<PAGE>
Page 1 of 16
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 2, 1998
- 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
(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.
$.05 par value 1,470,510,673 Shares, as of August 21, 1998
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
August 2, 1998
Page
Part I. Financial Information:
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS -
Three-Month and Six-Month Periods
Ended August 2, 1998 and August 3, 1997........................3
CONSOLIDATED CONDENSED BALANCE SHEETS -
As of August 2, 1998 and February 1, 1998......................4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
Six -Month Periods
Ended August 2, 1998 and August 3, 1997........................5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME -
Three-Month and Six-Month Periods
Ended August 2, 1998 and August 3, 1997........................6
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS............................................7
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition .................. 8 - 12
Item 3. Quantitative and Qualitative Disclosures about Market
Risk......................................................12
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security
Holders...................................................13
Item 5. Other Information.........................................13
Item 6. Exhibits and Reports on Form 8-K..........................14
Signature Page....................................................15
Index to Exhibits.................................................16
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Millions, Except Per Share Data)
Three Months Ended Six Months Ended
August 2, August 3, August 2, August 3,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $ 8,139 $ 6,550 $ 15,263 $ 12,208
Cost of Merchandise Sold 5,876 4,749 11,031 8,855
Gross Profit 2,263 1,801 4,232 3,353
Operating Expenses:
Selling and Store Operating 1,353 1,103 2,620 2,120
Pre-Opening 18 14 37 27
General and Administrative 122 101 244 199
Total Operating Expenses 1,493 1,218 2,901 2,346
Operating Income 770 583 1,331 1,007
Interest Income (Expense):
Interest and Investment
Income 9 14 15 24
Interest Expense (10) (11) (21) (22)
Interest, Net (1) 3 (6) 2
Earnings Before Income
Taxes 769 586 1,325 1,009
Income Taxes 302 228 521 392
Net Earnings $ 467 $ 358 $ 804 $ 617
Weighted Average Number of
Common Shares Outstanding 1,470 1,459 1,468 1,455
Basic Earnings Per Share $ 0.32 $ 0.25 $ 0.55 $ 0.42
Weighted Average Number of
Common Shares Outstanding
Assuming Dilution 1,546 1,524 1,542 1,517
Diluted Earnings Per Share $ 0.31 $ 0.24 $ 0.53 $ 0.41
Dividends Per Share $ 0.03 $ 0.03 $ 0.06 $ 0.05
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In Millions, Except Share Data)
August 2, February 1,
1998 1998
ASSETS
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 654 $ 172
Short-Term Investments 1 2
Receivables, Net 423 556
Merchandise Inventories 3,786 3,602
Other Current Assets 149 128
Total Current Assets 5,013 4,460
Property and Equipment, at cost 8,348 7,487
Less: Accumulated Depreciation
and Amortization (1,135) (978)
Net Property and Equipment 7,213 6,509
Long-Term Investments 15 15
Notes Receivable 24 27
Cost in Excess of the Fair
Value of Net Assets Acquired 269 140
Other 59 78
$ 12,593 $ 11,229
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,812 $ 1,358
Accrued Salaries and Related Expenses 373 312
Sales Taxes Payable 210 143
Other Accrued Expenses 559 530
Income Taxes Payable 114 105
Current Installments of Long-Term Debt 5 8
Total Current Liabilities 3,073 2,456
Long-Term Debt, excluding
current installments 1,317 1,303
Other Long-Term Liabilities 215 178
Deferred Income Taxes 79 78
Minority Interest 4 116
Stockholders' Equity:
Common Stock, par value $0.05.
Authorized: 2,500,000,000 shares;
issued and outstanding -
1,470,302,000 shares at 8/2/98
and 1,464,216,000 shares at 2/1/98 74 73
Paid-In Capital 2,742 2,626
Retained Earnings 5,154 4,430
Cumulative Translation Adjustments (60) (28)
7,910 7,101
Less Shares Purchased for Compensation
Plans 5 3
Total Stockholders' Equity 7,905 7,098
$ 12,593 $ 11,229
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions)
Six Months Ended
August 2, 1998 August 3, 1997
<S> <C> <C>
Cash Provided From Operations:
Net Earnings $ 804 $ 617
Reconciliation of Net Earnings to Net Cash
Provided by Operations:
Depreciation and Amortization 180 134
Decrease (Increase) in Receivables, Net 132 (4)
Increase in Merchandise Inventories (192) (472)
Increase in Accounts Payable and
Accrued Expenses 642 650
Increase in Income Taxes Payable 40 18
Other 1 (11)
Net Cash Provided by Operations 1,607 932
Cash Flows From Investing Activities:
Capital Expenditures (891) (585)
Proceeds from Sales of Property and
Equipment 22 25
Payment for Purchase of Minority
Partnership Interest (261) ---
Purchases of Investments (1) (65)
Proceeds from Maturities of Investments 2 49
Repayments of Advances Secured by Real
Estate, Net 3 8
Net Cash Used in Investing Activities (1,126) (568)
Cash Flows From Financing Activities:
Principal Repayments of Long-Term Debt (4) (37)
Proceeds from Sale of Common Stock, Net 84 64
Cash Dividends Paid to Stockholders (81) (65)
Minority Interest Contributions to
Partnership 5 1
Net Cash Provided by (Used in)
Financing Activities 4 (37)
Effect of Exchange Rate Changes on Cash, Net (3) ---
Increase in Cash and Cash Equivalents 482 327
Cash and Cash Equivalents at Beginning of
Period 172 146
Cash and Cash Equivalents at End of Period $ 654 $ 473
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In Millions)
Three Months Ended Six Months Ended
August 2, August 3, August 2, August 3,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Earnings $ 467 $ 358 $ 804 $ 617
Other Comprehensive
Income, net of tax:
Foreign Currency
Translation
Adjustments (22) --- (19) (5)
Unrealized Loss on
Investments --- --- --- (1)
Other Comprehensive
Income (22) --- (19) (6)
Comprehensive Income $ 445 $ 358 $ 785 $ 611
</TABLE>
<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 1, 1998, as
filed with the Securities and Exchange Commission (File No. 1-8207).
