-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SqZEs0HqLdi6w9DmoPlIyui09J+9LoOMocOsbUaEHZ1h9gUTXp4p+yKtbPgSSIEQ ywGwvUZ1eiJLxxU09XxU4Q== 0000354950-94-000001.txt : 19940425 0000354950-94-000001.hdr.sgml : 19940425 ACCESSION NUMBER: 0000354950-94-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19940130 FILED AS OF DATE: 19940422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME DEPOT INC CENTRAL INDEX KEY: 0000354950 STANDARD INDUSTRIAL CLASSIFICATION: 5211 IRS NUMBER: 953261426 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08207 FILM NUMBER: 94523957 BUSINESS ADDRESS: STREET 1: 2727 PACES FERRY RD CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4044338211 10-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended January 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 1-8207 THE HOME DEPOT, INC. (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) IRS No. 95-3261426 (I.R.S. Employer Identification No.) 2727 Paces Ferry Road, Atlanta, Georgia (Address of principal executive offices) 30339 (Zip Code) Registrant's telephone number, including area code: (404) 433-8211 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of Each Exchange Title of Each Class on Which Registered Common Stock, $.05 Par Value New York Stock Exchange 4-1/2% Convertible Subordinated New York Stock Exchange Notes due 1997 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[X] The aggregate market value of the Common Stock of the Registrant held by nonaffiliates of the Registrant on March 28, 1994 was $17,835,344,406. The aggregate market value was computed by reference to the closing price of the stock on the New York Stock Exchange on such date. For the purposes of this response, executive officers and directors are deemed to be the affiliates of the Registrant and the holding by nonaffiliates was computed as 418,473,590 shares. The number of shares outstanding of the Registrant's Common Stock as of March 28, 1994 was 450,648,080 shares. DOCUMENTS INCORPORATED BY REFERENCE The Registrant's proxy statement for its Annual Meeting of Stockholders, to be held May 25, 1994, which will be filed pursuant to Regulation 14A within 120 days of the close of Registrant's fiscal year, is incorporated by reference in answer to Part III of this report but only to the extent indicated therein. In addition, pages 20 through 38 of The Home Depot, Inc.'s 1993 Annual Report to Stockholders is incorporated by reference in answer to Items 6, 7 and 8 of Part II and Item 14(a) of Part IV of this report. PART I Item 1. BUSINESS The Home Depot, Inc. and its subsidiaries ("The Home Depot" or "Company") is the leading retailer in the home improvement industry. It operates "warehouse style" stores which sell a wide assortment of building materials and home improvement products. At fiscal year end the Company's three operating divisions-- Western, Southeast and Northeast--had 264 stores in 23 states with an aggregate total of approximately 26,383,000 square feet of selling space. Such stores average approximately 100,000 square feet of enclosed space per store, with an additional 10,000 to 28,000 square feet of outside selling and storage space. The Company's executive offices are located at 2727 Paces Ferry Road, Atlanta, Georgia 30339, telephone number (404) 433-8211. The Home Depot's operating strategy stresses providing a broad range of merchandise at competitive prices and utilizing highly knowledgeable service oriented personnel and aggressive advertising. Company-employed shoppers regularly check prices at competitors' operations to ensure that The Home Depot's low "Day-In, Day-Out" warehouse prices are competitive within each market. Since a large proportion of the Company's customers are individual homeowners, many of whom may have limited experience in do-it-yourself projects, management considers its employees' knowledge of products and home improvement techniques and applications to be very important to its marketing approach and its ability to maintain customer satisfaction. The Home Depot also devotes significant marketing, advertising and service efforts toward attracting professional remodelers and commercial users. Products Management estimates that during the course of a year, a typical store stocks approximately 30,000 product items, including variations in color and size. Each store carries a wide selection of quality and nationally advertised brand name merchandise. The table below shows the percentage of sales of each major product group for each of the last three fiscal years. However, these percentages may not necessarily be representative of the Company's future product mix due, among other things, to the effects of promotional activities associated with opening additional stores. Also, newly opened stores did not operate through a complete seasonal product cycle for all periods presented.
Percentage of Sales Year Ended Year Ended Year Ended Feb. 2, Jan. 31, Jan. 30, 1992 1993 1994 Product Group Plumbing, heating, lighting and electrical supplies 28.5% 27.3% 27.6% Building materials, lumber, floor and wall coverings 32.8 34.1 34.2 Hardware and tools 12.3 12.8 13.0 Seasonal and specialty items 15.2 14.8 14.5 Paint and Other 11.2 11.0 10.7 ----- ----- ----- 100.0% 100.0% 100.0% ===== ===== =====
The Company sources its merchandise from approximately 4,350 vendors worldwide, of which no single vendor accounts for as much as 10% of purchases. The Company is not dependent on any single vendor. A substantial majority of merchandise is purchased directly from manufacturers, thereby eliminating costs of intermediaries. Management believes that competitive sources of supply are readily available for substantially all its products. Marketing and Sales Management believes a number of the Company's existing stores are operating at or above their optimum capacity. In order to enhance market penetration over time, the Company has adopted a strategy of adding new stores near the edge of the market areas served by existing stores. While such a strategy may initially have a negative impact on the rate of growth of comparable store-for-store sales, management believes the benefits of this "cannibalization" strategy are to increase customer satisfaction and overall market share by reducing delays in shopping, increasing utilization by existing customers and attracting new customers to more convenient locations. The Home Depot has continued to introduce or refine a number of merchandising programs during fiscal 1993. Key among them is the Company's ongoing commitment to becoming the supplier of first choice to an assortment of professional customers, primarily small-scale remodelers, carpenters, plumbers, electricians and building maintenance professionals. The Company has reacted to the needs of this group by emphasizing commercial credit programs, delivery services, new merchandising programs and more efficient shopping through the Company's Store Productivity Improvement program. The Company continued a Company-wide roll-out of an enlarged garden center prototype. These centers which are as large as 28,000 square feet, feature 6,000 to 8,000 square foot greenhouses or covered selling areas providing year round selling opportunities as well as a significantly expanded product assortment. By the end of fiscal 1993, the prototype was in place in 87 stores. Both new and older stores will incorporate the expanded centers where space is available. During fiscal 1993, the Company continued to develop innovative merchandising programs that are helping to further grow the business. The Company's installed sales program became available in 251 stores in 26 markets and is planned to be in all of the Company's stores over the next year. There are approximately 2,370 installed sales vendors who, as independent, licensed contractors, are authorized to provide services to customers. This program targets the buy-it-yourself ("B-I-Y") customer, who will purchase an item but either does not have the desire or ability to install the item. During the past year, the Company began a three year marketing effort to support its sponsorship of the 1994 and 1996 Olympic Games and the U.S. Olympic teams' participation at those games. A select number of the Company's key suppliers are providing significant financial support for the sponsorship. In January 1994, the Company opened its second Expo(Regis. TM) Design Center in Atlanta, Georgia, which is the first of its kind on the East Coast. The Expo stores, located in San Diego and Atlanta, are enabling the regional merchandising staff to test a variety of upscale interior design products and services. The Company is currently considering the feasibility of opening Expo stores in other markets. During 1993 and early 1994, the Company also opened seven Depot Diners on a test basis in Atlanta, Seattle and various locations in South Florida. Depot Diners are an extension of the Company's commitment to total customer satisfaction, and are designed to provide customers and employees with a convenient place to eat. The Company believes customers with limited amounts of time to complete their shopping, especially customers with small children, may spend more time in the store if fast food is available on site. The food service providers vary by market. "The Home Depot", the "Homer" advertising symbol and various private label brand names under which the Company sells a limited range of products are service marks, trademarks or trade names of the Company and are considered to be important assets of the Company. Information Systems Each store is equipped with a computerized point of sale system, electronic bar code scanning system, and a mini-computer. These systems provide efficient customer check-out with an approximate 90 percent scan rate, store-based inventory management, rapid order replenishment, labor planning support, and item movement information. Store information is communicated to home office and divisional office computers via a satellite network. These computers provide corporate financial and merchandising support systems. The Company is constantly assessing and upgrading its information systems to support its growth, reduce and control costs, and enable better decision-making. The Company continues to see greater efficiency as a result of its electronic data interchange (EDI) program. Currently, over 250 of the Company's highest volume vendors are participating in the EDI program. The Company also operates its own television network and produces training and communications programs that are transmitted to stores via the satellite network. Employees As of fiscal year end, The Home Depot employed approximately 50,700 persons, of whom approximately 3,600 were salaried and the remainder were compensated on an hourly basis. Approximately 90 percent of the Company's employees are employed on a full-time basis. In order to attract and retain qualified personnel, the Company seeks to maintain salary and wage levels above those of its competitors in its market areas. The Company's policy is to hire and train additional personnel in anticipation of future store expansion. The Company has never experienced a strike or any work stoppage and management believes that its employee relations are satisfactory. There are no collective bargaining agreements covering any of the Company's employees. Competition The business of the Company is highly competitive, based in part on price, location of store, customer service and depth of merchandise. In each of the markets served by the Company, there are several other chains of building supply houses, lumber yards and home improvement stores. In addition, the Company must compete, with respect to some of its products, with discount stores, local, regional and national hardware stores, warehouse clubs, independent building supply stores and to a lesser extent, other retailers. Due to the variety of competition faced by the Company, management is unable to accurately measure the Company's market share in its existing market areas. However, management believes that the Company is an effective and significant competitor in these markets. Executive Officers The following provides information concerning the executive officers holding positions in the Company and/or its subsidiaries. BERNARD MARCUS, has been Chairman of the Board of Directors and Chief Executive Officer ("CEO") since its inception in 1978, and is, together with Mr. Arthur M. Blank and Mr. Kenneth G. Langone (a director of the Company), a co-founder of the Company. Mr. Marcus serves on the Board of Directors of Wachovia Bank of Georgia, N.A., National Service Industries, Inc. and the New York Stock Exchange, Inc. Mr. Marcus is a member of the Advisory Board and Board of Directors of the Shepherd Spinal Center in Atlanta, as well as a Vice President and member of the Board of The City of Hope, a charitable organization in Duarte, California. Mr. Marcus is also a member of Emory University's Board of Visitors. ARTHUR M. BLANK, has been President, Chief Operating Officer ("COO") and a director of The Home Depot since its inception in 1978; and is, together with Mr. Bernard Marcus and Mr. Kenneth G. Langone, a co-founder of the Company. Mr. Blank serves as Chairman of the Board of Trustees of North Carolina Outward Bound School, a non-profit corporation; serves on the Board of Trustees of Emory University; the Board of Councilors of the Carter Center of Emory University; and the Board of Directors of Post Properties Inc. and Harry's Farmers Market, Inc. RONALD M. BRILL, has been Executive Vice President and Chief Financial Officer ("CFO") of the Company since March 1993. Mr. Brill joined The Home Depot as its Controller in 1978, was elected Treasurer in 1980, Vice President-Finance in 1981, Senior Vice President and CFO in 1984, and elected as a director in 1987. Mr. Brill serves on the Board of Directors of AutoFinance Group, Inc.; the Board of Trustees of the Atlanta Jewish Federation; the Board of Trustees of Woodruff Arts Center; the Board of Directors of the Atlanta High Museum of Art; the Board of Directors of the Atlanta