-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VOsIg+KO7Skv9C4YxbwgqRf4w9LTc7LLIvjgFvK5mz2pZl3DkmpOZ+t/0Jtf/wJF 38Vl5Yx9cx5mrlycL4EaTQ== 0000354950-97-000006.txt : 19971203 0000354950-97-000006.hdr.sgml : 19971203 ACCESSION NUMBER: 0000354950-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971102 FILED AS OF DATE: 19971202 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME DEPOT INC CENTRAL INDEX KEY: 0000354950 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS [5211] IRS NUMBER: 953261426 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08207 FILM NUMBER: 97731298 BUSINESS ADDRESS: STREET 1: 2455 PACES FERRY ROAD CITY: ATLANTA STATE: GA ZIP: 30339-4024 BUSINESS PHONE: 770-433-8211 MAIL ADDRESS: STREET 1: 2455 PACES FERRY ROAD CITY: ATLANTA STATE: GA ZIP: 30339-4024 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 2, 1997 - OR - TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8207 THE HOME DEPOT, INC. (Exact name of registrant as specified in its charter) Delaware 95-3261426 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2455 Paces Ferry Road N.W. Atlanta, Georgia 30339-4024 (Address of principal executive offices) (Zip Code) (770)433-8211 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $.05 par value 731,543,951 Shares, as of November 19, 1997 THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q November 2, 1997 Part I. Financial Information: Item 1. Financial Statements CONSOLIDATED STATEMENTS OF EARNINGS - Three-Month and Nine-Month Periods Ended November 2, 1997 and October 27, 1996 3 CONSOLIDATED CONDENSED BALANCE SHEETS - As of November 2, 1997 and February 2, 1997 4 CONSOLIDATED STATEMENTS OF CASH FLOWS - Nine-Month Periods Ended November 2, 1997 and October 27, 1996...................... 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6 -7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.................8 - 11 Part II. Other Information: Item 3. Submission of Matters to a Vote of Security Holders 12 Item 4. Exhibits and Reports on Form 8-K 12 Signature Page 13 Index to Exhibits 14
PART I. FINANCIAL INFORMATION THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended November 2, October 27, November 2, October 27, 1997 1996 1997 1996 Net Sales $6,217,045 $4,921,831 $18,424,540 $14,576,963 Cost of Merchandise Sold 4,490,920 3,583,580 13,345,917 10,581,887 Gross Profit 1,726,125 1,338,251 5,078,623 3,995,076 Operating Expenses: Selling and Store Operating 1,113,079 877,861 3,225,873 2,594,927 Pre-Opening 15,781 14,638 42,699 37,640 General and Administrative 106,304 81,889 305,051 234,097 Non-Recurring Charge 104,000 -0- 104,000 -0- Total Operating Expenses 1,339,164 974,388 3,677,623 2,866,664 Operating Income 386,961 363,863 1,401,000 1,128,412 Interest Income (Expense): Interest and Investment Income 12,817 5,856 37,051 12,815 Interest Expense (10,043) (2,834) (31,735) (5,568) Interest, Net 2,774 3,022 5,316 7,247 Minority Interest (3,687) (2,774) (10,906) (6,425) Earnings Before Income Taxes 386,048 364,111 1,395,410 1,129,234 Income Taxes 150,170 142,740 542,820 442,670 Net Earnings $ 235,878 $ 221,371 $ 852,590 $ 686,564 Earnings Per Common and Common Equivalent Share $ 0.32 $ 0.30 $ 1.14 $ 0.95 Dividends Per Share $ 0.05 $ 0.04 $ 0.14 $ 0.11 Weighted Average Number of Common and Common Equivalent Shares 765,560 731,888 763,706 725,366
See accompanying notes to consolidated condensed financial statements.