2. Stock Split
On May 27, 1998, the Board of Directors authorized a two-for-one
stock split, effected in the form of a stock dividend, which was
distributed on July 2, 1998 to stockholders of record on June 11,
1998. This distribution resulted in a transfer on the Company's
balance sheet of $36,751,000 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.
3. Purchase of Minority Interest in Canadian Partnership
During the first quarter of fiscal 1998, the Company purchased, for
$261 million, the remaining 25% partnership interest in The Home
Depot Canada partnership that was held by The Molson Companies. As
a result of this transaction, the Company and its subsidiaries now
own all of The Home Depot's Canadian operations. The Home Depot
Canada partnership was formed in February, 1994 when the Company
acquired 75% of Aikenhead's Home Improvement Warehouse, which was
then operating seven home improvement stores in Canada. Since the
original acquisition and through the end of the second quarter of
fiscal 1998, The Home Depot Canada has opened 33 additional stores.
The terms of the original partnership agreement provided for a
put/call option, which would have resulted in the Company purchasing
the remaining 25% of The Home Depot Canada at any time after the
sixth anniversary of the original agreement. The companies reached
a mutual agreement, however, to complete the purchase transaction at
an earlier date.
<PAGE>
<TABLE>
<CAPTION>
THE HOME DEPOT, INC. AND SUBSIDIARIES
Item 2. 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
Three Months Six Months (Decrease) in
Ended Ended Dollar Amounts
Selected Consolidated
Statements of Earnings Aug 2, Aug 3, Aug 2, Aug 3, Three Six
Data 1998 1997 1998 1997 Months Months
<C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0% 24.3% 25.0%
Gross Profit 27.8 27.5 27.7 27.4 25.7 26.2
Operating Expenses:
Selling and
Store Operating 16.7 16.9 17.2 17.3 22.7 23.6
Pre-Opening 0.2 0.2 0.2 0.2 28.6 37.0
General and
Administrative 1.5 1.5 1.6 1.6 20.8 22.6
Total Operating
Expenses 18.4 18.6 19.0 19.1 22.6 23.7
Operating Income 9.4 8.9 8.7 8.3 32.1 32.2
Interest Income
(Expense):
Interest and Investment
Income 0.1 0.2 0.1 0.2 (35.7) (37.5)
Interest Expense (0.1) (0.2) (0.1) (0.2) (9.1) (4.5)
Interest, Net 0.0 0.0 0.0 0.0 (133.3) (400.0)
Earnings Before
Income Taxes 9.4 8.9 8.7 8.3 31.2 31.3
Income Taxes 3.7 3.4 3.4 3.2 32.5 32.9
Net Earnings 5.7% 5.5% 5.3% 5.1% 30.4 30.3
Selected Consolidated
Sales Data
Number of Transactions
(in Millions) 180 149 336 279 20.8 20.4
Average Amount of Sale
Per Transaction $44.98 $43.71 $45.08 $43.59 2.9 3.4
Weighted Average
Weekly Sales
Per Operating
Store
(in Thousands) $ 933 $ 922 $ 894 $ 879 1.2 1.7
Weighted Average
Sales Per Square Foot $ 455 $ 452 $ 436 $ 431 0.7 1.2
</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 second quarter of fiscal 1998 increased 24.3% to $8.139
billion from $6.550 billion for the second quarter of fiscal 1997. For the
first six months of fiscal 1998, sales increased 25% to $15.263 billion
from $12.208 billion for the comparable period in fiscal 1997. The sales
increase for both periods was primarily attributable to new stores (679
stores open at the end of the second quarter of fiscal 1998 compared with
559 at the end of the second quarter of fiscal 1997) and a comparable store-
for-store sales increase of 7% for both the second quarter and first six
months of fiscal 1998.