Chamber of Commerce; and the Governing Board of Woodward Academy. JAMES W. INGLIS, has been a director of the Company since 1993. Mr. Inglis has been Executive Vice President-Strategic Development since April 1994. Mr. Inglis joined The Home Depot in 1983 as a merchandiser and was shortly thereafter promoted to Senior Merchandiser and then promoted to Vice President- Merchandising (West Coast) in 1985, and Executive Vice President- Merchandising in 1988. Mr. Inglis serves as endowment chairman for the City of Hope's hardware and home improvement industry group. BRUCE W. BERG, has been President-Southeast Division since 1991. Mr. Berg joined the Company in 1984 as Vice President- Merchandising (East Coast) and was promoted to Senior Vice President (East Coast) in 1988. BILL HAMLIN, has been Executive Vice President-Merchandising since April 1994. Mr. Hamlin joined the Company in 1985 as a merchandiser and was promoted to Vice President-Merchandising (West Coast) in 1988 and President-Western Division in 1990. LARRY M. MERCER, has been President-Northeast Division since 1991. Mr. Mercer joined the Company in 1979 as an Assistant Store Manager and after serving as a Store Manager was promoted to Regional Manager of the Central Florida Region in 1983. Mr. Mercer was then promoted to Vice President-Store Operations (East Coast) in 1987. MARSHALL L. DAY, has been Senior Vice President-Finance since March 1993. Mr. Day joined the Company in 1986 as Controller, was promoted to Vice President, Controller in 1988 and Vice President-Finance in 1989. STEPHEN BEBIS, has been President and Chief Executive Officer of The Home Depot Canada, a Canadian partnership, since February 1994. Mr. Bebis' division operates the Aikenhead's Home Improvement Warehouse, which is owned jointly by the Molson Companies Limited and The Home Depot. Mr. Bebis joined The Home Depot in 1984 as a Merchandiser. Prior to joining Aikenhead's in 1990, Mr. Bebis was Vice President-Merchandising for the Mid- South Division of The Home Depot. Mr. Bebis is currently a member of the Board of Directors of Habitat for Humanity Canada and a member of the Young Presidents' Organization. HARRY PIERCE, has been President-Western Division since April 1994. Mr. Pierce joined the Company in 1984 as an Assistant Store Manager and later became an Associate Merchandiser in 1985. After serving several years as a Merchandiser both in Atlanta and in the Northeast, Mr. Pierce was promoted to Manager, Merchandising Information Systems in 1990. In 1992, Mr. Pierce joined the Company's Western Division as Vice President- Merchandising. Item 2. PROPERTIES The following table illustrates the Company's store locations by state as of the end of fiscal year 1993:
Number of Stores State in State Alabama 2 Arizona 11 California 73 Connecticut 7 Florida 52 Georgia 18 Louisiana 6 Maryland 6 Massachusetts 9 Nevada 3 New Hampshire 3 New Jersey 12 New York 10 North Carolina 3 Oklahoma 2 Oregon 1 Pennsylvania 2 Rhode Island 1 South Carolina 3 Tennessee 7 Texas 26 Virginia 4 Washington 3 --- TOTAL 264 ===
At fiscal year end, The Home Depot had stores located in 23 states, with approximately 68% being concentrated in California, Georgia, Texas, Florida and Arizona. In late fiscal 1988, the Company began to open stores in the Northeast, its first expansion outside the Sunbelt states. Despite a generally weak economy in the Northeast region, the stores the Company operates in this region have reported sales volumes which are among the highest of the Company's stores. Although new store openings for fiscal 1993 occurred primarily in existing markets, the Company continued its geographic expansion by opening stores in a number of new markets in fiscal 1993 -- upper New York; eastern Pennsylvania; metro Washington, D.C.; Portland, Oregon; Reno, Nevada; Greensboro, North Carolina; Charleston, South Carolina; Tallahassee, Florida; Augusta, Georgia; Bakersfield, Fresno and Stockton, California; and Oklahoma City, Oklahoma. In November 1993, the Company announced plans to acquire seven non-operating store locations in the Chicago area from Waban Inc., owners of HomeBase Home Improvement Centers. In February 1994, the Company acquired from the Molson Companies Limited ("Molson"), a 75% interest in the Canadian home improvement warehouse retailer, Aikenhead's Home Improvement Warehouse. The Company has the right to acquire Molson's remaining 25% interest in six years. The Company will be the managing partner of the new enterprise, known as The Home Depot Canada, a Canadian partnership. At the time of the acquisition, Aikenhead's was operating seven stores in Ontario and had an additional three stores scheduled to open by April 1994. The Company anticipates operating approximately 12 stores throughout major Canadian markets by the end of fiscal 1994. From the end of fiscal 1988 to the end of fiscal 1993, the Company increased its store count by an average of approximately 22% per year (from 96 to 264 stores) and increased the total store square footage by an average of approximately 26% per year (from 8,216,000 to 26,383,000 total square feet). The Home Depot expects to continue to increase its store count in both existing and selected new markets on a basis consistent with its previously stated policy of not exceeding a maximum growth rate of new stores of approximately 25 percent per year. The Home Depot took advantage of recent competitive opportunities despite this stated policy. During fiscal 1993, the Company opened 50 new stores and relocated six existing stores, including the opening of approximately 18 additional stores in the Northeast region, approximately 15 additional stores in the Southeast region, including the Expo Design Center store, and approximately 17 additional stores in the Western region. During fiscal 1994, the Company anticipates opening approximately 70 new stores: 18 in the Southeast, 18 in the Northeast, 19 in the West, 10 in the Midwest and five in Canada, plus relocations of nine existing stores. New stores average approximately 102,000 square feet with an additional 15,000 to 28,000 square feet of outside selling and storage area. Of the Company's 264 stores, 61% are owned (including those owned subject to a ground lease) consisting of approximately 16,197,00 square feet and 39% are leased consisting of approximately 10,186,000 square feet. In recent years, the relative percentage of new stores owned has increased. The Company prefers to own stores because of the greater operating control and flexibility, generally lower occupancy costs and certain other economic advantages of owned stores. See "Management's Discussion and Analysis of Results of Operations and Financial Condition--Liquidity and Capital Resources." The Company's executive, corporate staff and accounting office occupies approximately 371,000 square feet of leased space in two locations in Atlanta, Georgia. The Company occupies an aggregate of 122,500 square feet, of which 68,500 square feet is owned and 54,000 square feet is leased for divisional offices located in Atlanta, Georgia; Fullerton, California; South Plainfield, New Jersey; and Tampa, Florida. Item 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company is a party or to which any of its property is the subject. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 30, 1994. PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Since April 19, 1984, the Common Stock of the Company has been listed on the New York Stock Exchange under the symbol "HD". The table below sets forth the high and low sales prices of the Common Stock on the New York Stock Exchange Composite Tape as reported in The Wall Street Journal and the quarterly cash dividends declared per share of Common Stock during the periods indicated.
Price Range* Cash --------------- Dividends Low High Declared* --- ---- ---------- Fiscal Year 1992 First Quarter ended May 3, 1992 $29.75 $34.25 $.0150 Second Quarter ended August 2, 1992 30.88 38.00 .0225 Third Quarter ended November 1, 1992 36.75 43.75 .0225 Fourth Quarter ended January 31, 1993 42.75 51.50 .0225 Fiscal Year 1993 First Quarter ended May 2, 1993 $39.63 $50.50 $.0225 Second Quarter ended August 1, 1993 41.13 47.00 .0300 Third Quarter ended October 31, 1993 35.00 47.25 .0300 Fourth Quarter ended January 30, 1994 36.50 44.25 .0300 Fiscal Year 1994 First Quarter (through March 28, 1994) $37.13 $44.63 $.0300 _____________________________ * On July 1, 1992, the Company effected a three-for-two stock split and on April 13, 1993, the Company effected a four-for- three stock split, each in the form of a stock dividend, with respect to the shares of Common Stock issued and outstanding on June 11, 1992 and March 24, 1993, respectively. The prices in the table set forth above have been adjusted by the Company to give effect retroactively to such stock splits. Dividends declared also have been adjusted to give effect to the stock splits.
The Company paid its first cash dividend on June 22, 1987 and has since paid dividends in each quarter. Future dividend policy will depend on the Company's earnings, capital requirements, financial condition and other factors considered relevant by the Board of Directors. Number of Record Holders The number of record holders of The Home Depot's Common Stock as of March 28, 1994 was 61,596 (without including individual participants in nominee security position listings). Item 6. SELECTED FINANCIAL DATA Reference is made to information for the fiscal years 1988-1993 under the heading "Ten Year Selected Financial and Operating Highlights" contained in the Company's Annual Report to Stockholders for the fiscal year ended January 30, 1994, which information is incorporated herein by reference. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" contained in the Company's Annual Report to Stockholders for the fiscal year ended January 30, 1994, which information is incorporated herein by reference. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to information under the headings "Consolidated Statements of Earnings," "Consolidated Balance Sheets," "Consolidated Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements" and "Independent Auditors' Report" contained in the Company's Annual Report to Stockholders for the fiscal year ended January 30, 1994, which information is incorporated herein by reference. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 is incorporated by reference from the information in Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Stockholders to be held May 25, 1994, except as to biographical information on Executive Officers which is contained in Item I of this Annual Report on Form 10-K. Item 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference from the information in Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Stockholders to be held May 25, 1994. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 is incorporated by reference from the information in Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Stockholders to be held May 25, 1994. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 is incorporated by reference from the information in Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Stockholders to be held May 25, 1994. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following financial statements are filed herewith by incorporation by reference from pages 25 through 38 of the Registrant's Annual Report to Stockholders for the fiscal year ended January 30, 1994, as provided in Item 8 hereof: - Consolidated Statements of Earnings for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. - Consolidated Balance Sheets as of January 30, 1994 and January 31, 1993. - Consolidated Statements of Stockholders' Equity for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. - Consolidated Statements of Cash Flows for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. - Notes to Consolidated Financial Statements. - Independent Auditors' Report. 2. Financial Statement Schedules The following financial statement schedules are filed herewith: - Independent Auditors' Report on Financial Statement Schedules. - Schedule I - Investments for the fiscal year ended January 30, 1994. - Schedule II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees Other Than Related Parties for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. - Schedule V - Property and Equipment for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. - Schedule VI - Accumulated Depreciation and Amortization of Property and Equipment for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992. All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the last quarter of the fiscal year ended January 30, 1994. (c) Exhibits Exhibits marked with an asterisk (*) are hereby incorporated by reference to exhibits or appendices previously filed by the Registrant as indicated in brackets following the description of the exhibit. * 3.l Restated Certificate of Incorporation of The Home Depot, Inc. [Form 10-K for the fiscal year ended January 29, 1989, Exhibit 3.1]. * 3.2 By-Laws, as amended [Form 10-K for the fiscal year ended February 3, 1991, Exhibit 3.2]. * 4.1 Indenture dated as of January 15, 1992 among The Home Depot, Inc., as issuer, Home Depot U.S.A., Inc., as guarantor, and Wachovia Bank of Georgia, N.A., as trustee for $805,000,000, 4-1/2% Convertible Subordinated Notes due 1997. [Form 10-K for the fiscal year ended February 2, 1992, Exhibit 4.2]. *10.1 Investment Banking Consulting Contract dated April 17, 1985 between Invemed Associates, Inc. and the Registrant. [Form 10-K for the fiscal year ended February 2, 1992, Exhibit 10.1]. *10.2 +Corporate Office Management Bonus Plan of the Registrant dated March 1, 1991. [Form 10-K for the fiscal year ended February 2, 1992, Exhibit 10.2]. *10.3 +Employee Stock Purchase Plan, as amended March 22, 1991 [Appendix B to Registrant's Proxy Statement for the Annual Meeting of Stockholders held May 22, 1991]. 