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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-8207
THE HOME DEPOT, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation or Organization)
IRS NO. 95-3261426
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(I.R.S. Employer Identification No.)
2455 PACES FERRY ROAD, ATLANTA, GEORGIA
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(Address of Principal Executive Offices)
30339-4024
(Zip Code)
Registrant's telephone number, including area code: (770) 433-8211
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.05 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates of the Registrant on April 3, 2000, was $148,469,370,936. The
aggregate market value was computed by reference to the closing price of the
Common Stock on the New York Stock Exchange on such date. For the purposes of
this response, executive officers and directors are deemed to be the affiliates
of the Registrant and the holdings by nonaffiliates was computed at 125,436,460
shares.
The number of shares outstanding of the Registrant's Common Stock as of April 3,
2000 was 2,308,809,562 shares.
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INCORPORATION BY REFERENCE
Filings made by companies with the Securities and Exchange Commission sometimes
"incorporate information by reference." This means that the company is referring
you to information that was previously filed with the SEC, and this information
is considered to be part of the filing you are reading. The following materials
are incorporated by reference into this Form 10-K:
o Information contained in our Proxy Statement for the 2000
Annual Meeting of Stockholders is incorporated by reference in
response to Items 10 through 13 of Part III.
o Information contained on pages 22 through 33 of our 1999
Annual Report to Stockholders is incorporated by reference in
response to Item 8 of Part II.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Certain statements we make in this report, and other written and oral statements
made by us or our authorized executive officers on our behalf may constitute
"forward-looking statements" within the meaning of the federal securities laws.
Words or phrases such as "should result," "are expected to," "we anticipate,"
"we estimate," "we project" or similar expressions are intended to identify
forward-looking statements. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
Company's historical experience and its present expectations or projections.
These risks and uncertainties include, but are not limited to:
o unanticipated weather conditions;
o stability of costs and availability of sourcing channels;
o our ability to attract, train and retain highly-qualified associates;
o conditions affecting the availability, acquisition, development and
ownership of real estate;
o general economic conditions;
o the impact of competition; and
o regulatory and litigation matters.
You should not place undue reliance on forward-looking statements, since such
statements speak only as of the date they are made. Additional information
concerning the risks and uncertainties listed above and other factors you may
wish to consider are provided beginning on page 24 under "Item 7. Management's
Discussion and Analysis of Results of Operations and Financial Condition -
Forward-Looking Statements May Prove Inaccurate."
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PART I
ITEM 1. BUSINESS
The Home Depot, Inc. is the world's largest home improvement retailer and the
third largest retailer in the United States based on net sales volume for fiscal
1999. At the end of our 1999 fiscal year, we were operating 913 Home Depot(R)
stores and fifteen EXPO Design Center(R) stores. A description of these two
types of stores is as follows:
o HOME DEPOT STORES: Home Depot stores sell a wide assortment of
building materials and home improvement and lawn and garden
products. Home Depot stores average approximately 108,000
square feet of enclosed space, with an additional
approximately 24,000 square feet in the outside garden area.
At fiscal year end, we had 909 Home Depot stores located
throughout the United States and Canada, as well as four in
Chile.
o EXPO DESIGN CENTER STORES: EXPO Design Center stores sell
products and services primarily for design and renovation
projects. Unlike Home Depot stores, EXPO Design Center stores
do not sell building materials and lumber. Rather, EXPO Design
Center stores offer high-end interior design products, such as
kitchen and bathroom cabinetry, tiles, flooring and lighting
fixtures. The prototypical EXPO Design Center is approximately
90,000 square feet. At fiscal year end, EXPO Design Center
stores were operating in California, Florida, Georgia, New
York, Texas and Virginia.
Additionally, at the end of fiscal 1999 we were operating two Villager's
Hardware(SM) test stores in New Jersey. Villager's Hardware stores offer
products for home enhancement and small projects.
We also offer products through two direct marketing subsidiaries. Our
Maintenance Warehouse(R) subsidiary is a leading direct mail marketer of
maintenance, repair and operations products serving primarily the multi-family
housing and lodging facilities management market. The company fills orders
through its 15 distribution centers, which are located throughout the United
States. Our National Blinds & Wallpaper(SM) subsidiary is a telephone mail order
service for wallpaper and custom window treatments.
