-----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, C4oB/d8zPahOpOxamA9nZQP1vLzmLgw+aI92vm76ESzHADOXLdqw0EYg6mcGRl6g Jrj2uC1F9XTbDFu4C6sjPw== 0000354950-98-000004.txt : 19980902 0000354950-98-000004.hdr.sgml : 19980902 ACCESSION NUMBER: 0000354950-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980802 FILED AS OF DATE: 19980901 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: 98702324 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 Page 1 of 16 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 2, 1998 - OR - TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8207 THE HOME DEPOT, INC. (Exact name of registrant as specified in its charter) Delaware 95-3261426 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2455 Paces Ferry Road N.W. Atlanta, Georgia 30339 (Address of principal executive offices) (Zip Code) (770) 433-8211 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $.05 par value 1,470,510,673 Shares, as of August 21, 1998 THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q August 2, 1998 Page Part I. Financial Information: Item 1. Financial Statements CONSOLIDATED STATEMENTS OF EARNINGS - Three-Month and Six-Month Periods Ended August 2, 1998 and August 3, 1997........................3 CONSOLIDATED CONDENSED BALANCE SHEETS - As of August 2, 1998 and February 1, 1998......................4 CONSOLIDATED STATEMENTS OF CASH FLOWS - Six -Month Periods Ended August 2, 1998 and August 3, 1997........................5 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - Three-Month and Six-Month Periods Ended August 2, 1998 and August 3, 1997........................6 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS............................................7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition .................. 8 - 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk......................................................12 Part II. Other Information: Item 4. Submission of Matters to a Vote of Security Holders...................................................13 Item 5. Other Information.........................................13 Item 6. Exhibits and Reports on Form 8-K..........................14 Signature Page....................................................15 Index to Exhibits.................................................16
PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In Millions, Except Per Share Data) Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 1998 1997 1998 1997 Net Sales $ 8,139 $ 6,550 $ 15,263 $ 12,208 Cost of Merchandise Sold 5,876 4,749 11,031 8,855 Gross Profit 2,263 1,801 4,232 3,353 Operating Expenses: Selling and Store Operating 1,353 1,103 2,620 2,120 Pre-Opening 18 14 37 27 General and Administrative 122 101 244 199 Total Operating Expenses 1,493 1,218 2,901 2,346 Operating Income 770 583 1,331 1,007 Interest Income (Expense): Interest and Investment Income 9 14 15 24 Interest Expense (10) (11) (21) (22) Interest, Net (1) 3 (6) 2 Earnings Before Income Taxes 769 586 1,325 1,009 Income Taxes 302 228 521 392 Net Earnings $ 467 $ 358 $ 804 $ 617 Weighted Average Number of Common Shares Outstanding 1,470 1,459 1,468 1,455 Basic Earnings Per Share $ 0.32 $ 0.25 $ 0.55 $ 0.42 Weighted Average Number of Common Shares Outstanding Assuming Dilution 1,546 1,524 1,542 1,517 Diluted Earnings Per Share $ 0.31 $ 0.24 $ 0.53 $ 0.41 Dividends Per Share $ 0.03 $ 0.03 $ 0.06 $ 0.05
See accompanying notes to consolidated condensed financial statements.
THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In Millions, Except Share Data) August 2, February 1, 1998 1998 ASSETS Current Assets: Cash and Cash Equivalents $ 654 $ 172 Short-Term Investments 1 2 Receivables, Net 423 556 Merchandise Inventories 3,786 3,602 Other Current Assets 149 128 Total Current Assets 5,013 4,460 Property and Equipment, at cost 8,348 7,487 Less: Accumulated Depreciation and Amortization (1,135) (978) Net Property and Equipment 7,213 6,509 Long-Term Investments 15 15 Notes Receivable 24 27 Cost in Excess of the Fair Value of Net Assets Acquired 269 140 Other 59 78 $ 12,593 $ 11,229 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,812 $ 1,358 Accrued Salaries and Related Expenses 373 312 Sales Taxes Payable 210 143 Other Accrued Expenses 559 530 Income Taxes Payable 114 105 Current Installments of Long-Term Debt 5 8 Total Current Liabilities 3,073 2,456 Long-Term Debt, excluding current installments 1,317 1,303 Other Long-Term Liabilities 215 178 Deferred Income Taxes 79 78 Minority Interest 4 116 Stockholders' Equity: Common Stock, par value $0.05. Authorized: 2,500,000,000 shares; issued and outstanding - 1,470,302,000 shares at 8/2/98 and 1,464,216,000 shares at 2/1/98 74 73 Paid-In Capital 2,742 2,626 Retained Earnings 5,154 4,430 Cumulative Translation Adjustments (60) (28) 7,910 7,101 Less Shares Purchased for Compensation Plans 5 3 Total Stockholders' Equity 7,905 7,098 $ 12,593 $ 11,229
See accompanying notes to consolidated condensed financial statements.
THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Millions) Six Months Ended August 2, 1998 August 3, 1997 Cash Provided From Operations: Net Earnings $ 804 $ 617 Reconciliation of Net Earnings to Net Cash Provided by Operations: Depreciation and Amortization 180 134 Decrease (Increase) in Receivables, Net 132 (4) Increase in Merchandise Inventories (192) (472) Increase in Accounts Payable and Accrued Expenses 642 650 Increase in Income Taxes Payable 40 18 Other 1 (11) Net Cash Provided by Operations 1,607 932 Cash Flows From Investing Activities: Capital Expenditures (891) (585) Proceeds from Sales of Property and Equipment 22 25 Payment for Purchase of Minority Partnership Interest (261) --- Purchases of Investments (1) (65) Proceeds from Maturities of Investments 2 49 Repayments of Advances Secured by Real Estate, Net 3 8 Net Cash Used in Investing Activities (1,126) (568) Cash Flows From Financing Activities: Principal Repayments of Long-Term Debt (4) (37) Proceeds from Sale of Common Stock, Net 84 64 Cash Dividends Paid to Stockholders (81) (65) Minority Interest Contributions to Partnership 5 1 Net Cash Provided by (Used in) Financing Activities 4 (37) Effect of Exchange Rate Changes on Cash, Net (3) --- Increase in Cash and Cash Equivalents 482 327 Cash and Cash Equivalents at Beginning of Period 172 146 Cash and Cash Equivalents at End of Period $ 654 $ 473
See accompanying notes to consolidated condensed financial statements.
THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In Millions) Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 1998 1997 1998 1997 Net Earnings $ 467 $ 358 $ 804 $ 617 Other Comprehensive Income, net of tax: Foreign Currency Translation Adjustments (22) --- (19) (5) Unrealized Loss on Investments --- --- --- (1) Other Comprehensive Income (22) --- (19) (6) Comprehensive Income $ 445 $ 358 $ 785 $ 611
THE HOME DEPOT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies: Basis of Presentation - The accompanying consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 1, 1998, as filed with the Securities and Exchange Commission (File No. 1-8207). 2. Stock Split On May 27, 1998, the Board of Directors authorized a two-for-one stock split, effected in the form of a stock dividend, which was distributed on July 2, 1998 to stockholders of record on June 11, 1998. This distribution resulted in a transfer on the Company's balance sheet of $36,751,000 to common stock from paid -in-capital. The accompanying financial statements and management's discussion and analysis of results of operations and financial condition, including all share and per share amounts, have been adjusted to reflect this transaction. 3. Purchase of Minority Interest in Canadian Partnership During the first quarter of fiscal 1998, the Company purchased, for $261 million, the remaining 25% partnership interest in The Home Depot Canada partnership that was held by The Molson Companies. As a result of this transaction, the Company and its subsidiaries now own all of The Home Depot's Canadian operations. The Home Depot Canada partnership was formed in February, 1994 when the Company acquired 75% of Aikenhead's Home Improvement Warehouse, which was then operating seven home improvement stores in Canada. Since the original acquisition and through the end of the second quarter of fiscal 1998, The Home Depot Canada has opened 33 additional stores. The terms of the original partnership agreement provided for a put/call option, which would have resulted in the Company purchasing the remaining 25% of The Home Depot Canada at any time after the sixth anniversary of the original agreement. The companies reached a mutual agreement, however, to complete the purchase transaction at an earlier date.
THE HOME DEPOT, INC. AND SUBSIDIARIES Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The data below reflects selected sales data, the percentage relationship between sales and major categories in the Consolidated Statements of Earnings, and the percentage change in the dollar amounts of each of the items. Percentage Increase Three Months Six Months (Decrease) in Ended Ended Dollar Amounts Selected Consolidated Statements of Earnings Aug 2, Aug 3, Aug 2, Aug 3, Three Six Data 1998 1997 1998 1997 Months Months Net Sales 100.0% 100.0% 100.0% 100.0% 24.3% 25.0% Gross Profit 27.8 27.5 27.7 27.4 25.7 26.2 Operating Expenses: Selling and Store Operating 16.7 16.9 17.2 17.3 22.7 23.6 Pre-Opening 0.2 0.2 0.2 0.2 28.6 37.0 General and Administrative 1.5 1.5 1.6 1.6 20.8 22.6 Total Operating Expenses 18.4 18.6 19.0 19.1 22.6 23.7 Operating Income 9.4 8.9 8.7 8.3 32.1 32.2 Interest Income (Expense): Interest and Investment Income 0.1 0.2 0.1 0.2 (35.7) (37.5) Interest Expense (0.1) (0.2) (0.1) (0.2) (9.1) (4.5) Interest, Net 0.0 0.0 0.0 0.0 (133.3) (400.0) Earnings Before Income Taxes 9.4 8.9 8.7 8.3 31.2 31.3 Income Taxes 3.7 3.4 3.4 3.2 32.5 32.9 Net Earnings 5.7% 5.5% 5.3% 5.1% 30.4 30.3 Selected Consolidated Sales Data Number of Transactions (in Millions) 180 149 336 279 20.8 20.4 Average Amount of Sale Per Transaction $44.98 $43.71 $45.08 $43.59 2.9 3.4 Weighted Average Weekly Sales Per Operating Store (in Thousands) $ 933 $ 922 $ 894 $ 879 1.2 1.7 Weighted Average Sales Per Square Foot $ 455 $ 452 $ 436 $ 431 0.7 1.2
THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS Sales for the second quarter of fiscal 1998 increased 24.3% to $8.139 billion from $6.550 billion for the second quarter of fiscal 1997. For the first six months of fiscal 1998, sales increased 25% to $15.263 billion from $12.208 billion for the comparable period in fiscal 1997. The sales increase for both periods was primarily attributable to new stores (679 stores open at the end of the second quarter of fiscal 1998 compared with 559 at the end of the second quarter of fiscal 1997) and a comparable store- for-store sales increase of 7% for both the second quarter and first six months of fiscal 1998. Gross profit as a percent of sales was 27.8% for the second quarter of fiscal 1998 compared with 27.5% for the second quarter of fiscal 1997. For the first six months of fiscal 1998 gross profit as a percent of sales was 27.7% compared to 27.4% for the comparable period of fiscal 1997. The gross profit rate increase for both periods was primarily attributable to sales mix changes, lower lumber costs and to product line reviews and other merchandising initiatives, which have resulted in lower costs of merchandise. Operating expenses as a percent of sales decreased to 18.4% for the second quarter of fiscal 1998 from 18.6% for the second quarter of fiscal 1997, primarily due to lower selling and store operating expenses as a percent of sales. For the first six months of fiscal 1998, operating expenses decreased to 19.0% from 19.1% for the comparable period in fiscal 1997. Selling and store operating expenses as a percent of sales were 16.7% for the second quarter of fiscal 1998 compared to 16.9% for the comparable period of fiscal 1997. Net advertising expenses decreased as a percent of sales due to increased national advertising and cost leverage achieved from opening new stores in existing markets. During the first quarter of 1998, the Company purchased the remaining 25% of The Home Depot Canada Partnership from The Molson Companies. As a result, expense for minority interest, which represents the Molson Companies' share of earnings in the partnership, was lower as a percent of sales in the second quarter and first six months of fiscal 1998 compared with the second quarter and first six months of fiscal 1997. In addition, store relocation costs as a percent of sales were lower during the second quarter of fiscal 1998 than in the second quarter of fiscal 1997, due to differences in the unrecoverable costs of relocated stores and timing of the relocations. Partially offsetting these decreases were higher store selling payroll expenses as a percent of sales for the second quarter of fiscal 1998 compared to the second quarter of fiscal 1997 primarily due to increased focus on certain areas, including flooring and other decor areas that require labor skills which tend to carry higher than average pay rates. Selling and store operating expenses as a percent to sales decreased to 17.2% for the first six months of fiscal 1998 from 17.3% for the first six months of fiscal 1997. This decrease was due to lower net advertising expenses, minority interest expense and store relocation costs as described above. THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS - (Continued) Pre-opening expenses as a percent of sales were 0.2% for the second quarter and first six months of both fiscal 1998 and fiscal 1997. The Company opened 23 stores and relocated 1 during the second quarter of fiscal 1998 compared with 23 new stores and no relocations during the second quarter of fiscal 1997. General and administrative expenses as a percent of sales were 1.5% for both the second quarter of fiscal 1998 and fiscal 1997 and 1.6% for the first six months of fiscal 1998 and fiscal 1997. Net interest as a percent of sales was 0.0% for the second quarter and first six months of both fiscal 1998 and fiscal 1997. As a percent of sales, interest and investment income for the second quarter and first six months of fiscal 1998 decreased to 0.1% from 0.2% for the second quarter and first six months of 1997 primarily due to lower investment balances resulting from funds used to open new stores. Interest expense was substantially equivalent in dollars for both the second quarter and first six months of fiscal 1998 and fiscal 1997 but was lower as a percent of sales this year compared to last year due to the increase in sales. The Company's combined federal and state effective income tax rate increased to 39.3% for the second quarter and first six months of fiscal 1998 from 38.9% for the comparable periods of fiscal 1997. The increase was due to higher effective state tax rates and a reduction in tax-exempt interest income. Net earnings as a percent of sales increased to 5.7% and 5.3.