10.4 +Senior Officers' Bonus Pool Plan as adopted by the Compensation Committee of the Board of Directors on February 23, 1994. *10.5 +The Home Depot Employee Stock Ownership Plan and Trust, as amended [Form 10-K for the fiscal year ended January 29, 1989, Exhibit 10.7]. *10.6 +The Home Depot, Inc. 1991 Omnibus Stock Option Plan [Appendix A to Registrant's Proxy Statement for the Annual Meeting of Stockholders held May 22, 1991]. *10.7 +Executive Medical Reimbursement Plan, effective January 1, 1992 [Form 10-K for the fiscal year ended January 31, 1993, Exhibit 10.7]. 11 Computation of Earnings Per Common and Common Equivalent Share. 13 The Registrant's Annual Report to Stockholders for the fiscal year ended January 30, 1994. Only those portions of said report which are specifically designated in this Form 10-K as being incorporated by reference are being electronically filed pursuant to the Securities Exchange Act of 1934. 21 List of Subsidiaries of the Registrant. 23 Consent of Independent Auditors. 24 Special Powers of Attorney authorizing execution of this Form 10-K Annual Report have been granted and are filed herewith as follows: Power of Attorney from Frank Borman. Power of Attorney from Berry R. Cox. Power of Attorney from Peter S. Gold. Power of Attorney from Milledge A. Hart, III. Power of Attorney from James W. Inglis. Power of Attorney from Donald R. Keough. Power of Attorney from Kenneth G. Langone. Power of Attorney from M. Faye Wilson. - ---------------------- +Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant, The Home Depot, Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Atlanta, and State of Georgia on this 22nd day of April, 1994. THE HOME DEPOT, INC. By: /s/ Bernard Marcus (Bernard Marcus, Chairman of theBoard, Chief Executive Officer and Secretary) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, The Home Depot, Inc., and in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ Bernard Marcus Chairman of the Board, Chief April 22, 1994 (Bernard Marcus) Executive Officer and Secretary (Principal Executive Officer) /s/ Arthur M. Blank President, Chief Operating April 22, 1994 (Arthur M. Blank) Officer and Director /s/ Ronald M. Brill Chief Financial Officer, April 22, 1994 (Ronald M. Brill) Executive Vice President and Director (Principal Financial and Accounting Officer) * Director April 22, 1994 (Frank Borman) Signature Title Date - --------- ----- ---- * Director April 22, 1994 (Berry R. Cox) * Director April 22, 1994 (Peter S. Gold) * Director April 22, 1994 (Milledge A. Hart, III) * Director April 22, 1994 (James W. Inglis) * Director April 22, 1994 (Donald R. Keough) * Director April 22, 1994 (Kenneth G. Langone) * Director April 22, 1994 (M. Faye Wilson) * 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 on behalf of each such director. By: /s/ Bernard Marcus (Bernard Marcus, Attorney-in-fact) KPMG Peat Marwick Certified Public Accountants 303 Peachtree Street, N.E. Telephone 404 222 3000 Suite 2000 Telefax 404 222 3050 Atlanta. GA 30308 Independent Auditors' Report on Financial Statement Schedules The Board of Directors and Stockholders The Home Depot, Inc.: Under date of March 11, 1994, we reported on the consolidated balance sheets of The Home Depot, Inc. and subsidiaries as of January 30, 1994 and January 31, 1993, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended January 30, 1994, as contained in the January 30, 1994 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended January 30, 1994. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in Item 14. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as whole, present fairly, in all material respects, the information set forth therein. /s/KPMG PEAT MARWICK March 11, 1994 Schedule I The Home Depot, Inc. Investments As of 1-30-94 (000's)
Col A. Col. B Col. C Col. D Col. E Amount At Market Which Carried Category Principal Cost Value @ 1-30-94 On Balance Sheet Tax-exempt notes and bonds $100,110 $105,473 $105,419 $104,997 U.S. Treasury securities 60,915 61,339 61,717 61,285 U.S. government agency securities 74,392 74,983 74,898 74,941 Commercial paper 15,285 16,496 16,437 16,496 Certificates of deposit 30,000 30,000 29,811 30,000 Corporate bonds 208,500 210,714 212,172 209,902 Preferred stock 46,850 46,831 47,144 46,831 Asset-backed securities 60,397 61,351 61,357 61,288 Other 6,500 7,052 6,894 6,859 -------- -------- -------- -------- $602,949 $614,239 $615,849 $612,599 ======== ======== ======== ========
Schedule II Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other Than Related Parties
Col. A Col. B Col. C Col. D Col. E Balance at End Deductions of Period Balance at (1) (2) (1) (2) Name of Beginning of Amt. Written Not Debtor Period Additions Amt. Collected Off Current Current Fiscal Year 1993: Don Ingham (a) --- $100,000 $100,000 --- --- --- Lynn Martineau (a) $100,000 --- $100,000 --- --- --- Bernard Wolford (a) --- $125,000 $125,000 --- --- --- Fiscal Year 1992: Dennis Ryan (a) $ 35,241 --- $ 35,241 --- --- --- Bryant Scott (a) $100,000 --- $100,000 --- --- --- Lynn Martineau (a) --- $100,000 --- --- $100,000 --- Fiscal Year 1991: Bryant Scott (a) --- $100,000 --- --- $100,000 --- Dennis Ryan (a) $ 70,483 --- $ 35,242 --- $ 35,241 --- Ken Ubertino (a) $280,000 --- $280,000 --- --- --- Harry Pierce (a) $100,000 --- $100,000 --- --- --- (a) Non-interest bearing note was issued in conjunction with purchase of new home and is payable upon sale of existing home and/or from proceeds of annual bonuses or sales of stock through 1994.
Schedule V Property and Equipment
Col. A Col. B Col. C Col. D Col. E Col. F (In thousands) Other changes - Balance at add Balance beginning Additions (deduct) - at end Classification (1) of period at cost Retirements describe of period Fiscal year 1993 Land $ 502,022 $332,579 $20,161 --- $ 814,440 Buildings 619,909 280,713 8,867 --- 891,755 Furniture, fixtures, and equipment 344,139 139,785 32,135 --- 451,789 Leasehold improvements 212,196 24,880 12,143 --- 224,933 Construction in progress 101,064 93,912 494 --- 194,482 Capital leases 12,446 28,583 --- --- 41,029 ---------- -------- ------- --- ---------- $1,791,776 $900,452 $73,800 --- $2,618,428 ========== ======== ======= === ========== Fiscal year 1992 Land $ 379,073 $125,580 $ 2,631 --- $ 502,022 Buildings 444,249 177,939 2,279 --- 619,909 Furniture, fixtures, and equipment 253,831 104,273 13,965 --- 344,139 Leasehold improvements 178,460 39,389 5,654 --- 212,196 Construction in progress 120,390 (14,970) 4,356 --- 101,064 Capital leases 7,380 5,066 --- --- 12,446 ---------- -------- ------- --- ---------- $1,383,383 $437,277 $28,885 --- $1,791,776 ========== ======== ======= === ========== Fiscal year 1991 Land $ 262,560 $117,632 $ 1,119 --- $ 379,073 Buildings 272,095 172,313 159 --- 444,249 Furniture, fixtures, and equipment 186,025 72,153 4,347 --- 253,831 Leasehold improvements 160,760 23,907 6,207 --- 178,460 Construction in progress 82,179 38,813 602 --- 120,390 Capital leases --- 7,380 --- --- 7,380 ---------- -------- ------- --- ---------- $ 963,619 $432,198 $12,434 --- $1,383,383 ========== ======== ======= === ========== (1) Estimated useful lives used for property and equipment are: Buildings 20-45 years Furniture, fixtures, and equipment 5-20 years Leasehold improvements 8-30 years
Schedule VI Accumulated Depreciation and Amortization of Property and Equipment
Col. A Col. B Col. C Col. D Col. E Col. F In thousands Other Additions changes - Balance at charged to add Balance beginning costs and (deduct) - at end of period expenses Retirements describe of period Fiscal year 1993 Buildings $ 44,573 $21,933 $ 1,361 --- $ 65,145 Furniture, fixtures, and equipment 93,714 46,398 16,992 --- 123,120 Leasehold improvements 45,505 16,514 3,182 --- 58,837 Capital leases --- 422 --- --- 422 --------- ------- ------- --- -------- $ 183,792 $85,267 $21,535 --- $247,524 ========= ======= ======= === ======== Fiscal year 1992 Buildings $ 28,974 $16,110 $ 511 --- $ 44,573 Furniture, fixtures, and equipment 66,949 33,882 7,117 --- 93,714 Leasehold improvements 32,686 14,985 2,166 --- 45,505 -------- ------- ------ --- -------- $128,609 $64,977 $9,794 --- $183,792 ======== ======= ====== === ======== Fiscal year 1991 Buildings $17,568 $11,416 $ 10 --- $ 28,974 Furniture, fixtures, and equipment 44,549 24,633 2,233 --- 66,949 Leasehold improvements 22,772 12,989 3,075 --- 32,686 ------- ------- ------ --- -------- $84,889 $49,038 $5,318 --- $128,609 ======= ======= ====== === ========
EXHIBIT INDEX 10.4 Senior Officers' Bonus Pool Plan as adopted by the Compensation Committee of the Board of Directors on February 23, 1994. 11 Computation of Earnings Per Common and Common Equivalent Share. 13 The Registrant's Annual Report to Stockholders for the fiscal year ended January 30, 1994. Only those portions of said report which are specifically designated in this Form 10-K as being incorporated by reference are being electronically filed pursuant to the Securities Exchange Act of 1934. 21 List of Subsidiaries of the Registrant. 23 Consent of Independent Auditors. 24 Special Powers of Attorney authorizing execution of this Form 10-K Annual Report have been granted and are filed herewith as follows: Power of Attorney from Frank Borman. Power of Attorney from Berry R. Cox. Power of Attorney from Peter S. Gold. Power of Attorney from Milledge A. Hart, III. Power of Attorney from James W. Inglis. Power of Attorney from Donald R. Keough. Power of Attorney from Kenneth G. Langone. Power of Attorney from M. Faye Wilson. EX-10 2 EXHIBIT 10.4 SENIOR OFFICERS' BONUS POOL PLAN The performance goals contained in the Senior Officers' Bonus Pool Plan (the "SOBP") as adopted by the Compensation Committee of the Board of Directors of The Home Depot, Inc. (the "Company"), a committee of outside directors (the "Committee") will govern the award of annual bonuses to Mr. Bernard Marcus, Chief Executive Officer of the Company (the "CEO") and Mr. Arthur M. Blank, Chief Operating Officer of the Company (the "COO"), who are the designated eligible participants. Moreover, pursuant to the applicable provisions of the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), the U.S. Department of the Treasury could limit the Company's federal tax deduction for compensation paid to its senior officers to $1 million each, unless compensation in excess of this amount is based on the achievement of performance goals and eligibility requirements. The SOBP qualifies as performance-based compensation and all sums paid thereunder should be deductible by the Company. In 1993, the SOBP allowed the CEO and the COO collectively to earn a bonus based on 1.25% of the Company's earnings up to $54 million and 2.0% of earnings above $54 million (before being adjusted for the bonus pool and income taxes) up to a maximum amount of $4 million. In order to comply with a "safe harbor" under proposed regulations adopted under OBRA, the Committee has revised the SOBP to allow the CEO and the COO collectively to earn a bonus equal to 10% of the Company's earnings in excess of a threshold amount as established by the Committee (the "Earnings Threshold"), subject to an annual maximum established by the Committee. The Earnings Threshold for fiscal 1994 is equal to $457,401,000, which is approximately equal to the Company's net earnings for fiscal 1993. Monies payable from the SOBP are to be shared by the CEO and COO at the ratio of 54% and 46% respectively, on the first $2 million and 50% each on the balance of the next $2 million. For 1994, the maximum amount awardable under the SOBP is $4 million; however, the actual benefits to be paid under the SOBP are not presently determinable. Prior to awarding any cash bonuses for the 1994 fiscal year and all subsequent years covered by the SOBP, the Committee will evaluate the performance of the Company to certify that the performance goals have been met. EX-11 3 EXHIBIT 11 Exhibit 11 THE HOME DEPOT, INC. Computation of Primary and Fully Diluted Earnings Per Common and Common Equivalent Share
(In thousands, except per share amounts) Fiscal Year Ended 1-30-94 1-31-93 2-2-92 Primary Net earnings applicable to common and common equivalent shares $457,401 $362,863 $249,150 ======== ======== ======== Shares: Weighted average number of common and common equivalent shares assuming average market price for period 453,037 444,989 415,997 ======== ======== ======== Primary earnings per common and common equivalent share $ 1.01 $ .82 $ .60 ======== ======== ======== Fully Diluted Net earnings applicable to common and common equivalent shares $457,401 $362,863 $249,150 Tax effected interest expense attributable to convertible subordinated debentures $ 18,981 $ 898 $ 3,062 -------- -------- -------- $476,382 $363,761 $252,212 Shares: ======== ======== ======== Weighted average number of common and common equivalent shares at higher of ending or average market price 453,037 445,197 416,342 Additional shares from convertible subordinated debentures 20,774 5,208 10,370 ------- ------- ------- 473,811 450,405 426,712 Fully diluted earnings ======= ======= ======= per common & common equivalent share $ 1.01 $ .81 $ .59 ======= ======= ======= (1) Common equivalent shares represent shares granted under three stock option plans and an employee stock purchase plan. All periods have been adjusted to reflect the three-for-two and four-for-three stock split-ups effected in the form of a dividend in July 1992 and April 1993, respectively. (2) The Company's 6% convertible notes, issued in 1990, were common stock equivalents prior to their conversion to equity in June 1992. Because shares issuable upon conversion of this debt issue were not dilutive in 1991 and 1992, they are not included in the earnings per share computations for such years. The Company's 4-1/2% convertible notes, issued in 1992, are also common stock equivalents. Fully diluted earnings per share shows the effect on earnings per share assuming conversion of the 4-1/2% convertible notes as of the beginning of the accounting periods. In 1992, shares issuable upon conversion of the notes were not dilutive, and are not included in the earnings per share computation. In 1993, shares issuable upon conversion of the notes were dilutive, but had no impact on earnings per share.