During fiscal 1999, we acquired two companies, Georgia Lighting, Inc. and Apex
Supply Company, Inc., each of which we operate as a wholly owned subsidiary.
Georgia Lighting(R), a leading specialty lighting designer, distributor and
retailer, has six retail locations. Apex Supply Company(SM) is a wholesale
supplier of plumbing, HVAC and other related professional products with 21
locations in Georgia, Tennessee and South Carolina.
Our Store Support Center (corporate office) is located at 2455 Paces Ferry Road,
Atlanta, Georgia 30339-4024. The telephone number is (770) 433-8211.
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RETAIL BUSINESSES
HOME DEPOT STORES
OPERATING STRATEGY. The operating strategy for Home Depot stores is to offer a
broad assortment of high-quality merchandise at competitive prices using highly
knowledgeable, service-oriented personnel and aggressive advertising. We believe
that our associates' knowledge of products and home improvement techniques and
applications are very important in our marketing approach and our ability to
maintain customer satisfaction. We regularly check our competitors' prices to
ensure that our low "day-in day-out" warehouse prices are competitive within
each market.
CUSTOMERS. Home Depot stores serve three primary customer groups:
o DO-IT-YOURSELF (D-I-Y) CUSTOMERS: These customers are
typically homeowners who purchase products and complete their
own projects and installations. To complement the in-store
expertise of our associates, Home Depot stores offer many
D-I-Y "how-to" clinics taught by associates and merchandise
vendors.
o BUY-IT-YOURSELF (B-I-Y) CUSTOMERS: These customers are
typically homeowners who purchase materials themselves and
hire third parties to complete the project and/or
installation. We offer B-I-Y customers installation services
for a variety of products through third party contractors.
o PROFESSIONAL CUSTOMERS: These customers are professional
repair remodelers, general contractors and tradesmen. We offer
a variety of programs to these professional customers,
including additional delivery and will-call services;
dedicated staff; extensive merchandise selections; and
expanded credit programs, all of which we believe increase
sales.
PRODUCTS. A typical Home Depot store stocks approximately 40,000 to 50,000
product items, including variations in color and size. Each store carries a wide
selection of high-quality and nationally advertised brand name merchandise. The
following table shows the percentage of sales of each major product group for
each of the last three fiscal years:
Percentage of Sales for
Fiscal Year Ended
---------------------------------
Jan. 30, Jan. 31, Feb.1,
2000 1999 1998
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PRODUCT GROUP
Building materials, lumber and
millwork ............................ 24.7% 24.4% 24.8%
Plumbing, electrical and
kitchen ............................. 26.6 26.8 27.0
Hardware and seasonal ................. 28.5 28.5 28.3
Paint, flooring and wall coverings .... 20.2 20.3 19.9
--------- --------- ---------
Total ................................. 100.0% 100.0% 100.0%
========= ========= =========
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We buy our store merchandise from vendors located throughout the world. No
single vendor accounts for as much as five percent of our total purchases, and
we are not dependent on any single vendor. Most of our merchandise is purchased
directly from manufacturers, which eliminates "middleman" costs. We believe that
competitive sources of supply are readily available for substantially all of the
products we sell in Home Depot stores.
We maintain an import merchandise program to source high-quality products
directly from overseas manufacturers, which gives our customers a broader
selection of products and better values and enhances our gross margins. We
currently source products from approximately 35 countries. Our product
development managers travel internationally to identify opportunities to
purchase items directly for our stores. This enables us to improve product
quality, to import products not currently available to our customers and to
offer at a lower price products that would otherwise be purchased from third
party importers.
To complement the established national brand name products we offer, we have
formed strategic alliances with vendor partners to market products under brand
names that are only offered through The Home Depot. At the end of fiscal year
1999, we offered products under more than 40 proprietary and other exclusive
brands, including RIDGID(R) power tools; Behr(R) paint; Mill's Pride(R)
cabinets; GE SmartWater(TM) water heaters; Vigoro(R) fertilizer; and Hampton
Bay(TM) fans, lighting and accessories. During fiscal 2000 we will begin
offering Thomasville(R) kitchen and bathroom cabinets. In the future, we may
consider additional strategic alignments with other vendors to offer products
under proprietary brand names. Additionally, we will continue to assess
opportunities to expand the range of products available under existing
proprietary brands.
