<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1999
REGISTRATION NO. 333-89935
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE HOME DEPOT, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 5211 95-3261426
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
(770) 433-8211
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ARTHUR M. BLANK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
PHONE: (770) 433-8211
Name, address, including zip code, and telephone number, including area code, of
agent for service)
COPIES TO:
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KELLY R. CAFFARELLI, ESQ. JEFFREY M. STEIN
THE HOME DEPOT, INC. KING & SPALDING
2455 PACES FERRY ROAD 191 PEACHTREE STREET
ATLANTA, GEORGIA 30339 ATLANTA, GEORGIA 30303
PHONE: (770) 433-8211 PHONE: (404) 572-4600
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable following the effectiveness of this Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 17, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
THE HOME DEPOT, INC.
OFFER TO EXCHANGE
$500,000,000
6 1/2% SENIOR NOTES DUE SEPTEMBER 15, 2004
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR
$500,000,000 OUTSTANDING UNREGISTERED
6 1/2% SENIOR NOTES DUE SEPTEMBER 15, 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FEBRUARY 4, 2000, UNLESS EXTENDED.
------------------------
- HOME DEPOT IS OFFERING TO EXCHANGE $500,000,000 AGGREGATE PRINCIPAL AMOUNT
OF REGISTERED 6 1/2% SENIOR NOTES DUE SEPTEMBER 15, 2004 FOR $500,000,000
AGGREGATE PRINCIPAL AMOUNT OF UNREGISTERED 6 1/2% SENIOR NOTES DUE
SEPTEMBER 15, 2004.
- THE TERMS OF THE NEW NOTES ARE IDENTICAL IN ALL MATERIAL RESPECTS TO THE
TERMS OF THE OLD NOTES, EXCEPT THAT THE REGISTRATION RIGHTS AND RELATED
LIQUIDATED DAMAGES PROVISIONS AND THE TRANSFER RESTRICTIONS APPLICABLE TO
THE ORIGINAL NOTES ARE NOT APPLICABLE TO THE NEW NOTES.
- SUBJECT TO THE SATISFACTION OR WAIVER OF SPECIFIED CONDITIONS, HOME DEPOT
WILL EXCHANGE THE NEW NOTES FOR ALL OLD NOTES THAT ARE VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFER.
- THE EXCHANGE OF OLD NOTES FOR NEW NOTES PURSUANT TO THE EXCHANGE OFFER
GENERALLY WILL NOT BE A TAXABLE EVENT FOR U.S. FEDERAL INCOME TAX
PURPOSES. SEE "U.S. FEDERAL INCOME TAX CONSEQUENCES."
- HOME DEPOT WILL NOT RECEIVE ANY PROCEEDS FROM THE EXCHANGE OFFER.
INVESTING IN THE NEW NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD
CONSIDER IN CONNECTION WITH THIS EXCHANGE OFFER AND AN INVESTMENT IN THE NEW
NOTES.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 5
USE OF PROCEEDS............................................. 6
CAPITALIZATION.............................................. 7
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA.......... 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION........................ 10
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 17
THE EXCHANGE OFFER.......................................... 18
DESCRIPTION OF THE NEW NOTES................................ 27
U.S. FEDERAL INCOME TAX CONSEQUENCES........................ 41
PLAN OF DISTRIBUTION........................................ 42
LEGAL MATTERS............................................... 42
EXPERTS..................................................... 42
WHERE YOU CAN FIND MORE INFORMATION......................... 42
INCORPORATION OF DOCUMENTS BY REFERENCE..................... 44
</TABLE>
i
<PAGE>
PROSPECTUS SUMMARY
This summary highlights all material information from the prospectus. It may
not contain all of the information that is important to you. References in this
prospectus to "Home Depot," "we" and the "Company" refer to The Home Depot, Inc.
Home Depot urges you to carefully read and review the entire prospectus and the
other documents to which it refers to fully understand the terms of the new
notes and the exchange offer.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
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General.............................. On September 27, 1999, Home Depot completed a private
offering of the old notes, which consist of $500 million
aggregate principal amount of its 6 1/2% Senior Notes Due
September 15, 2004. In connection with the private offering,
Home Depot entered into a registration rights agreement in
which it agreed, among other things, to deliver this
prospectus to you and to complete an exchange offer for the
old notes.
The exchange offer................... We are offering to exchange $1,000 principal amount of our
registered 6 1/2% Senior Notes Due September 15, 2004, which
we refer to as the "new notes," for each $1,000 principal
amount of our unregistered 6 1/2% Senior Notes Due September
15, 2004, which we refer to as the "old notes."
We sometimes will refer to the new notes and the old notes
together as the "notes." Currently, $500 million principal
amount of old notes are outstanding.
The terms of the new notes are identical in all material
respects to the terms of the old notes, except that the
registration rights and related liquidated damages
provisions and the transfer restrictions applicable to the
old notes are not applicable to the new notes.
Old notes may be tendered only in $1,000 increments. Subject
to the satisfaction or waiver of specified conditions, Home
Depot will exchange the new notes for all old notes that are
validly tendered and not withdrawn prior to the expiration
of the exchange offer. Home Depot will cause the exchange to
be effected promptly after the expiration of the exchange
offer. See "The Exchange Offer--Terms of the Exchange
Offer."
Upon completion of the exchange offer, there may be no
market for the old notes and you may have difficulty selling
them. See "Risk Factors--If an active trading market does
not develop for the new notes, you may be unable to sell the
new notes or to sell them at a price you deem sufficient.
Expiration date...................... The exchange offer will expire at 5:00 p.m., New York City
time, on February 4, 2000 unless we extend it. In that case,
the phrase "expiration date" will mean the latest date and
time to which we extend the exchange offer. We expect that
the expiration date will not be later than May 4, 2000.
Procedures for participating in the
exchange offer..................... If you wish to participate in the exchange offer, you must
complete,
</TABLE>
1
<PAGE>
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<S> <C>
sign and date an original or faxed letter of transmittal in
accordance with the instructions in the letter of
transmittal accompanying this prospectus. Then you must
mail, fax or deliver the completed letter of transmittal
together with the old notes you wish to exchange and any
other required documentation to The Bank of New York, which
is acting as exchange agent. Its address appears on the
letter of transmittal. By signing the letter of transmittal
you will represent to and agree with Home Depot that, you
are acquiring the new notes in the ordinary course of your
business; you have no arrangement or understanding with
anyone to participate in a distribution of the new notes;
and you are not an "affiliate," as defined in Rule 405 under
the Securities Act, of Home Depot. See "The Exchange
Offer--Procedures for Tendering."
If you are a broker-dealer that will receive new notes for
your own account in exchange for old notes that you acquired
as a result of your market-making or other trading
activities, you will be required to acknowledge in the
letter of transmittal that you will deliver a prospectus in
connection with any resale of these new notes.
Resale of new notes.................. We believe that you can resell and transfer your new notes
without registering them under the Securities Act and
delivering a prospectus, if you can make the same three
representations that appear above under the heading
"Procedures for participating in the exchange offer." Our
belief is based on interpretations of the SEC for other
exchange offers that the SEC expressed in some of the SEC's
no-action letters to other issuers in exchange offers like
ours.
We cannot guarantee that the SEC would make a similar
decision about this exchange offer. If our belief is wrong,
or if you cannot truthfully make the representations
appearing above, and you transfer any new note issued to you
in the exchange offer without meeting the registration and
prospectus delivery requirements of the Securities Act, or
without an exemption from these requirements, you could
incur liability under the Securities Act. We are not
indemnifying you for any liability under the Securities Act.
A broker-dealer can only resell or transfer new notes if it
will deliver a prospectus.
Special procedures for beneficial
owners............................. If your old notes are held through a broker, dealer,
commercial bank, trust company or other nominee and you wish
to surrender your old notes, you should contact your
intermediary promptly and instruct it to surrender the old
notes on your behalf.
Guaranteed delivery
procedures......................... If you cannot meet the expiration date deadline, or you
cannot deliver your old notes, the letter of transmittal or
any other documentation on time, then you must surrender
your old notes according to the guaranteed delivery
procedures appearing below under "The Exchange
Offer--Guaranteed Delivery Procedures."
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2
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Acceptance of your old notes and
delivery of the new
notes.............................. We will accept for exchange any and all old notes that are
surrendered in the exchange offer prior to the expiration
date if you comply with the procedures of the offer. The new
notes will be delivered on the earliest practicable date
after the expiration date.
Withdrawal rights.................... You may withdraw the surrender of your old notes at any time
prior to the expiration date.
Appraisal rights..................... You will not be entitled to any appraisal or dissenters'
rights nor any other right to seek monetary damages in court
in connection with the exchange offer. See "The Exchange
Offer--Terms of the Exchange Offer."
U.S. federal income tax
consequences....................... You will not have to pay federal income tax as a result of
your participation in the exchange offer.
Exchange agent....................... The Bank of New York is serving as the exchange agent in
connection with the exchange offer. The Bank of New York
also serves as trustee under the indenture that governs the
notes.
</TABLE>
SUMMARY OF THE TERMS OF THE NEW NOTES
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the registration rights and related
liquidated damages provisions and the transfer restrictions applicable to the
old notes are not applicable to the new notes. The new notes will evidence the
same debt as the old notes. The new notes and the old notes will be governed by
the same indenture.
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<S> <C>
Aggregate Amount..................... $500 million principal amount of 6 1/2% Senior Notes Due
September 15, 2004.
Interest Payment Dates............... September 15 and March 15 of each year, commencing March 15,
2000.
Maturity Date........................ The new notes mature on September 15, 2004.
Optional Redemption.................. Home Depot, at its option, may redeem all or any portion of
the notes on not less than 30 nor more than 60 days' prior
notice at the redemption price stated in "Description of the
New Notes--Redemption" plus accrued interest to the date of
redemption.
Events of Default.................... The indenture describes the circumstances that constitute
events of default with respect to the new notes. See
"Description of the New Notes--Events of Default."
Restrictive Covenants................ The indenture imposes limitations on the ability of Home
Depot and its subsidiaries to, among other things, create
liens, enter into certain sale and leaseback transactions,
and consolidate or merge with or sell all or substantially
all of its assets to another person. See "Description of the
New Notes--Certain Covenants."
Use of Proceeds...................... Home Depot will not receive any proceeds from the exchange
offer.
</TABLE>
3
<PAGE>
HOME DEPOT
Home Depot is the leading retailer in the home improvement industry and
ranks among the ten largest retailers in the United States based on its net
sales volume for fiscal 1998. At October 31, 1999, we were operating 878 retail
stores, which included 809 Home Depot-Registered Trademark- stores in the United
States, 12 EXPO Design Center(SM) stores and one Villager's Hardware test store
in the United States and 56 Home Depot stores in international markets (51
stores in Canada, three stores in Chile and two stores in Puerto Rico). We also
offer home improvement products through our two direct marketing subsidiaries,
Maintenance Warehouse-Registered Trademark- and National Blinds and
Wallpaper, Inc.,(SM) and through our newly acquired lighting subsidiary, Georgia
Lighting, Inc. In addition to our leading market presence, we are also the home
improvement industry leader in terms of store productivity and operating profit
margin. In recognition of our industry leadership position and consistent,
strong financial performance, we have been named America's most admired
specialty retailer by FORTUNE magazine for the past six consecutive years. Our
common stock is included in the Dow Jones Industrial Average and the Standard &
Poor's Index.
- We have experienced 13 consecutive years of record sales, with net sales
of $30.2 billion in fiscal 1998, which represented a 25.1% increase from
fiscal 1997, including comparable store sales growth of 7%. Net sales in
the first nine months of fiscal 1999 were $29.3 billion, which represented
a 27.4% increase from the first nine months of fiscal 1998, including
comparable store sales growth of 10% in the third quarter.
- We have experienced 13 consecutive years of record earnings, with net
earnings as a percentage of sales of 5.3% in fiscal 1998, compared to 4.8%
for fiscal 1997. Net earnings as a percentage of sales in the first nine
months of fiscal 1999 were 6.0%, compared to 5.2% for the first nine
months of fiscal 1998.
- We have consistently expanded our store base since our formation, with 137
new store openings in fiscal 1998, which represented a 22% increase in
total stores from fiscal 1997.
- We have allocated resources efficiently to increase our return on invested
capital and maintain financial flexibility. We believe that our strong
capitalization profile is one of our principal competitive advantages.
On November 18, 1999, we announced a 3 for 2 stock split. To effect this
split, our board of directors declared a dividend of 1.5 shares of our common
stock for each share of common stock outstanding. We generally pay cash instead
of issuing fractional shares. This stock dividend is payable on December 30,
1999 to stockholders of record on December 2, 1999.
Our principal executive offices are located at 2455 Paces Ferry Road,
Atlanta, Georgia 30339, and our telephone number is (770) 433-8211.
4
<PAGE>
RISK FACTORS
YOU SHOULD READ AND CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS
THE OTHER INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS BEFORE DECIDING TO SURRENDER YOUR OLD NOTES IN EXCHANGE FOR NEW NOTES
IN THIS EXCHANGE OFFER.
IF YOU FAIL TO PROPERLY EXCHANGE YOUR OLD NOTES FOR NEW NOTES, YOU WILL CONTINUE
TO HOLD NOTES SUBJECT TO TRANSFER RESTRICTIONS AND YOUR ABILITY TO TRANSFER
OLD NOTES WILL BE ADVERSELY AFFECTED.
If you do not properly tender your old notes, you will continue to hold
unregistered old notes and your ability to transfer old notes will be adversely
affected. We will only issue new notes in exchange for old notes that you timely
and properly tender. Therefore, you should allow sufficient time to ensure
timely delivery of the old notes and you should carefully follow the
instructions on how to tender your old notes set forth under "The Exchange
Offer--Procedures for Tendering" and in the letter of transmittal that you will
receive with this prospectus. Neither we nor the exchange agent are required to
tell you of any defects or irregularities with respect to your tender of old
notes.