% for the second quarter and first six months of fiscal 1998, respectively, from 5.5% and 5.1% for the second quarter and first six months of fiscal 1997. Diluted earnings per share were $0.31 and $0.53 for the second quarter and first six months of fiscal 1998, respectively, compared to $0.24 and $0.41 for the second quarter and first six months of fiscal 1997, respectively. The increases for fiscal 1998 were primarily attributable to higher gross margin rates and lower selling and store operating expenses, partially offset by higher income tax rates, as described above. LIQUIDITY AND CAPITAL RESOURCES Cash flow generated from store operations provides the Company with a significant source of liquidity. Additionally, a significant portion of the Company's inventory is financed under vendor credit terms. THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES - (Continued) During the first six months of fiscal 1998, the Company opened 55 stores and relocated 1 store. During the remainder of fiscal 1998, the Company plans to open approximately 82 new stores and relocate 3 existing stores, for a 22% unit growth rate. It is anticipated that approximately 87% of these locations will be owned, and the remainder will be leased. The Company also plans to open approximately 170 stores, including relocations, in fiscal 1999. In June 1996, the Company entered into a $300 million operating lease agreement for the purpose of financing construction costs of certain new stores. In May 1997, the Company increased its available funding under the operating lease agreement to $600 million. Under the agreement, the lessor purchases the properties, pays for the construction costs and subsequently leases the facilities to the Company. The lease provides for substantial residual value guarantees and includes purchase options at original cost on each property. The Company financed a portion of new stores opened in fiscal 1997 under the agreement and anticipates utilizing this facility to finance selected new stores in fiscal 1998 and an office building in fiscal 1999. In addition, some planned locations for fiscal 1998 and fiscal 1999 will be leased individually, and it is expected that many locations may be obtained through the acquisition of land parcels and construction or purchase of buildings. While the cost of new stores to be constructed and owned by the Company varies widely, principally due to land costs, new store costs are currently estimated to average approximately $13.2 million per location. The cost to remodel and fixture stores to be leased is expected to average approximately $2.4 million per store. In addition, each new store will require approximately $2.9 million to finance inventories, net of vendor financing. During fiscal 1996, the Company issued, through a public offering, $1.1 billion of 3.25% Convertible Subordinated Notes due October 1, 2001 ("3.25% Notes"). The 3.25% Notes were issued at par and are convertible into shares of the Company's common stock at any time prior to maturity, unless previously redeemed by the Company, at a conversion price of $23.0416 per share, subject to adjustment under certain conditions. The 3.25% Notes may be redeemed, at the option of the Company, at any time on or after October 2, 1999, in whole or in part, at a redemption price of 100.813% of the principal amount and after October 1, 2000, at 100% of the principal amount. The Company used the net proceeds from the offering to repay outstanding commercial paper obligations, to finance a portion of the Company's capital expenditure program, including store expansions and renovations, and for general corporate purposes. The Company has a commercial paper program that allows borrowings up to a maximum of $800 million. As of August 2, 1998, there were no borrowings outstanding under the program. In connection with the program, the Company has a back-up credit facility with a consortium of banks for up to $800 million. The credit facility, which expires in December 2000, contains various restrictive covenants, none of which is expected to materially impact the Company's liquidity or capital resources. THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES - (Continued) As of August 2, 1998, the Company had $655 million in cash and cash equivalents and short-term investments, as well as $15 million in long-term investments. Management believes that its current cash position, the proceeds from short-term and long-term investments, internally generated funds, funds available from its $800 million commercial paper program, funds available from the $600 million operating lease agreement, and/or the ability to obtain alternate sources of financing should enable the Company to complete its capital expenditure programs, including store expansions and renovations, through the next several fiscal years. YEAR 2000 The Company is currently addressing a universal situation commonly referred to as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of certain computer software programs to properly recognize and process date-sensitive information relative to the Year 2000 and beyond. During fiscal 1997, the Company developed a plan to devote the necessary resources to identify and modify systems impacted by the Year 2000 Problem, or implement new systems to become Year 2000 compliant in a timely manner. The total cost of executing this plan is estimated at $13 million and, as of August 2, 1998, the Company was approximately 50% complete with the execution of this plan. In addition, the Company has contacted its major suppliers and vendors seeking information about their internal compliance efforts. The Company's risks involved with not solving the Year 2000 issue include, but are not limited to, the following: loss of local or regional electric power, loss of telecommunication services, delays or cancellations of shipping or transportation, manufacturing shut- downs, bank errors and computer errors by vendors. The Company is in the process of developing contingency plans for those areas which might be affected by the Year 2000 Problem. If the Company, its suppliers or vendors are unable to resolve issues related to the Year 2000 on a timely basis, it could result in a material financial risk. IMPACT OF INFLATION AND CHANGING PRICES Although the Company cannot accurately determine the precise effect of inflation on its operations, it does not believe inflation has had a material effect on sales or results of operations. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company has not entered into any transactions using derivative financial instruments or derivative commodity instruments and believes that its exposure to market risk associated with other financial instruments (such as investments) are not material. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Stockholders, on May 27, 1998, the stockholders elected the slate of nominees for election as director with votes cast as follows: Arthur M. Blank had 625,423,396 shares for and 13,329,195 shares withheld; Dr. Johnnetta B. Cole had 626,684,757 shares for and 12,067,834 shares withheld; Mr. Milledge A. Hart, III had 625,413,650 shares for and 13,338,940 shares withheld and Ms. M. Faye Wilson had 625,386,512 shares for and 13,366,078 shares withheld. There were no abstentions or broker non-votes applicable to the election of directors. The following other directors have terms of office as a director that continue after the meeting: Col. Frank Borman, Mr. Ronald M. Brill, Mr. John L. Clendenin, Mr. Berry R. Cox, Mr. Donald R. Keough, Mr. Kenneth G. Langone and Mr. Bernard Marcus. The stockholders approved The Home Depot, Inc. Senior Officers' Bonus Pool Plan with votes cast as follows: 609,451,180 shares for; 25,361,261 shares against; and 3,940,149 shares abstained. There were no broker non-votes applicable to this vote. The stockholders approved the Company's Executive Officers' Bonus Plan with votes cast as follows: 608,907,799 shares for; 25,799,325 shares against; and 4,045,466 shares abstained. There were no broker non-votes applicable to this vote. The stockholders approved an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares with votes cast as follows: 574,925,835 shares for; 61,862,075 shares against; and 1,964,679 shares abstained. There were no broker non-votes applicable to this vote. The stockholders rejected a proposal to amend the Company's Bylaws to require that the Board of Directors consist of a majority of independent directors with votes cast as follows: 157,973,605 shares for; 367,446,802 shares against; 7,824,898 shares abstained; and 105,507,284 broker non-votes. The stockholders rejected a proposal relating to a report on certain employment matters with votes cast as follows: 73,465,537 shares for; 437,824,806 shares against; 21,756,366 shares abstained; and 105,705,879 broker non-votes. Item 5. Other Information Stockholders who desire the Company to include notice of a matter in the Company's Proxy Statement for its 1999 Annual Stockholders' Meeting under Rule 14a-4 of the Exchange Act must submit notice to the Company's Secretary no later than February 25, 1999. PART II. OTHER INFORMATION (CONTINUED) Item 6. Exhibits 3.1 Restated Certificate of Incorporation of The Home Depot, Inc., as amended. 3.2 Bylaws, as amended. 11.1 Computation of Basic and Diluted Earnings Per Share 27. Financial Data Schedule (only submitted to SEC in electronic format) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE HOME DEPOT, INC. (Registrant) By: /s/ Arthur M. Blank Arthur M. Blank President & CEO /s/ Marshall L. Day Marshall L. Day Senior Vice President Finance & Accounting August 31, 1998 (Date) THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO EXHIBITS Exhibit Description 3.1 Restated Certificate of Incorporation of The Home Depot, Inc., as amended 3.2 Bylaws, as amended 11.1 Computation of Basic and Diluted Earnings Per Share 27. Financial Data Schedule (only submitted to SEC in electronic format) EX-3.1 2 EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF THE HOME DEPOT, INC., AS AMENDED (Originally incorporated on June 29, 1978 under the name M. B. Associates Incorporated) FIRST: The name of the corporation (which is herein referred to as the "Corporation") is The Home Depot, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, in the County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware. Without limiting in any manner the scope and generality of the foregoing, it is hereby provided that the Corporation shall have the following purposes, objects and powers: To manufacture, purchase or otherwise acquire, invest in, own, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with, any and all goods, wares, merchandise and personal property relating to home improvement services, materials, products, devices, manuals, audio-visual aids, tools and any and all products related thereto of every kind and description. To do all and everything necessary, suitable and proper for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers herein before set forth, either alone or in association with other corporations, firms or individuals, and to do every other act or acts, thing or things incidental to or growing out of or connected with the aforesaid powers or any part or parts thereof, including, without limitation, the acquisition and operation of businesses exclusively or partially engaged in providing home improvement services, materials, products, devices, manuals, audio-visual aids, tools, and related products or services to consumers. The business or purpose of the Corporation is from time to time to do any one or more of the acts and things herein before set forth, and it shall have power to conduct and carry on said business, or any part thereof, and to have one or more offices, and to exercise any or all of its corporate powers and rights, in the State of Delaware, and in the various other states, territories, colonies and dependencies of the United States, in the District of Columbia, and in all or any foreign countries. The enumeration herein of the objects and purposes of the Corporation shall be construed as powers as well as objects and purposes and shall not be deemed to exclude by inference any powers, objects or purposes which the Corporation is empowered to exercise, whether expressly by force of the laws of the State of Delaware now or hereafter in effect, or impliedly by the reasonable construction of said laws. FOURTH: The total number of shares of stock which the Corporation will have authority to issue is 2,500,000,000, all of which shall be shares of Common Stock of the par value of five cents ($.05) each. FIFTH: The name and mailing address of the sole incorporator is as follows: Kenneth G. Langone c/o INVEMED ASSOCIATES INCORPORATED 375 Park Avenue New York. New York 10022 SIXTH: 1. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than three nor more than fifteen directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. At the meeting of stockholders at which this Article is adopted, Class I, II and III directors shall be elected to serve until the 1987, 1986 and 1985 annual meetings of stockholders, respectively. 2. At each annual meeting of the stockholders beginning with 1985, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. 3. No person (other than a person nominated by or on behalf of the Board of Directors) shall be eligible for election as a director at any annual or special meeting of stockholders unless a written request that his or her name be placed in nomination is received from a stockholder of record by the Secretary of the Corporation not less than 30 days prior to the date fixed for the meeting, together with the written consent of such person to serve as a director. 4. Except to the extent prohibited by law, the Board of Directors shall have the right (which, to the extent exercised, shall be exclusive) to establish the rights, powers, duties, rules and procedures that from time to time shall govern the Board of Directors and each of its members, including without limitation the vote required for any action by the Board of Directors, the determination by resolution of the Board of Directors of the officers of the Corporation and their respective titles and duties, the determination by resolution of the Board of Directors of the manner of choosing the officers of the Corporation and the terms of their respective offices, the determination by resolution of the Board of Directors of the terms and conditions under which the Corporation shall exercise the powers granted to it as of January I, 1984 by Section 145 of the Delaware General Corporation Law, as such powers may exist from time to time after January 1, 1984, and that from time to time shall affect the directors' power otherwise to manage the business and affairs of the Corporation; and, notwithstanding any other provision of this Certificate of Incorporation to the contrary, no by-law shall be adopted by stockholders which shall interpret or qualify, or impair or impede the implementation of, the foregoing. Any inconsistency between, on the one side, a document which implements the provisions of this paragraph 4 and sets forth the rights, powers, duties, rules and/or procedures governing the Board of Directors and, on the other side, any by-law or other corporate document shall be construed in favor of the document setting forth such rights, powers, duties, rules and/or procedures. 5. No action shall be taken by stockholders of the Corporation except at an annual or special meeting of the stockholders of the Corporation. Except to the extent, if any, otherwise required by law, a special meeting of the stockholders of the Corporation may be called only by the Chairman of the Board of Directors, the President or the Board of Directors of the Corporation. 6. No amendment to the Certificate of Incorporation of the Corporation shall amend, alter, change or repeal any of the provisions of this Article SIXTH, unless the amendment effecting such amendment, alteration, change or repeal shall receive the affirmative vote of the holders of eighty percent (80%) of all shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article SIXTH as one class; provided that this paragraph 6 shall not apply to, and such eighty percent (80%) vote or consent shall not be required for, any amendment, alteration, change or repeal unanimously recommended to the stockholders by the Board of Directors of the Corporation if each of such directors is a person who would be eligible to serve as a continuing director as hereinafter defined in paragraph 7 of this Article SIXTH. 