Gross profit as a percent of sales was 27.8% for the second quarter of
fiscal 1998 compared with 27.5% for the second quarter of fiscal 1997. For
the first six months of fiscal 1998 gross profit as a percent of sales was
27.7% compared to 27.4% for the comparable period of fiscal 1997. The gross
profit rate increase for both periods was primarily attributable to sales
mix changes, lower lumber costs and to product line reviews and other
merchandising initiatives, which have resulted in lower costs of
merchandise.
Operating expenses as a percent of sales decreased to 18.4% for the second
quarter of fiscal 1998 from 18.6% for the second quarter of fiscal 1997,
primarily due to lower selling and store operating expenses as a percent of
sales. For the first six months of fiscal 1998, operating expenses
decreased to 19.0% from 19.1% for the comparable period in fiscal 1997.
Selling and store operating expenses as a percent of sales were 16.7% for
the second quarter of fiscal 1998 compared to 16.9% for the comparable
period of fiscal 1997. Net advertising expenses decreased as a percent of
sales due to increased national advertising and cost leverage achieved from
opening new stores in existing markets. During the first quarter of 1998,
the Company purchased the remaining 25% of The Home Depot Canada
Partnership from The Molson Companies. As a result, expense for minority
interest, which represents the Molson Companies' share of earnings in the
partnership, was lower as a percent of sales in the second quarter and
first six months of fiscal 1998 compared with the second quarter and first
six months of fiscal 1997. In addition, store relocation costs as a
percent of sales were lower during the second quarter of fiscal 1998 than
in the second quarter of fiscal 1997, due to differences in the
unrecoverable costs of relocated stores and timing of the relocations.
Partially offsetting these decreases were higher store selling payroll
expenses as a percent of sales for the second quarter of fiscal 1998
compared to the second quarter of fiscal 1997 primarily due to increased
focus on certain areas, including flooring and other decor areas that
require labor skills which tend to carry higher than average pay rates.
Selling and store operating expenses as a percent to sales decreased to
17.2% for the first six months of fiscal 1998 from 17.3% for the first six
months of fiscal 1997. This decrease was due to lower net advertising
expenses, minority interest expense and store relocation costs as described
above.
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
RESULTS OF OPERATIONS - (Continued)
Pre-opening expenses as a percent of sales were 0.2% for the second quarter
and first six months of both fiscal 1998 and fiscal 1997. The Company
opened 23 stores and relocated 1 during the second quarter of fiscal 1998
compared with 23 new stores and no relocations during the second quarter of
fiscal 1997. General and administrative expenses as a percent of sales
were 1.5% for both the second quarter of fiscal 1998 and fiscal 1997 and
1.6% for the first six months of fiscal 1998 and fiscal 1997.
Net interest as a percent of sales was 0.0% for the second quarter and
first six months of both fiscal 1998 and fiscal 1997. As a percent of
sales, interest and investment income for the second quarter and first six
months of fiscal 1998 decreased to 0.1% from 0.2% for the second quarter
and first six months of 1997 primarily due to lower investment balances
resulting from funds used to open new stores. Interest expense was
substantially equivalent in dollars for both the second quarter and first
six months of fiscal 1998 and fiscal 1997 but was lower as a percent of
sales this year compared to last year due to the increase in sales.
The Company's combined federal and state effective income tax rate
increased to 39.3% for the second quarter and first six months of fiscal
1998 from 38.9% for the comparable periods of fiscal 1997. The increase
was due to higher effective state tax rates and a reduction in tax-exempt
interest income.
Net earnings as a percent of sales increased to 5.7% and 5.3.% for the
second quarter and first six months of fiscal 1998, respectively, from 5.5%
and 5.1% for the second quarter and first six months of fiscal 1997.
Diluted earnings per share were $0.31 and $0.53 for the second quarter and
first six months of fiscal 1998, respectively, compared to $0.24 and $0.41
for the second quarter and first six months of fiscal 1997, respectively.
The increases for fiscal 1998 were primarily attributable to higher gross
margin rates and lower selling and store operating expenses, partially
offset by higher income tax rates, as described above.
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.
<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)
During the first six months of fiscal 1998, the Company opened 55 stores
and relocated 1 store. During the remainder of fiscal 1998, the Company
plans to open approximately 82 new stores and relocate 3 existing stores,
for a 22% unit growth rate. It is anticipated that approximately 87% of
these locations will be owned, and the remainder will be leased. The
Company also plans to open approximately 170 stores, including relocations,
in fiscal 1999.
In June 1996, the Company entered into a $300 million operating lease
agreement for the purpose of financing construction costs of certain new
stores. In May 1997, the Company increased its available funding under the
operating lease agreement to $600 million. Under the agreement, the lessor
purchases the properties, pays for the construction costs and subsequently
leases the facilities to the Company. The lease provides for substantial
residual value guarantees and includes purchase options at original cost on
each property.
