The Home Depot, Inc is an American home improvement chain based in Atlanta. It operates 2,284 DIY stores (as of April 2018) in North America (USA, Canada, Mexico, Puerto Rico) and claims to be the largest DIY store chain in the world. The company has over 400,000 employees.
The Home Depot also owns home improvement stores and user stores, such as the EXPO Design Center, Landscape Supply Garden Center, and a number of specialized stores.
The company was founded in Atlanta in 1978 by Bernie Marcus and Arthur Blank. It grew rapidly, with annual sales of $1 billion in 1986. In fiscal 2017, sales were $ 100.9 billion.
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 July 28, 1996 - 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) 2727 Paces Ferry Road 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 479,107,754 Shares, as of August 15, 1996
THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q JULY 28, 1996 Page Part I. Financial Information: Item 1. Financial Statements CONSOLIDATED STATEMENTS OF EARNINGS - Three-Month and Six-Month Periods Ended July 28, 1996 and July 30, 1995 3 CONSOLIDATED CONDENSED BALANCE SHEETS - As of July 28, 1996 and January 28, 1996 4 CONSOLIDATED STATEMENTS OF CASH FLOWS - Six-Month Periods Ended July 28, 1996 and July 30, 1995 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 7 - 10 Part II. Other Information: Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature Page 12 Index to Exhibits 13
<TABLE> PART I. FINANCIAL INFORMATION THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In Thousands, Except Per Share Data) <CAPTION> Three Months Ended Six Months Ended July 28, July 30, July 28, July 30, 1996 1995 1996 1995 <S> <C> <C> <C> <C> Net Sales $ 5,292,917 $ 4,151,722 $ 9,655,132 $ 7,720,684 Cost of Merchandise Sold 3,856,022 3,028,676 6,998,307 5,600,117 Gross Profit 1,436,895 1,123,046 2,656,825 2,120,567 Operating Expenses: Selling and Store Operating 904,708 699,700 1,720,717 1,365,677 Pre-Opening 10,143 13,485 23,002 26,020 General and Administrative 80,108 67,703 152,208 132,559 Total Operating Expenses 994,959 780,888 1,895,927 1,524,256 Operating Income 441,936 342,158 760,898 596,311 Interest Income (Expense): Interest and Investment Income 2,833 4,655 6,959 8,855 Interest Expense (405) (1,216) (2,734) (3,454) Interest, Net 2,428 3,439 4,225 5,401 Earnings Before Income Taxes 444,364 345,597 765,123 601,712 Income Taxes 174,190 132,710 299,930 231,060 Net Earnings $ 270,174 $ 212,887 $ 465,193 $ 370,652 Earnings Per Common and Common Equivalent Share $ 0.56 $ 0.45 $ 0.97 $ 0.78 Dividends Per Share $ 0.06 $ 0.05 $ 0.11 $ 0.09 Weighted Average Number of Common and Common Equivalent Shares 482,446 477,737 481,384 477,424 See accompanying notes to consolidated condensed financial statements. </TABLE>
<TABLE> THE HOME DEPOT INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In Thousands, Except Share Data) <CAPTION> July 28, January 28, ASSETS 1996 1996 <S> <C> <C> Current Assets: Cash and Cash Equivalents $ 33,224 $ 53,269 Short-Term Investments 233 54,756 Receivables, Net 305,370 325,384 Merchandise Inventories 2,516,349 2,180,318 Other Current Assets 60,842 58,242 Total Current Assets 2,916,018 2,671,969 Property and Equipment, at cost 5,475,113 4,968,895 Less: Accumulated Depreciation and Amortization (605,918) (507,871) Net