7. As used in paragraph 6 of this Article SIXTH, (a) the term "continuing director" shall mean either a person who was a member of the Board of Directors of the Corporation elected by the stockholders of the Corporation prior to the time that an "other entity" acquired in excess of ten percent (10%) of the stock of the Corporation entitled to vote in the election of directors, or a person recommended to succeed any continuing director by a majority of continuing directors; (b) the term "other entity" shall include any corporation, person or other entity (other than the Corporation, any of its subsidiaries or a trustee holding stock for the benefit of employees of the Corporation or its subsidiaries, or any one of them, pursuant to one or more employee benefit plans or arrangements) and any other entity with which it or its "affiliate" or "associate" (as defined below) has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of stock of the Corporation, or which is its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1984, together with the successors and assigns of such persons in any transaction or series of transactions not involving a "public offering" of the Corporation's stock within the meaning of the Securities Act of 1933, provided that "other entity" does not include any one or any group of more than one of the persons who were directors of the Corporation as of January 1, 1984, or any one or any group of more than one continuing director (as defined above); (c) an other entity (as defined above) shall be deemed to be the beneficial owner of any shares of stock of the Corporation which such other entity has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; and (d) the outstanding shares of any class of stock of the Corporation shall include shares deemed owned through application of clause (c) above but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. 8. A majority of the continuing directors shall have the power and duty to determine for the purposes of this Article SIXTH on the basis of information known to them whether (a) such other entity beneficially owns more than ten percent (10%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, (b) an other entity is an "affiliate" or "associate" (as defined above) of another, or (c) an other entity has an agreement, arrangement or understanding with another. SEVENTH: The Board of Directors shall have power to make, alter or repeal the by-laws of the Corporation, except as may otherwise be provided in the by-laws. EIGHTH: 1. The affirmative vote or, if permitted under this Certificate of Incorporation, consent of the holders of eighty percent (80%) of all shares of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article EIGHTH as one class, shall be required for the adoption or authorization of (i) a business combination (as hereinafter defined) with any other entity (as hereinafter defined) if, as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon, or, if so permitted, consent thereto, such other entity is the beneficial owner, directly or indirectly, of more than twenty percent (20%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article EIGHTH as one class, or (ii) a proposed dissolution of the Corporation or a proposed amendment of the Certificate of Incorporation of the Corporation which would either change the entitlement of the holders of shares of Common Stock of the Corporation to vote in the election of directors or would authorize the Corporation to issue either shares of capital stock (other than shares of its Common Stock) or bonds, debentures or other obligations, which, if issued, would or could be entitled to vote in the election of directors if, as of the record date for the determination of stockholders entitled to notice of and to vote on or, if so permitted, consent to such proposed dissolution or such proposed amendment, an other entity (as hereinafter defined) is the beneficial owner, directly or indirectly, of more than twenty percent (20%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article EIGHTH as one class; provided that such eighty percent (80%) voting requirement shall not be applicable to the adoption or authorization of a business combination if: (a) The cash, or fair market value of other consideration, to be received per share by holders of shares of any class of capital stock of the Corporation in such business combination bears the same or a greater percentage relationship to the market price of such shares of capital stock immediately prior to the announcement of such business combination as the highest per share price (including brokerage commissions and/or soliciting dealers' fees) which such other entity has theretofore paid for any of such shares of capital stock already owned by it bears to the market price of such shares of capital stock immediately prior to the commencement of acquisition of such shares of capital stock by such other entity; (b) The cash, or fair market value of other consideration, to be received per share by holders of shares of any class of capital stock of the Corporation in such business combination is not less than the highest per share price (including brokerage commissions and/or soliciting dealers' fees) paid by such other entity in acquiring any of its holdings of such shares of capital stock (c) After such other entity has acquired such greater-than- twenty percent (20%) interest and prior to the consummation of such business combination: (i) such other entity shall have taken steps to ensure that the Corporation's Board of Directors included- at all times representation by continuing director(s) (as hereinafter defined) proportionate to the stockholdings of the Corporation's stockholders not affiliated with such other entity (with a continuing director to occupy any resulting fractional board position); (ii) such other entity shall not have acquired any newly issued shares of capital stock, directly or indirectly, from the Corporation (except upon conversion of securities acquired by it prior to obtaining such greater-than-twenty percent (20%) interest or as a result of a pro rata stock dividend or stock split); and (iii) such other entity shall not have acquired any additional shares of the Corporation's outstanding capital stock or securities convertible into capital stock except as a part of the transaction which results in such other entity acquiring such greater-than- twenty percent (20%) interest; and (d) Such other entity shall not have received the benefit, directly or indirectly (except proportionately as a stockholder) of any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation. The provisions of this Article EIGHTH shall also apply to a business combination with any other entity which at any time has been the beneficial owner, directly or indirectly, of more than twenty percent (20%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, considered for the purpose of this Article EIGHTH as one class, notwithstanding the fact that such other entity has reduced its shareholdings below twenty percent (20%) if, as of the record date for the determination of stockholders entitled to notice of and to vote on or, if so permitted, consent to the business combination, such other entity is an "affiliate" of the Corporation (as hereinafter defined). 