If you do not exchange your old notes for new notes in the exchange offer,
the old notes you hold will continue to be subject to the existing transfer
restrictions. In general, you may not offer or sell the old notes except under
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. We do not plan to register old notes under the
Securities Act. If you continue to hold any old notes after the exchange offer
is completed, you may have trouble selling them because of the restrictions on
transfer of the old notes.
IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP FOR THE NEW NOTES, YOU MAY BE
UNABLE TO SELL THE NEW NOTES OR TO SELL THEM AT A PRICE YOU DEEM SUFFICIENT.
If an active trading market does not develop for the new notes, you may be
unable to sell the new notes or to sell them at a price that you deem
sufficient. The new notes will be new securities for which there is no
established trading market. We do not intend to list the new notes on any
exchange. We cannot give you any assurance as to:
- the liquidity of any trading market that may develop;
- the ability of holders to sell their new notes; or
- the price at which the holders would be able to sell their new notes.
Even if a trading market develops, the new notes may trade at higher or
lower prices than their principal amount or purchase price, depending on many
factors, including:
- prevailing interest rates;
- the number of holders of the notes;
- the interest of securities dealers in making a market for the notes;
- the market for similar notes; or
- our financial performance.
We understand that the initial purchasers presently intend to make a market
in the notes. However, they are not obligated to do so and may discontinue
making a market in the notes at any time without notice. Finally, if a large
number of holders of old notes do not tender old notes or tender old notes
improperly, the limited amount of new notes that would be issued and outstanding
after we complete the exchange offer could adversely affect the development of a
market for the new notes.
5
<PAGE>
THE COVENANTS IN THE NEW NOTES NEITHER LIMIT OUR ABILITY TO INCUR DEBT NOR
PROTECT HOLDERS OF NEW NOTES UPON A CHANGE OF CONTROL.
The indenture does not restrict our ability to incur indebtedness or require
us to maintain financial ratios or specified levels of net worth or liquidity.
If we incur substantial additional indebtedness in the future, these higher
levels of indebtedness may affect our creditworthiness. See "Description of the
New Notes--General."
The indenture does not require us to repurchase or redeem or otherwise
modify the terms of the notes, upon a change in control of Home Depot or other
events involving Home Depot that may affect our creditworthiness or otherwise
restrict these events. These events include:
- a consolidation, merger, sale of assets or other similar transaction;
- a change in control of Home Depot; or
- a highly leveraged transaction involving Home Depot whether or not
involving a change in control.
The covenants applicable to the notes do not prevent a transaction like
those described above from taking place. See "Description of the New
Notes--Certain Covenants--Consolidation, Merger or Sale of Assets of the
Company."
OUR SYSTEMS AND THOSE OF OUR SUPPLIERS MAY NOT BE YEAR 2000 COMPLIANT, WHICH
COULD DISRUPT OUR BUSINESS OPERATIONS.
We and our third party suppliers have attempted to upgrade our computer
systems and software products to accept four-digit date entries that distinguish
the year 2000 from the year 1900. However, if these upgrades are not successful,
we could experience problems, including:
- loss of local or regional electrical power;
- loss of telecommunication services;
- delays or cancellations of merchandise shipments;
- manufacturing shutdowns;
- delays in processing customer transactions; and
- bank errors and computer errors by suppliers.
Our failure or the failure of the third parties with whom we do business to
solve the year 2000 problem may disrupt our business and have a material adverse
impact on our results of operations, financial condition or business.
Additionally, because our year 2000 compliance is dependent upon certain other
third parties (including infrastructure providers) also being year 2000
compliant on a timely basis, there can be no assurance that our efforts will
prevent a material adverse impact on our results of operations, financial
condition or business. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Year 2000."
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement that we entered into relating to the old notes. We
will not receive any proceeds from the exchange offer. You will receive, in
exchange for old notes tendered by you in the exchange offer, new notes in like
principal amount. The old notes surrendered in exchange for the new notes will
be retired and cancelled and cannot be reissued. Accordingly, the issuance of
the new notes will not result in any increase of our outstanding debt.
We received approximately $496.7 million of net proceeds from the sale of
the old notes. We will use the proceeds from the sale of the old notes to
finance a portion of our capital expenditure programs, including planned store
expansions and renovations, and for general corporate purposes. In the interim,
these proceeds are being invested in cash equivalents and short-term
interest-bearing investments.
6
<PAGE>
CAPITALIZATION
The following table sets forth our consolidated capitalization at
October 31, 1999. This table should be read in conjunction with our consolidated
financial statements, including the notes to those consolidated financial
statements, and other information set forth in the reports we have filed with
the SEC. See "Where You Can Find More Information."
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<CAPTION>
OCTOBER 31, 1999
----------------
(UNAUDITED,
IN MILLIONS)
<S> <C>
Cash and Cash Equivalents (1)............................... $ 976
=======
Long-Term Debt:
6 1/2% Senior Notes Due 2004............................... $ 500
3 1/4% Convertible Subordinated Notes...................... 0
Capital Lease Obligations.................................. 198
Installment Notes Payable.................................. 20
Unsecured Bank Loan........................................ 14
Variable Rate Industrial Revenue Bonds..................... 3
-------
Total Long-Term Debt.................................... $ 735
-------
Stockholders' Equity:
Common Stock (2)........................................... $ 114
Additional Paid-In Capital (2)............................. 4,247
Retained Earnings.......................................... 7,455
Accumulated Other Comprehensive Income..................... (44)
Assets in Trust............................................ (6)
-------
Total Stockholders' Equity.............................. $11,766
-------
Total Capitalization.................................... $12,501
=======
</TABLE>
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(1) Includes short-term investments of $30 million.
(2) Reflects the impact of the 3-for-2 stock split effected in the form of a
stock dividend, payable on December 30, 1999.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated financial data under the captions "Income
Statement Data" and "Balance Sheet Data" of Home Depot for, and as of the end
of, each of the periods indicated in the five-year period ended January 31,
1999, have been derived from the audited consolidated financial statements of
Home Depot, which consolidated financial statements have been audited by KPMG
LLP. The consolidated financial statements as of January 31, 1999 and
February 1, 1998, and for each of the years in the three-year period ended
January 31, 1999, and the report thereon, are incorporated by reference
elsewhere in this prospectus. The selected consolidated financial data for each
of the nine month periods ended November 1, 1998 and October 31, 1999, and as of
November 1, 1998 and October 31, 1999, have been derived from the unaudited
consolidated financial statements of Home Depot, which reflect, in the opinion
of management of Home Depot, all adjustments, which include only normal
recurring adjustments, necessary for the fair presentation of the financial data
for those periods. The results for the interim periods are not necessarily
indicative of the results for the full year. The information presented below
under the caption "Other Data" is unaudited. The selected consolidated financial
and operating data should be read in conjunction with the consolidated financial
statements of Home Depot, including the notes to those consolidated financial
statements, and the audit reports of KPMG LLP.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR(1) -------------------------
------------------------------------------------------ NOVEMBER 1, OCTOBER 31,
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- ----------- -----------
(AMOUNTS IN MILLIONS, EXCEPT NUMBER OF STORES AND SALES PER SQUARE FOOT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales............... $12,477 $15,470 $19,535 $24,156 $30,219 $22,961 $29,260
Gross Profit............ 3,485 4,286 5,434 6,781 8,605 6,409 8,489
Operating Income........ 987 1,180 1,526 1,896 2,661 1,975 2,866
Interest, Net........... (7) 15 9 2 (7) (5) (1)
Net Earnings............ 605 732 938 1,160 1,614 1,196 1,742
OTHER DATA
EBITDA(2)............... $ 1,117 $ 1,361 $ 1,758 $ 2,179 $ 3,034 $ 2,252 $ 3,204
Ratio of Earnings to
Fixed Charges(3)...... 11.5x 17.7x 18.0x 16.7x 19.6x 19.7x 25.5x
Comparable Store Sales
Increase.............. 8% 3% 7% 7% 7% 7% 10%
Number of Stores at End
of Period............. 340 423 512 624 761 717 878
Weighted Average Sales
per Square Foot....... $ 404 $ 390 $ 398(4) $ 406 $ 410 $ 427 $ 441
BALANCE SHEET DATA
Total Assets............ $ 5,778 $ 7,354 $ 9,342 $11,229 $13,465 $13,324 $17,037
Total Long-term Debt.... 983 720 1,247 1,303 1,566 1,319 735
Total Stockholders'
Equity................ 3,442 4,988 5,955 7,098 8,740 8,316 11,766
</TABLE>
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(1) Fiscal years 1994, 1995, 1996, 1997 and 1998 refer to the fiscal years ended
January 29, 1995; January 28, 1996; February 2, 1997; February 1, 1998; and
January 31, 1999, respectively. Fiscal year 1996 consisted of 53 weeks.
(2) EBITDA is defined as operating income plus depreciation and amortization.
EBITDA is presented because management believes it is a widely accepted
financial indicator of a company's ability to service indebtedness. However,
EBITDA does not represent net income or cash provided from operations as
defined by generally accepted accounting principles, is not necessarily
indicative of cash available to fund all cash flow needs, should not be
considered as an alternative to net income or to cash provided from
operations and should not be construed as an indication of a company's
operating performance or as a measure of liquidity. EBITDA is not
necessarily comparable with similarly-titled measures presented by other
companies.
8
<PAGE>
(3) For purposes of computing the ratios of earnings to fixed charges,
"earnings" consist of earnings before income taxes and minority interest
plus fixed charges, excluding capitalized interest. "Fixed charges" consist
of interest incurred on indebtedness, amortization of debt expense and the
portion of rental expense under operating leases deemed to be the equivalent
of interest. The ratios of earnings to fixed charges are calculated as
follows:
(Income before income taxes and minority interest) + (fixed charges) -
(capitalized interest)
(fixed charges)
(4) Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 1996.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following section is substantially similar to the Management's
Discussion and Analysis of Results of Operations and Financial Condition
sections of our most recent Annual Report on Form 10-K and our Quarterly Reports
on Form 10-Q, which have been filed with the SEC. You should read this section
together with the consolidated financial statements included in those reports.
To obtain a copy of our most recent Annual Report and our Quarterly Reports, see
"Where You Can Find More Information."
RESULTS OF OPERATIONS
NINE MONTHS ENDED OCTOBER 31, 1999 COMPARED TO NINE MONTHS ENDED NOVEMBER 1,
1998
The data below reflects selected sales data, the percentage relationship
between sales and major categories in the Consolidated Statements of Earnings
and the percentage change in the dollar amounts of each of the items.
<TABLE>
<CAPTION>
NINE MONTHS ENDED PERCENTAGE
------------------------- INCREASE
NOVEMBER 1, OCTOBER 31, (DECREASE) IN
1998 1999 DOLLAR AMOUNTS
----------- ----------- --------------
<S> <C> <C> <C>
SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA
Net Sales............................................... 100.0% 100.0% 27.4%
Gross Profit............................................ 27.9 29.0 32.5
Operating Expenses:
Selling and Store Operating........................... 17.4 17.3 26.7
Pre-Opening........................................... 0.3 0.3 27.9
General and Administrative............................ 1.6 1.6 28.0
Total Operating Expenses............................ 19.3 19.2 26.8
Operating Income.................................... 8.6 9.8 45.1
Interest Income (Expense):
Interest and Investment Income........................ 0.1 0.1 0.0
Interest Expense...................................... (0.1) (0.1) (13.8)
Interest, Net....................................... 0.0 0.0 (80.0)
Earning Before Income Taxes......................... 8.6 9.8 45.4
Income Taxes............................................ 3.4 3.8 45.1
Net Earnings........................................ 5.2% 6.0% 45.7
SELECTED CONSOLIDATED SALES DATA
Number of Transactions (000's).......................... 503,089 602,151 19.7%
Average Sale Per Transaction............................ $45.26 $48.28 6.7
Weighted Average Weekly Sales Per Operating Store
(000's)............................................... $878 $912 3.9
Weighted Average Sales Per Square Foot.................. $427 $441 3.3
</TABLE>
Sales for the first nine months of fiscal 1999 increased 27.4% to
$29.260 billion from $22.961 billion for the comparable period in fiscal 1998.
The sales increase for this period was primarily attributable to new stores (878
stores open at the end of the third quarter of fiscal 1999 compared with 717 at
the end of the third quarter of fiscal 1998) and a comparable store-for-store
sales increase of approximately 10% for the first nine months of fiscal 1999.
Gross profit as a percent of sales was 29.0% for the first nine months of
fiscal 1999 compared with 27.9% for the comparable period of fiscal 1998. The
gross profit rate increase for this period was primarily attributable to the
ongoing benefits of product line reviews, which have resulted in lower costs
10
<PAGE>
of merchandise and more effective product assortments, cost reductions through
direct sourcing of imports, additional tool rental centers in certain stores and
better shrink results.
Total operating expenses as a percent of sales decreased to 19.2% for the
first nine months of fiscal 1999 from 19.3% for the comparable period in fiscal
1998. Selling and store operating expenses as a percent of sales decreased to
17.3% for the first nine months of fiscal 1999 from 17.4% for the comparable
period in fiscal 1998. This decrease was due primarily to lower net advertising
expenses, fewer store relocations and leverage achieved from high comparable
store sales, partially offset by higher credit card discounts and medical plan
expenses. Net advertising expenses decreased as a percent of sales due to higher
co-op support from vendors, increased national advertising and cost leverage
achieved from opening new stores in existing markets. Store relocation costs
were lower than last year as we recorded expenses for five relocations during
the first nine months of fiscal 1999 compared to four relocations during the
comparable period in fiscal 1998. We also leveraged occupancy and certain other
operating expenses as the result of the high comparable store sales. Partially
offsetting these decreases were higher costs for store selling payroll as some
non-selling hours were shifted to the sales floor combined with continued
staffing tests and increased labor standards in certain departments, and higher
medical costs resulting from increased participation in our medical plan and
higher costs related to prescription drugs. In addition, credit card discounts
for the first nine months of fiscal 1999 were higher than the comparable period
of fiscal 1998 as a percent of sales, due to a higher penetration of credit card
sales and non-private label discount rate increases.