Property and Equipment 4,869,195 4,461,024 Long-Term Investments 13,831 25,436 Notes Receivable 51,955 54,715 Cost in Excess of the Fair Value of Net Assets Acquired 86,416 87,238 Other 60,137 53,651 $ 7,997,552 $ 7,354,033 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,229,334 $ 824,808 Accrued Salaries and Related Expenses 233,502 198,208 Sales Taxes Payable 144,453 113,066 Other Accrued Expenses 289,306 242,859 Income Taxes Payable 77,311 35,214 Current Installments of Long-Term Debt 2,148 2,327 Total Current Liabilities 1,976,054 1,416,482 Long-Term Debt, excluding current installments 275,389 720,080 Other Long-Term Liabilities 147,911 115,917 Deferred Income Taxes 42,470 37,225 Minority Interest 87,176 76,563 Stockholders' Equity: Common Stock, par value $0.05. Authorized: 1,000,000,000 shares; issued and outstanding - 479,056,000 shares at 7/28/96 and 477,106,000 shares at 1/28/96 23,953 23,855 Paid-In Capital 2,469,148 2,407,815 Retained Earnings 2,991,621 2,579,059 Cumulative Translation Adjustments (4,745) (6,131) Unrealized Loss on Investments, Net (42) (47) 5,479,935 5,004,551 Less: Notes Receivable from ESOP 10,890 16,539 Shares Held in Employee Benefit Trust 493 246 Total Stockholders' Equity 5,468,552 4,987,766 $ 7,997,552 $ 7,354,033 See accompanying notes to consolidated condensed financial statements. </TABLE>
<TABLE> THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) Six Months Ended July 28, 1996 July 30, 1995 <S> <C> <C> Cash Provided from Operations: Net Earnings $ 465,193 $ 370,652 Reconciliation of Net Earnings to Net Cash Provided by Operations: Depreciation and Amortization 109,332 82,494 Deferred Income Tax Expense 5,239 5,572 Decrease (Increase) in Receivables, Net 10,459 (8,565) Increase in Merchandise Inventories (335,628) (265,748) Increase in Accounts Payable and Accrued Expenses 545,634 486,355 Increase in Income Taxes Payable 47,932 49,486 Other 13,586 20,742 Net Cash Provided by Operations 861,747 740,988 Cash Flows From Investing Activities: Capital Expenditures (532,354) (665,433) Proceeds from Sales of Property and Equipment 9,709 14,433 Sales and Maturities of Short-Term Investments, Net 66,132 16,777 Proceeds from Maturities of Long-Term Investments 0 4,688 Proceeds from Sales of Long-Term Investments 0 3,885 Advances Secured by Real Estate, Net 11,489 (13,567) Net Cash Used in Investing Activities (445,024) (639,217) Cash Flows From Financing Activities: Repayments of Commercial Paper Obligations, Net (454,000) (100,000) Cash Received from ESOP 5,649 430 Principal Repayments of Long-Term Debt (1,357) (1,728) Proceeds from Sale of Common Stock, Net 55,637 43,268 Shares Purchased for Employee Benefit Trust (247) (246) Cash Dividends Paid to Stockholders (52,631) (42,089) Minority Interest Contributions to Partnership 10,289 16,374 Net Cash Used in Financing Activities (436,660) (83,991) Effect of Exchange Rate Changes on Cash (108) 8 (Decrease) Increase in Cash and Cash Equivalents (20,045) 17,788 Cash and Cash Equivalents at Beginning of Period 53,269 1,154 Cash and Cash Equivalents at End of Period $ 33,224 $ 18,942 See accompanying notes to consolidated condensed financial statements. </TABLE>
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 January 28, 1996, as filed with the Securities and Exchange Commission (File No. 1-8207).