2. As used in this Article EIGHTH, (a) the term "other entity" shall include any corporation, person or other entity (other than the Corporation, any of its subsidiaries or a trustee holding stock for the benefit of employees of the Corporation or its subsidiaries or any one of them, pursuant to one or more employee benefit plans or arrangements) and any other entity with which it or its "affiliate" or "associate" (as defined below) has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of stock of the. Corporation, or which is its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1984, together with the successors and assigns of such persons in any transaction or series of transactions not involving a "public offering" of the Corporation's stock within the meaning of the Securities Act of 1933, provided that "other entity" does not include any one or any group of more than one of the persons who were directors of the Corporation as of January 1, 1984, or any one or any group of more than one continuing director (as defined below), (b) an other entity (as defined above) shall be deemed to be the beneficial owner of any shares of stock of the Corporation which such other entity has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; (c) the outstanding shares of any class of stock of the Corporation shall include shares deemed owned through application of clause (b) above but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; (d) the term, "business combination" shall include any merger or consolidation of the Corporation with or into any other corporation, or the sale or lease of all or any substantial part of the assets of the Corporation to, or any sale or lease to the Corporation or any subsidiary thereof in exchange for securities of the Corporation of any assets (except assets having an aggregate fair market value of less than $5,000,000) of, any other entity; (e) the term "continuing director" shall mean either a person who was a member of the Board of Directors of the Corporation elected by the stockholders of the Corporation prior to the time that an other entity acquired in excess of ten percent (10%) of the stock of the Corporation entitled to vote in the election of directors, or a person recommended to succeed any continuing director by a majority of continuing directors; and (f) for the purposes of subparagraphs l(a) and (b) of this Article EIGHTH the term "other consideration to be received" shall mean capital stock of the Corporation retained by its stockholders (other than such other entity) in the event of a business combination with such other entity in which the Corporation is the surviving corporation. 3. A majority of the continuing directors shall have the power and duty to determine for the purposes of this Article EIGHTH on the basis of information known to them whether (a) such other entity beneficially owns more than ten percent (10%) or twenty percent (20%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, (b) an other entity is an "affiliate" or "associate" (as defined above) of another, (c) an other entity has an agreement, arrangement or understanding with another, or (d) the assets being acquired by the Corporation, or any subsidiary thereof, have an aggregate fair market value of less than $5,000,000. 4. No amendment to the Certificate of Incorporation of the Corporation- shall amend, alter, change or repeal any of the provisions of this Article EIGHTH, unless the amendment effecting such amendment, alteration, change or repeal shall receive the affirmative vote or consent of the holders of eighty percent (80%) of all shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article EIGHTH as one class; provided that this paragraph 4 shall not apply to, and such eighty percent (80%) vote or (if permitted under this Certificate of Incorporation) consent shall not be required for, any amendment, alteration, change or repeal unanimously recommended to the stockholders by the Board of Directors of the Corporation if all of such directors are persons who would be eligible to serve as "continuing directors" within the meaning of paragraph 2 of this Article EIGHTH. 5. Nothing contained in this Article EIGHTH shall be construed to relieve any other entity from any fiduciary obligation imposed by law. 6. The provisions of this Article EIGHTH shall not apply to: (a) The adoption or authorization of any business combination described in paragraph 1 of this Article EIGHTH if the Board of Directors of the Corporation shall have approved by resolution a memorandum of understanding with the other corporation, person or entity with whom such business combination is proposed prior to the time that such other corporation, person or entity shall have become a beneficial owner of five percent (5%) or more of the outstanding shares of any class of capital stock of the Corporation entitled to vote in the election of directors: or (b) The adoption or authorization of any business combination, proposed dissolution or proposed amendment described in paragraph 1 of this Article EIGHTH, if such business combination, proposed dissolution or proposed amendment is approved, prior to its adoption or authorization by the stockholders of the Corporation, by a resolution of the Board of Directors of the Corporation which is approved by at least two- thirds of those members of the Board of Directors of the Corporation who are not, at the time of their approval, involved with and/or representing an other entity which, at such time, is the beneficial owner, directly or indirectly, of more than twenty percent (20%) of the outstanding shares of stock of the Corporation then entitled to vote in the election of directors. NINTH: No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. EX-3.2 3 EXHIBIT 3.2 THE HOME DEPOT, INC. BY-LAWS (AMENDED AND RESTATED) ARTICLE I. MEETINGS OF STOCKHOLDERS SECTION l. The annual meeting of the stockholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held on such date and at such time and place as the Board of Directors may by resolution provide. Notice of any other business to be brought before an annual meeting of stockholders by a stockholder must be provided in writing to the Secretary of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the date of the meeting. Such stockholder's notice shall set forth (a) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of the Corporation that are owned beneficially and held of record by such stockholder and such beneficial owner. In addition, if the stockholder intends to solicit proxies from the stockholders of the Corporation, such stockholder's notice shall notify the Corporation of this intent. If a stockholder fails to notify the Corporation of his or her intent to solicit proxies and does in fact solicit proxies, the Chairman of the Board shall have the authority, in his or her discretion, to strike the proposal or nomination by the stockholder. SECTION 2. Special meetings of the stockholders may be called at any time by the Chairman of the Board, the President or the Board of Directors. SECTION 3. Written notice of the time and place of every annual or special meeting of the stockholders shall be given at least ten but not more than sixty days previous to such meetings by personal delivery to the stockholder of a copy of such notice or by mailing a copy of such notice addressed to the stockholder at his post office address as the same shall appear on the record of stockholders of the Corporation or, if he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to him at some other address, then addressed to him at such other address; provided, however, that notice of any meeting to take action on a proposed merger or consolidation of the Corporation or on a proposed sale of all or substantially all of the assets of the Corporation shall be given at least twenty but not more than sixty days prior to such meeting. Notice of a special meeting of the stockholders shall also state the purpose or purposes for which the meeting is called. Each notice of a special meeting of stockholders shall indicate that it has been issued by or at the direction of the person or persons calling the meeting. Notice shall be deemed given when deposited, postage prepaid, in a United States post office or official depository. A written waiver of notice signed by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. SECTION 4. Every annual meeting of the stockholders shall be held at such place within or without the State of Delaware as may be determined by the Board of Directors and stated in the notice of any such meeting, and every special meeting shall be held at such place within or without the State of Delaware as may be stated in the notice of such special meeting. SECTION 5. No business shall be transacted at any special meeting of the stockholders except that business which related to the purpose or purposes set forth