Pre-opening expenses as a percent of sales were 0.3% for the first nine
month of fiscal 1999 and fiscal 1998. During the first nine months of 1999, we
opened 117 new stores, reopened one store that was closed in fiscal 1998 and
relocated five stores, compared with 93 new stores and four store relocations
during the first nine months of fiscal 1998. General and administrative expenses
as a percent of sales were 1.6% for the first nine months of both fiscal 1999
and fiscal 1998.
Net interest as a percent of sales was 0.0% for first nine months of both
fiscal 1999 and fiscal 1998. As a percent of sales, interest and investment
income was 0.1% for the first nine months of fiscal 1999 and fiscal 1998.
Interest expense as a percent of sales was 0.1% for all comparable periods.
Our combined federal and state effective income tax rate decreased to 39.2%
for the first nine months of fiscal 1999 from 39.3% for the comparable period of
fiscal 1998. During the fourth quarter of fiscal 1998, an adjustment was made to
lower the annual effective tax rate to 39.2%
Net earnings as a percent of sales increased to 6.0% for the first nine
months of fiscal 1999 from 5.2% for the first nine months of fiscal 1998. The
increase was primarily attributable to higher gross margin rates and lower
selling and store operating expenses as a percent of sales, as described above.
11
<PAGE>
ANNUAL DISCUSSION
The data below reflect selected sales data, the percentage relationship
between sales and major categories in the Consolidated Statements of Earnings
and the percentage change in the dollar amounts of each of the items.
<TABLE>
<CAPTION>
PERCENTAGE
INCREASE
(DECREASE) IN
DOLLAR AMOUNTS
FISCAL YEAR(1) -------------------
-------------- 1997 VS. 1998 VS.
1996 1997 1998 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED STATEMENTS OF EARNINGS
DATA
Net Sales..................................... 100.0% 100.0% 100.0% 23.7% 25.1%
Gross Profit.................................. 27.8 28.1 28.5 24.8 26.9
Operating Expenses:
Selling and Store Operating(2).............. 18.0 17.8 17.7 21.9 24.1
Pre-Opening................................. 0.3 0.3 0.3 19.7 34.1
General and Administrative.................. 1.7 1.7 1.7 27.2 24.9
Non-Recurring Charge........................ -- 0.4 -- NM(3) NM(3)
-------- -------- --------
Total Operating Expenses.................. 20.0 20.2 19.7 25.0 21.7
Operating Income.......................... 7.8 7.9 8.8 24.3 40.4
Interest Income (Expense):
Interest and Investment Income.............. 0.1 0.2 0.1 73.8 (32.1)
Interest Expense............................ -- (0.2) (0.1) 160.8 (11.0)
-------- -------- --------
Interest, Net............................. 0.1 -- -- (73.7) (386.2)
-------- -------- --------
Earnings Before Income Taxes.............. 7.9 7.9 8.8 23.7 39.8
Income Taxes.................................. 3.1 3.1 3.5 23.7 40.9
-------- -------- --------
Net Earnings.............................. 4.8% 4.8% 5.3% 23.7% 39.1%
======== ======== ========
SELECTED CONSOLIDATED SALES DATA
Number of Transactions (000's)................ 464,089 550,226 665,125 18.6% 20.9%
Average Sale Per Transaction.................. $42.09 $43.63 $45.05 3.7 3.3
Weighted Average Weekly Sales Per Operating
Store (000's)............................... $803 $829 $844 3.2 1.8
Weighted Average Sales Per Square Foot........ $398(4) $406 $410 1.8 1.0
</TABLE>
- ------------------------
(1) Fiscal years 1996, 1997 and 1998 refer to the fiscal years ended
February 2, 1997; February 1, 1998; and January 31, 1999, respectively.
(2) Minority interest has been reclassified to selling and store operating
expenses.
(3) Not meaningful.
(4) Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 1996.
FISCAL YEAR ENDED JANUARY 31, 1999 COMPARED TO FEBRUARY 1, 1998
Net sales for fiscal 1998 increased 25.1% to $30.2 billion from
$24.2 billion in fiscal 1997. This increase was attributable to, among other
things, full year sales from the 112 new stores opened during fiscal 1997, a 7%
comparable store-for-store sales increase, and 138 new store openings and 4
store relocations during fiscal 1998. One store opened during fiscal 1998 was
subsequently closed during the year and is planned to reopen during fiscal 1999.
Gross profit as a percent of sales was 28.5% for fiscal 1998 compared to
28.1% for fiscal 1997. The rate increase was primarily attributable to a lower
cost of merchandise resulting from product line
12
<PAGE>
reviews and other merchandising initiatives begun in fiscal 1996 and continued
through fiscal 1997 and 1998. In addition, sales mix changes, better inventory
shrink results and benefits from import strategies contributed to the overall
gross profit improvement.
Operating expenses as a percent of sales were 19.7% for fiscal 1998 compared
to 20.2% for fiscal 1997. Operating expenses for fiscal 1997 included a
$104 million non-recurring charge related to the settlements of a class action
gender discrimination lawsuit and three other gender discrimination lawsuits.
Excluding the non-recurring charge, operating expenses as a percent of sales
were 19.8% for fiscal 1997.
Selling and store operating expenses as a percent of sales decreased to
17.7% in fiscal 1998 from 17.8% in fiscal 1997. The decrease was primarily
attributable to lower net advertising expenses resulting from higher cooperative
advertising participation by vendors, increased use of national advertising and
leverage achieved from opening stores in existing markets. In addition, improved
claims management and focus on safety programs resulted in lower worker's
compensation and general liability claims experience as a percent of sales.
Also, minority interest decreased from fiscal 1997, mainly due to the purchase
of the remaining 25% of The Home Depot Canada partnership from The Molson
Companies during the first quarter of fiscal 1998. Partially offsetting these
decreases were higher medical costs from increased family enrollment in our
medical plans and higher store selling payroll expenses as a percent of sales.
The increase in store selling payroll expenses was primarily due to increased
sales penetrations in higher margin decor categories, which require more hours
and higher average pay rates to support. Overall productivity, in terms of sales
per labor hour, increased from fiscal 1997.
Pre-opening expenses as a percent of sales were 0.3% for both fiscal 1998
and 1997. We opened 138 new stores and relocated 4 stores in fiscal 1998, and
opened 112 new stores and relocated 5 stores in fiscal 1997. Pre-opening
expenses averaged $618,000 per store in fiscal 1998 compared to $559,000 per
store in fiscal 1997. The higher average expense resulted primarily from our
initial entry into markets such as Chile, Puerto Rico and Alaska, which involve
longer pre-opening periods and higher travel and relocation costs.
General and administrative expenses as a percent of sales were 1.7% for both
fiscal 1998 and 1997. Incremental expenses related to long-term growth and
business planning initiatives incurred in fiscal 1998 were offset by
efficiencies realized from increased sales.
Interest and investment income as a percent of sales decreased to 0.1% in
fiscal 1998 from 0.2% in fiscal 1997 due to lower investment balances and lower
interest rates. Interest expense as a percent of sales was 0.1% in fiscal 1998
compared to 0.2% in fiscal 1997. The decrease from fiscal 1997 was primarily
attributable to economies realized from a 25.1% increase in sales, to lower debt
levels and higher capitalized interest resulting from a higher percentage of
owned stores under construction for fiscal 1998.
Our combined federal and state effective income tax rate was 39.2% for
fiscal 1998 compared to 38.9% for fiscal 1997. The increase was due to a
reduction in tax-exempt interest income as investment balances declined during
the year and to higher effective state tax rates.
Net earnings as a percent of sales were 5.3% for fiscal 1998 compared to
4.8% for fiscal 1997, reflecting a higher gross profit rate, lower selling and
store operating expenses as a percent of sales and the non-recurring charge
recorded in fiscal 1997.
FISCAL YEAR ENDED FEBRUARY 1, 1998 COMPARED TO FEBRUARY 2, 1997
Fiscal 1997 consisted of 52 weeks compared to 53 weeks in fiscal 1996. Net
sales for fiscal 1997 increased 23.7% to $24.2 billion from $19.5 billion in
fiscal 1996. The increase was attributable to, among other things, full year
sales from the 89 new stores opened during fiscal 1996, a 7% comparable 52-week
store-for-store sales increase, and 112 new store openings and 5 store
relocations during fiscal
13
<PAGE>
1997. The percentage increase in sales was negatively impacted by one less week
of sales in fiscal 1997 versus fiscal 1996.
Gross profit as a percent of sales was 28.1% for fiscal 1997 compared to
27.8% for fiscal 1996. The rate increase was primarily attributable to a lower
cost of merchandise resulting from product line reviews and other merchandising
initiatives begun in fiscal 1996 and continued through fiscal 1997. In addition,
lower and more stable lumber costs, sales mix changes, and better inventory
shrink results contributed to the gross profit improvement.
Operating expenses as a percent of sales were 20.2% for fiscal 1997 compared
to 20.0% for fiscal 1996. Operating expenses for fiscal 1997 included a
$104 million non-recurring charge related to the settlements of a class action
gender discrimination lawsuit and three other gender discrimination lawsuits.
The non-recurring charge included $65 million for the plaintiff class members,
$22.5 million for the plaintiffs' attorneys and approximately $17 million for
other related internal costs, including implementation or enhancement of certain
human resources programs, as well as the settlement terms of the three other
lawsuits. Excluding the non-recurring charge, operating expenses as a percent of
sales were 19.8% for fiscal 1997.
Selling and store operating expenses as a percent of sales decreased to
17.8% in fiscal 1997 from 18.0% in fiscal 1996. The decrease was primarily
attributable to lower net advertising expenses resulting from higher cooperative
advertising participation by vendors and increased use of national advertising,
as well as lower medical insurance costs primarily due to a higher percentage of
our associates using in-network providers. Partially offsetting these decreases
were higher store payroll expenses as a percent of sales, mainly due to
increased focus on certain higher margin merchandising categories that require
more labor hours to support, such as flooring and other decor areas.
Pre-opening expenses as a percent of sales were 0.3% for both fiscal 1997
and 1996. We opened 112 new stores and relocated 5 stores in fiscal 1997, and
opened 89 new stores and relocated 7 stores in fiscal 1996. Pre-opening expenses
averaged $559,000 per store in fiscal 1997 compared to $570,000 per store in
fiscal 1996.
General and administrative expenses as a percent of sales were 1.7% for both
fiscal 1997 and 1996. Incremental expenses related to long-term growth and
business planning initiatives incurred in fiscal 1997 were partially offset by
efficiencies realized from increased sales.
Interest and investment income as a percent of sales increased to 0.2% in
fiscal 1997 from 0.1% in fiscal 1996 due to a full year of investment income
earned in fiscal 1997 from the proceeds of the issuance of $1.1 billion of our
3 1/4% Convertible Subordinated Notes due October 1, 2001 (the "Convertible
Notes") in October 1996. See "--Liquidity and Capital Resources." Interest
expense as a percent of sales was 0.2% in fiscal 1997 compared to 0% in fiscal
1996. The increase from the prior year was primarily attributable to a full year
of interest expense on the Convertible Notes in fiscal 1997, compared to a
partial year of interest expense on the Convertible Notes and lower levels of
long-term debt prior to issuance of the Convertible Notes in fiscal 1996.
Our combined federal and state effective income tax rate was 38.9% for both
fiscal 1997 and 1996.
Net earnings as a percent of sales were 4.8% for both fiscal 1997 and 1996,
reflecting a higher gross profit percentage and lower selling and store
operating expenses as a percent of sales, offset by the non-recurring charge
recorded during fiscal 1997, as described above.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from store operations provides us with a significant
source of liquidity. Additionally, a significant portion of our inventory is
financed under vendor credit terms. During the first nine months of fiscal 1999,
we opened 117 new stores, reopened one store that was closed in fiscal 1998 and
relocated 5 stores. During the remainder of fiscal 1999, we plan to open
approximately 52 new stores including one additional Villager's Hardware test
store, and relocate one store, for a 22%
14
<PAGE>
unit growth rate for the year. It is anticipated that approximately 84% of the
fourth quarter new locations will be owned, and the remainder will be leased.
We have two operating lease agreements totaling $882 million for the purpose
of financing construction costs of certain new stores. Under the operating lease
agreements, the lessor purchases the properties, pays for the construction costs
and subsequently leases the facilities to the company. The leases provide for
substantial residual value guarantees and include purchase options at original
cost on each property. We financed a portion of our new stores opened in fiscal
1997, 1998 and 1999 as well as an office building in fiscal 1999 under the
operating lease agreements and anticipate utilizing these facilities to finance
selected new stores during the remainder of fiscal 1999 and in fiscal 2000. In
addition, some planned locations for fiscal 1999 and fiscal 2000 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 us varies
widely, principally due to land costs, new store costs are currently estimated
to average approximately $13.0 million per location. The cost to remodel and/or
fixture stores to be leased is expected to average approximately $4.1 million
per store. In addition, each new store will require approximately $3.1 million
to finance inventories, net of vendor financing.
On October 5, 1999, we announced our decision to redeem, on November 1,
1999, all our outstanding Convertible Notes at a redemption price including a
premium of $1,008.13 per $1,000 principal amount of Convertible Notes. The
Convertible Notes were convertible into shares of our common stock at the rate
of one share for each $23.0417 principal amount of Convertible Notes owned. All
but 215 of the $1,000 Convertible Notes were converted to our common stock.