INSTALLED SALES SERVICES. Home Depot stores offer a variety of installed sales
programs. These programs include the installation of carpeting, flooring,
kitchen cabinets, solid surface countertops, millwork, garage doors, garage door
openers, window treatments and water heaters. This service targets the B-I-Y
customer who will select and purchase materials for a project but lacks the
desire, the time or the ability to undertake the installation. We implement our
installed sales programs through approximately 6,200 independent licensed
contractors in the U.S. and Canada.
IN-STORE INITIATIVES. We continually assess our business to find opportunities
to increase customer loyalty, thereby increasing sales. Accordingly, we
implemented or expanded a number of in-store initiatives in Home Depot stores
during fiscal 1999, including:
o PROFESSIONAL BUSINESS CUSTOMER INITIATIVE. We are committed to
being the supplier of choice to a variety of professional
customers, including certain repair remodelers, carpenters,
plumbers, painters, electricians, building maintenance
professionals and designers. During fiscal 1999, we expanded
an initiative that adds service-related programs to our stores
designed to increase sales to professional customers. Stores
participating in the program added associates at a sales desk
dedicated to providing more personalized service to
professional customers, including managing accounts and taking
and filling orders for pick-up or same-day delivery.
Additionally, during the hours when professionals typically
shop, these stores assigned sales associates in certain
departments to assist these customers. To better serve our
professional customers, we also increased quantities of
existing products typically purchased by professionals in
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bulk quantities and offered certain items in each department
packaged in bulk to offer additional savings. While aimed at
the professional customer, this program has also enabled us to
better serve our D-I-Y customer with improved customer
service, including delivery and will-call services, expanded
credit programs and additional merchandise. Additionally,
through this initiative, we have identified best practices in
serving our professional customers that are being implemented
in many of our stores without material additional costs. By
the end of fiscal 1999, we had expanded the professional
customer initiative into 13 markets with approximately 110
stores, which included at least one market in each of our
divisions. During fiscal 2000, we will continue to monitor the
operational and financial results of this program and expect
to finalize plans to begin a three-year company-wide rollout
of the program.
o APPLIANCE SALES. During fiscal 1999, we began selling major
appliances manufactured by General Electric in selected
markets. We display and stock the more popular appliances in
these stores and offer the ability to special order over 1,000
additional products through computer kiosks. Through the
computer we can check inventory and arrange for delivery to
the customer directly from the manufacturer as soon as 48
hours after the order is placed. At January 30, 2000, we were
selling appliances in 135 stores, and we currently expect to
offer appliances in the majority of Home Depot stores in the
U.S. by the end of fiscal 2000.
o CREDIT SERVICES. Home Depot offers credit purchase programs to
both professional and D-I-Y customers. In fiscal 1999, 1.8
million new Home Depot credit accounts were opened, bringing
the total number of Home Depot account holders to over 6
million. Proprietary credit card sales accounted for
approximately 17% of all Home Depot sales in fiscal 1999.
During fiscal 1999 we also tested a new in-store initiative in
certain markets that gives our customers the opportunity to
apply for unsecured Home Improvement Loans to purchase
products and services in our stores. This program is currently
being tested in approximately 60 stores, and we anticipate
offering it in substantially all U.S. stores during fiscal
2000.
o TOOL RENTAL. As part of our efforts to satisfy a broad range
of the needs of our professional customers, as well as our
D-I-Y customers, we offer a tool rental service in certain
stores. Under this program, we rent approximately 200
commercial-quality tools in ten categories, including saws,
floor sanders, generators, gas powered lawn equipment and
plumbing tools. Customers can lease the tools on an hourly,
daily, weekly or monthly basis. Our associates who work in the
tool rental area receive special training concerning the use
and maintenance of the tools. As of January 30, 2000, we
offered tool rental service in approximately 150 stores
compared to 46 stores at the end of fiscal 1998. During fiscal
2000, we anticipate expanding tool rental services into more
than 200 additional stores, and we believe that ultimately
tool rental centers will be in approximately 60% of our
stores. We believe that offering this service increases the
sales of related merchandise without reducing the sales of
equipment similar to that available for rental.