The Company financed a portion of new stores opened in fiscal 1997 under
the agreement and anticipates utilizing this facility to finance selected
new stores in fiscal 1998 and an office building in fiscal 1999. In addition,
some planned locations for fiscal 1998 and fiscal 1999 will be leased
individually, and it is expected that many locations may be obtained
through the acquisition of land parcels and 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 $13.2 million per location.
The cost to remodel and fixture stores to be leased is expected to average
approximately $2.4 million per store. In addition, each new store will
require approximately $2.9 million to finance inventories, net of vendor
financing.
During fiscal 1996, the Company issued, through a public offering, $1.1
billion of 3.25% Convertible Subordinated Notes due October 1, 2001 ("3.25%
Notes"). The 3.25% Notes were issued at par and are convertible into shares
of the Company's common stock at any time prior to maturity, unless
previously redeemed by the Company, at a conversion price of $23.0416 per
share, subject to adjustment under certain conditions. The 3.25% Notes may
be redeemed, at the option of the Company, at any time on or after October
2, 1999, in whole or in part, at a redemption price of 100.813% of the
principal amount and after October 1, 2000, at 100% of the principal
amount. The Company used the net proceeds from the offering to repay
outstanding commercial paper obligations, to finance a portion of the
Company's capital expenditure program, including store expansions and
renovations, and for general corporate purposes.
The Company has a commercial paper program that allows borrowings up to a
maximum of $800 million. As of August 2, 1998, there were no borrowings
outstanding under the program. In connection with the program, the Company
has a back-up credit facility with a consortium of banks for up to $800
million. The credit facility, which expires in December 2000, contains
various restrictive covenants, none of which is expected to materially
impact the Company's liquidity or capital resources.
<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)
As of August 2, 1998, the Company had $655 million in cash and cash
equivalents and short-term investments, as well as $15 million in long-term
investments. Management believes that its current cash position, the
proceeds from short-term and long-term investments, internally generated
funds, funds available from its $800 million commercial paper program,
funds available from the $600 million operating lease agreement, and/or the
ability to obtain alternate sources of financing should enable the Company
to complete its capital expenditure programs, including store expansions
and renovations, through the next several fiscal years.
YEAR 2000
The Company is currently addressing a universal situation commonly referred
to as the "Year 2000 Problem." The Year 2000 Problem relates to the
inability of certain computer software programs to properly recognize and
process date-sensitive information relative to the Year 2000 and beyond.
During fiscal 1997, the Company developed a plan to devote the necessary
resources to identify and modify systems impacted by the Year 2000 Problem,
or implement new systems to become Year 2000 compliant in a timely manner.
The total cost of executing this plan is estimated at $13 million and, as
of August 2, 1998, the Company was approximately 50% complete with the
execution of this plan. In addition, the Company has contacted its major
suppliers and vendors seeking information about their internal compliance
efforts. The Company's risks involved with not solving the Year 2000
issue include, but are not limited to, the following: loss of local or
regional electric power, loss of telecommunication services, delays or
cancellations of shipping or transportation, manufacturing shut- downs,
bank errors and computer errors by vendors. The Company is in the process
of developing contingency plans for those areas which might be affected by
the Year 2000 Problem. If the Company, its suppliers or vendors are unable
to resolve issues related to the Year 2000 on a timely basis, it could
result in a material financial risk.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has not entered into any transactions using derivative
financial instruments or derivative commodity instruments and
believes that its exposure to market risk associated with other
financial instruments (such as investments) are not material.
<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 27, 1998,
the stockholders elected the slate of nominees for election as
director with votes cast as follows: Arthur M. Blank had
625,423,396 shares for and 13,329,195 shares withheld; Dr.
Johnnetta B. Cole had 626,684,757 shares for and 12,067,834 shares
withheld; Mr. Milledge A. Hart, III had 625,413,650 shares for and
13,338,940 shares withheld and Ms. M. Faye Wilson had 625,386,512
shares for and 13,366,078 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 continue after the meeting: Col. Frank Borman,
Mr. Ronald M. Brill, Mr. John L. Clendenin, Mr. Berry R. Cox, Mr.
Donald R. Keough, Mr. Kenneth G. Langone and Mr. Bernard Marcus.
The stockholders approved The Home Depot, Inc. Senior Officers'
Bonus Pool Plan with votes cast as follows: 609,451,180 shares
for; 25,361,261 shares against; and 3,940,149 shares abstained.
There were no broker non-votes applicable to this vote.
The stockholders approved the Company's Executive Officers' Bonus
Plan with votes cast as follows: 608,907,799 shares for;
25,799,325 shares against; and 4,045,466 shares abstained. There
were no broker non-votes applicable to this vote.