Since the third fiscal quarter of 1996, the Convertible Notes had a dilutive
effect on earnings per share and accordingly, we have reported earnings per
share assuming the Convertible Notes had converted at the beginning of the
accounting period and accordingly, the conversion of the Convertible Notes did
not have a dilutive effect on earnings per share.
On September 27, 1999, we issued $500,000,000 of old notes. We will pay
interest semiannually on March 15 and September 15 of each year commencing
March 15, 2000. We may, at our option, redeem all or part of the notes at any
time by notice to the holders. The notes are redeemable at a premium plus
accrued interest up to the redemption date.
The net proceeds from the issuance of the old notes will be used to finance
a portion of our capital expenditure programs, including planned store
expansions and renovations, and for general corporate purposes. In the interim,
the net proceeds are being invested in cash equivalent and short-term
interest-bearing investments.
We have a commercial paper program that allows borrowings up to a maximum of
$800 million. As of October 31, 1999, there were no borrowings outstanding under
the program. In connection with the program, we have a back-up credit facility
with a consortium of banks for up to $800 million. The credit facility, which
was refinanced during fiscal 1999 and expires in September 2004, contains
various restrictive covenants, none of which is expected to materially impact
our liquidity or capital resources.
As of October 31, 1999, we had $976 million in cash and cash equivalents and
short-term investments, as well as $15 million in long-term investments. The
increase in cash and cash equivalents from the prior quarter is primarily
attributable to the issuance of the old notes. Management believes that our
current cash position, the proceeds from short-term and long-term investments,
internally generated funds, funds available from our $800 million commercial
paper program, funds available from the $882 million operating lease agreements,
and/or the ability to obtain alternate sources of financing should enable us to
complete our capital expenditure programs, including store expansions and
renovations, through the next several fiscal years.
15
<PAGE>
YEAR 2000
We are 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, we developed a plan to devote the necessary resources to identify and
modify internal systems impacted by the Year 2000 Problem, or implement new
systems to become year 2000 compliant, in a timely manner. This compliance plan
consists of four major areas of focus: systems, desktops, facilities and
supplier management. The revised estimated total cost of executing this plan is
approximately $11.5 million, and as of October 31, 1999, we had expended
approximately $10.4 million to effect the plan. All expenditures related to our
year 2000 readiness initiative have been funded by cash flow from operations,
have been expensed as incurred and have not materially impacted our other
operating or investment plans.
We have completed the systems portion of the compliance plan and no system
replacements were necessary. The compliance plan for desktop applications
critical to our overall business infrastructure was complete at the end of the
third quarter of fiscal 1999. Substantially all critical facilities systems,
including, but not limited to, security systems, energy management, material
handling, copiers and faxes, have been inventoried and tested. The testing
revealed that some of these systems needed to be remediated to avoid year 2000
problems and we hired third parties to complete this remediation. As of
October 31, 1999, we had substantially completed the facilities systems portion
of our compliance plan.
To date, we have experienced no material year 2000 system problems. In
implementing the systems portion of the plan, we completed an inventory of all
software programs operating on our systems, identified year 2000 problems,
created an appropriate testing environment, completed testing and installed year
2000 compliant software in the production environment.
We are assessing the year 2000 compliance status of our suppliers, many of
which participate in electronic data interchange ("EDI") or similar programs
with us. Based on information provided by the suppliers and carriers through
surveys and telephone interviews, we have confirmed that suppliers and carriers
representing approximately 98% of our EDI volume have completed their internal
year 2000 testing of both EDI and non-EDI systems. Additionally, we are
conducting substantial testing with EDI merchandise suppliers and transportation
carriers including, with respect to merchandise suppliers participating in EDI
programs, point-to-point testing of EDI systems for year 2000 compliance. As of
October 31, 1999, we had completed testing with suppliers and carriers
representing approximately 50% of our EDI volume and had completed testing with
suppliers and carriers representing approximately 70% of our EDI volume as of
November 30, 1999. We engaged in written or oral communications concerning the
year 2000 readiness of the remaining 30%. These communications have not revealed
any information that has caused us to believe that the systems of our suppliers
and carriers will fail to be year 2000 compliant in a timely manner.
Our risks involved with not solving the Year 2000 Problem include, but are
not limited to, the following:
- loss of local or regional electrical power;
- loss of telecommunication services;
- delays or cancellations of merchandise shipments;
- manufacturing shutdowns;
- delays in processing customer transactions; and
- bank errors and computer errors by suppliers.
Because our year 2000 compliance is dependent upon certain third parties
(including infrastructure providers) also being year 2000 compliant on a timely
basis, there can be no assurance that our efforts will prevent a material
adverse impact on our results of operations, financial condition or business.
16
<PAGE>
However, we are taking steps to enable our stores to operate in an independent
mode in case of power or telecommunications systems outages, which steps include
building alternative processes for stores to communicate with the store support
centers.
We have designed our year 2000 contingency plan as an extension of our
current business recovery plan, which prescribes the measures to be taken upon
the occurrence of a variety of contingencies. The contingency plan focuses on
the following priorities:
- ability to sell products to customers;
- ability to order and distribute merchandise;
- ability to pay employees; and
- ability to meet other regulatory and administrative needs.
In addition to relying upon recovery actions contained in our existing business
recovery plan, our year 2000 contingency plan is supported by our year 2000
command center. Key personnel (including managerial, technical, maintenance,
logistics and other personnel employed at our stores and store support centers)
will be available in the year 2000 command center 24 hours a day beginning on
December 31, 1999, to identify and seek to rectify as promptly as possible any
business disruptions. Although we have substantially completed our year 2000
contingency planning, we will continue to modify and test implementation of
these contingency plans throughout the remainder of 1999. In addition, we have
identified critical activities that would normally be conducted during the first
two weeks of January 2000, which may be completed instead in December 1999.
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements we make in this prospectus, and other written and oral
statements made by us or our subsidiaries with the approval of an authorized
executive officer of Home Depot, may constitute "forward-looking statements" as
defined under the Private Securities Litigation Reform Act of 1995. Words or
phrases like "should result," "are expected to," "we anticipate," "we estimate,"
"we project" or similar expressions are intended to identify forward-looking
statements. These statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our historical experience
and our present expectations or projections. These risks and uncertainties
include, but are not limited to:
- unanticipated weather conditions;
- stability of costs and availability of sourcing channels;
- our ability to attract, train and retain highly-qualified associates;
- conditions affecting the availability, acquisition, development and
ownership of real estate;
- year 2000 problems;
- the impact of competition; and
- regulatory and litigation matters.
Caution should be taken not to place undue reliance on forward-looking
statements, since the statements speak only as of the date they are made. We
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of future events, new information or otherwise.
Additional information concerning the risks and uncertainties listed above and
other factors you may wish to consider are set forth in our Annual Report on
Form 10-K for the fiscal year ended January 31, 1999, and other reports we file
from time to time with the SEC. See "Where You Can Find More Information."
17
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We sold the old notes on September 27, 1999 to Credit Suisse First Boston
Corporation and Invemed Associates LLC pursuant to a purchase agreement. These
initial purchasers subsequently sold the old notes to:
- "qualified institutional buyers" ("QIBs"), as defined in Rule 144A under
the Securities Act, in reliance on Rule 144A; and
- persons in offshore transactions in reliance on Regulation S under the
Securities Act.
As a condition to the initial sale of the old notes, Home Depot and the
initial purchasers entered into a registration rights agreement. Pursuant to the
registration rights agreement, we agreed to:
- file with the SEC by December 26, 1999 a registration statement under the
Securities Act with respect to the issuance of the new notes in an
exchange offer; and
- use our commercially reasonable efforts to cause the registration
statement to become effective under the Securities Act on or before
March 25, 2000.
We agreed to issue and exchange the new notes for all old notes validly
tendered and not validly withdrawn prior to the expiration of the exchange
offer. A copy of the registration rights agreement has been filed as an exhibit
to the registration statement which includes this prospectus. The filing of the
registration statement is intended to satisfy some of our obligations under the
registration rights agreement and the purchase agreement.
The term "holder" with respect to the exchange offer means any person in
whose name old notes are registered on the trustee's books or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose old notes are held of record by The Depository Trust Company
(the "Depositary" or "DTC") who desires to deliver the old notes, by book-entry
transfer at DTC.
TERMS OF THE EXCHANGE OFFER
Based on the terms and conditions in this prospectus and in the letter of
transmittal, we will issue $1,000 principal amount of new notes in exchange for
each $1,000 principal amount of outstanding old notes properly surrendered
pursuant to the exchange offer and not withdrawn prior to the expiration date.
Old notes may be surrendered only in integral multiples of $1,000. The form and
terms of the new notes are the same as the form and terms of the old notes
except that
- the new notes will be registered under the Securities Act and, therefore,
the new notes will not bear legends restricting the transfer of the new
notes; and
- holders of the new notes will not be entitled to any of the registration
rights and related liquidated damages of holders of old notes under the
registration rights agreement, which will terminate upon the consummation
of the exchange offer.
The new notes will evidence the same indebtedness as the old notes, which
they replace, and will be issued under, and be entitled to the benefits of, the
same indenture, which authorized the issuance of the old notes. As a result,
both series of notes will be treated as a single class of debt securities under
the indenture.
As of the date of this prospectus, $500 million in aggregate principal
amount of the old notes is outstanding. All of it is registered in the name of
Cede & Co., as nominee for DTC. Solely for reasons of administration, we have
fixed the close of business on December 20, 1999 as the record date for the
exchange offer for purposes of determining the persons to whom this prospectus
and the letter of
18
<PAGE>
transmittal will be mailed initially. There will be no fixed record date for
determining holders of the old notes entitled to participate in this exchange
offer.
In connection with the exchange offer, neither the General Corporation Law
of the State of Delaware nor the indenture governing the notes gives you any
appraisal or dissenters' rights nor any other right to seek monetary damages in
court. We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement and the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
related SEC rules and regulations.
For all relevant purposes we will be regarded as having accepted properly
surrendered old notes if and when we give oral or written notice of our
acceptance to the exchange agent. The exchange agent will act as agent for the
surrendering holders of old notes for the purposes of receiving the new notes
from us.
If you surrender old notes in the exchange offer, you will not be required
to pay brokerage commissions or fees. In addition, subject to the instructions
in the letter of transmittal, you will not have to pay transfer taxes for the
exchange of old notes. We will pay all charges and expenses, other than certain
applicable taxes described under "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The "expiration date" is 5:00 p.m., New York City time on February 4, 2000
unless we extend the exchange offer, in which case the expiration date is the
latest date and time to which we extend the exchange offer.
In order to extend the exchange offer, we will
- notify the exchange agent of any extension by oral or written notice and
- issue a press release or other public announcement which would include
disclosure of the approximate number of old notes deposited and which
would be issued prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right
- to delay accepting any old notes;
- to extend the exchange offer;
- to terminate or amend the exchange offer, and not accept for exchange any
old notes not previously accepted for exchange, upon the occurrence of any
of the events set forth in "--Conditions of the Exchange Offer" by giving
oral or written notice to the exchange agent; or
- to waive any conditions or otherwise amend the exchange offer in any
respect, by giving oral or written notice to the exchange agent.
Any delay in acceptance, extension, termination or amendment will be
followed as soon as practicable by a press release or other public announcement
or post-effective amendment.
If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose that amendment by means of a
prospectus supplement or post-effective amendment that will be distributed to
the holders. We will also extend the exchange offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the holders, if the exchange offer would otherwise expire
during the five to ten business day period.
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We will have no obligation to publish, advertise or otherwise communicate
any public announcement of any delay, extension, amendment or termination that
we may choose to make, other than by making a timely release to an appropriate
news agency.
INTEREST ON THE NEW NOTES
The new notes will accrue cash interest on the same terms as the old notes
at the rate of 6 1/2% per year from September 27, 1999, payable semi-annually in
arrears on September 15 and March 15 of each year, commencing March 15, 2000.
Old notes accepted for exchange will not receive accrued interest thereon at the
time of exchange. However, each new note will bear interest from the most recent
date to which interest has been paid on the old notes, or if no interest has
been paid on the old notes or the new notes, from September 27, 1999.
RESALE OF THE NEW NOTES
We believe that you will be allowed to resell the new notes to the public
without registration under the Securities Act, and without delivering a
prospectus that satisfies the requirements of Section 10 of the Securities Act,
if you can make the three representations set forth above under "Prospectus
Summary--Summary of the Terms of the Exchange Offer--Procedures for
participating in the exchange offer" on page 1. However, if you intend to
participate in a distribution of the new notes, you must comply with the
registration requirements of the Securities Act and deliver a prospectus, unless
an exemption from registration is otherwise available. In addition, you will be
subject to additional restrictions if you are an "affiliate" of Home Depot as
defined under Rule 405 of the Securities Act. You will be required to represent
to Home Depot in the letter of transmittal accompanying this prospectus that you
meet these conditions exempting you from the registration requirements.
Our belief is based on interpretations of the SEC for other exchange offers
that the SEC expressed in some of the SEC's no-action letters to other issuers
in exchange offers like ours. However, we have not asked the SEC to consider
this particular exchange offer in the context of a no-action letter. Therefore,
you cannot be certain that the SEC will treat it in the same way it has treated
other exchange offers in the past.
A broker-dealer that has bought old notes for market-making or other trading
activities has to deliver a prospectus in order to resell any new notes it has
received for its own account in the exchange. This prospectus may be used by a
broker-dealer to resell any of its exchange notes. We have agreed in the
registration rights agreement to send this prospectus to any broker-dealer that
requests copies in the letter of transmittal for a period of up to 135 days
after the registration statement relating to this exchange offer is declared
effective. See "Plan of Distribution" for more information regarding
broker-dealers.