in the notice of the meeting. SECTION 6. At each meeting of the stockholders there shall be present, either in person or by proxy, the holders of a majority of the shares of the Corporation entitled to vote thereat in order to constitute a quorum. Any meeting of the stockholders at which a quorum is not present may be adjourned from time to time to some other time without any new notice other than an announcement at the meeting by the votes cast in person or by proxy of the holders of a majority of those shares which are cast on a motion to adjourn, provided, however, that if any adjournment is for more than thirty days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 7. At all meetings of the stockholders, all questions except as otherwise required by the laws of the State of Delaware shall be determined by a majority of the votes cast at the meeting of the holders of shares entitled to vote thereon. Upon all questions, every stockholder of record shall be entitled at every meeting of stockholders to one vote for every share of common stock standing in his name on the books of the Corporation and qualified to vote. Holders of shares of $50 Series A Preferred Stock and $50 Series B Preferred Stock all have not right to vote such shares at any meeting of stockholders and shall have no voice in the management of the Corporation. SECTION 8. At all meetings of the stockholders, absent stockholders entitled to vote thereat may vote by proxy or by the attorney- in-fact thereof. No proxy shall be valid after the expiration of three years from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the person executing it except as otherwise provided by the laws of the State of Delaware. SECTION 9. Any action required to be taken or which may be taken at a meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if consent in writing, setting forth the action so taken, shall be signed by the holders of stock having not less than the minimum number of votes necessary to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate actions without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE II. DIRECTORS SECTION 1. The business and affairs of the Corporation shall be managed by and under the direction of the Board of Directors. Except as otherwise provided by law and except as hereinafter otherwise provided for filling vacancies, the directors of the Corporation shall be elected by the stockholders entitled to vote at the annual meeting of the stockholders, to hold office until the expiration of the term for which he is elected and until his successor has been elected and qualified or until his earlier resignation or removal. SECTION 2. An annual meeting of the Board of Directors shall be held after each annual election of directors. If such election occurs at an annual meeting of stockholders, the annual meeting of the Board of Directors shall take place as soon after such written consent is duly filed with the Corporation as is practicable. SECTION 3. Special meetings of the Board of Directors shall be called at any time by the Secretary at the direction of the Chairman of the Board, the President or a majority of the directors. SECTION 4. Written notice of each special meeting of the Board of Directors shall be given to each member thereof specifying the time and place of the meeting. Notice shall be given by first class mail, telegram, radiogram, telex or personal service. At least forty-eight hours' notice must be given by telegram, radiogram, telex or personal service when less than six days' notice is given. If notice to a director is given by mail, the notice shall be directed to him at the address designated by him for the purpose, or, if none is designated, at his last known address, and shall be deemed given when deposited, postage prepaid, in a post office or official depository of any nation. If notice to a director is given by telegram, radiogram or telex, it shall be directed to his last known address and, in the case of notice by telegram or radiogram, shall be deemed given when received by the communications carrier. Notice by telex shall be deemed given when transmitted. A written waiver of notice signed by the director entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. SECTION 5. Except for meeting held after an annual meeting of stockholders, meetings of the Board of Directors shall be held at such place as may be specified in the notice thereof, or, if no place is specified in the notice, at such other place or places as the Board of Directors may from time to time fix thereof. SECTION 6. Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all person participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at such meeting. SECTION 7. A majority of the total number of directors shall be necessary to constitute a quorum for the transaction of business and the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Any regular or special meeting of the Board at which a quorum is not present may be adjourned from time to time to some other place or time or both by a majority of the directors present without any new notice other than an announcement at the meeting. SECTION 8. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors and to the extent permitted by law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation, (ii) adopt an agreement of merger or consolidation, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, (iv) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution or (v) amend the by-laws of the Corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. SECTION 9. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board consent thereto in writing and the writing is filed with the minutes of proceedings of the Board. SECTION 10. The Board of Directors of the Corporation shall consist of not less than three nor more than fifteen members, the exact number of Directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. SECTION 11. Directors may receive compensation for services to the Corporation in their capacities as directors or otherwise in such manner and in such amounts as may be fixed from time to time by resolution of the Board of Directors. ARTICLE III. OFFICERS SECTION 1. The Board of Directors, at the annual meeting thereof, shall appoint a Chairman of the Board, a President, a Treasurer and a Secretary. The Board may at any time appoint one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries. Each such officer shall serve from time of his appointment until a successor shall be chosen and qualified or until his earlier resignation or removal. The compensation of the officers shall be fixed by the Board. SECTION 2. The Chairman of the Board shall preside at all meetings of stockholders and of the Board of Directors. He shall be the chief executive officer and head of the Corporation and, subject to the Board of Directors, shall have the general control and management of the business and affairs of the Corporation. He shall vote any shares of stock or other voting securities owned by the Corporation. In general, he shall perform all duties incident to the office of the Chairman of the Board and such other duties as may from time to time be assigned to him by the Board. SECTION 3. The President shall be the Chief operating officer of the Corporation and, subject to the Board of Directors and the Chairman of the Board, shall have control of the operational aspects of the business and affairs of the Corporation. He shall see that all orders of the Chairman of the Board are carried into effect, and shall perform all other duties necessary to his office or properly required of him by the Board or the Chairman of the Board. SECTION 4. During the absence or disability of the President, or during a vacancy in the office of President, the Vice President with the greatest seniority shall perform the duties and have the powers of the President. SECTION 5. The Secretary shall have custody of the seal of the Corporation. He shall keep the minutes of the Board of Directors, and of the stockholders, and shall attend to the giving and serving of all notices of the Corporation. He shall have charge of the certificate book and such other books and papers as the Board may direct; and he shall perform such other duties as may be incidental to