THE HOME DEPOT INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In Thousands, Except Share Data) November 2, February 2, ASSETS 1997 1997 Current Assets: Cash and Cash Equivalents $ 458,193 $ 146,006 Short-Term Investments 287,501 412,430 Receivables, Net 532,560 388,416 Merchandise Inventories 3,477,625 2,708,283 Other Current Assets 77,722 54,238 Total Current Assets 4,833,601 3,709,373 Property and Equipment, at cost 7,098,066 6,149,816 Less: Accumulated Depreciation and Amortization (915,218) (712,770) Net Property and Equipment 6,182,848 5,437,046 Long-Term Investments 15,000 8,480 Notes Receivable 27,313 39,518 Cost in Excess of the Fair Value of Net Assets Acquired 81,661 86,540 Other 73,682 60,753 $11,214,105 $ 9,341,710 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,758,277 $ 1,089,736 Accrued Salaries and Related Expenses 291,041 249,356 Sales Taxes Payable 163,909 129,284 Other Accrued Expenses 507,443 322,503 Income Taxes Payable 32,076 48,728 Current Installments of Long-Term Debt 7,905 2,519 Total Current Liabilities 2,760,651 1,842,126 Long-Term Debt, excluding current installments 1,285,581 1,246,593 Other Long-Term Liabilities 176,637 134,034 Deferred Income Taxes 66,308 66,020 Minority Interest 110,701 97,751 Stockholders' Equity: Common Stock, par value $0.05. Authorized: 1,000,000,000 shares; issued and outstanding - 731,451,000 shares at 11/2/97 and 720,773,000 shares at 2/2/97 36,572 36,038 Paid-In Capital 2,636,175 2,511,081 Retained Earnings 4,160,505 3,406,592 Cumulative Translation Adjustments (14,875) 2,173 Unrealized Loss on Investments, Net (803) (168) 6,817,574 5,955,716 Less: Shares Held in Employee Benefit Trust 1,116 530 Deferred Compensation Plans 2,231 ---- Total Stockholders' Equity 6,814,227 5,955,186 $11,214,105 $ 9,341,710
See accompanying notes to consolidated condensed financial statements.
THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) Nine Months Ended November 2, 1997 October 27, 1996 Cash Provided from Operations: Net Earnings $ 852,590 $ 686,564 Reconciliation of Net Earnings to Net Cash Provided by Operations: Depreciation and Amortization 204,737 168,502 Deferred Income Tax Expense 657 18,747 Increase in Receivables, Net (122,557) (56,057) Increase in Merchandise Inventories (755,677) (473,854) Increase in Accounts Payable and Accrued Expenses 952,948 732,823 Increase in Income Taxes Payable 371 13,252 Other 14,357 35,490 Net Cash Provided by Operations 1,147,426 1,125,467 Cash Flows From Investing Activities: Capital Expenditures (984,915) (874,690) Proceeds from Sales of Property and Equipment 45,904 17,650 Proceeds from Sales of Investments ---- 40,737 Purchase of Investments (193,576) (189,105) Proceeds from Maturities of Investments 311,487 25,836 Repayments of Advances Secured by Real Estate, Net (1,046) 13,128 Net Cash Used in Investing Activities (822,146) (966,444) Cash Flows From Financing Activities: Proceeds from Long-Term Borrowings 14,998 1,092,960 Repayments of Commercial Paper Obligations, Net ---- (620,000) Repayments of Notes Receivable from ESOP ---- 8,074 Principal Repayments of Long-Term Debt (37,151) (2,077) Proceeds from Sale of Common Stock, Net 105,834 93,378 Cash Dividends Paid to Stockholders (101,860) (81,383) Contributions to Deferred Compensation Plan Trust (197) ---- Shares Purchased for Employee Benefit Trust (587) ---- Minority Interest Contributions to Partnership 6,146 13,208 Net Cash (Used In)/Provided by Financing Activities (12,817) 504,160 Effect of Exchange Rate Changes on Cash, Net (276) 248 Increase in Cash and Cash Equivalents 312,187 663,431 Cash and Cash Equivalents at Beginning of Period 146,006 53,269 Cash and Cash Equivalents at End of Period $ 458,193 $ 716,700