The stockholders approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized
shares with votes cast as follows: 574,925,835 shares for;
61,862,075 shares against; and 1,964,679 shares abstained. There
were no broker non-votes applicable to this vote.
The stockholders rejected 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: 157,973,605
shares for; 367,446,802 shares against; 7,824,898 shares
abstained; and 105,507,284 broker non-votes.
The stockholders rejected a proposal relating to a report on
certain employment matters with votes cast as follows: 73,465,537
shares for; 437,824,806 shares against; 21,756,366 shares
abstained; and 105,705,879 broker non-votes.
Item 5. Other Information
Stockholders who desire the Company to include notice of a matter
in the Company's Proxy Statement for its 1999 Annual Stockholders'
Meeting under Rule 14a-4 of the Exchange Act must submit notice
to the Company's Secretary no later than February 25, 1999.
<PAGE>
PART II. OTHER INFORMATION
(CONTINUED)
Item 6. Exhibits
3.1 Restated Certificate of Incorporation of The
Home Depot, Inc., as amended.
3.2 Bylaws, as amended.
11.1 Computation of Basic and Diluted Earnings Per Share
27. Financial Data Schedule (only submitted to SEC
in electronic format)
<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 & CEO
/s/ Marshall L. Day
Marshall L. Day
Senior Vice President
Finance & Accounting
August 31, 1998
(Date)
<PAGE>
THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Description
3.1 Restated Certificate of Incorporation of
The Home Depot, Inc., as amended
3.2 Bylaws, as amended
11.1 Computation of Basic and Diluted Earnings Per Share
27. Financial Data Schedule (only submitted to SEC in electronic
format)
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 in 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 herein before
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 herein before 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 2,500,000,000, 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 (80%) 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 (10%) 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 $5,000,000.
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.
THE HOME DEPOT, INC.
BY-LAWS (AMENDED AND RESTATED)
ARTICLE I.
MEETINGS OF STOCKHOLDERS
SECTION l. The annual meeting of the stockholders for the
election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date and at such
time and place as the Board of Directors may by resolution provide. Notice
of any other business to be brought before an annual meeting of
stockholders by a stockholder must be provided in writing to the Secretary
of the Corporation not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day prior to the date of
the meeting. Such stockholder's notice shall set forth (a) a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner, if
any, on whose behalf the proposal is made and (b) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
proposal is made (i) the name and address of such stockholder, as they
appear on the Corporation's books, and of such beneficial owner and (ii)
the class and number of shares of the Corporation that are owned
beneficially and held of record by such stockholder and such beneficial
owner. In addition, if the stockholder intends to solicit proxies from the
stockholders of the Corporation, such stockholder's notice shall notify the
Corporation of this intent. If a stockholder fails to notify the
Corporation of his or her intent to solicit proxies and does in fact
solicit proxies, the Chairman of the Board shall have the authority, in his
or her discretion, to strike the proposal or nomination by the stockholder.
SECTION 2. Special meetings of the stockholders may be called
at any time by the Chairman of the Board, the President or the Board of
Directors.
SECTION 3. Written notice of the time and place of every annual
or special meeting of the stockholders shall be given at least ten but not
more than sixty days previous to such meetings by personal delivery to the
stockholder of a copy of such notice or by mailing a copy of such notice
addressed to the stockholder at his post office address as the same shall
appear on the record of stockholders of the Corporation or, if he shall
have filed with the Secretary of the Corporation a written request that
notices to him be mailed to him at some other address, then addressed to
him at such other address; provided, however, that notice of any meeting to
take action on a proposed merger or consolidation of the Corporation or on
a proposed sale of all or substantially all of the assets of the
Corporation shall be given at least twenty but not more than sixty days
prior to such meeting. Notice of a special meeting of the stockholders
shall also state the purpose or purposes for which the meeting is called.
Each notice of a special meeting of stockholders shall indicate that it has
been issued by or at the direction of the person or persons calling the
meeting. Notice shall be deemed given when deposited, postage prepaid, in
a United States post office or official depository. A written waiver of
notice signed by the stockholder entitled to notice, whether before or
after the time stated therein, shall be deemed equivalent to notice.
Attendance of a stockholder at a meeting shall constitute a waiver of
notice of such meeting, except when the stockholder attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders need be specified in any
written waiver of notice.
SECTION 4. Every annual meeting of the stockholders shall be
held at such place within or without the State of Delaware as may be
determined by the Board of Directors and stated in the notice of any such
meeting, and every special meeting shall be held at such place within or
without the State of Delaware as may be stated in the notice of such
special meeting.
SECTION 5. No business shall be transacted at any special
meeting of the stockholders except that business which related to the
purpose or purposes set forth in the notice of the meeting.