his office or as may be assigned to him by the Board of Directors. He shall also keep or cause to be kept a stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the Corporation showing their respective addresses, the number of shares registered in the name of each, and the dates when they respectively became the owners of record thereof, and such books shall be open for inspection as prescribed by the laws of the States of Delaware. During the absence or disability of the Secretary, or during a vacancy in the office of Secretary, the Assistant Secretary with the greatest seniority shall perform the duties and have the powers of the Secretary. SECTION 6. The Treasurer shall have the care and custody of the funds and securities of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks as the Board of Directors may determine. The Treasurer shall also have the care and custody of the Corporation's books of account and he shall be responsible for the general and cost accounting functions of the Corporation. During the absence or disability of the Treasurer, or during a vacancy in the office of Treasurer, the Assistant Treasurer with the greatest seniority shall perform the duties and have the powers of the Treasurer. ARTICLE IV. RESIGNATIONS, REMOVALS, VACANCIES AND INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 1. Any director or officer may resign his office at any time, such resignation to be made in writing and to take effect from the time of its receipt by the Corporation, unless some future time be fixed in the resignation and in that case from that time. The acceptance of a resignation shall not be required to make it effective. Nothing herein shall be deemed to affect any contractual rights of the Corporation. SECTION 2. Any officer may be removed with or without cause at any time by the Board of Directors. Any employee of the Corporation may be removed at any time by the Board of Directors or by an officer. The removal of an officer or employee without cause shall be without prejudice to his contractual rights, if any. The election or appointment of an officer or employee shall not of itself create contractual rights. Any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. SECTION 3. Any vacancy or newly created directorship on the Board of Directors may be filled by a majority vote of the Directors then in office, or by majority vote of the stockholders. SECTION 4. Each former, present or future director, officer, employee or agent of the Corporation, and each person who may serve at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise shall be indemnified by the Corporation in all events, to the fullest extent and in the manner permitted by the laws of the State of Delaware then in effect. ARTICLE V. COMMON STOCK SECTION 1. Certificates for shares of the common stock of the Corporation shall be numbered and registered on the books of the Corporation in the order in which they shall be issued and shall be signed by the Chairman of the Board, the President or a Vice President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation. SECTION 2. Transfers of shares shall be made upon the books of the Corporation (i) only by the holder thereof in person or by power of attorney duly executed and filed with the Corporation, (ii) in accordance with the Shareholders Agreement, and (iii) upon the surrender to the Corporation of the certificate or certificates for such shares. ARTICLE VI PREFERRED STOCK SECTION 1. Certificates for shares of the $50 Series A Preferred Stock and the $50 Series B Preferred Stock of the Corporation shall be numbered and registered on the books of the Corporation in the order in which they shall be issued and shall be signed by the Chairman of the Board or the President or a Vice President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation. SECTION 2. In accordance with the terms under which such preferred shares were issued, all of the shares of the $50 Series A Preferred Stock of the Corporation shall be deemed by the Corporation at its election expressed by resolution of the Board of Directors but no later than six (6) calendar months following the close of any fiscal year at which the Net Worth of the Corporation and any subsidiaries thereof, computed in accordance with generally accepted accounting principles consistently applied on a consolidated basis, shall be equal to or exceed Ten Million Dollars ($10,000,000.00), and subject to there being sufficient surplus to repurchase all of the Common Shares which the Corporation is obligated to repurchase pursuant to the Shareholders Agreement. SECTION 3. In accordance with the terms under which such preferred shares were issued, the shares of the $50 Series B Preferred Stock of the Corporation shall be redeemed by the Corporation at the election of the holder of such shares; provided, however, that such election may not be exercised at any time prior to the redemption of the Series A Preferred Stock. ARTICLE VII. CHECKS, DRAFTS AND NOTES The Chairman of the Board or the President or any officers designated by Resolution of the Board of Directors shall sign all checks and drafts necessary to be drawn and may accept any drafts drawn upon the Corporation in due course of business. No check or draft shall be endorsed by the Corporation and no promissory note, bond, debenture or other evidence of indebtedness shall be made, signed, issued or endorsed by the Corporation unless signed by the Chairman or the President or any officer designated under powers given by a resolution of the Board except that any officer may endorse for collection or deposit only, expressly stating the purpose of such endorsements, checks, drafts and promissory notes to the order of the Corporation. ARTICLE VIII. SEAL The seal of the Corporation shall be in the custody of the Secretary. It shall be circular in form and shall have engraved upon it the name of the Corporation arranged in a circle and the words and figures "Incorporated 1978 Delaware" across the center of the space enclosed. ARTICLE IX BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS The Corporation shall not be subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware (Business Combination with Interested Stockholders). This Article IX shall not be amended only by the affirmative vote of a majority of the Corporation's stockholders entitled to vote on such matter. EX-11.1 4
Exhibit 11.1 THE HOME DEPOT, INC. AND SUBSIDIARIES COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE (In Millions, Except Per Share Data) Three Months Ended Six Months Ended Aug 2, Aug 3, Aug 2, Aug 3, 1998 1997 1998 1997 BASIC Net Earnings Available to Common Shareholders $ 467 $ 358 $ 804 $ 617 Weighted Average Number of Common Shares Outstanding 1,470 1,459 1,468 1,455 Basic Earnings Per Share $ 0.32 $ 0.25 $ 0.55 $ 0.42 DILUTED Net Earnings Available to Common Shareholders $ 467 $ 358 $ 804 $ 617 Tax-Effected Interest Expense Attributable to 3.25% Convertible Subordinated Notes 6 6 12 11 Net Earnings Available to Common Shareholders Assuming Dilution $ 473 $ 364 $ 816 $ 628 Weighted Average Number of Common Shares Outstanding 1,470 1,459 1,468 1,455 Effect of Potentially Dilutive Securities: 3.25% Convertible Subordinated Notes 48 48 48 48 Employee Stock Plans 28 17 26 14 Weighted Average Number of Common Shares Outstanding Assuming Dilution 1,546 1,524 1,542 1,517 Diluted Earnings Per Share $ 0.31 $ 0.24 $ 0.53 $ 0.41 (1) Employee stock plans represent shares granted under the Company's employee stock purchase plan and stock option plans, as well as shares issued for deferred compensation stock plans. For fiscal years 1998 and 1997, shares issuable upon conversion of the Company's 3.25% Notes, issued in October 1996, were included in weighted average shares assuming dilution for purposes of calculating diluted earnings per share. To calculate diluted earnings per share, net earnings are adjusted for tax-effected net interest and issue costs on the 3.25% Notes and divided by weighted average shares assuming dilution.
EX-27 5
5 1,000,000 3-MOS Jan-31-1999 Aug-02-1998 654 1 423 0 3,786 5,013 8,348 1,135 12,593 3,073 1,317 0 0 74 7,831 12,593 8,139 8,139 5,876 5,876 1,493 0 1 769 302 467 0 0 0 467 .32 .31
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