PROCEDURES FOR TENDERING
GENERAL PROCEDURES
If you wish to surrender old notes you must
- complete, sign and date the letter of transmittal, or a facsimile thereof,
- have the signatures guaranteed if required by the letter of transmittal
and
- mail or deliver the letter of transmittal or the facsimile to the exchange
agent at the address appearing below under "--Exchange Agent" for receipt
prior to the expiration date.
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In addition, either
- certificates for your old notes must be received by the exchange agent
along with the letter of transmittal,
- a timely confirmation of a book-entry transfer of the old notes into the
exchange agent's account at DTC, pursuant to the procedure for book-entry
transfer described below, must be received by the exchange agent prior to
the expiration date or
- you must comply with the procedures described below under "--Guaranteed
Delivery Procedures."
THE METHOD OF DELIVERY TO THE EXCHANGE AGENT OF OLD NOTES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT
SEND THE LETTER OF TRANSMITTAL OR ANY OLD NOTES TO US. YOU MAY REQUEST THAT YOUR
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE PERFORM THESE
TRANSACTIONS FOR YOU.
If you do not withdraw your surrender of old notes prior to the expiration
date, you will be regarded as agreeing to surrender the new notes in accordance
with the terms and conditions in this offer.
If you are a beneficial owner of the old notes and your old notes are held
through a broker, dealer, commercial bank, trust company or other nominee and
you want to surrender your old notes, you should contact your intermediary
promptly and instruct it to surrender the old notes on your behalf.
SIGNATURES AND GUARANTEE OF SIGNATURES
Signatures on a letter of transmittal or a notice of withdrawal described
below under "--Withdrawal of Tenders," as the case may be, must generally be
guaranteed by an eligible institution. You can submit a letter of transmittal
without guarantee if you surrender your old notes (a) as a registered holder and
you have not completed the box titled "Special Delivery Instruction" on the
letter of transmittal or (b) for the account of an eligible institution. In the
event that signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be made by
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers;
- a commercial bank or trust company having an office or correspondent in
the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
If you sign the letter of transmittal even though you are not the registered
holder of any old notes listed in the letter of transmittal, your notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder exactly as the registered holder's name appears on the old
notes.
In connection with any surrender of old notes in definitive certificated
form, if you sign the letter of transmittal or any old notes or bond powers in
your capacity as trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or if you are otherwise acting in a fiduciary or
representative capacity, you should indicate this when signing. Unless waived by
us, you must submit with the letter of transmittal evidence satisfactory to us
of your authority to act in the particular capacity.
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The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's automated tender offer
program to surrender old notes.
ACCEPTANCE OF TENDERS
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of surrendered old notes will be determined
by us in our sole discretion, which will be final and binding.
We reserve the absolute right to reject any and all old notes not properly
surrendered. Nor will we accept any old notes if our acceptance of them would,
in the opinion of our counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of surrender as to particular old
notes.
Unless waived, you must cure any defects or irregularities in connection
with surrenders of old notes within the time period we will determine. Although
we intend to notify holders of defects or irregularities in connection with
surrenders of old notes, neither we, the exchange agent nor anyone else will be
liable for failure to give this notice. Surrenders of old notes will not be
deemed to have been made until any defects or irregularities have been cured or
waived.
We do not currently intend to acquire any old notes that are not surrendered
in the exchange offer or to file a registration statement to permit resales of
any old notes that are not surrendered pursuant to the exchange offer. We
reserve the right in our sole discretion to purchase or make offers for any old
notes that remain outstanding after the expiration date. To the extent permitted
by law, we also reserve the right to purchase old notes in the open market, in
privately negotiated transactions or otherwise. The terms of any future
purchases or offers could differ from the terms of the exchange offer.
EFFECT OF SURRENDERING OLD NOTES
By surrendering old notes pursuant to the exchange offer, you will be
telling us that, among other things,
- you have full power and authority to surrender, sell, assign and transfer
the old notes surrendered;
- we will acquire good title to the old notes being surrendered, free and
clear of all security interests, liens, restrictions, charges,
encumbrances, conditional sale agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim when the old
notes are accepted by us;
- you are acquiring the new notes in the ordinary course of your business;
- you have no arrangement or understanding with any person to participate in
the distribution of the new notes;
- you acknowledge and agree that if you are a broker-dealer registered under
the Exchange Act or you are participating in the exchange offer for the
purpose of distributing the new notes, you must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the new notes, and you understand
that you cannot rely on the position of the SEC's staff in their no-action
letters;
- you understand that a secondary resale transaction described above and any
resales of new notes obtained by you in exchange for old notes acquired by
you directly from us should be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or Item 508 of Regulation S-K of the SEC; and
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- you are not an "affiliate," as defined in Rule 405 under the Securities
Act, of Home Depot.
If you are a broker-dealer and you will receive new notes for your own
account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, you must acknowledge in
the letter of transmittal that you will deliver a prospectus in connection with
any resale of your new notes. See "Plan of Distribution."
RETURN OF OLD NOTES
If any surrendered old notes are not accepted for any reason described in
this prospectus or if old notes are withdrawn or are submitted for a greater
principal amount than you desire to exchange, those old notes will be returned
without expense to (a) the person who surrendered them or (b) in the case of old
notes surrendered by book-entry transfer into the exchange agent's account at
DTC. The old notes will be credited to an account maintained with DTC as
promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer the old notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. However, although delivery of
old notes may be effected through book-entry transfer at DTC, you have to
transmit the letter of transmittal with any required signature guarantees and
any other required documents to the exchange agent at the address appearing
below under "--Exchange Agent" for its receipt on or prior to the expiration
date or pursuant to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to surrender your old notes and (a) your old notes are not
readily available so you can meet the expiration date deadline or (b) you cannot
deliver your old notes, the letter of transmittal or any other required
documents to the exchange agent prior to the expiration date, you may still
participate in the exchange offer if
- the surrender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from the
eligible institution a properly completed and duly executed notice of
guaranteed delivery substantially in the form provided by us, by facsimile
transmission, mail or hand delivery, containing the name and address of
the holder, the certificate number(s) of the old notes, if applicable, and
the principal amount of old notes surrendered. The notice of guaranteed
delivery must also state that the surrender is being made thereby and
guarantee that, within five New York Stock Exchange trading days after the
expiration date, the letter of transmittal, together with the
certificate(s) representing the old notes in proper form for transfer or a
book-entry confirmation, and any other required documents, will be
deposited by the eligible institution with the exchange agent; and
- the properly executed letter of transmittal, as well as the certificate(s)
representing all surrendered old notes in proper form for transfer or a
book-entry confirmation, and all other documents required by the letter of
transmittal are received by the exchange agent within five New York Stock
Exchange trading days after the expiration date.
The exchange agent will send you a notice of guaranteed delivery upon your
request if you wish to surrender your old notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
surrender of old notes at any time prior to the expiration date.
To withdraw a surrender of old notes in the exchange offer, the exchange
agent must receive a written or facsimile transmission notice of withdrawal at
its address set forth herein prior to the expiration date. Any notice of
withdrawal must
- specify the name of the person having deposited the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the certificate number
or numbers, if applicable, and principal amount of the old notes; and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered.
All questions as to the validity, form, eligibility and time of receipt of
notices will be determined by us, in our sole discretion, and our determination
shall be final and binding on all parties. Any old notes so withdrawn will be
deemed not to have been validly surrendered for purposes of the exchange offer,
and no new notes will be issued unless the old notes so withdrawn are validly
retendered. Properly withdrawn old notes may be resurrendered by following one
of the procedures described above under "--Procedures for Tendering" at any time
prior to the expiration date.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, or any extension of
the exchange offer, we do not have to accept for exchange, or exchange new notes
for, any old notes, and we may terminate the exchange offer before acceptance of
the old notes, if:
- any statute, rule or regulation has been enacted, or any action has been
taken by any court or governmental authority that, in our reasonable
judgement, seeks to or would prohibit, restrict or otherwise render
consummation of the exchange offer illegal; or
- any change, or any development that would cause a change, in our business
or financial affairs has occurred that, in our sole judgment, might
materially impair our ability to proceed with the exchange offer or a
change that would materially impair the contemplated benefits to us of the
exchange offer; or
- a change occurs in the current interpretations by the staff of the SEC
that, in our reasonable judgement, might materially impair our ability to
proceed with the exchange offer.
If we, in our sole discretion, determine that any of the above conditions is not
satisfied, we may:
- refuse to accept any old notes and return all surrendered old note to the
surrendering holders;
- extend the exchange offer and retain all old notes surrendered prior to
the expiration date, subject to the holders' right to withdraw the
surrender of the old notes; or
- waive any unsatisfied conditions regarding the exchange offer and accept
all properly surrendered old notes that have not been withdrawn. If this
waiver constitutes a material change to the exchange offer, we will
promptly disclose the waiver by means of a prospectus supplement or
post-effective amendment that will be distributed to the holders. We will
also extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure
to the holders, if the exchange offer would otherwise expire during the
five to ten business day period.
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EXCHANGE AGENT
The Bank of New York is the exchange agent for the exchange offer. You
should direct any questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for
notice of guaranteed delivery to the exchange agent, addressed as follows:
BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York
101 Barclay Street, 7 E
New York, New York 10286
Attention: Tolutope Adeyoju
Reorganization Section
TO CONFIRM BY TELEPHONE:
(212) 815-3738
FACSIMILE TRANSMISSIONS (ELIGIBLE INSTITUTIONS ONLY):
(212) 815-6339
BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attention: Tolutope Adeyoju
Reorganization Section
The Bank of New York also serves as trustee under the indenture.
FEES AND EXPENSES
We will pay for the expenses of the exchange offer. The principal
solicitation is being made by mail. However, additional solicitation may be made
by telegraph, facsimile transmission, e-mail, telephone or in person by our
officers and regular employees.
We have not retained a dealer-manager for the exchange offer, and will not
make any payments to brokers, dealers or others soliciting acceptances of the
exchange offer. We will, however, pay the exchange agent reasonable and
customary fees and out-of-pocket expenses.
We will pay any transfer taxes applicable to the exchange of old notes. If,
however, a transfer tax is imposed for any reason other than the exchange, then
the amount of any transfer taxes will be payable by the person surrendering the
notes. If you do not submit satisfactory evidence of payment of taxes or of an
exemption with the letter of transmittal, the amount of those transfer taxes
will be billed directly to you.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
your financial and tax advisors in making your decisions on what action to take.
Old notes that are not exchanged will remain "restricted securities" within
the meaning of Rule 144(a)(3)(iv) of the Securities Act. Accordingly, they may
not be offered, sold, pledged or otherwise transferred except
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- to a person who the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act purchasing for its own account or for the account of a qualified
institutional buyer in a transaction meeting the requirements of
Rule 144A;
- in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act;
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available;
- pursuant to an effective registration statement under the Securities Act;
or
- pursuant to another available exemption from the registration requirements
of the Securities Act, and in accordance with all other applicable
securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the remaining term of the notes.
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DESCRIPTION OF THE NEW NOTES
The form and terms of the new notes and the old notes are identical in all
material respects, except that transfer restrictions and registration rights and
related liquidated damages provisions applicable to the old notes do not apply
to the new notes.
The old notes were, and the new notes will be, issued under an Indenture
dated as of September 27, 1999 between Home Depot and The Bank of New York, as
Trustee. The following discussion includes a summary description of the material
terms of the Indenture and the Registration Rights Agreement dated as of
September 27, 1999 between Home Depot and the initial purchasers. Because this
is a summary, it does not include all of the information that is included in the
Indenture or the Registration Rights Agreement, including the definitions of
some of the terms used below. You should read the Indenture and the Registration
Rights Agreement carefully and in their entirety. You may request copies of
these documents from Home Depot, as described under "Where You Can Find More
Information."
GENERAL
The notes:
- are senior unsecured obligations of Home Depot;
- limited to $500,000,000 aggregate principal amount;
- will mature on September 15, 2004; and
- will bear interest at 6 1/2% per annum from September 27, 1999.
We will pay interest semiannually on September 15 and March 15 of each year
beginning March 15, 2000, to the person in whose name the notes (or any
predecessor note) is registered at the close of business on the September 1 or
March 1, respectively, preceding the interest payment date. Interest on the
notes will be calculated on the basis of a 360-day year consisting of 12 months
of 30 days each.
Principal of and premium, if any, and interest on the notes are payable, and
the notes are exchangeable and transfers thereof are registrable, at an office
or agency of Home Depot, one of which is maintained for this purpose in New
York, New York (which initially will be the corporate trust office of the
Trustee) or any other office or agency permitted under the Indenture.
We do not intend to list the notes on a national securities exchange.
The Indenture does not contain any provisions that would limit our ability
to incur indebtedness or require the maintenance of financial ratios or
specified levels of net worth or liquidity. However, the Indenture does:
- provide that, subject to the exceptions described under "--Certain
Covenants--Limitations on Liens," neither Home Depot nor any Subsidiary
will subject its property or assets to any mortgage or other encumbrance
unless the notes are secured equally and ratably with the other
indebtedness thereby secured; and
- contain certain limitations on the ability of Home Depot and its
Subsidiaries to enter into certain sale and leaseback arrangements.
In addition, the Indenture does not contain any provisions that would
require us to repurchase or redeem or otherwise modify the terms of any of the
notes upon a change in control or other events involving Home Depot that may
adversely affect our creditworthiness. See "--Certain Covenants."