SECTION 6. At each meeting of the stockholders there shall be
present, either in person or by proxy, the holders of a majority of the
shares of the Corporation entitled to vote thereat in order to constitute a
quorum. Any meeting of the stockholders at which a quorum is not present
may be adjourned from time to time to some other time without any new
notice other than an announcement at the meeting by the votes cast in
person or by proxy of the holders of a majority of those shares which are
cast on a motion to adjourn, provided, however, that if any adjournment is
for more than thirty days, notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
SECTION 7. At all meetings of the stockholders, all questions
except as otherwise required by the laws of the State of Delaware shall be
determined by a majority of the votes cast at the meeting of the holders of
shares entitled to vote thereon. Upon all questions, every stockholder of
record shall be entitled at every meeting of stockholders to one vote for
every share of common stock standing in his name on the books of the
Corporation and qualified to vote. Holders of shares of $50 Series A
Preferred Stock and $50 Series B Preferred Stock all have not right to vote
such shares at any meeting of stockholders and shall have no voice in the
management of the Corporation.
SECTION 8. At all meetings of the stockholders, absent
stockholders entitled to vote thereat may vote by proxy or by the attorney-
in-fact thereof. No proxy shall be valid after the expiration of three
years from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the person executing it except
as otherwise provided by the laws of the State of Delaware.
SECTION 9. Any action required to be taken or which may be
taken at a meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote if consent in writing, setting
forth the action so taken, shall be signed by the holders of stock having
not less than the minimum number of votes necessary to take such action at
a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate actions without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II.
DIRECTORS
SECTION 1. The business and affairs of the Corporation shall be
managed by and under the direction of the Board of Directors. Except as
otherwise provided by law and except as hereinafter otherwise provided for
filling vacancies, the directors of the Corporation shall be elected by the
stockholders entitled to vote at the annual meeting of the stockholders, to
hold office until the expiration of the term for which he is elected and
until his successor has been elected and qualified or until his earlier
resignation or removal.
SECTION 2. An annual meeting of the Board of Directors shall be
held after each annual election of directors. If such election occurs at
an annual meeting of stockholders, the annual meeting of the Board of
Directors shall take place as soon after such written consent is duly filed
with the Corporation as is practicable.
SECTION 3. Special meetings of the Board of Directors shall be
called at any time by the Secretary at the direction of the Chairman of the
Board, the President or a majority of the directors.
SECTION 4. Written notice of each special meeting of the Board
of Directors shall be given to each member thereof specifying the time and
place of the meeting. Notice shall be given by first class mail, telegram,
radiogram, telex or personal service. At least forty-eight hours' notice
must be given by telegram, radiogram, telex or personal service when less
than six days' notice is given. If notice to a director is given by mail,
the notice shall be directed to him at the address designated by him for
the purpose, or, if none is designated, at his last known address, and
shall be deemed given when deposited, postage prepaid, in a post office or
official depository of any nation. If notice to a director is given by
telegram, radiogram or telex, it shall be directed to his last known
address and, in the case of notice by telegram or radiogram, shall be
deemed given when received by the communications carrier. Notice by telex
shall be deemed given when transmitted. A written waiver of notice signed
by the director entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except when
the director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
directors need be specified in any written waiver of notice.
SECTION 5. Except for meeting held after an annual meeting of
stockholders, meetings of the Board of Directors shall be held at such
place as may be specified in the notice thereof, or, if no place is
specified in the notice, at such other place or places as the Board of
Directors may from time to time fix thereof.
SECTION 6. Members of the Board of Directors may participate in
a meeting of the Board by means of conference telephone or similar
communications equipment by means of which all person participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
SECTION 7. A majority of the total number of directors shall be
necessary to constitute a quorum for the transaction of business and the
act of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board of Directors. Any regular or
special meeting of the Board at which a quorum is not present may be
adjourned from time to time to some other place or time or both by a
majority of the directors present without any new notice other than an
announcement at the meeting.
SECTION 8. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors and to the extent permitted by law,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers
which may require it; but no such committee shall have the power or
authority to (i) amend the certificate of incorporation, (ii) adopt an
agreement of merger or consolidation, (iii) recommend to the stockholders
the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the Corporation or a revocation of a dissolution or (v)
amend the by-laws of the Corporation. Such committee or committees shall
have such name or names as may be determined from time to time by
resolution adopted by the Board.
SECTION 9. Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if all
members of the Board consent thereto in writing and the writing is filed
with the minutes of proceedings of the Board.
SECTION 10. The Board of Directors of the Corporation shall
consist of not less than three nor more than fifteen members, 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.
SECTION 11. Directors may receive compensation for services to
the Corporation in their capacities as directors or otherwise in such
manner and in such amounts as may be fixed from time to time by resolution
of the Board of Directors.
ARTICLE III.
OFFICERS
SECTION 1. The Board of Directors, at the annual meeting
thereof, shall appoint a Chairman of the Board, a President, a Treasurer
and a Secretary. The Board may at any time appoint one or more Vice
Presidents, Assistant Treasurers and Assistant Secretaries. Each such
officer shall serve from time of his appointment until a successor shall be
chosen and qualified or until his earlier resignation or removal. The
compensation of the officers shall be fixed by the Board.
