 1996 and 1.6% for the
first six months of fiscal 1997 and fiscal 1996.
PAGE 8 OF 13
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
RESULTS OF OPERATIONS - (Continued)
Net interest income as a percent of sales decreased to 0.0% for the second
quarter of fiscal 1997 from 0.1% for the same period of fiscal 1996 and was
0.0% for the first six months of both fiscal 1997 and fiscal 1996.
Interest and investment income as a percent of sales for the second quarter
and first six months of fiscal 1997 increased to 0.2% from 0.1% for the
second quarter and first six months of fiscal 1996 due to investment income
generated from the remaining proceeds of the 3.25% Convertible Subordinated
Notes issued in October 1996. Interest expense as a percent of sales for
the second quarter and first six months of fiscal 1997 increased to 0.2%
from 0.0% for the second quarter and 0.1% for the first six months of
fiscal 1996 due to the interest expense on the Notes.
The Company's combined Federal and state effective income tax rate
decreased to 38.9% for the second quarter and first six months of fiscal
1997 from 39.2% for the comparable periods of fiscal 1996. During the
fourth quarter of fiscal 1996, the Company adjusted its combined federal
and state effective income tax rate to 38.9% for the fiscal year due to
lower tax-advantaged investments and a higher effective state income tax
rate, particularly offset by various state and local tax planning
strategies.
Net earnings as a percent of sales were 5.5% and 5.1% for the second
quarter and first six months of fiscal 1997, respectively, compared to 5.1%
and 4.8% for the second q uarter and first six months of fiscal 1996.
Earnings per share were $0.48 and $0.83 for the second quarter and first
six months of fiscal 1997, respectively, compared to $0.37 and $0.64 for
the second quarter and first six months of fiscal 1996, respectively.
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 six months of fiscal 1997, the Company opened 47 stores
and relocated 1 store. During the remainder of fiscal 1997, the Company
plans to open approximately 64 additional new stores and relocate 3
existing stores. In fiscal 1998, the Company plans to increase its total
number of stores by approximately 21 to 22 percent. 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 1997. 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 $13,000,000 per location. The Company may purchase
PAGE 9 OF 13
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES - (Continued)
leasehold interests at varying amounts depending upon the value of such
properties. In addition, each new store will require approximately
$3,400,000 to finance inventories, net of vendor financing. The cost to
remodel (including leasehold interests) and fixture stores to be leased is
expected to average approximately $2,500,000 per store. Of the 111 new
stores and 4 relocations planned in fiscal 1997, it is expected that
approximately 70% will be owned and the remainder will be leased.
In June 1996, the Company entered into a $300,000,000 operating lease
agreement for the purpose of financing construction costs of new stores.
In May 1997, the Company increased its available funding under the
operating lease agreement to $600,000,000. As of August 3, 1997, the
Company had $908,348,000 in cash and short-term investments. Management
believes that its current cash position, the proceeds from short-term
investments, internally generated funds, funds available from the
$600,000,000 operating lease agreement, and/or the ability to obtain
alternate sources of financing, including the ability to raise financing
under its commercial paper program, 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 10 OF 13
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholders, on May 28, 1997,
the stockholders elected the slate of nominees for election as
director with votes cast as follows: Col. Frank Borman had
416,074,398 shares for and 7,311,818 shares withheld; Mr. Ronald M.
Brill had 416,472,889 shares for and 6,913,327 shares withheld; Mr.
Berry R. Cox had 416,417,600 shares for and 6,968,616 shares
withheld; and Mr. Ronald A. Matricaria had 413,872,465 shares for
and 9,513,751 shares withheld. There were no abstentions or broker
non-votes applicable to the election of directors. The following
other directors have terms of office as a director that continued
after the meeting: Mr. Arthur M. Blank, Mr. John L. Clendenin, Dr.
Johnnetta B. Cole, Mr. Milledge A. Hart, III, Mr. Donald R. Keough,
Mr. Kenneth G. Langone, Mr. Bernard Marcus and Ms. M. Faye Wilson.
The stockholders approved The Home Depot, Inc. 1997 Omnibus Stock
Incentive Plan with votes cast as follows: 237,760,918 shares for;
102,055,909 shares against; 2,680,062 shares abstained and
80,889,327 broker non-votes.