REDEMPTION
We may, at our option, redeem all or part of the notes at any time at a
redemption price equal to the greater of:
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(1) 100% of the Principal Amount of the notes to be redeemed; and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest on the notes to be redeemed that would be due after
the related redemption date but for the redemption (except that, if the
applicable redemption date is not an interest payment date, the amount of
the next succeeding scheduled interest payment will be reduced by the amount
of interest accrued thereon to the redemption date), discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 10 basis points, plus, in
either case, accrued and unpaid interest on the Principal Amount being
redeemed to the applicable redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the notes.
"Comparable Treasury Price" means, with respect to any redemption date:
(1) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third business day preceding the applicable redemption date, as set
forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Notes"; or
(2) if the release (or any successor release) is not published or does
not contain these prices on the business day,
(a) the average of the Reference Treasury Dealer Quotations for the
applicable redemption date, after excluding the highest and lowest of the
Reference Treasury Dealer Quotations, or
(b) if the Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all Quotations obtained.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by Home Depot.
"Reference Treasury Dealer" means Credit Suisse First Boston Corporation and
its successors and two other nationally recognized investment banking firms that
are Primary Treasury Dealers specified from time to time by Home Depot. However,
if any of the foregoing ceases to be a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), Home Depot is required to
designate as a substitute another nationally recognized investment banking firm
that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealer as of 3:30 p.m., New
York City time, on the third business day preceding the applicable redemption
date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding the applicable redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for the applicable redemption date.
We will mail notice of any redemption date at least 30 days but not more
than 60 days before the relevant redemption date to each holder of notes to be
redeemed. If less than all the notes are to be
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redeemed at our option, the Trustee will select, in the manner it deems fair and
appropriate, the notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the notes or portions of the
notes called for redemption.
BOOK-ENTRY SYSTEM
We will initially issue the new notes in the form of one or more global
securities (the "Global Notes"). The Global Notes will be deposited with, or on
behalf of, The Depository Trust Company (the "Depository") and registered in the
name of the Depository or its nominee. Except as set forth below, the Global
Notes may be transferred only as a whole to the Depository or another nominee of
the Depository. You may hold your beneficial interests in the Global Notes
directly through the Depository if you have an account with the Depository or
indirectly through organizations which have accounts with the Depository.
The Depository has advised Home Depot that the Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under the Exchange Act. The Depository was created to hold
the securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in those securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include:
- securities brokers and dealers (which may include the initial purchasers);
- banks;
- trust companies;
- clearing corporations; and
- certain other organizations.
Access to the Depository's book-entry system is also available to others,
including banks, brokers, dealers and trust companies, that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Upon the issuance of the Global Notes, the Depository or its nominee will
credit, on its internal system, the principal amount of notes represented by the
Global Notes to the accounts of participants. Ownership of beneficial interest
in the Global Notes will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of those ownership interests will be
effected only through, records maintained by the Depository or its nominee for
the Global Notes. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of the securities in definitive
form. These limits and laws may impair your ability to transfer or pledge
beneficial interests in the Global Notes.
So long as the Depository, or its nominee, is the registered holder and
owner of the Global Notes, the Depository or its nominee, as the case may be,
will be considered the sole legal owner and holder of any related notes
represented by the Global Notes for all purposes of the notes and the Indenture.
Except as set forth below, as an owner of a beneficial interest in the Global
Notes, you will not:
- be entitled to have the notes represented by the Global Notes registered
in your name;
- receive or be entitled to receive physical delivery of certificated notes;
and
- be considered to be the owner or holder of any notes represented by the
Global Notes.
Accordingly, each person owning a beneficial interest in the Global Notes
must rely on the procedures of the Depository and, if that person is not a
participant in the book-entry registration and
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transfer system of the Depository, on the procedures of the participant through
which that person owns its interest, to exercise any rights of an owner or
holder of the notes under the Indenture.
Home Depot understands that, under existing industry practice, if an owner
of a beneficial interest in Global Notes desires to give any notice or take any
action that the Depository, as the owner or holder of the Global Notes, is
entitled to give or take, the Depository would authorize the participants to
give the requested notice or take the requested action and the participants
would authorize beneficial owners owning through participants to give the notice
or take the action or would otherwise act upon the instructions of beneficial
owners owning through them.
Home Depot will make payments of principal of, premium, if any, and interest
on notes represented by the Global Notes registered in the name of and held by
the Depository or its nominee to the Depository or its nominee, as the case may
be, as the registered owner and holder of the Global Notes.
Home Depot has been advised by the Depository that, upon receipt of any
payment of principal of, premium, if any, or interest on the Global Notes, the
Depository will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the Global Notes as shown on the records of the Depository. Home Depot
expects that payments by participants to owners of beneficial interests in the
Global Notes held through participants will be governed by standing instructions
and customary practices as is now the case with securities held for customer
accounts registered in "street name" and will be the responsibility of those
participants.
None of Home Depot, the Trustee, the registrar or any paying agent for the
notes will have any responsibility or liability for:
- any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in Global Notes for any notes; or
- for maintaining, supervising or reviewing any records relating to these
beneficial ownership interests; or
- for any other aspect of the relationship between the Depository and its
participants or indirect participants and the owners of beneficial
interests in the Global Notes owning through these participants.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of the
Depository, it is under no obligation to perform these procedures, and these
procedures may be discontinued at any time. None of Home Depot, the Trustee, the
registrar or any paying agent for the Notes will have any responsibility or
liability for the performance by the Depository or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED NOTES
The new notes represented by the Global Notes are exchangeable for
certificated new notes only if:
- the Depository notifies Home Depot that it is unwilling or unable to
continue as Depository for the Global Notes or if at any time the
Depository ceases to be a clearing agency registered under the
Exchange Act and a successor Depository is not appointed by Home
Depot, in either case, within 90 days;
- Home Depot in its discretion at any time determines not to have all of
the notes represented by the Global Notes; or
- an Event of Default has occurred and is continuing.
Any new note that is exchangeable for certificated notes pursuant to the
preceding sentence will be transferred to, and registered and exchanged for,
certificated notes in authorized denominations as the
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Depository may direct. Subject to the foregoing, the Global Notes are not
exchangeable, except for Global Notes of the same aggregate denomination to be
registered in the name of the Depository or its nominee.
None of Home Depot, the Trustee, the registrar or any paying agent for the
notes will be liable for any delay by the Depository or any participant in
identifying the beneficial owners of the related notes and each of these persons
may conclusively rely on, and will be protected in relying on, instructions from
the Depository for all purposes, including with respect to the registration and
delivery, and the respective principal amounts, of the notes to be issued.
PAYMENT
The Indenture requires us to make payments in respect of notes (including
principal, premium, if any, and interest) at the office or agency of Home Depot
maintained for that purpose or, at our option, by mailing a check to each
holder's registered address.
CERTAIN COVENANTS
LIMITATIONS ON LIENS. The Indenture provides that Home Depot may not, nor
may it permit any Subsidiary to, issue, assume or guarantee any notes, bonds,
debentures or other similar evidences of indebtedness for money borrowed
("indebtedness") which are secured by any mortgage, security interest, pledge or
lien ("mortgage") of any Principal Property, or of any shares of capital stock
or evidences of indebtedness of any Subsidiary that owns any Principal Property,
whether the Principal Property, shares of capital stock or evidences of
indebtedness were owned at the date of the Indenture or thereafter acquired,
without effectively securing the notes equally and ratably with, or prior to,
the applicable mortgage.
The restriction described above does not apply to:
(1) mortgages existing on the date of the Indenture;
(2) mortgages on any property existing at the time of its acquisition;
(3) mortgages on property, shares of capital stock or evidences of
indebtedness of a corporation existing at the time the corporation is
merged into or consolidated with, or disposes of substantially all
its properties, or those of a division, to, Home Depot or a
Subsidiary;
(4) mortgages on property, shares of capital stock or evidences of
indebtedness of any corporation existing at the time the corporation
first becomes a Subsidiary;
(5) mortgages securing indebtedness of a Subsidiary to Home Depot or to
another Subsidiary;
(6) mortgages to secure the cost of acquisition, construction,
development or substantial repair, alteration or improvement of
property if the commitment to extend the credit secured by any of
these mortgages is obtained within 60 months after the later of the
completion or the placing in operation of the acquired, constructed,
developed or substantially repaired, altered or improved property;
(7) mortgages securing current liabilities;
(8) any extension, renewal or replacement, or successive extensions,
renewals or replacements, of all or part of any mortgage referred to
in clauses (1) through (7), provided, however, that the principal
amount of indebtedness secured thereby and not otherwise authorized
by clauses (1) to (7) above, inclusive, shall not exceed the
principal amount of indebtedness, plus any premium or fee payable in
connection with any extension, renewal or replacement, so secured at
the time of the applicable extension, renewal or replacement;
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(9) mortgages in favor of the United States or any State thereof, or any
department, agency or instrumentality or political subdivision of the
United States or any State thereof, to secure partial progress,
advance or other payments pursuant to any contract or statute or to
secure any indebtedness incurred for the purpose of financing all or
any part of the purchase price or the cost of constructing or
improving the property subject to these mortgages;
(10) mortgages arising out of a final judgment for the payment of money
aggregating not in excess of $10,000,000 or mortgages related to any
legal proceeding being contested in good faith by appropriate
proceedings, provided that the enforcement of any mortgage has been
stayed; or
(11) mortgages for taxes or other governmental charges either not yet
delinquent or the nonpayment of which is being contested in good
faith by appropriate proceedings; mortgages comprising landlord's
liens or liens of carriers, warehousemen, mechanics or materialmen
incurred in the ordinary course of business for sums not yet due and
payable or which are being contested in good faith by appropriate
proceedings; and any other mortgages incurred or created in the
ordinary course of business not arising in connection with
indebtedness that do not materially impair the use or value of the
assets of Home Depot and its Subsidiaries, taken as a whole.
Home Depot or any Subsidiary may, however, issue, assume or guarantee
indebtedness secured by mortgages which would otherwise be subject to the
restriction described above in an aggregate amount which, together with all
other indebtedness outstanding and all Attributable Debt outstanding under the
provisions described in the last sentence under "--Limitations on Sale and
Lease-Back Transactions" below does not at the time exceed the greater of 10.0%
of all Consolidated Net Tangible Assets or 15.0% of Consolidated Capitalization.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS. The Indenture provides
that neither Home Depot nor any Subsidiary may enter into any Sale and
Lease-Back Transaction with respect to any Principal Property unless:
(1) the Sale and Lease-Back Transaction involves a lease for a term,
including renewals, of not more than 48 months;
(2) the Sale and Lease-Back Transaction is between Home Depot and a
Subsidiary or between Subsidiaries;
(3) Home Depot or any Subsidiary would be entitled pursuant to the
provisions described in the first sentence under "--Limitations on
Liens" above to issue, assume or guarantee evidences of indebtedness
secured by a mortgage on the applicable Principal Property in an
amount at least equal to the Attributable Debt in respect of the
applicable Sale and Lease-Back Transaction without being required
under the provisions described under "--Limitation on Liens" to
equally and ratably secure the notes from time to time outstanding;
or
(4) Home Depot applies within one year an amount equal to, in the case of
a sale or transfer for cash, the net proceeds (not exceeding the net
book value) and, otherwise, an amount equal to the fair value (as
determined by its Board of Directors) of the Principal Property so
leased
(a) to the retirement of the notes or other Senior Funded
Indebtedness of Home Depot or a Subsidiary, subject to reduction
as set forth in the Indenture in respect of the notes and other
Senior Funded Indebtedness retired during the applicable one-year
period otherwise than pursuant to mandatory sinking fund or
prepayment provisions and payments at maturity or
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(b) to the purchase of a Principal Property or Principal Properties
(other than the Principal Property involved in any sale or
transfer).
Home Depot or any Subsidiary may, however, enter into a Sale and Lease-Back
Transaction which would otherwise be subject to the foregoing restriction so as
to create an aggregate amount of Attributable Debt which, together with all
other Attributable Debt outstanding and all indebtedness outstanding under the
provisions described in the last sentence under "--Limitations on Liens" above,
does not exceed 15.0% of Consolidated Capitalization.
WAIVER OF COVENANTS. The Indenture provides that holders of a majority in
Principal Amount of the outstanding notes may waive compliance with certain
covenants or conditions set forth in the Indenture.
CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE COMPANY. The Indenture
provides that we may not consolidate with or merge into any other Person or sell
its assets substantially as an entirety, unless:
- the Person formed by the consolidation or into which Home Depot is merged
or the Person which acquires its assets is a Person organized in the
United States and expressly assumes the due and punctual payment of the
principal of and interest on the notes and the performance of every
covenant of the Indenture on the part of Home Depot; and
- immediately after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time, or both, would become
an Event of Default, shall have happened and be continuing.
Upon any consolidation, merger or sale, the successor corporation formed by
the consolidation or into which Home Depot is merged or to which the sale is
made will succeed to, and be substituted for, Home Depot under the Indenture,
and the predecessor corporation shall be released from all obligations and
covenants under the Indenture and the notes.
The Indenture does not restrict, or require Home Depot to redeem or permit
holders of notes to cause a redemption of notes in the event of a:
- consolidation, merger, sale of assets or other similar transaction that
may adversely affect the creditworthiness of Home Depot or the successor
or combined entity;
- change in control of Home Depot; or
- highly leveraged transaction involving Home Depot whether or not involving
a change in control.
Accordingly, the holders of the notes would not have protection in the event
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction involving Home Depot that may adversely affect the holders
of the notes. The existing protective covenants applicable to the notes would
continue to apply to Home Depot in the event of a leveraged buyout initiated or
supported by Home Depot, the management of Home Depot, or an affiliate of Home
Depot or its management, but may not prevent a transaction from taking place.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that if an Event of Default shall have occurred and
be continuing, then either the Trustee or the Holders of not less than 25% in
outstanding Principal Amount of the notes within ten days after notice to Home
Depot may declare to be due and payable immediately the Principal Amount of the
notes, together with interest, if any, accrued thereon.