<TABLE> 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. <CAPTION> Percentage Increase (Decrease) in Three Months Ended Six Months Ended Dollar Amounts July 28, July 30, July 28, July 30, Three Six 1996 1995 1996 1995 Months Months Selected Consolidated Statements of Earnings Data <S> <C> <C> <C> <C> <C> <C> Net Sales 100.0% 100.0% 100.0% 100.0% 27.5% 25.1% Gross Profit 27.1 27.0 27.5 27.5 27.9 25.3 Operating Expenses: Selling and Store Operating 17.1 16.9 17.8 17.7 29.3 26.0 Pre-Opening 0.2 0.3 0.2 0.3 (24.8)(11.6) General and Administrative 1.5 1.6 1.6 1.7 18.3 14.8 Total Operating Expenses 18.8 18.8 19.6 19.7 27.4 24.4 Operating Income 8.3 8.2 7.9 7.7 29.2 27.6 Interest Income (Expense): Interest and Investment Income 0.1 0.1 0.1 0.1 (39.1)(21.4) Interest Expense --- --- (0.1) --- (66.7)(20.8) Interest, Net 0.1 0.1 0.0 0.1 (29.4)(21.8) Earnings Before Income Taxes 8.4 8.3 7.9 7.8 28.6 27.2 Income Taxes 3.3 3.2 3.1 3.0 31.3 29.8 Net Earnings 5.1% 5.1% 4.8% 4.8% 26.9 25.5 Selected Consolidated Sales Data Number of Transactions 124,840,000 98,624,000 229,048,000 183,248,000 26.6 25.0 Average Amount of Sale Per Transaction $ 42.40 $ 42.10 $ 42.15 $ 42.13 0.7 0.0 Weighted Average Weekly Sales Per Operating Store $ 911,000 $ 871,000 $ 848,000 $ 832,000 4.6 1.9 Weighted Average Sales Per Square Foot $ 450 $ 433 $ 419 $ 414 3.9 1.2 </TABLE>
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 1996 increased 27% to $5,292,917,000 compared to sales of $4,151,722,000 for the second quarter of fiscal 1995. For the first six months of fiscal 1996, sales increased 25% to $9,655,132,000 from sales of $7,720,684,000 for the comparable period in fiscal 1995. The sales increase for both periods was primarily attributable to new stores (456 at the end of the second quarter of fiscal 1996 compared to 379 at the end of the second quarter of fiscal 1995) and a comparable store-for-store sales increase of 9% and 6% for the second quarter and first six months of fiscal 1996, respectively. For the second quarter, management believes a portion of the sales increase was also due to pent-up demand resulting from a late start to the spring season. Gross profit as a percent of sales was 27.1% for the second quarter of fiscal 1996 compared to 27.0% for the comparable period of fiscal 1995. The increase for the quarter was primarily attributable to, among other things, changes in merchandise mix and more effective buying practices which reduced the Company's merchandise cost. For the first six months of fiscal 1996, gross profit as a percent of sales was 27.5% compared to 27.5% for the comparable period of fiscal 1995. Operating expenses as a percent to sales were 18.8% for the second quarters of fiscal 1996 and fiscal 1995. For the first six months of fiscal 1996, operating expenses as a percent of sales were down slightly to 19.6% from 19.7% for the same period of fiscal 1995. Selling and store operating expenses as a percent of sales increased to 17.1% and 17.8% for the second quarter and first six months of fiscal 1996, respectively, from 16.9% and 17.7% for the second quarter and first six months of fiscal 1995, respectively. The increase for the second quarter was attributable to, among other things, one-time expenditures related to the Olympic Games and higher store relocation and remodeling costs resulting primarily from the adoption in fiscal 1996 of certain accounting standards which changed the timing of recognition of these expenses. Additionally, profits increased in the Home Depot Canada partnership resulting in higher minority interest. Pre-opening expenses as a percent to sales decreased to 0.2% for both the second quarter and first six months of fiscal 1996 from 0.3% for the comparable periods of fiscal 1995. These decreases were primarily attributable to the timing of store openings, as many of the Company's fiscal third quarter 1996 store openings are expected to occur the latter part of the quarter and as a result have not yet incurred significant pre- opening expenses. General and administrative expenses as a percent to sales decreased to 1.5% and 1.6% for the second quarter and first six months of fiscal 1996 from 1.6% and 1.7% in the second quarter and first six months of fiscal 1995. These decreases were attributable to higher sales volumes and continued focus on controlling costs. Net Interest income as a percent to sales increased to 0.1% in the second fiscal quarter of 1996 from 0.0% in the comparable period of 1995 due to higher capitalized interest compared to the prior year. Interest income for the first six months of fiscal 1996 as a percent to sales was 0.1% compared to 0.1% for the first six months of fiscal 1995.