The stockholders approved the Company's Nonemployee Directors'
Deferred Stock Compensation Plan with votes cast as follows:
331,799,589 shares for; 7,774,782 shares against; 2,922,517 shares
abstained; and 80,889,328 broker non-votes.
The stockholders did not adopt a proposal to amend the Company's
Bylaws to require that the Board of Directors consist of a
majority of independent directors with votes cast as follows:
82,035,043 shares for; 241,969,792 shares against; 17,978,052
shares abstained; and 81,403,329 broker non-votes.
The stockholders did not adopt a proposal to amend the Company's
Bylaws to require that an independent director who was not
formerly the chief executive of the Company serve as chair of the
board with votes cast as follows: 69,220,478 shares for;
259,549,706 shares against; 13,726,702 shares abstained; and
80,889,330 broker non-votes.
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
August 3, 1997.
PAGE 11 OF 13
<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
CEO, President & COO
/s/ Marshall L. Day
Marshall L. Day
Senior Vice President
Chief Financial Officer
August 28, 1997
PAGE 12 OF 13
<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 (only submitted to SEC in electronic
format)
PAGE 13 OF 13
<TABLE>
<CAPTION>
Exhibit 11.1
THE HOME DEPOT, INC. AND SUBSIDIARIES
Computation of Earnings
Per Common and Common Equivalent Share
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
Primary August 3, July 28, August 3, July 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Earnings Applicable to
Common and Common Equivalent
Shares $ 357,878 $ 270,174 $ 616,712 $ 465,193
Tax Effected Interest Expense,
Net of Interest Capitalized,
Attributable to 3.25%
Convertible Subordinated
Notes 5,845 ------ 11,686 ----
Shares:
Weighted Average Number of
Common and Common Equivalent
Shares Assuming Average
Market Price for Period 737,928 723,669 734,469 722,076
Additional Shares from
assumed Conversion of 3.25%
Convertible Subordinated
Notes 23,957 ------ 23,957 ------
761,885 723,669 758,426 722,076
Primary Earnings per Common
and common Equivalent Share $ .477 $ .373 $ .829 $ .644
Fully Diluted
Net Earnings Applicable to
Common and Common
Equivalent Shares $ 357,878 $ 270,174 $ 616,712 $ 465,193
Tax Effected Interest
Expense, Net of Interest
Capitalized, attributable
to 3.25% Convertible
Subordinated Notes $ 5,845 $ ------- $ 11,686 $ ------
$ 363,723 $ 270,174 $ 628,398 $ 465,193
Shares:
Weighted Average Number
of Common and Common
Equivalent Shares at
Higher of Ending or
Average Market Price 739,557 723,669 737,379 722,437
Additional Shares From 3.25%
Convertible Subordinated
Notes 23,957 ----- 23,957 ------
763,514 723,669 761,336 722,437
Fully Diluted Earnings
per Common and Common
Equivalent Shares $ .476 $ .373 $ .825 $ .644
(1) Common equivalent shares represent shares granted under the Company's
employee stock purchase plan and stock option plans for the three
and six month periods ended August 3, 1997 and July 28, 1996.
All periods have been adjusted to reflect the three-for-two stock
split in July 1997.
<PAGE>
Exhibit 11.1
(continued)
THE HOME DEPOT, INC. AND SUBSIDIARIES
Computation of Earnings
Per Common and Common Equivalent Share
(2) The Company's 3.25% Convertible Subordinated Notes issued on October 2,
1996, are common stock equivalents. For the three and six months
ended August 3, 1997, the Notes were dilutive and, accordingly,
were assumed to be converted at the beginning of the accounting period
for purposes of calculating earnings per share.
(3) For the three month period ended July 28, 1996, the ending price of
the stock was lower than the average price and therefore the
average price of the stock is used in calculating fully dilutive earnings
per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1998
<PERIOD-END> AUG-03-1997
<CASH> 473258
<SECURITIES> 435090
<RECEIVABLES> 399661
<ALLOWANCES> 0
<INVENTORY> 3196919
<CURRENT-ASSETS> 4595371
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