SECTION 2. The Chairman of the Board shall preside at all
meetings of stockholders and of the Board of Directors. He shall be the
chief executive officer and head of the Corporation and, subject to the
Board of Directors, shall have the general control and management of the
business and affairs of the Corporation. He shall vote any shares of stock
or other voting securities owned by the Corporation. In general, he shall
perform all duties incident to the office of the Chairman of the Board and
such other duties as may from time to time be assigned to him by the Board.
SECTION 3. The President shall be the Chief operating officer
of the Corporation and, subject to the Board of Directors and the Chairman
of the Board, shall have control of the operational aspects of the business
and affairs of the Corporation. He shall see that all orders of the
Chairman of the Board are carried into effect, and shall perform all other
duties necessary to his office or properly required of him by the Board or
the Chairman of the Board.
SECTION 4. During the absence or disability of the President,
or during a vacancy in the office of President, the Vice President with the
greatest seniority shall perform the duties and have the powers of the
President.
SECTION 5. The Secretary shall have custody of the seal of the
Corporation. He shall keep the minutes of the Board of Directors, and of
the stockholders, and shall attend to the giving and serving of all notices
of the Corporation. He shall have charge of the certificate book and such
other books and papers as the Board may direct; and he shall perform such
other duties as may be incidental to his office or as may be assigned to
him by the Board of Directors. He shall also keep or cause to be kept a
stock book, containing the names, alphabetically arranged, of all persons
who are stockholders of the Corporation showing their respective addresses,
the number of shares registered in the name of each, and the dates when
they respectively became the owners of record thereof, and such books shall
be open for inspection as prescribed by the laws of the States of Delaware.
During the absence or disability of the Secretary, or during a vacancy in
the office of Secretary, the Assistant Secretary with the greatest
seniority shall perform the duties and have the powers of the Secretary.
SECTION 6. The Treasurer shall have the care and custody of the
funds and securities of the Corporation and shall deposit the same in the
name of the Corporation in such bank or banks as the Board of Directors may
determine. The Treasurer shall also have the care and custody of the
Corporation's books of account and he shall be responsible for the general
and cost accounting functions of the Corporation. During the absence or
disability of the Treasurer, or during a vacancy in the office of
Treasurer, the Assistant Treasurer with the greatest seniority shall
perform the duties and have the powers of the Treasurer.
ARTICLE IV.
RESIGNATIONS, REMOVALS, VACANCIES AND
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Any director or officer may resign his office at any
time, such resignation to be made in writing and to take effect from the
time of its receipt by the Corporation, unless some future time be fixed in
the resignation and in that case from that time. The acceptance of a
resignation shall not be required to make it effective. Nothing herein
shall be deemed to affect any contractual rights of the Corporation.
SECTION 2. Any officer may be removed with or without cause at
any time by the Board of Directors. Any employee of the Corporation may be
removed at any time by the Board of Directors or by an officer. The
removal of an officer or employee without cause shall be without prejudice
to his contractual rights, if any. The election or appointment of an
officer or employee shall not of itself create contractual rights. Any
director or the entire Board may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors.
SECTION 3. Any vacancy or newly created directorship on the
Board of Directors may be filled by a majority vote of the Directors then
in office, or by majority vote of the stockholders.
SECTION 4. Each former, present or future director, officer,
employee or agent of the Corporation, and each person who may serve at the
request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
shall be indemnified by the Corporation in all events, to the fullest
extent and in the manner permitted by the laws of the State of Delaware
then in effect.
ARTICLE V.
COMMON STOCK
SECTION 1. Certificates for shares of the common stock of the
Corporation shall be numbered and registered on the books of the
Corporation in the order in which they shall be issued and shall be signed
by the Chairman of the Board, the President or a Vice President, and the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer and sealed with the seal of the Corporation.
SECTION 2. Transfers of shares shall be made upon the books of
the Corporation (i) only by the holder thereof in person or by power of
attorney duly executed and filed with the Corporation, (ii) in accordance
with the Shareholders Agreement, and (iii) upon the surrender to the
Corporation of the certificate or certificates for such shares.
ARTICLE VI
PREFERRED STOCK
SECTION 1. Certificates for shares of the $50 Series A
Preferred Stock and the $50 Series B Preferred Stock of the Corporation
shall be numbered and registered on the books of the Corporation in the
order in which they shall be issued and shall be signed by the Chairman of
the Board or the President or a Vice President, and the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer and sealed
with the seal of the Corporation.