See accompanying notes to consolidated condensed financial statements. THE HOME DEPOT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies: Basis of Presentation - The accompanying consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 2, 1997, as filed with the Securities and Exchange Commission (File No. 1-8207). 2. Joint Venture Agreement with S.A.C.I. Falabella On June 11, 1997, the Company entered into an agreement formalizing a joint venture with S.A.C.I. Falabella ("Falabella"), a leading department store retailer in Chile, to facilitate The Home Depot's entry into the Chilean market. The Home Depot's controlling share of the joint venture is 66.67 percent. The alliance with Falabella is expected to enhance The Home Depot's presence in the Chilean market, offer attractive real estate opportunities and provide assistance with, among other things, systems, credit marketing and distribution logistics. 3. Stock Split On May 28, 1997, the Board of Directors authorized a three-for- two stock split, effected in the form of a stock dividend, which was mailed on July 3, 1997, to stockholders of record on June 12, 1997. This distribution resulted in a transfer of $12,160,000 to common stock from paid-in capital. The accompanying financial statements and management's discussion and analysis of results of operations and financial condition, including all share and per share amounts, have been adjusted to reflect this transaction. 4. Maintenance Warehouse Merger On March 14, 1997, the Company acquired Maintenance Warehouse/America Corp. ("Maintenance Warehouse") through the exchange of all the common stock of Maintenance Warehouse for shares of The Home Depot, Inc. Common Stock. Maintenance Warehouse, which had sales of approximately $130 million in 1996, is the leading direct-mail marketer of maintenance, repair and operations products serving the U.S. building and facilities management market. The San Diego-based company continues to operate under its own name as a subsidiary of the company. THE HOME DEPOT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued) 5. Lawsuit Settlement On September 19, 1997, the Company, without admitting any wrongdoing, entered into a settlement agreement with plaintiffs in the class action lawsuit Butler et. al. v. Home Depot, Inc. in which the plaintiffs had asserted claims of gender discrimination. The Company also has reached agreements in principle to resolve three other lawsuits: Griffin et. al. v. Home Depot, Inc.; Tostajada v. Home Depot, Inc.; and Fleniken v. Home Depot, Inc., each of which involved claims of alleged gender discrimination. The Company recorded a pretax non- recurring charge of $104 million during the third quarter of fiscal 1997. The one-time charge includes expected payments to the plaintiff class members in Butler and their attorneys, internal costs related to enhancing certain human resource programs, and settlement terms for the Griffin, Tostajada and Fleniken cases. 6. Implementation of New Accounting Standard In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128 ("SFAS 128"), "Earnings Per Share." This statement is effective for financial statements issued for interim and annual periods ending after December 15, 1997. In the fourth quarter of fiscal 1997, the Company will begin reporting earnings per share based on the requirements of SFAS 128, which will include restating all prior periods presented, if appropriate. The Company currently reports primary earnings per share ("EPS") in accordance with Accounting Principles Board Opinion No. 15 ("APB No. 15"), "Earnings Per Share." APB No. 15 requires the Primary EPS calculation to include convertible securities and stock options that are considered common stock equivalents. All of the Company's convertible securities and stock options are common stock equivalents, and therefore, are included in the calculation of Primary EPS. The diluted EPS calculation under SFAS 128 requires similar treatment for common stock equivalents. Implementation of SFAS 128 is not expected to have a material impact on the Company's reported Earnings Per Share. 7. Subsequent Event On November 21, 1997, the Company acquired for cash the assets of privately held DeeKay Enterprises, Inc., owner of National Blind and Wallpaper Factory, a Detroit based telephone mail order service, and Habitat Wallpaper and Blinds, which operates 13 retail stores located in Illinois, Missouri and Ohio. The acquisition, which will not have a material effect on the Company's results of operations, will be accounted for using the purchase method of accounting.
THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The data below reflects selected sales data, the percentage relationship between sales and major categories in the Consolidated Statements of Earnings, and the percentage change in the dollar amounts of each of the items. Percentage Increase (Decrease) in Three Months Ended Nine Months Ended Dollar Amounts Selected Consolidated Nov. 2, Oct. 27, Nov. 2, Oct. 27, Three Nine Statements of Earnings Data 1997 1996 1997 1996 Months Months Net Sales 100.0% 100.0% 100.0% 100.0% 26.3% 26.4% Gross Profit 27.8 27.2 27.6 27.4 29.0 27.1 Operating Expenses: Selling and Store Operating 17.9 17.8 17.5 17.8 26.8 24.3 Pre-Opening 0.3 0.3 0.2 0.3 7.8 13.4 General and Administrative 1.7 1.7 1.7 1.6 29.8 30.3 Non-Recurring Charge 1.7 0.0 0.6 0.0 N/A N/A Total Operating Expenses 21.6 19.8 20.0 19.7 37.4 28.3 Operating Income 6.2 7.4 7.6 7.7 6.3 24.2 Interest Income (Expense): Interest and Investment Income 0.2 0.1 0.2 0.1 118.9 189.1 Interest Expense (0.2) (0.0) (0.2) (0.1) 254.4 470.0 Interest, Net 0.0 0.1 0.0 0.0 (8.2) (26.6) Minority Interest (0.0) (0.1) (0.0) (0.0) 32.9 69.7 Earnings Before Income Taxes 6.2 7.4 7.6 7.7 6.0 23.6 Income Taxes 2.4 2.9 3.0 3.1 5.2 22.6 Net Earnings 3.8% 4.5% 4.6% 4.7% 6.6 24.2 Selected Consolidated Sales Data Number of Transactions (000's) 138,813 115,656 417,552 344,705 20.0 21.1 Average Amount of Sale Per Transaction $44.50 $42.56 $43.89 $42.29 4.6 3.8 Weighted Average Weekly Sales Per Operating Store (000's) $ 838 $ 815 $ 865 $ 836 2.8 3.5 Weighted Average Sales Per Square Foot $ 411 $ 403 $ 424 $ 413 1.9 2.6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS - (Continued) Sales for the third quarter of fiscal 1997 increased 26% to $6,217,045,000 compared to sales of $4,921,831,000 for the third quarter of fiscal 1996. For the first nine months of fiscal 1997, sales increased 26% to $18,424,540,000 from sales of $14,576,963,000 for the comparable period in fiscal 1996. The sales increase for both periods was primarily attributable to new stores (583 at the end of the third quarter of fiscal 1997 compared to 479 at the end of the third quarter of fiscal 1996) and a comparable store-for-store sales increase of 7% and 8% for the third quarter and first nine months of fiscal 1997, respectively. Gross profit as a percent of sales was 27.8% for the third quarter of fiscal 1997 compared to 27.2% for the comparable period of fiscal 1996. The increase for the quarter was primarily attributable to merchandise line reviews, which resulted in lower cost of goods in certain product categories, other merchandising initiatives, improved shrink results, product mix changes and lower and more stable lumber costs. For the first nine months of fiscal 1997 gross profit as a percent of sales was 27.6% compared to 27.4% for the comparable period of fiscal 1996, also reflecting the improvements as described above. Operating expenses as a percent of sales increased to 21.6% for the third quarter of fiscal 1997 from 19.8% for the same period of fiscal 1996. Operating expenses included a pre-tax non-recurring charge of $104,000,000 related to the settlements of a class action lawsuit and three other lawsuits. Excluding the non-recurring charge, operating expenses as a percent of sales were 19.9% for the third quarter of fiscal 1997. Selling and store operating expenses as a percent of sales increased to 17.9% for the third quarter of fiscal 1997 from 17.8% for the third quarter of fiscal 1996. The increase for the third quarter was attributable to, among other things, higher selling payroll related to an increased focus on certain merchandising categories that are more labor intensive, higher store relocation costs (estimated unrecoverable costs for two future store relocations were expensed in the third quarter of fiscal 1997 compared to expenses for one store relocation in the third quarter of fiscal 1996), additional store real estate related costs, and expenses for two distribution centers that are expected to close when the Company's Import Distribution Center in Savannah, Georgia is fully operational in December of 1997. Partially offsetting these increases were lower net advertising expenses resulting from higher marketing funds provided by vendors. For the first nine months of fiscal 1997 operating expenses as a percent of sales increased to 20.0% from 19.7% for the same period of fiscal 1996. Excluding the non-recurring charge, operating expenses as a percent of sales were 19.4% for the first nine months of fiscal 1997. Selling and store operating expenses, as a percent of sales, decreased to 17.5% for the first nine months of fiscal 1997 from 17.8% for the first nine months of fiscal 1996. The