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o SPECIAL ORDER CENTER TEST. We are currently testing the
special order center, or SOC, in approximately 85 Home Depot
stores in Michigan, Minnesota and Georgia. The SOC supports
special order sales of blinds and wallpaper, which sales are
time intensive due to the precise measurements that are
required. Customers are initially helped in selecting
merchandise by in-store associates, but when they are ready to
place an order, they use telephones placed in the store to
speak to an associate at the SOC. The SOC associate can also
assist with scheduling the installation of the product. We
believe that the special expertise offered by the SOC
increases the accuracy of orders, while decreasing the time
required to place a special order, and enables in-store
associates to assist more customers. We are currently
assessing plans to open additional call centers and to add the
services of the SOC to more stores during fiscal 2000. We will
also research and test how the SOC may support other Home
Depot special order processes.
o CUSTOMER EDUCATION PROGRAMS. We offer several programs to
enhance the skills and confidence of our D-I-Y customers. Our
associates and vendors teach "how-to" clinics, which focus on
D-I-Y projects, such as installing garbage disposals, laying
patio pavers or building a deck. In addition to the clinics,
we have initiated Home Depot UniversitySM, which was available
in all stores at the end of fiscal 1999. Home Depot University
presents four-week modules allowing our customers to learn
about several facets of a home improvement topic. For example,
a room enhancement module may provide instruction on paint,
wallpaper and window treatments. Through The Home Depot's Kids
WorkshopSM program, children are instructed in tool safety and
complete a small project, such as building a birdhouse or tool
box. We believe that these types of educational programs
increase our sales by encouraging our customers to undertake
more projects, differentiating us from our competition and
reinforcing our position as experts in home improvement.
STORE GROWTH
UNITED STATES. At the end of fiscal 1999, we were operating 856 Home Depot
stores in the United States, including Puerto Rico. During fiscal 1999 in the
U.S., we opened 155 new Home Depot stores and relocated six existing Home Depot
stores. Although these new store openings occurred primarily in existing
markets, we continued our geographic expansion by opening stores in a number of
new markets.
In existing markets, we believe a number of Home Depot stores are operating at
or above their optimum capacity. To increase customer service levels and enhance
long-term market penetration, we often open new stores near the edge of the
market areas served by existing stores. While these openings may initially have
a negative impact on comparable store-for-store sales, we believe this
"cannibalization" strategy increases customer satisfaction and overall market
share by reducing delays in shopping, increasing utilization by existing
customers and attracting new customers to more convenient locations.
CANADA. At the end of fiscal 1999, we were operating 53 Home Depot stores in
five Canadian provinces. Of these stores, ten were opened during fiscal 1999.
During fiscal 2000, we plan to
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open additional stores in Canada, including our first stores in Quebec. Our
Canadian stores are operated through a wholly owned Canadian subsidiary of The
Home Depot.
LATIN AMERICA. At the end of fiscal 1999, we were operating four Home Depot
stores in Chile, and we anticipate opening additional stores in Latin America
during fiscal 2000. We operate our Chilean Home Depot stores through a joint
venture with S.A.C.I. Falabella, a leading department store retailer in Chile.
Our controlling share of the joint venture is 66.67%. We have offices in Chile
from which day-to-day operations are handled by a management team comprised of
both Chilean nationals and seasoned U.S. Home Depot managers. We expect to open
our first Home Depot store in Buenos Aires, Argentina during fiscal 2000. During
fiscal 1999, we opened offices in Argentina to manage the operation of the
business.
ANTICIPATED FUTURE GROWTH. We currently anticipate opening approximately 200 new
Home Depot, EXPO Design Center and Villager's Hardware stores during fiscal
2000. This plan is consistent with our policy of opening stores at a consistent
rate of 21-22% per year for the foreseeable future. Overall, our current plan
anticipates having over 1,900 stores by the end of fiscal 2003, the substantial
majority of which will be Home Depot stores located in the United States.
EXPO DESIGN CENTER STORES
OPERATING STRATEGY. The operating strategy for our EXPO Design Center stores is
to offer complete interior design services and high-quality, competitively
priced products to assist our customers in their home decor and remodeling
projects. Each EXPO Design Center store features up to eight different
showrooms, each with full-size displays to help customers visualize the end
result of possible projects. To assist our customers, we employ associates who
have expertise in designing, planning and completing projects and who provide
exceptional customer service.
CUSTOMERS. Typically, customers at EXPO Design Center stores are middle to upper
income B-I-Y customers, who purchase merchandise for installation by others.