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Each of the following constitutes an Event of Default with respect to the
notes under the Indenture:
- default for 30 days in payment of any interest due with respect to any
note;
- default in payment of principal of or premium, if any, on any note;
- default for 90 days after written notice to us by the Trustee or by
holders of not less than 25% in Principal Amount of the notes then
outstanding in the performance of any covenant or other agreement in the
Indenture or the notes for the benefit of the notes;
- indebtedness for borrowed money of Home Depot or any Subsidiary is
accelerated by the holders thereof because of a default and the total
amount of the defaulted indebtedness accelerated exceeds $50,000,000, and
the defaulted indebtedness is not discharged or acceleration of the
defaulted indebtedness is not cured, waived, annulled or rescinded within
ten days after notice to Home Depot by the Trustee or by holders of not
less than 25% in Principal Amount of the notes then outstanding; and
- certain events of bankruptcy, insolvency and reorganization.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to the notes, give to the holders notice of
the relevant default known to it, unless cured or waived. However, in the case
of default in the payment of principal, premium, if any, or interest, if any,
the Trustee will be protected in withholding notice of the relevant default if
it in good faith determines that the withholding of this notice is in the
interests of the Holders. The term "default" for the purpose of this provision
means any event which is, or after notice or lapse of time, or both, would
become, an Event of Default.
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during the continuance of an Event of Default to act with
the required standard of care, to be indemnified by the holders before
proceeding to exercise any right or power under the Indenture at the request of
the holders. The Indenture provides that the holders of a majority in
outstanding Principal Amount of the notes may, subject to certain exceptions, on
behalf of the holders direct the time, method and place of conducting
proceedings for remedies available to the Trustee, or exercising any trust or
power conferred on the Trustee.
The Indenture includes a covenant that we will file annually with the
Trustee a certificate of no default, or specifying any default that exists.
In certain cases, the holders of a majority in outstanding Principal Amount
of the notes may on behalf of the holders rescind a declaration of acceleration
or waive any past default or Event of Default. However, a default not
theretofore cured in payment of the principal, premium, if any, of or interest,
if any, on the notes or in respect of a provision which under the Indenture
cannot be modified or amended without the consent of the holder of each note.
No holder of a note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder unless:
- the holder shall have previously given to the Trustee written notice of a
continuing Event of Default;
- the holders of at least 25% in aggregate Principal Amount of the
outstanding notes have also made a written request;
- the Holder or Holders have offered reasonable indemnity to the Trustee to
institute the proceeding as trustee;
- the Trustee has not received from the Holders of a majority in outstanding
principal amount of the notes a direction inconsistent with the request;
and
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- the Trustee has failed to institute the requested proceeding within 90
calendar days of the notice.
However, the limitations described above do not apply to a suit instituted
by a holder of notes for enforcement of payment of the principal of and interest
on the notes on or after the respective due dates expressed in the notes.
MODIFICATION AND WAIVER
Except as described below, modifications and amendments of the Indenture may
be made by Home Depot and the Trustee with the consent of the holders of a
majority in outstanding Principal Amount of the notes. However, no modification
or amendment may, without the consent of the holder of each note:
- change the stated maturity of, or time for payment of interest on, the
notes;
- reduce the Principal Amount of, the rate of interest on, or the premium,
if any, payable upon the redemption of, the notes;
- change the place or currency of payment of principal of, or premium, if
any, or interest on, the notes;
- impair the right to institute suit for the enforcement of any payment on
or with respect to the notes on or after the stated maturity or prepayment
date thereof; or
- reduce the percentage in principal amount of the notes, the consent of the
Holders of which is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults.
The holders of a majority in outstanding Principal Amount of the notes may
on behalf of the holders of all notes waive compliance by Home Depot with
certain covenants or conditions set forth in the Indenture. The holders of not
less than a majority in outstanding Principal Amount of the notes may on behalf
of the holders of all notes waive any past default under the Indenture, except a
default in the payment of the principal of, or premium, if any, or interest on,
the notes or in respect of a provision which under the Indenture cannot be
modified or amended without the consent of the holder of each note.
DEFEASANCE
We will be discharged from any and all obligations in respect of the notes
except for certain obligations to register the transfer or exchange of notes, to
replace stolen, lost or mutilated notes, to maintain paying agencies and hold
monies for payment in trust and to pay the principal of and interest, if any, on
notes, upon:
- the irrevocable deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations thereof in accordance with their terms will provide
money in an amount sufficient to pay any installment of principal,
premium, if any, and interest, if any, in respect of the notes on the
stated maturity date of the principal or installment of principal,
premium, if any, or interest; and
- the delivery by Home Depot to the Trustee of an Opinion of Counsel (who
may be counsel to Home Depot) to the effect that, based upon applicable
U.S. Federal income tax law or a ruling published by the United States
Internal Revenue Service, the defeasance and discharge will not be deemed,
or result in, a taxable event with respect to the Holders.
We may also omit to comply with the restrictive covenants described under
"--Certain Covenants--Limitation on Liens" and "--Certain Covenants--Limitations
on Sale and Lease-Back
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Transactions" above (together with certain other covenants set forth in the
Indenture) and any omission shall not be an Event of Default with respect to the
notes, upon:
- the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay any installment of principal, premium, if any, and
interest in respect of the notes on the stated maturity date of the
principal or installment of principal, premium, if any, or interest; and
- the delivery by Home Depot to the Trustee of an Opinion of Counsel (who
may be counsel to Home Depot) to the effect that the requested defeasance
and discharge will not be deemed, or result in a taxable event with
respect to the holders. Our obligations under the Indenture and the notes
other than with respect to these covenants shall remain in full force and
effect.
In the event we exercise our option to omit compliance with certain
covenants as described in the preceding paragraph with respect to the notes and
the notes are declared due and payable because of the occurrence of any Event of
Default, then the amount of money and U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the notes at the time
of the acceleration resulting from the Event of Default. We shall in any event
remain liable for these payments as provided in the notes.
SATISFACTION AND DISCHARGE
At our option, we may satisfy and discharge the Indenture (except for
specified obligations of Home Depot and the Trustee, including, among others,
the obligations to apply money held in trust) when:
- either
(a) all notes previously authenticated and delivered under the
Indenture have been delivered to the Trustee for cancellation or
(b) all notes not theretofore delivered to the Trustee for
cancellation have become due and payable, will become due and
payable at their stated maturity within one year, or are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee, and Home Depot has deposited or caused
to be deposited with the Trustee as trust funds in trust for this
purpose an amount sufficient to pay and discharge the entire
indebtedness on the notes;
- Home Depot has paid or caused to be paid all other sums payable under the
Indenture by Home Depot; and
- Home Depot has delivered to the Trustee an officer's certificate and an
opinion of counsel, each to the effect that all conditions precedent
relating to the satisfaction and discharge of the Indenture have been
satisfied.
INFORMATION
Home Depot will file with the Trustee and the SEC, and transmit to holders
of the notes, the information, documents and other reports, and summaries
thereof, as may be required by the Trust Indenture Act of 1939 at the time and
in the manner provided by the Trust Indenture Act. However, any information,
documents or reports required to be filed with the SEC pursuant to Section 13 or
15(d) of the Exchange Act will be filed with the Trustee within 15 calendar days
after the information, document or report is required to be filed with the SEC.
In addition, Home Depot has agreed that, for so long as any notes remain
outstanding, it will furnish to the Holders of the notes and to securities
analysts and prospective purchasers of the notes,
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upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act. Any request for information should be
directed to Home Depot at the address referred to under "Where You Can Find More
Information."
Home Depot will be required to file with the Trustee annually, within four
months of the end of each fiscal year of Home Depot, a certificate as to the
compliance with all conditions and covenants of the Indenture.
GOVERNING LAW
The Indenture and the notes will be governed by, and construed in accordance
with, the laws of the State of New York.
EXCHANGE OFFER; REGISTRATION RIGHTS
In connection with the sale of the old notes by Home Depot to the initial
purchasers of the old notes, Home Depot and the initial purchasers entered into
a registration rights agreement.
In the registration rights agreement, Home Depot agreed to:
- file with the SEC no later than December 26, 1999 a registration statement
relating to an offer to exchange the new notes for old notes;
- use its commercially reasonable efforts to cause the registration
statement to be declared effective by the SEC no later than March 25,
2000;
- offer to exchange the new notes for old notes promptly after the
effectiveness of the registration statement; and
- keep the exchange offer open for not less than 30 days (or longer if
required by applicable law) after the date on which notice of the exchange
offer is mailed to the holders of the old notes.
The registration rights agreement also requires Home Depot to take
additional action in the following circumstances:
- if Home Depot is not permitted to consummate the exchange offer because
the exchange offer is not permitted by applicable law or SEC policy;
- if any of the initial purchasers of the old notes directly from Home Depot
so requests with respect to old notes not eligible to be exchanged for new
notes in the exchange offer and held by it following consummation of the
exchange offer;
- if any holder of Transfer Restricted Securities (as defined below) is not
eligible to participate in the exchange offer or, in the case of any
holder (other than a broker-dealer) that participates in the exchange
offer, the ineligible holder does not receive freely tradeable new notes;
or
- if the exchange offer is not consummated by May 4, 2000.
If these circumstances, Home Depot would be required to:
- file with the SEC as promptly as practicable, a shelf registration
statement relating to resales of the affected original securities or
exchange securities, as the case may be;
- use its commercially reasonable efforts to cause the shelf registration
statement to be declared effective under the Securities Act; and
- use its commercially reasonable efforts to keep the shelf registration
statement effective (with certain exceptions) until the earlier of
(1) two years from the effective date and
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(2) the date on which all securities registered thereunder cease to be
Transfer Restricted Securities.
Home Depot will be permitted to suspend the effectiveness of the shelf
registration statement or the use of the prospectus that is part of the shelf
registration statement during specified periods ("Suspension Periods") in
specified circumstances, including circumstances relating to the pending
corporate developments.
"Transfer Restricted Securities" means each note until the earliest to occur
of:
- the date on which the note has been exchanged by a person other than a
broker-dealer for a freely tradeable new note in the exchange offer;
- following the exchange by a broker-dealer in the exchange offer of an old
note for a new note, the date on which the new note is sold to a purchaser
who receives from the broker-dealer on or prior to the date of sale a copy
of this prospectus;
- the date on which the note has been effectively registered under the
Securities Act and disposed of in accordance with the shelf registration
statement; and
- the date on which the note is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k)
under the Securities Act.
Home Depot has agreed to pay additional interest on the old notes if any of
the following events (each of which constitutes a "registration default")
occurs:
- if, at the close of business on December 26, 1999, neither the
registration statement nor the shelf registration statement has been filed
with the SEC;
- at the close of business on May 4, 2000, the exchange offer has not been
consummated and, if required to be filed in lieu of the exchange offer,
the shelf registration statement is not declared effective by the SEC; or
- after either the registration statement or the shelf registration
statement is declared effective,
(a) the registration statement ceases to be effective or
(b) the registration statement or the related prospectus ceases to be
usable (excluding any Suspension Periods) in connection with resales of
Transfer Restricted Securities during the applicable periods specified in
the registration rights agreement because either:
- any event occurs as a result of which the related prospectus forming part
of the registration statement would include an untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading; or
- it is necessary to amend the registration statement or supplement the
related prospectus to comply with the Securities Act or the Exchange Act
or the respective rules thereunder.
Additional interest will accrue on the affected old notes over and above the
interest set forth in the title of the old notes from and including the date on
which any registration default occurs to but excluding the date on which all
registration defaults have been cured, at a rate of 0.50% per annum (regardless
of number of registration defaults).
Any holders (other than the initial purchasers) of old notes who are
eligible to participate in the exchange offer but fail to, or elect not to,
participate therein will continue to hold Transfer Restricted Securities and
will have no further rights to exchange their old notes or have the old notes
registered under the registration rights agreement.
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REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of Home Depot within three months of, or subsequent
to, a default by Home Depot to make payment in full of principal of or interest
on any debt securities issued pursuant to the Indenture when and as the same
becomes due and payable, to obtain payment of claims, or to realize for its own
account on property received in respect of any claim as security or otherwise,
unless and until the default is cured. However, the Trustee's rights as a
creditor of Home Depot will not be limited if the creditor relationship arises
from, among other things:
- the ownership or acquisition of securities issued under any indenture or
having a maturity of one year or more at the time of acquisition by the
Trustee;
- certain advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by the Indenture;
- disbursements made in the ordinary course of business in its capacity as
indenture trustee, transfer agent, registrar, custodian or paying agent or
in any other similar capacity;
- indebtedness created as a result of goods or securities sold in a cash
transaction or services rendered or premises rented; or
- the acquisition, ownership, acceptance or negotiation of certain drafts,
bills of exchange, acceptances or other obligations.
The Indenture does not prohibit the Trustee from serving as trustee under
any other indenture to which we may be a party from time to time or from
engaging in other transactions with us. If the Trustee acquires any conflicting
interest within the meaning of the Trust Indenture Act and any debt securities
issued pursuant to the Indenture are in default, it must eliminate the conflict
or resign.
CERTAIN DEFINED TERMS
Capitalized terms used but not defined herein have the meanings given to the
terms in the Indenture. In addition, for purposes of the Indenture the following
definitions apply:
"Attributable Debt" in respect of any Sale and Lease-Back Transaction means,
as of the time of determination, the lesser of
(1) the sale price of the Principal Property so leased multiplied by a
fraction the numerator of which is the remaining portion of the base
term of the lease included in the transaction and the denominator of
which is the base term of the lease, and
(2) the total obligation (discounted to present value at the rate of
interest implicit in the transaction compounded semiannually) of the
lessee for rental payments (other than amounts required to be paid on
account of property taxes as well as maintenance, repairs, insurance,
water rates and other terms which do not constitute payments or
property rights) during the remaining portion of the base term of the
lease included in the transaction.