decrease was partially attributable to leveraging certain costs as a result of a comparable store-for-store sales increases of 8% for the first nine months of fiscal 1997. In addition, the MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS - (Continued) Company incurred one-time expenditures related to the Olympic games during fiscal 1996. Also, net advertising expenses were lower as a percent of sales as described above. Pre-opening expenses as a percent of sales were 0.3% and 0.2% for the third quarter and first nine months of fiscal 1997, respectively, compared to 0.3% for both the third quarter and first nine months of fiscal 1996, respectively. The Company opened 24 new stores and relocated 2 stores in the third quarter of fiscal 1997 compared to opening 23 new stores in the third quarter of fiscal 1996. General and administrative expenses as a percent of sales were 1.7% for the third quarter of both fiscal 1997 and fiscal 1996 and 1.7% for the first nine months of fiscal 1997 as compared to 1.6% for the first nine months of fiscal 1996. The increase for the nine month period was primarily attributable to costs incurred for initiatives that are expected to provide future benefits. Net interest income as a percent of sales was 0.0% for the third quarter and first nine months of 1997 compared to 0.1% for the third quarter and 0.0% for the first nine months of fiscal 1996. Interest and investment income as a percent of sales for the third quarter and first nine months of fiscal 1997 increased to 0.2% from 0.1% for the third quarter and first nine months of fiscal 1996 due to investment income generated from the remaining proceeds of the 3.25% Convertible Subordinated Notes issued in October 1996 (the "Notes"). Interest expense as a percent of sales for the third quarter and first nine months of fiscal 1997 increased to 0.2% from 0.0% for the third quarter and 0.1% for the first nine months of fiscal 1996 due to the interest expense on the Notes. The Company's combined federal and state effective income tax rate decreased to 38.9% for the third quarter and first nine months of fiscal 1997 from 39.2% for the comparable periods of fiscal 1996. During the fourth quarter of fiscal 1996, the Company adjusted its combined federal and state effective income tax rate to 38.9% for the fiscal year. For the third quarter of fiscal 1997, net earnings as a percent of sales decreased to 3.8% from 4.5% for the third quarter of fiscal 1996. The decrease was primarily attributable to the non-recurring charge, partially offset by higher gross margins as described above. For the first nine months, net earnings were 4.6% and 4.7% of fiscal years 1997 and 1996, respectively. Excluding the non-recurring charge, net earnings as a percent of sales were 4.8% and 5.0% for the third quarter and first nine months of fiscal 1997, respectively, as compared to 4.5% and 4.7% for the third quarter and first nine months of fiscal 1996. Earnings per share were $0.32 and $1.14 for the third quarter and first nine months of fiscal 1997, respectively. Excluding the non- recurring charge, earnings per share were $0.40 and $1.22 for the third quarter and first nine months of fiscal 1997, respectively, compared to $0.30 and $0.95 for the third quarter and first nine months of fiscal 1996, respectively. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued) LIQUIDITY AND CAPITAL RESOURCES Cash flow generated from store operations provides the Company with a significant source of liquidity. Additionally, a significant portion of the Company's inventory is financed under vendor credit terms. During the first nine months of fiscal 1997, the Company opened 71 stores and relocated 3 stores. During the fourth quarter of fiscal 1997, the Company plans to open approximately 40 new stores and relocate 2 existing stores. In fiscal 1998, the Company plans to increase its total number of stores by approximately 21 to 22 percent. Although some of these locations will be leased directly, it is expected that many may be obtained through the purchase of pre- existing leasehold interests, the acquisition of land parcels and the construction or purchase of buildings during fiscal 1997. While the cost of new stores to be constructed and owned by the Company varies widely, principally due to land costs, new store costs (including land, building and fixtures) are currently estimated to average approximately $13,100,000 per location. The Company may purchase leasehold interests at varying amounts depending upon the value of such properties. In addition, each new store will require approximately $3,600,000 to finance inventories, net of vendor financing. The cost to remodel (including leasehold