EX-13 4 EXHIBIT 13 Ten Year Selected Financial and Operating Highlights (Selected Portions) The Home Depot, Inc. and Subsidiaries Amounts in thousands, except where noted
5 Year Annual Compound Growth Rate 1993 1992 1991 1990(1) 1989 - -------------------------------------------------------------------------------------------------------------------------------- Statement of Earnings Data Net sales 35.8% $ 9,238,763 $7,148,436 $5,136,674 $ 3,815,356 $2,758,535 Net sales increase - % 29.2 39.2 34.6 38.3 38.0 Earnings before income taxes 42.4 736,871 575,973 396,120 259,828 182,015 Net earnings 42.9 457,401 362,863 249,150 163,428 111,954 Net earnings increase - % _ 26.1 45.6 52.5 46.0 45.9 Earnings per share ($) 35.6 1.01 .82 .60 .45 .32 Earnings per share increase - % _ 23.2 36.7 33.3 40.6 45.5 Weighted avg. number of shares 5.5 453,037 444,989 415,997 362,505 355,409 Gross margin - % to sales _ 27.7 27.6 28.1 27.9 27.8 Store selling and operating - % to sales _ 17.6 17.4 18.1 18.2 18.3 Pre-opening - % to sales _ .4 .4 .3 .4 .3 General and administrative - % to sales _ 2.0 2.1 2.3 2.4 2.5 Net interest income (expense) - % to sales _ .3 .4 .3 (.1) (.1) Earnings before income taxes - % to sales _ 8.0 8.1 7.7 6.8 6.6 Net earnings - % to sales _ 5.0 5.1 4.8 4.3 4.1 - -------------------------------------------------------------------------------------------------------------------------------- Balance Sheet Data and Financial Ratios Total assets 46.4% $4,700,889 $3,931,790 $2,510,292 $1,639,503 $ 1,117,534 Working capital 47.4 993,963 807,028 623,937 300,867 273,851 Merchandise inventories 34.5 1,293,477 939,824 662,257 509,022 381,452 Net property and equipment 48.1 2,370,904 1,607,984 1,254,774 878,730 514,440 Long-term debt 50.9 841,992 843,672 270,575 530,774 302,901 Stockholders' equity 49.0 2,814,100 2,304,081 1,691,212 683,402 512,129 Book value per share ($) 40.8 6.26 5.20 4.01 1.93 1.49 Long-term debt to equity - % _ 29.9 36.6 16.0 77.7 59.1 Current ratio _ 2.02:1 2.07:1 2.17:1 1.73:1 1.94:1 Inventory turnover _ 5.9x 6.3x 6.1x 6.0x 5.9x Return on average equity - % _ 17.9 18.1 18.5 27.6 25.2 - -------------------------------------------------------------------------------------------------------------------------------- Statement of Cash Flows Data Depreciation and amortization 43.7% $ 89,839 $ 69,536 $ 52,283 $ 34,358 $ 21,107 Capital expenditures 53.7 900,452 437,278 432,198 400,205 204,972 Cash dividends per share ($) _ .113 .083 .055 .037 .024 - -------------------------------------------------------------------------------------------------------------------------------- Customer and Store Data Number of states 18.1% 23 19 15 12 12 Number of stores 22.4 264 214 174 145 118 Square footage at year-end 26.3 26,383 20,897 16,480 13,278 10,424 Change in square footage - % _ 26.3 26.8 24.1 27.4 26.9 Average square footage per store _ 100 98 95 92 88 No. of customer transactions 29.7 236,101 189,493 146,221 112,464 84,494 Average sale per transaction ($) 4.7 39.13 37.72 35.13 33.92 32.65 Number of employees 31.2 50,600 38,900 28,000 21,500 17,500 - -------------------------------------------------------------------------------------------------------------------------------- Other Data Avg. total company weekly sales 35.8% $ 177,669 $ 137,470 $ 98,782 $ 71,988 $ 53,049 Weighted average weekly sales per operating store 10.5 764 724 633 566 515 Comparable store sales increase - % (2) _ 7 15 11 10 13 Weighted average sales per square foot ($) (2) 7.1 398 387 348 322 303 Advertising expense - % to sales _ .5 .5 .7 .9 1.1 - -------------------------------------------------------------------------------------------------------------------------------- (1) Fiscal years 1990 and 1984 consisted of 53 weeks, all other years reported consisted of 52 weeks. (2) Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 1990.
Management's Discussion and Analysis of Results of Operations and Financial Condition The Home Depot, Inc. and Subsidiaries 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.
Percentage Increase (Decrease) of Dollar Amounts Fiscal Year(1) ----------------------- ---------------------------- 1993 1992 1993 1992 1991 vs. 1992 vs. 1991 - ------------------------------------------------------------------------------------------------------- Selected Consolidated Statements of Earnings Data Net Sales 100.0% 100.0% 100.0% 29.2% 39.2% - ------------------------------------------------------------------------------------------------------- Gross Profit 27.7 27.6 28.1 29.7 36.3 - ------------------------------------------------------------------------------------------------------- Operating Expenses: Selling and Store Operating 17.6 17.4 18.1 30.5 34.1 Pre-Opening .4 .4 .3 36.6 52.6 General and Administrative 2.0 2.1 2.3 25.8 26.7 - ------------------------------------------------------------------------------------------------------- Total Operating Expenses 20.0 19.9 20.7 30.1 33.6 - ------------------------------------------------------------------------------------------------------- Operating Income 7.7 7.7 7.4 28.6 43.9 Interest Income (Expense): Interest Income .6 1.0 .5 (9.9) 152.2 Interest Expense (.3) (.6) (.2) (25.1) 232.1 - ------------------------------------------------------------------------------------------------------- Interest, Net .3 .4 .3 13.7 83.9 - ------------------------------------------------------------------------------------------------------- Earnings Before Income Taxes 8.0 8.1 7.7 27.9 45.4 Income Taxes 3.0 3.0 2.9 31.1 45.0 - ------------------------------------------------------------------------------------------------------- Net Earnings 5.0% 5.1% 4.8% 26.1% 45.6% ======================================================================================================= Selected Consolidated Sales Data Number of Customer Transactions 236,101,000 189,493,000 146,221,000 24.6% 29.6% Average Amount of Sale Per Transaction $ 39.13 $ 37.72 $ 35.13 3.7 7.4 Weighted Average Weekly Sales Per Operating Store $ 764,000 $ 724,000 $ 633,000 5.5 14.4 Weighted Average Sales Per Square Foot $ 398.18 $ 386.92 $ 348.13 2.9 11.1 ======================================================================================================= (1) Fiscal years 1993, 1992 and 1991 refer to the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992, respectively.