THE HOME DEPOT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS - (Continued) The Company's combined Federal and state effective income tax rate increased to 39.2% for the second quarter and first six months of fiscal 1996 from 38.4% for the comparable periods of fiscal 1995. In the fourth quarter of fiscal 1995, the Company adjusted its combined Federal and state effective income tax rate to 38.8% for the fiscal year. The increase in the rate for the second quarter and first six months of fiscal 1996 from the adjusted 1995 tax rate was due to a higher effective state tax rate. Net earnings as a percent of sales were 5.1% and 4.8% for the second quarter and first six months of fiscal 1996, respectively, as well as for the comparable periods of fiscal 1995. Earnings per share was $0.56 and $0.97 for the second quarter and first six months of fiscal 1996, respectively, compared to $0.45 and $0.78 for the second quarter and first six months of fiscal 1995, respectively. 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 six months of fiscal 1996, the Company opened 33 stores and relocated 5 stores. The Company currently plans to open approximately 57 new stores and relocate 2 stores during the last six months of fiscal 1996 and open approximately 110 new stores, including relocations, during fiscal 1997. Of the planned 90 new stores and 7 relocations in fiscal 1996, it is expected that 74 will be owned and 23 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. Under the agreement, the lessor will purchase the properties, pay for the construction costs and subsequently lease the facilities to the Company. The lease provides for substantial residual value guarantees and includes purchase options at original cost on each property. This agreement will primarily cover new stores planned to open in 1996 and 1997. In addition to the leasing agreement, some planned locations for the remainder of fiscal 1996 and 1997 will be leased directly, and it is expected that many may be obtained through the purchase of pre- existing leasehold interests, acquisition of land parcels and the construction or purchase of buildings during fiscal 1996. 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 $13,800,000 per location. The Company may purchase leasehold interests at varying amounts depending upon the value of such properties. The cost to remodel (including leasehold interests) and fixture stores to be leased is expected to average approximately $2,300,000 per store. In addition, each new store will require approximately $2,800,000 to finance inventories, net of vendor financing.
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 July 28, 1996, the Company had $33,457,000 in cash and short-term investments, and $13,831,000 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 the $300,000,000 operating lease agreement, its commercial paper program, and/or the ability to obtain alternate sources of financing should enable the Company to complete its capital expenditure programs, including store expansion and renovation, through the next several fiscal years. IMPACT OF INFLATION AND CHANGING PRICES Although the Company cannot accurately determine the precise effect of inflation on its operations, it does not believe inflation has had a material effect on sales or results of operations.
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 29, 1996, the stockholders elected the slate of nominees for election as director with votes cast as follows: Mr. Bernard Marcus had 411,214,359 shares for and 4,127,483 shares withheld; Mr. Donald R. Keough had 411,792,197 shares for and 3,549,645 shares withheld; Mr. Kenneth G. Langone had 411,218,076 shares for and 4,123,766 shares withheld; and Mr. John L. Clendenin had 410,794,093 shares for and 4,547,749 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 continued after the meeting: Mr. Arthur M. Blank, Col. Frank Borman, Mr. Ronald M. Brill, Dr. Johnnetta B. Cole, Mr. Berry R. Cox, Mr. Milledge A. Hart, III and Ms. M. Faye Wilson. The stockholders adopted a proposal to approve the amendment to the Senior Officers' Bonus Pool Plan with votes cast as follows: 392,660,842 shares for; 18,645,438 shares against; 4,035,562 shares abstained; and 0 broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10. $300,000,000 Operating Lease Agreement between Home Depot U.S.A., Inc. and Credit Suisse Leasing 92-A 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 No reports on Form 8-K were filed during the quarter ended July 28, 1996.
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 /s/ Marshall L. Day Marshall L. Day Senior Vice President Chief Financial Officer August 26, 1996 (Date)
THE HOME DEPOT, INC. AND SUBSIDIARIES INDEX TO EXHIBITS Exhibit Description 10. $300,000,000 Operating Lease Agreement between Home Depot U.S.A., Inc. and Credit Suisse Leasing 92-A 11.1 Computation of Earnings per Common and Common Equivalent Share 27. Financial Data Schedule (only submitted to SEC in electronic format)