interests) and fixture stores to be leased is expected to average approximately $2,400,000 per store. Of the 111 new stores and 5 relocations planned in fiscal 1997, it is expected that approximately 65% will be owned and the remainder will be leased. In June 1996, the Company entered into a $300,000,000 operating lease agreement for the purpose of financing construction costs of new stores. In May 1997, the Company increased its available funding under the operating lease agreement to $600,000,000. As of November 2, 1997, the Company had $745,694,000 in cash and short-term investments. Management believes that its current cash position, the proceeds from short-term investments, internally generated funds, remaining funds available from the $600,000,000 operating lease agreement, and/or the ability to obtain alternate sources of financing, including the ability to raise financing under its commercial paper program, should enable the Company to complete its capital expenditure programs, including store expansion and renovation, through the next several fiscal years. IMPACT OF INFLATION AND CHANGING PRICES Although the Company cannot accurately determine the precise effect of inflation on its operations, it does not believe inflation has had a material effect on sales or results of operations. PART II. OTHER INFORMATION Item 1. Legal Proceedings The information required by Item 1 is incorporated by reference from Note 5 of the Notes to Consolidated Condensed Financial Statements included in Part I of this report. Item 3. Submission of Matters to a Vote of Security Holders. During the third quarter of fiscal 1997, no matters were submitted to a vote of security holders. Item 4. Exhibits and Reports on Form 8-K (a) Exhibits 11.1 Computation of Earnings per Common and Common Equivalent Share 27. Financial Data Schedule (only submitted to SEC in electronic format) (b) Reports on Form 8-K On September 23, 1997, the Company filed a Form 8-K, pursuant to Item 5 - Other Event, reporting the settlement of Butler et al. v. Home Depot, Inc. and and Frank, et al. v. Home Depot, Inc., Case Nos. 94- 4335SI and 95-2182SI, respectively, pending in U.S. Dist. Ct., N.D. CA. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE HOME DEPOT, INC. (Registrant) By: /s/ Arthur M. Blank Arthur M. Blank CEO, President & COO /s/ Marshall L. Day Marshall L. Day Senior Vice President Chief Financial Officer December 2, 1997 THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO EXHIBITS Exhibit Description 11.1 Computation of Earnings per Common and Common Equivalent Share 27. Financial Data Schedule (only submitted to SEC in electronic format) EX-11.1 2
Exhibit 11.1 THE HOME DEPOT, INC. AND SUBSIDIARIES Computation of Earnings Per Common and Common Equivalent Share (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended Primary November 2, October 27, November 2, October 27, 1997 1996 1997 1996 Net Earnings Applicable to Common and Common Equivalent Shares $ 235,878 $ 221,371 $ 852,590 $ 686,564 Tax Effected Interest Expense, Net of Interest Capitalized, Attributable to 3.25% Convertible Subordinated Notes 5,845 1,659 17,531 1,659 $ 241,723 $ 223,030 $ 870,121 $ 688,223 Shares: Weighted Average Number of Common and Common Equivalent Shares Assuming the higher of the Ending or Average Market Price for Period 741,604 725,043 739,750 723,084 Additional Shares from Assumed Conversion of 3.25% Convertible Subordinated Notes 23,956 6,845 23,956 2,282 765,560 731,888 763,706 725,366 Primary Earnings per Common and Common Equivalent Share $ 0.316 $ 0.305 $ 1.139 $ 0.949 (1) Common equivalent shares represent shares granted under the Company's employee stock purchase plan and stock option plans for the three and nine month periods ended November 2, 1997 and October 27, 1996. All periods have been adjusted to reflect the three-for-two stock split in July 1997. (2) Primary Earnings per Common and Common Equivalent Shares excluding the $104,000,000 non-recurring charge were $.399 for the three months and $1.223 for the nine months ended November 2, 1997. (3) The Company's 3.25% Convertible Subordinated Notes issued on October 2, 1996, are common stock equivalents. For the three and nine month periods ended November 2, 1997 and October 27, 1996, the Notes were dilutive and, accordingly, were assumed to be converted at the beginning of the accounting period for purposes of calculating earnings per share.
EX-27 3
5 1,000 3-MOS FEB-01-1998 May-04-1997 614174 427366 348913 0 3249236 4724122 6434961 784516 10548666 2731276 1259534 0 0 24309 6205914 10548666 5657274 5657274 4105480 4105480 1127299 0 861 423634 164800 258834 0 0 0 258834 .53 .53
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