Results of Operations - -------------------------------------------------------------------------- For an understanding of the significant factors that influenced the Company's performance during the past three fiscal years, the following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere in this annual report. Fiscal Year Ended January 30, 1994 Compared to January 31, 1993 - -------------------------------------------------------------------------- Sales for fiscal year 1993 increased 29.2% from $7,148,436,000 in fiscal 1992 to $9,238,763,000. This increase was attributable to, among other things, 50 new store openings, six store relocations, a 7% comparable store-for-store sales increase and full year sales from the 40 store openings during fiscal 1992. The percentage increase in comparable store sales would have been 8% after excluding all sales from the ten stores in Southern Florida that were significantly affected by Hurricane Andrew. Gross profit as a percent of sales was 27.7% for fiscal 1993 compared to 27.6% for fiscal 1992. This higher gross profit percentage resulted primarily from higher vendor volume rebates and changes in merchandise mix, partially offset by lower margins in highly competitive markets. Operating expenses as a percent of sales increased to 20.0% in fiscal 1993 from 19.9% in fiscal 1992. This increase was attributable to, among other things, higher payroll costs as a percent of sales due to the implementation of new labor standards that put additional hours on the selling floor, partially offset by lower self-funded insurance costs and lower general and administrative expenses as a percent of sales due to cost control measures. Interest income as a percent of sales decreased to 0.6% in fiscal 1993 compared to 1.0% during fiscal 1992. This decrease was attributable to a reduction of investment principal due to utilization of funds for capital expansion, partially offset by a higher yield on the investment portfolio. Interest expense as a percent of sales decreased to 0.3% in fiscal 1993 from 0.6% in fiscal 1992 due to the call for redemption and conversion to equity of substantially all the Company's 6% Convertible Subordinated Notes in June, 1992 and due to higher capitalized interest. The Company's combined Federal and state effective income tax rate, before cumulative effect of a change in accounting principle, was 38.2% for fiscal 1993 compared to 37.0% for fiscal 1992. This increase was attributable to the enactment of the Omnibus Budget Reconciliation Act of 1993 and to lower tax-advantaged investments. The Company implemented SFAS 109 "Accounting for Income Taxes" in the first quarter of fiscal 1993. As a result of this change in accounting principle, the combined Federal and state effective income tax rate was 37.9% in 1993. Net earnings as a percent of sales was 5.0% for fiscal 1993 compared to 5.1% for fiscal 1992, reflecting higher operating expenses, lower net interest income and a higher effective income tax rate, partially offset by higher gross profits, as described above. Earnings per share was $1.01 for fiscal 1993 compared to $.82 for fiscal 1992 on 2% more weighted average shares outstanding in fiscal 1993. Fiscal Year Ended January 31, 1993 Compared to February 2, 1992 - -------------------------------------------------------------------------- Sales for fiscal year 1992 increased 39.2% from $5,136,674,000 in fiscal 1991 to $7,148,436,000. This increase was attributable to, among other things, 40 new store openings, five store relocations, a 15% comparable store-for-store sales increase and full year sales from the 30 store openings during fiscal 1991. The percentage increase in comparable store sales would have been 14% after excluding all sales from the eight stores in Southern Florida that were significantly affected by Hurricane Andrew. Gross profit as a percent of sales was 27.6% for fiscal 1992 compared to 28.1% for fiscal 1991. This lower gross profit percentage resulted primarily from more aggressive pricing and a higher penetration of sales from lower margin categories such as lumber and building materials. Operating expenses as a percent of sales decreased to 19.9% in fiscal 1992 from 20.7% in fiscal 1991. This decrease was attributable to, among other things, lower net advertising expenses, lower occupancy costs, lower payroll costs and lower general and administrative expenses as a percent of sales, due to economies of scale from increased volumes and cost control measures. These reductions as a percent of sales were partially offset by higher pre-opening expenses during fiscal 1992 associated with 40 store openings and five relocations compared to 30 store openings and four relocations during fiscal 1991. Interest income as a percent of sales increased to 1.0% in fiscal 1992 compared to 0.5% during fiscal 1991. This increase was attributable to investing proceeds from the $805,000,000, 4-1/2% Convertible Subordinated Notes due 1997 (4-1/2% Convertible Notes) issued on February 3, 1992. Interest expense as a percent of sales increased to 0.6% in fiscal 1992 from 0.2% in fiscal 1991 due to the issue of the 4-1/2% Convertible Notes, partially offset by the call for redemption and conversion to equity of substantially all the Company's 6% Convertible Subordinated Notes in June, 1992. The Company's combined Federal and state effective income tax rate was 37.0% for fiscal 1992 compared to 37.1% for fiscal 1991. This decrease was attributable to an increase in income from tax-advantaged investments. Net earnings as a percent of sales was 5.1% for fiscal 1992 compared to 4.8% for fiscal 1991, reflecting lower operating expenses, higher net interest income and a lower effective income tax rate, partially offset by lower gross profits, as described above. Earnings per share was $.82 for fiscal 1992 compared to $.60 for fiscal 1991 on 7% more weighted average shares outstanding in fiscal 1992. Liquidity and Capital Resources - -------------------------------------------------------------------------- Cash flow generated from store operations provides the Company with a significant source of liquidity. Additionally, a significant portion of the Company's inventory is financed under vendor credit terms. The Company plans to open approximately 70 new stores and relocate nine existing stores during fiscal 1994. Of these 79 locations, it is anticipated that approximately 80% will be owned and the balance will be leased. The Company also plans to open approximately 93 stores, including relocations, in fiscal 1995. Although some of these locations will be leased directly, it is expected that many may be obtained during fiscal 1994 through the purchase of pre-existing leasehold interests, the acquisition of land parcels and the construction or purchase of buildings. While the cost of new stores to be constructed and owned by the Company varies widely, principally due to land costs, new store costs are currently estimated to average approximately $12,800,000 per location, including land, building and fixtures. In addition, the Company may purchase leasehold interests at varying amounts depending on the value of such properties. The cost to remodel and fixture stores to be leased is expected to average approximately $4,000,000 per store. Each new store will require approximately $2,900,000 to finance inventories, net of vendor financing. In addition, the Company paid approximately $163,000,000 on February 28, 1994 in conjunction with the acquisition of a 75% interest in Aikenhead's Home Improvement Warehouse in Canada. After six years, the Company has the option to purchase, or the other partner has the right to cause the Company to purchase, the remaining 25% of the Canadian company. At the time of acquisition, Aikenhead's was operating seven stores and the Company anticipates having 12 stores in Canada by the end of fiscal 1994. These Canadian stores have been included in the planned store totals discussed above. As of January 30, 1994, the Company had $430,973,000 in cash and cash equivalents and short-term investments as well as $281,623,000 in long-term investments. Management believes that its current cash position, the proceeds from short-term and long- term investments, internally generated funds, and/or the ability to obtain alternate sources of financing should enable the Company to complete its capital expenditure programs, including store expansion and renovation, through the next several fiscal years. Impact of Inflation and Changing Prices - -------------------------------------------------------------------------- Although the Company cannot accurately determine the precise effect of inflation on its operations, it does not believe inflation has had a material effect on sales or results of operations. Consolidated Statements of Earnings The Home Depot, Inc. and Subsidiaries Amounts in thousands, except per share data
Fiscal Year Ended January 30, January 31, February 2, 1994 1993 1992 Net Sales $9,238,763 $7,148,436 $5,136,674 Cost of Merchandise Sold 6,685,384 5,179,368 3,692,337 - ------------------------------------------------------------------------------------ Gross Profit 2,553,379 1,969,068 1,444,337 - ------------------------------------------------------------------------------------ Operating Expenses: Selling and Store Operating 1,624,920 1,245,608 928,928 Pre-Opening 36,816 26,959 17,668 General and Administrative 184,954 147,080 116,063 - ------------------------------------------------------------------------------------ Total Operating Expenses 1,846,690 1,419,647 1,062,659 - ------------------------------------------------------------------------------------ Operating Income 706,689 549,421 381,678 - ------------------------------------------------------------------------------------ Interest Income (Expense): Interest Income 60,896 67,562 26,790 Interest Expense (note 2) (30,714) (41,010) (12,348) - ------------------------------------------------------------------------------------ Interest, Net 30,182 26,552 14,442 - ------------------------------------------------------------------------------------ Earnings Before Income Taxes 736,871 575,973 396,120 Income Taxes (note 3) 279,470 213,110 146,970 - ------------------------------------------------------------------------------------ Net Earnings $ 457,401 $ 362,863 $ 249,150 ==================================================================================== Earnings Per Common and Common Equivalent Share $ 1.01 $ .82 $ .60 ==================================================================================== Weighted Average Number of Common and Common Equivalent Shares (note 4) 453,037 444,989 415,997 ==================================================================================== See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets The Home Depot, Inc. and Subsidiaries Amounts in thousands, except share data
January 30, January 31, 1994 1993 - ---------------------------------------------------------------------------- Assets Current Assets: Cash and Cash Equivalents $ 99,997 $ 121,744 Short-Term Investments, including current maturities of long-term investments (note 7) 330,976 292,451 Accounts Receivable, Net 198,431 177,502 Merchandise Inventories 1,293,477 939,824 Other Current Assets 43,720 30,452 - ---------------------------------------------------------------------------- Total Current Assets 1,966,601 1,561,973 - ---------------------------------------------------------------------------- Property and Equipment, at cost: Land 814,440 502,022 Buildings 891,755 619,909 Furniture, Fixtures and Equipment 451,789 344,139 Leasehold Improvements 224,933 212,196 Construction in Progress 194,482 101,064 Capital Leases (note 5) 41,029 12,446 - ---------------------------------------------------------------------------- 2,618,428 1,791,776 Less Accumulated Depreciation and Amortization 247,524 183,792 - ---------------------------------------------------------------------------- Net Property and Equipment 2,370,904 1,607,984 Long-Term Investments (note 7) 281,623 694,276 Cost in Excess of the Fair Value of Net Assets Acquired, net of accumulated amortization of $5,788 at January 30, 1994 and $5,155 at January 31, 1993 19,503 20,136 Other 62,258 47,421 - ---------------------------------------------------------------------------- $4,700,889 $3,931,790 ============================================================================ See accompanying notes to consolidated financial statements. ============================================================================ ============================================================================
January 30, January 31, 1994 1993 Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable $ 521,246 $ 420,318 Accrued Salaries and Related Expenses (note 8) 167,489 127,133 Sales Taxes Payable 57,590 46,320 Other Accrued Expenses (note 5) 184,462 135,478 Income Taxes Payable 40,303 23,868 Current Installments of Long-Term Debt (note 2) 1,548 1,828 - ---------------------------------------------------------------------------- Total Current Liabilities 972,638 754,945 - ---------------------------------------------------------------------------- Long-Term Debt, excluding current installments (notes 2 and 6) 841,992 843,672 - ---------------------------------------------------------------------------- Other Long-Term Liabilities (note 5) 44,332 12,968 - ---------------------------------------------------------------------------- Deferred Income Taxes (note 3) 27,827 16,124 - ---------------------------------------------------------------------------- Stockholders' Equity (notes 2 and 4): Common Stock, par value $.05. Authorized: 1,000,000,000 shares; issued and outstanding 449,364,000 shares at January 30, 1994 and 443,585,000 shares at January 31, 1993 22,468 22,179 Paid-in Capital 1,436,029 1,339,821 Retained Earnings 1,400,575 993,517 Cumulative Translation Adjustments (121) _ - ---------------------------------------------------------------------------- 2,858,951 2,355,517 - ---------------------------------------------------------------------------- Less Notes Receivable From ESOP (note 6) 44,851 51,436 - ---------------------------------------------------------------------------- Total Stockholders' Equity 2,814,100 2,304,081 - ---------------------------------------------------------------------------- Commitments and Contingencies (notes 5, 8 and 10) - ---------------------------------------------------------------------------- $4,700,889 $3,931,790 ============================================================================
Consolidated Statements of Stockholders' Equity The Home Depot, Inc. and Subsidiaries Fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992 Amounts in thousands, except per share data
Common Stock Cumulative Notes Total ----------------- Paid-in Retained Translation Receivable Stockholders' Shares Amount Capital Earnings Adjustments from ESOP Equity - ----------------------------------------------------------------------------------------------------------------------------------- Balance, February 3, 1991 354,197 $ 17,710 $ 252,494 $ 439,770 $ - $ (26,572) $ 683,402 Conversion of 6-3/4% Convertible Subordinated Debentures, Net 35,627 1,781 253,769 _ _ _ 255,550 Sale of Common Stock in a Public Stock Offering, Net of Expenses of Sale 25,876 1,294 467,495 _ _ _ 468,789 Shares Sold Under Employee Stock Purchase and Option Plans, Net of Retirements (note 4) 6,511 325 33,500 _ _ _ 33,825 Tax Effect of Sale of Option Shares by Employees _ _ 14,575 _ _ _ 14,575 Repayments of Notes Receivable from ESOP (note 6) _ _ _ _ _ 8,159 8,159 Conversion of 6% Convertible Subordinated Notes, Net 13 1 210 _ _ _ 211 Net Earnings _ _ _ 249,150 _ _ 249,150 Cash Dividends ($.05 per share) _ _ _ (22,449) _ _ (22,449) - ------------------------------------------------------------------------------------------------------------------------------------ Balance, February 2, 1992 422,224 $ 21,111 $ 1,022,043 $ 666,471 _ $ (18,413) $1,691,212 - ------------------------------------------------------------------------------------------------------------------------------------ Shares Sold Under Employee Stock Purchase and Option Plans, Net of Retirements (note 4) 7,053 353 57,971 _ _ _ 58,324 Tax Effect of Sale of Option Shares by Employees _ _ 32,451 _ _ _ 32,451 Additional Notes Receivable from ESOP, Net of Repayments of $8,419 (note 6) _ _ _ _ _ (33,023) (33,023) Conversion of 6% Convertible Subordinated Notes, Net 14,308 715 227,346 _ _ _ 228,061 Conversion of 4-1/2% Convertible Subordinated Notes, Net (note 2) _ _ 10 _ _ _ 10 Net Earnings _ _ _ 362,863 _ _ 362,863 Cash Dividends ($.08 per share) _ _ _ (35,817) _ _ (35,817) - ----------------------------------------------------------------------------------------------------------------------------------- Balance, January 31, 1993 443,585 $22,179 $1,339,821 $ 993,517 _ $ (51,436) $2,304,081 - ----------------------------------------------------------------------------------------------------------------------------------- Shares Sold Under Employee Stock Purchase and Option Plans, Net of Retirements (note 4) 5,779 289 76,500 _ _ _ 76,789 Tax Effect of Sale of Option Shares by Employees _ _ 19,708 _ _ _ 19,708 Cumulative Translation Adjustments _ _ _ _ (121) _ (121) Repayments of Notes Receivable from ESOP (note 6) _ _ _ _ _ 6,585 6,585 Net Earnings _ _ _ 457,401 _ _ 457,401 Cash Dividends ($.11 per share) _ _ _ (50,343) _ _ (50,343) - ----------------------------------------------------------------------------------------------------------------------------------- Balance, January 30, 1994 449,364 $22,468 $1,436,029 $1,400,575 $(121) $(44,851) $2,814,100 =================================================================================================================================== See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows The Home Depot, Inc. and Subsidiaries Amounts in thousands