Accordingly, we offer installation services for most of the products we sell.
PRODUCTS. EXPO Design Center stores offer interior design products and
installation services in the following core product categories:
o Kitchens
o Baths
o Decor
o Lighting
o Flooring
o Appliances
o Patio
o Window Treatments
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EXPO Design Center stores offer a broad range of merchandise in an effort to
meet all the needs of shoppers whose interior design preferences may go beyond
the items available in a Home Depot store. While there is minimal overlap
between the products offered in Home Depot stores and EXPO Design Center stores,
those available at EXPO Design Center stores are typically higher-end or more
unique items. In addition to nationally advertised brand name products, we also
offer items that must be special ordered or that are typically offered through
showrooms open only to design professionals.
STORE GROWTH. At the end of fiscal 1999, we were operating fifteen EXPO Design
Center stores in California, Florida, Georgia, Texas, New York and Virginia. We
opened seven of these stores during fiscal 1999. We currently anticipate opening
eleven additional stores in fiscal 2000, and we expect to be operating
approximately 200 stores in the next five to six years. These new stores are
expected to average approximately 90,000 square feet and will incorporate a
showroom environment.
IN-STORE SERVICES. We have associates at our EXPO Design Center stores to assist
with every phase of a project. Certified kitchen and bath designers are on
staff. We also have design professionals to help our customers design lighting,
tile and flooring, custom upholstery and bedding, and custom closets and window
treatments. Installation services are available for most products at EXPO Design
Center stores, including kitchens, baths, flooring, wallpaper, tile, lighting
fixtures and window treatments. Our project managers ensure that the products
are available and then schedule licensed third party contractors to complete the
work. We warrant the workmanship of each installation for as long as the
customer owns the home.
GEORGIA LIGHTING
We acquired our wholly owned subsidiary Georgia Lighting in June 1999. Georgia
Lighting is a leading specialty lighting designer, distributor and retailer
based in Atlanta. The company, which has six retail locations, offers an
extensive collection of decorative lighting fixtures, supplies, accents and
accessories to commercial and retail customers. We believe the acquisition of
Georgia Lighting will allow us to strengthen our sourcing, training and
merchandising in lighting for both The Home Depot and EXPO Design Center stores.
APEX SUPPLY COMPANY
In January 2000, we acquired Apex Supply Company, a wholesale distributor of
plumbing, HVAC and other related products. The Company offers these products
through 21 locations in Georgia, Tennessee and South Carolina and employs
approximately 525 associates. Through this acquisition, we believe we will
increase our penetration of the professional plumbing trades and be able to
handle special orders for plumbing products more efficiently in Home Depot
stores.
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VILLAGER'S HARDWARE STORES
During fiscal 1999, we opened the first two Villager's Hardware test stores in
New Jersey. These stores stock approximately 40,000 items, including variations
in color and size, including hardware, fasteners, tools, plumbing, electrical
and seasonal, as well as a broad selection of home enhancement products,
including paint and wallpaper, window treatments, lighting, storage, housewares
and giftware. We believe that the primary focus for these stores will be home
enhancement and small projects. Each Villager's Hardware store has approximately
35,000 to 40,000 square feet of selling space in a retail environment,
emphasizing customer service and education. We currently anticipate opening two
additional Villager's Hardware test stores in fiscal 2000.
INTERNET
In June 1999, we re-launched our website at www.homedepot.com. The new site
offers more information about projects and our products, calculators to estimate
the amount of materials needed to complete a project, as well as information
about our company. As with our stores, the focus of our website is customer
service. More than 100,000 users have registered for reminder notices and for a
personalized home page on the site. We receive approximately 700 e-mails and
telephone calls per day requesting information about projects and our products
and services. These requests are typically answered in 24 hours.
We currently sell Home Depot gift cards through our Internet site. Additionally,
beginning during the second quarter of fiscal 2000, we plan to offer Home Depot
products over the Internet in selected markets. We will offer customers all of
the products available at stores in their local market on our website, and the
products will be priced based on the market in which the customer lives. Orders
will be fulfilled from our stores, and customers can either pick up their
purchases or have them delivered. By integrating Internet purchases with our
stores, we hope to provide our customers with greater flexibility and service.