"Consolidated Capitalization" means the total of all of the assets appearing
on the most recent consolidated balance sheet of Home Depot and its
Subsidiaries, less
(1) current liabilities, including liabilities for indebtedness maturing
more than 12 months from the date of the original creation thereof,
but maturing within 12 months from the date of determination, and
(2) deferred income taxes.
"Consolidated Net Tangible Assets" means the total of all of the assets
appearing on the most recent consolidated balance sheet of Home Depot and its
Subsidiaries (less depreciation and valuation
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reserves and other reserves and items deductible from gross book value of
specific asset accounts under GAAP), after deducting therefrom
(1) all current liabilities, including liabilities for indebtedness
maturing more than 12 months from the date of the original creation
thereof, but maturing within 12 months from the date of
determination, and
(2) all goodwill, trade names, trademarks, patents, unamortized debt
discount, organization expenses and other like intangibles.
"Funded Indebtedness" of a corporation means the principal of
(1) indebtedness for money borrowed or evidenced by an instrument given
in connection with an acquisition which is not payable on demand and
which matures, or which the corporation has the right to renew or
extend to a date, more than one year after the date of determination,
(2) any indebtedness of others of the kinds described in the preceding
clause (1) for the payment of which the corporation is responsible or
liable as a guarantor or otherwise, and
(3) amendments, renewals and refundings of any this indebtedness. For the
purposes of the definition of "Funded Indebtedness," the term
"principal" when used at any date with respect to any indebtedness
means the amount of principal of this indebtedness that could be
declared due and payable on that date pursuant to the terms of this
indebtedness.
"Person" means any individual, partnership, corporation, joint stock
company, business trust, trust, unincorporated association, joint venture or
other entity, or a government or political subdivision or agency thereof.
"Principal Amount" means, when used with respect to any note, the amount of
principal thereof that could then be declared due and payable as a result of an
Event of Default with respect to the note.
"Principal Property" means all real property and tangible personal property
owned by the Company or a Subsidiary constituting a part of any store, warehouse
or distribution center located within the United States, exclusive of motor
vehicles, mobile materials-handling equipment and other rolling stock, cash
registers and other point of sale recording devices and related equipment, and
data processing and other office equipment; provided, however, that this term
shall not include any property constituting a part of any store, warehouse or
distribution center unless the net book value of all real property (including
leasehold improvements) and tangible personal property constituting a part of
the store, warehouse or distribution center exceeds 0.25% of Consolidated
Capitalization.
"Sale and Lease-Back Transaction" of Home Depot or any Subsidiary means any
arrangement whereby:
(1) property has been or is to be sold or transferred by Home Depot or
any Subsidiary to any Person with the intention on the part of Home
Depot or any Subsidiary of taking back a lease of the property
pursuant to which the rental payments are calculated to amortize the
purchase price of the property substantially over the useful life of
the property;
(2) the property is in fact so leased by Home Depot or any Subsidiary;
and
(3) the commitment by or on behalf of the purchaser or transferee is
obtained more than twelve months after the later of
(a) the completion of the acquisition, substantial repair or
alteration, construction, development or substantial improvement
of the property or
(b) the placing in operation of the property or of the property as so
substantially repaired or altered, constructed, developed or
substantially improved.
40
<PAGE>
"Senior Funded Indebtedness" of Home Depot means any Funded Indebtedness of
Home Depot unless in any instruments evidencing or securing Funded Indebtedness
it is provided that the Funded Indebtedness is subordinate in right of payment
to the Notes to the extent provided in the Indenture.
"Senior Funded Indebtedness" of a Subsidiary means any Funded Indebtedness
of that Subsidiary and the aggregate preference on involuntary liquidation of
any class of stock of that Subsidiary ranking, either as to payment of dividends
or distribution of assets, prior to any other class of stock of that Subsidiary.
"Subsidiary" means, as applied, with respect to any Person, any corporation,
partnership or other legal entity of which, in the case of a corporation, more
than 50% of the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of the corporation
(irrespective of whether at the time capital stock of any other class or classes
of the corporation has or might have voting power upon the occurrence of any
contingency), or, in the case of any partnership or other legal entity, more
than 50% of the ordinary equity capital interests, is at the time directly or
indirectly owned or controlled by that Person, by that Person and one or more of
its other Subsidiaries or by one or more of that Person's other Subsidiaries.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, proposed
Treasury regulations, judicial authority and administrative rulings and
practice. We cannot assure you that the Internal Revenue Service will agree with
these conclusions, and no ruling from the IRS has been or will be sought.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements set forth herein. Any
changes or interpretations may or may not be retroactive and could affect the
tax consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. WE RECOMMEND THAT EACH
HOLDER CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES
OF EXCHANGING HIS, HER OR ITS OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The exchange of old notes for new notes in the exchange offer will not be
treated as an "exchange" for federal income tax purposes because the new notes
do not differ materially in kind or extent from the old notes. Accordingly:
- holders will not recognize taxable gain or loss upon the receipt of new
notes in exchange for old notes in the exchange offer;
- the holding period for a new note received in the exchange offer will
include the holding period of the old note surrendered in exchange
therefor; and
- the adjusted tax basis of a new note immediately after the exchange will
be the same as the adjusted tax basis of the old note surrendered in
exchange therefor.
41
<PAGE>
PLAN OF DISTRIBUTION
We are not using any underwriters for this exchange offer. We are bearing
the expenses of the exchange.
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of these new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
the old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 135 days after the
expiration date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any resale of these
old notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other persons. New notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new notes, or a combination
of these methods of resale, at market prices prevailing at the time of resale,
at prices related to the prevailing market prices, or negotiated prices. Any
resale of new notes may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of any new notes. Any
broker-dealer that resells new notes that were received by it for its own
account pursuant to the exchange offer and any broker-dealer that participates
in a distribution of the new notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any these resales of new
notes and any commissions or concessions received by any these persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 135 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests these documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the notes, other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the notes, including any broker-dealer, against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the new notes was passed upon for us by King & Spalding,
Atlanta, Georgia. A copy of the legal opinion rendered by King & Spalding was
filed as an exhibit to the registration statement containing this prospectus.
EXPERTS
The consolidated financial statements of The Home Depot, Inc. and
subsidiaries as of January 31, 1999 and February 1, 1998 and for each of the
years in the three-year period ended January 31, 1999, have been incorporated by
reference in this prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act. We
file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange
42
<PAGE>
Commission. Our SEC filings are available over the Internet at the SEC's web
site at http: // www.sec.gov. You may also read and copy any document we file
with the SEC at its public reference facilities:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on
the operations of the public reference facilities. Our SEC filings are also
available at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
43
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with the SEC, which means:
- incorporated documents are considered part of this prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede the information in this prospectus and any information that was
previously incorporated in this prospectus.
We incorporate by reference the documents listed below which were filed with
the SEC under the Securities Exchange Act of 1934:
(1) our Annual Report on Form 10-K for the year ended January 31, 1999,
filed on April 19, 1999; and
(2) our Quarterly Report on Form 10-Q for the quarters ended May 2, 1999,
filed on June 3, 1999; August 1, 1999, filed on August 27, 1999; and
October 31, 1999, filed on December 3, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus and prior to the
termination of the offering:
- reports filed under Section 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- reports filed under Section 15(d) of the Exchange Act.
You can obtain any of the filings incorporated by reference in this
prospectus through us or from the SEC through the SEC's web site or at the
addresses listed above. Documents incorporated by reference are available from
us without charge, excluding any exhibits to those documents that are not
specifically incorporated by reference in THESE documents. You can request a
copy of the documents incorporated by reference in this prospectus by requesting
them in writing or by telephone from us at the following address:
The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339-4024
Attention: Investor Relations
Telephone: (770) 433-8211
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY NOT LATER THAN
JANUARY 27, 2000, WHICH IS 5 BUSINESS DAYS BEFORE THE EXPIRATION DATE, IN ORDER
TO RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES ON FEBRUARY 4, 2000.
The exchange offer is not being made to, nor will Home Depot accept
surrenders for exchange from, holders of old notes in any jurisdiction in which
the exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of that jurisdiction.
44
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[HOME DEPOT LOGO]
THE HOME DEPOT, INC.
OFFER TO EXCHANGE
$500,000,000
6 1/2% SENIOR NOTES DUE SEPTEMBER 15, 2004
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR $500,000,000 OUTSTANDING UNREGISTERED
6 1/2% SENIOR NOTES DUE SEPTEMBER 15, 2004
------------------
PROSPECTUS
------------------
, 1999
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, ANY INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY HOME DEPOT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER
IN ANY JURISDICTION.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article IV, Section 4, of the Registrant's Restated By-Laws provide that to
the fullest extent permitted by Delaware law, each former, present or future,
director, officer, employee or agent of the Registrant, and each person who may
serve at the request of the Registrant as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
shall be indemnified by the Registrant in all events.
Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that to the fullest extent permitted by Delaware law, no director of
the Registrant shall be liable to the Registrant 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 Registrant
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 Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 145 of the General Corporation Law of the State of Delaware sets
forth the applicable terms, conditions and limitations governing the
indemnification of officers, directors and other persons.
In addition, the Registrant maintains officers' and directors' liability
insurance for the benefit of its officers and directors.
ITEM 21. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<S> <C>
*1.1 Purchase Agreement dated September 21, 1999 between The Home Depot, Inc., Credit Suisse First Boston
Corporation and Invemed Associates LLC.
*4.1 Indenture, dated as of September 27, 1999, between The Home Depot, Inc. and The Bank of New York, as
Trustee.
*4.2 Registration Rights Agreement dated as of September 21, 1999 between The Home Depot, Inc., Credit
Suisse First Boston Corporation and Invemed Associates LLC.
4.3 Form of 6 1/2% Senior Note Due September 15, 2004 (included in Exhibit 4.1)
*5.1 Opinion of King & Spalding.
*12.1 Statement re: Computation of Ratios.
23.1 Consent of King & Spalding (included in Exhibit 5.1).
**23.2 Consent of KPMG LLP, Independent Certified Public Accountants.
*24.1 Powers of Attorney.
*25.1 Statement of Eligibility of Trustee on Form T-1.
*99.1 Form of Letter of Transmittal for 6 1/2% Senior Notes Due September 15, 2004.
*99.2 Form of Notice of Guaranteed Delivery for 6 1/2% Senior Notes Due September 15, 2004.
*99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------- -------------------------------------------------------------------------------------------------------
<S> <C>
*99.4 Form of Letter to Clients.
*99.5 Form of Letter to Nominees.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
(b) Financial Statement Schedules
None.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(5) To respond to requests for information that is incorporated by
reference into this prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
II-2
<PAGE>
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on December 16, 1999.
<TABLE>
<S> <C> <C>
THE HOME DEPOT, INC.
By: /s/ ARTHUR M. BLANK
-----------------------------------------
Arthur M. Blank
President & CEO
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated below as of the 16th day of December, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
/s/ BERNARD MARCUS
------------------------------------------- Chairman of the Board
Bernard Marcus
/s/ ARTHUR M. BLANK
------------------------------------------- President and CEO (Principal Executive
Arthur M. Blank Officer)
/s/ RONALD M. BRILL
------------------------------------------- Executive Vice President--Chief Administrative
Ronald M. Brill Officer and Director
*
------------------------------------------- Director
Frank Borman
/s/ DENNIS CAREY
------------------------------------------- Executive Vice President--Chief Financial
Dennis Carey Officer (Principal Financial Officer)
*
------------------------------------------- Director
John L. Clendenin
*
------------------------------------------- Director
Berry R. Cox
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
*
------------------------------------------- Director
William S. Davila
*
------------------------------------------- Director
Milledge A. Hart, III
*
------------------------------------------- Director
Bonnie G. Hill
*
------------------------------------------- Director
Kenneth G. Langone
*
------------------------------------------- Senior Vice President and Director
M. Faye Wilson
</TABLE>
- ------------------------
* The undersigned, by signing his name hereto, does hereby sign this report on
behalf of each of the above-indicated directors of the registrant pursuant
to powers of attorney executed by such directors.
<TABLE>
<S> <C> <C> <C>
BY: /s/ ARTHUR M. BLANK
--------------------------------------
Arthur M. Blank
Attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<S> <C>
*1.1 Purchase Agreement dated September 21, 1999 between The Home Depot, Inc., Credit Suisse First Boston
Corporation and Invemed Associates LLC.
*4.1 Indenture, dated as of September 27, 1999, between The Home Depot, Inc. and The Bank of New York, as
Trustee.
*4.2 Registration Rights Agreement dated as of September 21, 1999 between The Home Depot, Inc., Credit
Suisse First Boston Corporation and Invemed Associates LLC.
4.3 Form of 6 1/2% Senior Note Due September 15, 2004 (included in Exhibit 4.1)
*5.1 Opinion of King & Spalding.
*12.1 Statement re: Computation of Ratios.
23.1 Consent of King & Spalding (included in Exhibit 5.1).
**23.2 Consent of KPMG LLP, Independent Certified Public Accountants.
*24.1 Powers of Attorney.
*25.1 Statement of Eligibility of Trustee on Form T-1.
*99.1 Form of Letter of Transmittal for 6 1/2% Senior Notes Due September 15, 2004.
*99.2 Form of Notice of Guaranteed Delivery for 6 1/2% Senior Notes Due September 15, 2004.
*99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
*99.4 Form of Letter to Clients.
*99.5 Form of Letter to Nominees.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 23.2
The Board of Directors
The Home Depot, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Atlanta, Georgia
December 15, 1999