Fiscal Year Ended -------------------------------------- January 30, January 31, February 2, 1994 1993 1992 Cash Provided From Operations: Net Earnings $ 457,401 $ 362,863 $ 249,150 Reconciliation of Net Earnings to Net Cash Provided by Operations: Depreciation and Amortization 89,839 69,536 52,283 Deferred Income Tax Expense (Benefit) 12,578 5,465 (2,082) Increase in Receivables, Net (36,658) (68,593) (30,147) Increase in Merchandise Inventories (353,653) (277,567) (153,235) Increase in Accounts Payable and Accrued Expenses 200,977 219,046 108,180 Increase in Income Taxes Payable 36,143 34,031 28,063 Other (10,120) (6,639) 14,405 - ------------------------------------------------------------------------------ Total (60,894) (24,721) 17,467 - ------------------------------------------------------------------------------ Net Cash Provided by Operations 396,507 338,142 266,617 - ------------------------------------------------------------------------------ Cash Flows From Investing Activities: Capital Expenditures, Net of $36,294, $4,765 and $538 of non-cash capital expenditures in 1993, 1992 and 1991, respectively (864,158) (432,513) (431,660) Proceeds from Sale of Property and Equipment 35,070 5,046 831 Sale (Purchase) of Short-Term Investments, Net 14,903 (62,008) (132,124) Purchase of Long-Term Investments (840,361) (2,029,214) (85,844) Proceeds from Maturities of Long- Term Investments 269,988 212,786 6,451 Proceeds from Sale of Long-Term Investments 929,598 1,132,627 _ Advances Secured by Real Estate, Net 5,681 (54,022) - - ------------------------------------------------------------------------------ Net Cash Used in Investing Activities (449,279) (1,227,298) (642,346) - ------------------------------------------------------------------------------ Cash Flows From Financing Activities: Proceeds from Long-Term Borrowings _ 805,000 5,200 Cash Loaned to ESOP _ (41,442) _ Repayments of Notes Receivable from ESOP 6,585 8,419 8,159 Principal Repayments of Long-Term Debt (2,006) (2,133) (7,141) Proceeds from Sale of Common Stock, Net 76,789 58,324 502,614 Cash Dividends Paid to Stockholders (50,343) (35,817) (22,449) - ------------------------------------------------------------------------------ Net Cash Provided by Financing Activities 31,025 792,351 486,383 ----------------------------------------------------------------------------- (Decrease) Increase in Cash and Cash Equivalents (21,747) (96,805) 110,654 Cash and Cash Equivalents at Beginning of Year 121,744 218,549 107,895 - ------------------------------------------------------------------------------ Cash and Cash Equivalents at End of Year $99,997 $ 121,744 $ 218,549 ============================================================================== Supplemental Disclosure of Cash Payments Made For: Interest (net of interest capitalized) $ 28,778 $ 26,182 $ 16,366 Income Taxes $ 228,968 $ 169,617 119,901 - ------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements The Home Depot, Inc. and Subsidiaries NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year - ---------------------------------------------------------------------------- The Company's fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal years 1993, 1992 and 1991, which ended January 30, 1994, January 31, 1993 and February 2, 1992, respectively, consisted of 52 weeks. Basis of Presentation - ---------------------------------------------------------------------------- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Cash Equivalents - ---------------------------------------------------------------------------- The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents are primarily cash equivalents carried at cost, which approximate market value, and consist of preferred stocks, commercial paper, money market funds, promissory notes and U.S. government agency securities. Investments - ---------------------------------------------------------------------------- The Company's short-term investments, consisting primarily of debt securities, are valued at amortized cost which approximates market. Certain long-term investments have been designated as being held available for sale, and are recorded at the lower of amortized cost or market. The Company has the intent and ability to hold its remaining long-term investments until maturity. Accordingly, these long-term investments are valued at amortized cost. However, the Company's intent to hold long-term investments until maturity is based upon an evaluation of anticipated future events. Should the actual events differ substantially from the Company's forecast, the intent to hold long-term investments until maturity may change. The cost of investments sold is determined on the specific identification method. Merchandise Inventories - ---------------------------------------------------------------------------- Inventories are stated at the lower of cost (first-in, first-out) or market, as determined by the retail inventory method. Income Taxes - ---------------------------------------------------------------------------- The Company provides for Federal and state income taxes currently payable as well as for those deferred because of timing differences between reporting income and expenses for financial statement purposes and income and expenses for tax purposes. Targeted jobs tax credits are recorded as a reduction of income taxes in the year realized. Effective February 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes" and reported the cumulative effect of that change in the method of accounting for income taxes in the consolidated statement of earnings for the first fiscal quarter of 1993, which ended May 2, 1993. SFAS 109 requires an asset and liability approach in accounting for income taxes and, therefore, required a change from the deferred method the Company previously used. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. Pursuant to the deferred method under Accounting Principles Board Opinion 11, which was applied in 1992 and prior years, deferred income taxes that were reported in different years for financial reporting purposes and income tax purposes were recognized for income and expense items using the tax rate applicable for the year of the calculation. Under the deferred method, deferred taxes were not adjusted for subsequent changes in the tax rate. Depreciation and Amortization - ---------------------------------------------------------------------------- The Company's buildings, furniture, fixtures and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Improvements to leased premises are amortized on the straight-line method over the life of the lease or the useful life of the improvement, whichever is shorter. The Company's property and equipment is depreciated using the following estimated useful lives: LIfe - ---------------------------------------------------------------------------- Buildings 20-45 years Furniture, fixtures and equipment 5-20 years Leasehold improvements 8-30 years - ---------------------------------------------------------------------------- The cost in excess of the fair value of net assets acquired is being amortized on a straight-line basis over 40 years. The cost of purchased software and associated consulting fees is amortized on a straight-line basis over periods ranging from three to five years. Store Pre-Opening Costs - ---------------------------------------------------------------------------- Non-capital expenditures associated with opening new stores are charged to expense as incurred. Store Closing Costs - ---------------------------------------------------------------------------- When a store is relocated or closed, estimated unrecoverable costs are charged to expense. Such costs include the estimated loss on sale of land and building, the book value of abandoned fixtures, equipment, leasehold improvements and a provision for the present value of future lease obligations, less estimated sub-rental income. Earnings Per Common and Common Equivalent Share - ---------------------------------------------------------------------------- Earnings per common and common equivalent share are based on the weighted average number of shares and equivalent shares outstanding. Common equivalent shares used in the calculation of earnings per share represent options to purchase shares granted under the Company's employee stock option and stock purchase plans. The Company's 4-1/2% Convertible Subordinated Notes due 1997, issued in 1992, are common stock equivalents. The Company's 6% Convertible Subordinated Notes, issued in 1990, were common stock equivalents prior to their conversion to equity in 1992. Because shares issuable upon conversion of either of these debt issues were not dilutive in 1991 and 1992, they are not included in the earnings per share computations for such years. In 1993, shares issuable upon conversion of the 4-1/2% Convertible Subordinated Notes were dilutive, but had no impact on earnings per share. Employee Stock Ownership Plan - ---------------------------------------------------------------------------- For all shares purchased by the Employee Stock Ownership Plan (ESOP) prior to December 15, 1993, the Company's contributions to the ESOP are determined based on the ESOP's cost of the shares released to the employees. For shares purchased after December 15, 1993, the Company's contributions to the ESOP will be based on the fair value of the shares released to the employees as of the release date. Foreign Currency Translation - ---------------------------------------------------------------------------- The local currency has been used as the functional currency in Canada. The assets and liabilities denominated in foreign currency are translated into U.S. dollars at the current rate of exchange existing at year-end and revenues and expenses are translated at the average monthly exchange rates. The translation gains and losses are included as a separate component of stockholders' equity. Transaction gains and losses included in results of operations are not material. Recent Accounting Pronouncements - ---------------------------------------------------------------------------- In May 1993, Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115), was issued. This standard addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Under SFAS 115, the Company is required to classify its debt and marketable equity securities in one of three categories: trading, available for sale, or held to maturity. Trading securities are bought and held primarily for the purpose of selling them in the near term. Held to maturity securities are securities that the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. Trading securities are recorded at fair value with unrealized gains and losses included in earnings. Held to maturity securities are recorded at amortized cost, adjusted for amortization or accretion of premiums or discounts. Unrealized gains and losses on securities available for sale are excluded from earnings and are reported as a separate component of stockholders' equity until realized. The Company plans to adopt SFAS 115 in fiscal year 1994. SFAS 115 will not have a significant impact on the Company's results of operations. Reclassifications - ---------------------------------------------------------------------------- Certain balances in prior fiscal years have been reclassified to conform with the presentation adopted in the current fiscal year. NOTE 2. LONG-TERM DEBT The Company's long-term debt consists of the following (in thousands):
January 30, January 31, 1994 1993 4-1/2% Convertible Subordinated Notes, due February 15, 1997, convertible into shares of common stock of the Company at a conversion price of $38.75 per share. The Notes are redeemable by the Company at a premium, plus accrued interest, beginning March 3, 1995. $804,990 $804,990 7.95% Unsecured Note, payable on September 1, 1995, incurred in connection with the establishment of a leveraged Employee Stock Ownership Plan and Trust (see Note 6); interest is payable semi-annually. 20,000 20,000 Variable Rate Industrial Revenue Bonds, secured by letters of credit or land, interest rates averaging 2.9% during fiscal 1993, payable in varying installments through 1999 and $5,200 payable on September 1, 2011. 10,500 11,133 Installment Notes Payable of $10,092 and $12,102 in 1993 and 1992, respectively, interest imputed at rates between 9.5% and 11.5%, payable in varying installments through 2000. 7,592 8,862 Other 458 515 - ---------------------------------------------------------------------------- Total long-term debt 843,540 845,500 Less current installments 1,548 1,828 - ---------------------------------------------------------------------------- Long-term debt, excluding current installments $841,992 $843,672 ============================================================================
Maturities of long-term debt are $1,548,000 for fiscal 1994, $21,854,000 for fiscal 1995, $1,240,000 for fiscal 1996, $806,129,000 for fiscal 1997 and $3,902,000 for fiscal 1998. On February 3, 1992, the Company issued, through a public offering, $805,000,000 of its 4-1/2% Convertible Subordinated Notes at par, maturing February 15, 1997. The Notes are convertible into shares of common stock at any time prior to maturity, unless previously redeemed, at a conversion price of $38.75 per share, subject to adjustment under certain conditions. The Notes may be redeemed in whole or in part during the period beginning March 3, 1995 and ending on February 14, 1996 at 101.125% of their principal amount and thereafter at 100% of their principal amount. The Notes are not subject to sinking fund provisions. The 7.95% Unsecured Note related to the ESOP requires, among other things, that debt shall not exceed 66-2/3% of consolidated assets net of goodwill and current liabilities. The Company was in compliance with all restrictive covenants as of January 30, 1994. The restrictive covenants related to letter of credit agreements securing the industrial revenue bonds are no more restrictive than those referenced or described above. Interest expense in the accompanying consolidated statements of earnings is net of interest capitalized of $13,912,000 in fiscal 1993, $7,549,000 in fiscal 1992 and $11,676,000 in fiscal 1991. Based on discounted cash flows of future payment streams, assuming rates equivalent to the average yield on investment securities that would be sold to retire existing debt, the fair value of the 7.95% unsecured ESOP Note, the Variable Rate Industrial Revenue Bonds, the Installment Notes and other notes payable as of January 30, 1994 is $40,604,000. The fair value of the 4-1/2% Convertible Notes as of January 30, 1994, based on the quoted market price on the last business day of the year, is $933,788,000. NOTE 3. INCOME TAXES As discussed in Note 1, the Company adopted SFAS 109 as of February 1, 1993. The cumulative effect of this change in accounting for income taxes, which resulted in a tax benefit of $2,130,000, was determined as of February 1, 1993 and has been reflected in the consolidated statement of earnings for the fiscal year ended January 30, 1994. Prior years' financial statements have not been restated to apply the provisions of SFAS 109.