DIRECT MARKETING SALES
We have two subsidiaries that sell merchandise through direct marketing:
o MAINTENANCE WAREHOUSE. Our Maintenance Warehouse subsidiary is
a leading provider of maintenance, repair and operations
products to the multi-family housing and lodging facilities
management market. Through its catalog, which is published
semi-annually, Maintenance Warehouse offers approximately
13,000 items, including variations in color and size.
Maintenance Warehouse, which employs approximately 800 people,
emphasizes accurate order taking, delivery and personalized
service. Orders are typically placed over the telephone,
through a field sales representative or through the company's
website at www.mwh.com, are filled through one of Maintenance
Warehouses' 15 distribution centers and are shipped for
same-day or next-day delivery.
o NATIONAL BLINDS & WALLPAPER. National Blinds and Wallpaper
sells decor products through telephone sales. The company
markets primarily through magazine advertising
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aimed at customers seeking the lowest prices. The company
maintains no inventory, but rather acts as a broker to fill
special order sales.
STORE SUPPORT SERVICES
INFORMATION SYSTEMS. Each Home Depot, EXPO Design Center and Villager's Hardware
store is equipped with a computerized point of sale system, electronic bar code
scanning system and a UNIX server. Store information is communicated to the
Store Support Center's computers via a land-based frame relay network. This
frame relay network is in the process of being converted to an Asynchronous
Transfer Mode ("ATM") network, which will provide much greater bandwidth and
allow Internet access in the future. These computers provide corporate,
financial, merchandising and other back office function support. We believe our
systems provide efficient customer check-out (with a greater than 90% rate of
scannable products) and returns, store-based inventory management, rapid order
replenishment, labor planning support and item movement information. Fast
registers, credit authorizations and check approvals expedite transactions in
our stores at a pace that we believe sets the standard for our industry. For
example, to better serve the increasing number of customers applying for credit,
the charge card approval process time has been reduced to less than 30 seconds.
We have implemented a mobile ordering system in our Home Depot stores using
portable carts with computers to assist our associates in placing accurate
orders for inventory. Through the system, an associate on the sales floor can
see the supply the store has for a given item, review the suggested re-order
quantities based on the store's historical experience and place an order with
the vendor. We believe the system increases the efficiency and productivity of
our associates because it requires less time and fewer people to assess and
order inventory. We are also in the process of rolling out a mobile signing
system to help ensure that our signing is in sync with our point-of-sale price
data. Additionally, we are in the process of rolling out additional systems
tools to assist with labor scheduling to help ensure the best possible customer
service levels.
We are continuously assessing and upgrading our information systems to support
growth, reduce and control costs and enable our associates to make better
decisions. We continue to realize greater efficiency as a result of our
electronic data interchange ("EDI") program. Currently, most of our high volume
vendors are participating in the EDI program, which represents more than 70% of
our total transactional volume. EDI is a paperless system, which processes
orders from buying offices to vendors, alerts the stores when the merchandise is
to arrive and transmits invoice data from the vendors and freight carriers to
the Store Support Center.
ASSOCIATE DEVELOPMENT. As of January 30, 2000, we employed approximately 201,000
associates, of whom approximately 12,000 were salaried, with the remainder
compensated on an hourly basis. Approximately 75% of our associates are employed
on a full-time basis. To attract and retain qualified personnel, we seek to
maintain salary and wage levels above those of our competitors in each market
area. Store managers have access to information regarding competitive salary
rates in their respective markets.
In fiscal 1999, we enhanced our training programs in a continuing effort to
service the needs of our associates. These programs are designed to increase
associates' knowledge of merchandising
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departments and products, including mandatory product knowledge training
classes, and to educate, develop and test the skills of those associates who are
interested in being promoted. Because our policy is to promote or relocate
current associates to serve as managers and assistant managers for new stores,
training and assessment of our associates is essential to our growth. Our
district managers and store managers typically meet with our human resources
associates to discuss the development of assistant managers and certain
department heads and consider possible candidates for promotion.
We have implemented programs to ensure that we hire and promote the best
qualified associates in a non-discriminatory way. These programs integrate
validated computerized tests for all applicants, as well as specialized tests
for certain positions. If an applicant passes the computer test, he or she may
be selected for a structured interview in which questions to be asked are
selected by the computer based on the answers given on the original computer
test. We also maintain a list of qualified associates who are interested in a
new assignment and of qualified outside applicants that can be reviewed when
positions become available.