SECTION 2. In accordance with the terms under which such
preferred shares were issued, all of the shares of the $50 Series A
Preferred Stock of the Corporation shall be deemed by the Corporation at
its election expressed by resolution of the Board of Directors but no later
than six (6) calendar months following the close of any fiscal year at
which the Net Worth of the Corporation and any subsidiaries thereof,
computed in accordance with generally accepted accounting principles
consistently applied on a consolidated basis, shall be equal to or exceed
Ten Million Dollars ($10,000,000.00), and subject to there being sufficient
surplus to repurchase all of the Common Shares which the Corporation is
obligated to repurchase pursuant to the Shareholders Agreement.
SECTION 3. In accordance with the terms under which such
preferred shares were issued, the shares of the $50 Series B Preferred
Stock of the Corporation shall be redeemed by the Corporation at the
election of the holder of such shares; provided, however, that such
election may not be exercised at any time prior to the redemption of the
Series A Preferred Stock.
ARTICLE VII.
CHECKS, DRAFTS AND NOTES
The Chairman of the Board or the President or any officers designated
by Resolution of the Board of Directors shall sign all checks and drafts
necessary to be drawn and may accept any drafts drawn upon the Corporation
in due course of business. No check or draft shall be endorsed by the
Corporation and no promissory note, bond, debenture or other evidence of
indebtedness shall be made, signed, issued or endorsed by the Corporation
unless signed by the Chairman or the President or any officer designated
under powers given by a resolution of the Board except that any officer may
endorse for collection or deposit only, expressly stating the purpose of
such endorsements, checks, drafts and promissory notes to the order of the
Corporation.
ARTICLE VIII.
SEAL
The seal of the Corporation shall be in the custody of the
Secretary. It shall be circular in form and shall have engraved upon it
the name of the Corporation arranged in a circle and the words and figures
"Incorporated 1978 Delaware" across the center of the space enclosed.
ARTICLE IX
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
The Corporation shall not be subject to the provisions of Section
203 of the General Corporation Law of the State of Delaware (Business
Combination with Interested Stockholders). This Article IX shall not be
amended only by the affirmative vote of a majority of the Corporation's
stockholders entitled to vote on such matter.
<TABLE>
<CAPTION>
Exhibit 11.1
THE HOME DEPOT, INC. AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED
EARNINGS PER SHARE
(In Millions, Except Per Share Data)
Three Months Ended Six Months Ended
Aug 2, Aug 3, Aug 2, Aug 3,
1998 1997 1998 1997
BASIC
<S> <C> <C> <C> <C>
Net Earnings Available
to Common Shareholders $ 467 $ 358 $ 804 $ 617
Weighted Average Number of
Common Shares Outstanding 1,470 1,459 1,468 1,455
Basic Earnings Per Share $ 0.32 $ 0.25 $ 0.55 $ 0.42
DILUTED
Net Earnings Available to
Common Shareholders $ 467 $ 358 $ 804 $ 617
Tax-Effected Interest Expense
Attributable to 3.25%
Convertible Subordinated
Notes 6 6 12 11
Net Earnings Available to
Common Shareholders
Assuming Dilution $ 473 $ 364 $ 816 $ 628
Weighted Average Number of
Common Shares Outstanding 1,470 1,459 1,468 1,455
Effect of Potentially
Dilutive Securities:
3.25% Convertible
Subordinated Notes 48 48 48 48
Employee Stock Plans 28 17 26 14
Weighted Average Number
of Common Shares
Outstanding Assuming
Dilution 1,546 1,524 1,542 1,517
Diluted Earnings Per Share $ 0.31 $ 0.24 $ 0.53 $ 0.41
(1) Employee stock plans represent shares granted under the Company's
employee stock purchase plan and stock option plans, as well as shares
issued for deferred compensation stock plans. For fiscal years 1998 and
1997, shares issuable upon conversion of the Company's 3.25% Notes, issued
in October 1996, were included in weighted average shares assuming
dilution for purposes of calculating diluted earnings per share.
To calculate diluted earnings per share, net earnings are
adjusted for tax-effected net interest and issue costs on the 3.25% Notes
and divided by weighted average shares assuming dilution.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jan-31-1999
<PERIOD-END> Aug-02-1998
<CASH> 654
<SECURITIES> 1
<RECEIVABLES> 423
<ALLOWANCES> 0
<INVENTORY> 3,786
<CURRENT-ASSETS> 5,013
<PP&E> 8,348
<DEPRECIATION> 1,135
<TOTAL-ASSETS> 12,593
<CURRENT-LIABILITIES> 3,073
<BONDS> 1,317
0
0
<COMMON> 74
<OTHER-SE> 7,831
<TOTAL-LIABILITY-AND-EQUITY> 12,593
<SALES> 8,139
<TOTAL-REVENUES> 8,139
<CGS> 5,876
<TOTAL-COSTS> 5,876
<OTHER-EXPENSES> 1,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 769
<INCOME-TAX> 302
<INCOME-CONTINUING> 467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 467
<EPS-PRIMARY> .32
<EPS-DILUTED> .31
</TABLE>