Income tax expense for the fiscal year ended January 30, 1994 is comprised of the following (in thousands): Income tax expense from operations $281,600 Cumulative effect of a change in accounting principle (2,130) - ------------------------------------------------------------------------------ Total $279,470 ==============================================================================
The provision for income taxes from operations consists of the following (in thousands):
Fiscal Year Ended -------------------------------------------- January 30, January 31, February 2, 1994 1993 1992 - ------------------------------------------------------------------------------------ Current: Federal $236,888 $181,727 $ 133,139 State 32,134 25,918 15,913 - ------------------------------------------------------------------------------------ 269,022 207,645 149,052 - ------------------------------------------------------------------------------------- Deferred: Federal 10,212 4,413 (1,676) State 2,366 1,052 (406) - ------------------------------------------------------------------------------------ 12,578 5,465 (2,082) - ------------------------------------------------------------------------------------ Total $281,600 $ 213,110 $146,970
The significant components of deferred income tax expense from operations for the fiscal year ended January 30, 1994 are as follows (in thousands):
Deferred tax expense, exclusive of other components listed below $12,399 Adjustments to deferred tax assets and liabilities for enacted changes in tax rates and laws 307 Other (128) - ------------------------------------------------------------------------------------ Total $12,578 ====================================================================================
In August 1993, the Omnibus Budget Reconciliation Act of 1993 was enacted into law. Accordingly, the effect of the increase in the corporate Federal tax rate from 34% to 35% was recorded in the Company's fiscal third quarter results by cumulative adjustment for the first half of the fiscal year. Including the effect of the Federal tax rate increase, the Company's combined state and Federal effective tax rate from operations, net of offsets generated by targeted jobs tax credits, is approximately 38.2% for fiscal year 1993. The effective tax rates for fiscal years 1992 and 1991 were 37.0% and 37.1%, respectively. A reconciliation of income tax expense from operations at the Federal statutory rate to actual tax expense from operations for the applicable fiscal years follows (in thousands):
Fiscal Year Ended -------------------------------------------- January 30, January 31, February 2, 1994 1993 1992 - ------------------------------------------------------------------------------------ Income taxes at Federal statutory rate $ 257,905 $195,831 $ 134,681 State income taxes, net of Federal income tax benefit 22,425 17,800 10,235 Other, net 1,270 (521) 2,054 - ------------------------------------------------------------------------------------ Total $281,600 $213,110 $146,970 ====================================================================================
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 30, 1994 are as follows (in thousands):
Deferred Tax Assets: - ------------------------------------------------------------------------------------ Accrued self-insurance liabilities $ 26,813 Other accrued liabilities 16,300 - ------------------------------------------------------------------------------------ Net deferred tax assets $ 43,113 - ------------------------------------------------------------------------------------ Deferred Tax Liabilities: Accelerated depreciation $ (62,835) Other (8,105) - ------------------------------------------------------------------------------------ Total gross deferred liabilities $ (70,940) Net deferred tax liability $ (27,827) ====================================================================================
No valuation allowance was recorded against the deferred tax assets at February 1, 1993 or January 30, 1994. The Company's management believes the existing net deductible temporary differences comprising the total gross deferred tax assets will reverse during periods in which the Company generates net taxable income. Deferred income taxes result from differences in the timing of reporting income and expenses for financial statement and income tax purposes. The sources of these differences and the tax effect of each are as follows (in thousands):
Fiscal Year Ended -------------------------- January 31, February 2, 1993 1992 - ------------------------------------------------------------------------------------ Accelerated depreciation $12,245 $ 7,708 Accrued self-insurance liabilities (9,132) (5,463) Other accrued liabilities (574) (5,316) Other, net 2,926 989 - ------------------------------------------------------------------------------------ Total $ 5,465 $(2,082) ====================================================================================
NOTE 4. EMPLOYEE STOCK PLANS The Company has stock option plans that provide for the granting of incentive and non-qualified options to purchase the Company's common stock to selected key employees, officers and directors. Under the Employee Incentive Stock Option Plan of 1981, options for 43,408,150 shares, net of cancellations (of which 38,861,116 have been exercised), have been granted at $.16 to $18.83 per share as of January 30, 1994. Such options may be exercised at the rate of 25% per year commencing with the first anniversary date of the grant and expire after five years. The Plan expired on June 1, 1991 and the shares available for grant were carried over to the 1991 Omnibus Stock Option Plan. Under the Non-Qualified Stock Option Plan of 1984, options for 679,124 shares, net of cancellations (of which 529,232 have been exercised), have been granted at $1.53 to $9.86 per share as of January 30, 1994. Such options may be exercised at varying rates commencing on the first anniversary date of the grant and expire on the tenth anniversary date of the grant. The Plan expired on June 1, 1991 and the shares available for grant were carried over to the 1991 Omnibus Stock Option Plan. The provisions of the 1991 Omnibus Stock Option Plan, which became effective June 1, 1991, authorize a maximum number of shares available for grant equal to the cumulative number of shares available the previous year plus 1% of the number of shares of common stock issued and outstanding at the beginning of each fiscal year the plan is in effect. Under the 1991 Omnibus Stock Option Plan, options for 5,130,259 shares, net of cancellations (of which 179,749 have been exercised), have been granted at $24.50 to $48.94 per share. As of January 30, 1994, the maximum shares available under this plan for future grants were 27,589,560. The following summarizes shares outstanding under the plans at January 30, 1994, January 31, 1993 and February 2, 1992 and changes during the fiscal years then ended (in thousands of shares):
Fiscal Year Ended -------------------------------------------- January 30, January 31, February 2, 1994 1993 1992 - ---------------------------------------------------------------------------- Number of option shares At beginning of year Outstanding 12,455 14,750 16,640 Exercisable 4,528 4,576 3,936 During the year Issued 1,831 3,549 3,042 Cancelled 332 415 506 Became exercisable 2,536 5,381 5,066 Exercised 4,307 5,429 4,426 At end of year Outstanding 9,647 12,455 14,750 Exercisable 2,757 4,528 4,576 Average price per share Outstanding at the end of year $23.50 $14.89 $7.33 Exercised during the year $ 7.42 $ 4.99 $3.77
In addition, the Company had 3,795,923 shares available for future grants under the Employee Stock Purchase Plan at January 30, 1994. This plan enables the Company to grant substantially all full-time employees options to purchase up to 17,137,500 shares of common stock, of which 13,341,577 shares have been exercised from inception of the plan, at a price equal to 85% of the stock's fair market value at the date of grant. Shares purchased may not exceed the lesser of 20% of the employee's annual compensation, as defined, or $25,000 of common stock at its fair market value (determined at the time such option is granted) for any one calendar year. Employees pay for the shares ratably over a period of one year (the purchase period) through payroll deductions, and cannot exercise their option to purchase any of the shares until the conclusion of the purchase period. In the event an employee elects not to exercise such options, the full amount withheld is refundable. During fiscal 1993, options for 1,525,074 shares were exercised at an average price of $30.96 per share. At January 30, 1994, 889,464 options were outstanding, net of cancellations, at an average price of $35.14 per share. NOTE 5. LEASES The Company leases certain retail locations, office space, warehouse and distribution space, equipment and vehicles. While the majority of the leases are operating leases, certain retail locations are capital leases. As leases expire, it can be expected that in the normal course of business, leases will be renewed or replaced. Total rent expense, net of minor sublease income, for the fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992 amounted to $137,252,000, $110,577,000 and $87,750,000, respectively. Real estate taxes, insurance, maintenance and operating expenses applicable to the leased property are obligations of the Company under the building leases. Certain of the store leases provide for contingent rentals based on percentages of sales in excess of specified minimums. Contingent rentals for fiscal years ended January 30, 1994, January 31, 1993 and February 2, 1992 were approximately $8,370,000, $6,855,000 and $4,381,000, respectively. The approximate future minimum lease payments under capital and operating leases at January 30, 1994 are as follows (in thousands):
Capital Operating Fiscal year leases leases 1994 $ 9,064 $ 147,557 1995 9,064 156,645 1996 9,064 149,081 1997 9,064 139,969 1998 9,072 130,919 Thereafter 137,325 1,498,308 - --------------------------------------------------------------------- 182,653 $2,222,479 ==================== Less: Imputed interest (141,822) - ----------------------------------------- Net present value of capital lease obligations 40,831 Less: Current installments (561) - ----------------------------------------- Long-term, excluding current installments $ 40,270 =========================================
On the Consolidated Balance Sheet the short-term and long-term obligations for capital leases are included in Other Accrued Expenses and Other Long-Term Liabilities, respectively. The assets recorded at January 30, 1994 and January 31, 1993, net of amortization, in Net Property and Equipment amounted to $40,608,000 and $12,446,000, respectively. NOTE 6. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST During fiscal 1988, the Company established a leveraged Employee Stock Ownership Plan and Trust (ESOP) covering substantially all full-time employees. At January 30, 1994, the ESOP held a total of 7,911,264 shares of the Company's common stock in trust for plan participants. The ESOP purchased the shares in the open market with the proceeds of loans obtained from the Company during fiscal 1992, 1990 and 1989 totaling $81,442,000. Of that amount, the Company borrowed $20,000,000 during 1988 in a private placement (see note 2), which in turn was loaned to the ESOP for the purpose of purchasing the shares. The additional $61,442,000 loaned to the ESOP was funded by cash from operations of the Company. The private placement loan and remaining $61,442,000 of Company loans to the ESOP have similar terms. Maturities are $40,000,000 in August, 1995 and $41,442,000 in August, 2001. The Company's Board of Directors authorized loans to the ESOP up to $90,000,000. The Company may advance funds to the ESOP so that the ESOP may purchase up to an additional $8,558,000 of the Company's stock in the open market at prices the ESOP deems desirable. The Company's common stock purchased by the ESOP is held in a "suspense account" as collateral for amounts loaned by the Company. Each year the Company makes contributions to the ESOP which the plan trustee is required to use to make loan interest and principal payments to the Company. When the Company commits to make contributions to the ESOP, a portion of the common stock is released from the "suspense account" and allocated to participating employees. Any dividends on unallocated shares are used to service the ESOP's debt, to pay expenses of the ESOP, to purchase additional shares of the Company or to purchase other investments. The unpaid portion of the ESOP's obligation to the Company is recorded as a reduction of stockholders' equity. The Company's contributions to the ESOP were $6,000,000, $8,200,000 and $8,000,000 for the fiscal years 1993, 1992 and 1991, respectively. NOTE 7. INVESTMENTS The Company's investments, including aggregate estimated market values by balance sheet classification consisted of the following at January 30, 1994 and January 31, 1993 (in thousands):
January 30, 1994 January 31, 1993 -------------------------------------------------------------------------------------------- Short-term, Short-term, including current Long-term including current Long-term Long-term maturities of held available maturities of held available held to long-term for sale long-term for sale maturity - ---------------------------------------------------------------------------------------------------------------------------- Tax exempt notes and bonds $ 6,897 $ 98,100 $ 47,134 $185,662 $ _ U.S. Treasury securities 1,427 59,858 103,697 182,968 _ U.S. government agency securities 67,405 7,536 21,625 4,990 _ Commercial paper 16,496 _ _ _ _ Certificates of deposit _ 30,000 8,013 _ _ Corporate bonds 184,278 25,624 _ 218,110 _ Preferred stock 12,905 33,926 5,000 _ 40,832 Promissory notes _ _ 24,517 _ _ Asset-backed securities 41,568 19,720 82,465 61,529 _ Other _ 6,859 _ _ 185 - ------------------------------------------------------------------------------------ Total $ 330,976 $281,623 $292,451 $653,259 $ 41,017 - ------------------------------------------------------------------------------------ Estimated market value $ 332,524 $283,325 $293,518 $662,775 $ 41,195 ====================================================================================
Estimated market values of investments are based on quoted market prices on the last business day of the fiscal year. NOTE 8. COMMITMENTS AND CONTINGENCIES At January 30, 1994, the Company was contingently liable for approximately $111,906,000 under outstanding letters of credit issued in connection with purchase commitments. Under the Company's workers' compensation program, coverage is obtained for significant exposures as well as those risks required to be insured by law or contract. It is the Company's preference to retain a significant portion of certain expected losses related to workers' compensation. Provisions for expected losses under this program are recorded based upon the Company's estimates of the aggregate liability for claims incurred. Included in Accrued Salaries and Related Expenses on the Consolidated Balance Sheets as of January 30, 1994 and January 31, 1993 are accruals for workers' compensation liability totaling $52,738,000 and $32,708,000, respectively. The Company has litigation arising from the normal course of business. In management's opinion this litigation will not materially affect the Company's consolidated results of operations. NOTE 9. QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the unaudited quarterly results of operations for the fiscal years ended January 30, 1994 and January 31, 1993 (in thousands, except per share data): Net earnings
Percent per common increase in and common comparable Gross Net equivalent Net Sales store sales profit earnings share - ---------------------------------------------------------------------------------------------------------------------------- Fiscal year ended January 30, 1994: First Quarter $2,180,218 7% $ 601,700 $106,799 $ .24 Second Quarter 2,453,756 9% 661,834 134,504 .30 Third Quarter 2,317,372 6% 626,186 103,418 .23 Fourth Quarter 2,287,417 6% 663,659 112,680 .25 - ---------------------------------------------------------------------------------------------------------------------------- $9,238,763 7% $ 2,553,379 $457,401 $1.01 ============================================================================================================================ Fiscal year ended January 31, 1993: First Quarter $ 1,639,575 15% $ 446,000 $ 79,496$ .18 Second Quarter 1,856,380 14% 502,420 101,867 .23 Third Quarter 1,834,006 16% 495,093 84,360 .19 Fourth Quarter 1,818,475 15% 525,555 97,140 .21 - ---------------------------------------------------------------------------------------------------------------------------- $ 7,148,436 15% $1,969,068 $362,863 $ .82 ============================================================================================================================
NOTE 10. SUBSEQUENT EVENT Effective February 28, 1994, the Company entered into a partnership and, as a result, acquired 75% of a Canadian company (Aikenhead's Home Improvement Warehouse) which currently operates seven warehouse-style home improvement stores in Toronto, London, and Kitchener, Ontario, Canada. At any time after the sixth anniversary of the purchase, the Company has the option to purchase, or the other partner has the right to cause the Company to purchase, the remaining 25% of the Canadian company. The option price is based on the lesser of fair market value or a value to be determined by an agreed-upon formula as of the option exercise date. The purchase price paid for the 75% interest in the Canadian company was approximately $163,000,000 and will be accounted for by the purchase method of accounting. The excess purchase price over the estimated fair value of the net assets as of the acquisition date will be recorded as goodwill and amortized over 40 years. Independent Auditors' Report The Home Depot, Inc. and Subsidiaries KPMG Peat Marwick The Board of Directors and Stockholders The Home Depot, Inc.: We have audited the accompanying consolidated balance sheets of The Home Depot, Inc. and subsidiaries as of January 30, 1994 and January 31, 1993, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended January 30, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Home Depot, Inc. and subsidiaries as of January 30, 1994 and January 31, 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended January 30, 1994 in conformity with generally accepted accounting principles. /s/KPMG Peat Marwick KPMG Peat Marwick Atlanta, Georgia March 11, 1994 EX-21 5 EXHIBIT 21 Exhibit 21 List of Subsidiaries of the Registrant State or Jurisdiction of Name of Subsidiary Incorporation d/b/a ------------------ --------------- ----- Home Depot International, Inc. Delaware Home Depot U.S.A., Inc. Delaware The Home Depot Homer III, Inc. Delaware Homerlease, Inc. Delaware M B Food Service, Inc. Delaware Home Depot of Canada Inc. Canada THD Bermuda, LTD. Bermuda Home Depot NRO Holdings, Inc. Canada Jabs Realty, Inc. Georgia Homer II, Inc. Delaware Homer TLC, Inc. Delaware Home Depot Recycling, Inc. Georgia The Home Depot Special Services, Inc. Delaware Go Blue, Inc. Georgia The Home Depot Canada A Canadian Aikenhead's partnership Home Improvement in which the Warehouse Registrant owns a 75% interest EX-23 6 EXHIBIT 23 KPMG Peat Marwick Certified Public Accountants 303 Peachtree Street, N.E. Telephone 404 222 3000 Suite 2000 Telefax 404 222 3050 Atlanta, GA 30308 INDEPENDENT AUDITOR'S CONSENT The Board of Directors The Home Depot, Inc.: We consent to incorporation by reference in the Registration Statements (No.'s 33-46476, 33-22531, and 33-22299) on Form S-8 of The Home Depot, Inc. of our report dated March 11, 1994, relating to the consolidated balance sheets of The Home Depot, Inc. and subsidiaries as of January 30, 1994 and January 31, 1993, and the related consolidated statements of earnings, stockholders' equity, and cash flows and related schedules for each of the years in the three-year period ended January 30, 1994, which reports are included or incorporated by reference in the January 30, 1994 Annual Report on Form 10-K of The Home Depot, Inc. /s/KPMG PEAT MARWICK Atlanta, Georgia April 15, 1994 EX-24 7 EXHIBIT 24 POWER OF ATTORNEY STATE OF NEW MEXICO COUNTY OF DONA ANA KNOW ALL MEN BY THESE PRESENTS, that I, Frank Borman, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of February, 1994. /s/ Frank Borman ACKNOWLEDGEMENT BEFORE me this 16th day of February, 1994, came Frank Borman, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Patricia M. Frietze NOTARY PUBLIC State of New Mexico My Commission Expires: November 11, 1995 POWER OF ATTORNEY STATE OF TEXAS COUNTY OF DALLAS KNOW ALL MEN BY THESE PRESENTS, that I, Berry R. Cox, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 18th day of February, 1994. /s/ Berry R. Cox ACKNOWLEDGEMENT BEFORE me this 18th day of February, 1994, came Berry R. Cox, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Shirley Young NOTARY PUBLIC State of Texas My Commission Expires: May 21, 1997 POWER OF ATTORNEY STATE OF CALIFORNIA COUNTY OF LOS ANGELES KNOW ALL MEN BY THESE PRESENTS, that I, Peter S. Gold, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 17th day of February, 1994. /s/ Peter S. Gold ACKNOWLEDGEMENT BEFORE me this 17th day of February, 1994, came Peter S. Gold, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Julie Ann Gold NOTARY PUBLIC State of California My Commission Expires: September 5, 1996 POWER OF ATTORNEY STATE OF TEXAS COUNTY OF DALLAS KNOW ALL MEN BY THESE PRESENTS, that I, Milledge A. Hart, III, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 22nd day of February, 1994. /s/ Milledge A. Hart, III ACKNOWLEDGEMENT BEFORE me this 22nd day of February, 1994, came Milledge A. Hart, III, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Jodie L. Patnoe NOTARY PUBLIC State of Texas My Commission Expires: June 10, 1995 POWER OF ATTORNEY STATE OF GEORGIA COUNTY OF COBB KNOW ALL MEN BY THESE PRESENTS, that I, James W. Inglis, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day of February, 1994. /s/ James W. Inglis ACKNOWLEDGEMENT BEFORE me this 28th day of February, 1994, came James W. Inglis, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Diana S. Eastman NOTARY PUBLIC State of Georgia My Commission Expires: January 21, 1997 POWER OF ATTORNEY STATE OF GEORGIA COUNTY OF COBB KNOW ALL MEN BY THESE PRESENTS, that I, Donald R. Keough, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 18th day of April, 1994. /s/ Donald R. Keough ACKNOWLEDGEMENT BEFORE me this 18th day of April, 1994, came Donald R. Keough, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Mary Beth Meeder NOTARY PUBLIC State of Georgia My Commission Expires: January 28, 1996 POWER OF ATTORNEY STATE OF GEORGIA COUNTY OF COBB KNOW ALL MEN BY THESE PRESENTS, that I, Kenneth G. Langone, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day of February, 1994. /s/ Kenneth G. Langone ACKNOWLEDGEMENT BEFORE me this 23rd day of February, 1994, came Kenneth G. Langone, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as his true act and deed. /s/Margie Bidwell NOTARY PUBLIC State of Georgia My Commission Expires: August 14, 1994 POWER OF ATTORNEY STATE OF CALIFORNIA COUNTY OF SAN DIEGO KNOW ALL MEN BY THESE PRESENTS, that I, M. Faye Wilson, a director of The Home Depot, Inc., a Delaware corporation, do constitute and appoint Bernard Marcus and Ronald M. Brill, jointly and severally, my true and lawful attorneys-in-fact, each with full power of substitution, for me in any and all capacities, to sign, pursuant to the requirements of the Securities Exchange Act of 1934, the Annual Report of the Corporation of Form 10-K for the fiscal year of the Corporation ended January 30, 1994, and to file the same with the Securities and Exchange Commission, together with all exhibits thereto and other documents in connection therewith, including such as are incorporated therein by reference, and to sign on my behalf and in my stead, in any and all capacities, any amendments to said Annual Report, incorporating such changes as any of the said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact deems appropriate, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 15th day of February, 1994. /s/ Margaret Faye Wilson ACKNOWLEDGEMENT BEFORE me this 15th day of February, 1994, came M. Faye Wilson, personally known to me, who in my presence did sign and seal the above and foregoing Power of Attorney and acknowledged the same as her true act and deed. /s/Carla D. Barlow NOTARY PUBLIC State of California My Commission Expires: April 29, 1994 -----END PRIVACY-ENHANCED MESSAGE-----