We have never experienced a strike or any work stoppage, and we believe that our
employee relations are good. There are no collective bargaining agreements
covering any of our associates.
MARKETING. We are one of the nation's largest retail advertisers, and we utilize
all forms of mass media and selected forms of highly targeted media. We also
incorporate major sponsorships into our marketing plan, such as NASCAR(R), the
Olympics, CBS College Football and home and garden shows. We extend our reach
and educate our customers through proprietary publications, such as the HOME
IMPROVEMENT 1-2-3(TM) series and the STYLE IDEAS magazine.
We execute our marketing campaigns on both a national and local basis. Because
our stores are located throughout the United States and Canada, we can achieve
greater efficiencies than smaller retailers by using national advertising. At
the same time, we tailor the majority of our advertising locally to respond to
market differences, both in terms of products and the competitive environment.
INTELLECTUAL PROPERTY. Through our wholly owned subsidiary, Homer TLC, Inc., we
have registered or applied for registration of a variety of trade names, service
marks or trademarks for use in our business, including The Home Depot(R), the
"Homer"(R) character, Villager's Hardware(SM) and EXPO Design Center(R) stores.
We regard our intellectual property as having significant value and as being an
important factor in the marketing of the Company and our stores and direct
marketing efforts. We are not aware of any facts that could be expected to
negatively impact our intellectual property.
QUALITY ASSURANCE PROGRAM. As part of our import merchandise program, we have
implemented a quality assurance program. Through this program, we have
established criteria for both vendor/factory and product performance, which
measure factors including product quality, timely shipments, fill rate and
policy compliance. The performance record is monitored for compliance with our
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standards and is also made available to the factories to allow them to strive
for improvement. This quality assurance program, which is applied to products
directly imported by Home Depot, has four components:
o we authorize laboratories to test products prior to purchase
to ensure compliance with requirements;
o we develop and document requirements, based on test results,
applicable national and international standards and features
determined by our merchants;
o we assess the capability of factories to manufacture quality
products that meet the standards we have developed, as well as
to assess their compliance with Home Depot policies on child
and forced labor; and
o we make routine audits of purchases by conducting inspections
at the factory on shipments to assure continued compliance
with our product requirements and with our policies.
LOGISTICS. We use several mechanisms to lower distribution costs and increase
our efficiencies. The vast majority of our products are shipped from the
manufacturer directly to the stores. Certain import products require the use of
distribution centers. Accordingly, we have six distribution centers, located in
Savannah, Georgia; Cranbury, New Jersey; Ontario, California (where we have two
facilities); Ontario, Canada; and Chicago, Illinois. During fiscal 2000, we plan
to open additional distribution centers in Montgomery, New York and Buenos
Aires, Argentina. Additionally, at the end of fiscal 1999, we had 25 lumber
distribution facilities located throughout the United States and Canada to
support the lumber demands of our stores. We also operate a cross-docking
transit facility in Philadelphia, Pennsylvania. At this facility, we receive
merchandise from manufacturers and immediately load it onto trucks for delivery
to our stores. We are currently evaluating sites for establishing additional
transit facilities.
COMPETITION. Our business is highly competitive, based in part on price, store
location, customer service and depth of merchandise. In each of the markets we
serve, there are a number of other electrical, plumbing and building materials
supply houses, lumber yards and home improvement stores. With respect to some
products, we also compete with discount stores, local, regional and national
hardware stores, mail order firms, warehouse clubs, independent building supply
stores and, to a lesser extent, other retailers. In addition to these entities,
our EXPO Design Center stores also compete with specialty design stores or
showrooms, some of which are only open to interior design professionals.
Due to the variety of competition we face, we are unable to precisely measure
our market share in existing market areas. We believe that we are an effective
and significant competitor in our markets. Based on U.S. Census data estimates,
internal estimates and data provided by the Home Improvement Research Institute,
we believe that our market share in the U.S. and Canada, currently defined as
including the Do-It-Yourself/Buy-It-Yourself, Tradesmen, Builders/General
Contractors, Heavy Industrial, Repair and Remodeling and Property Maintenance
markets, is approximately 8.9%.
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EXECUTIVE OFFICERS
Executive officers of Home Depot are elected by, and serve at the
pleasure of, the Board of Directors. The following provides information as of
January 30, 2000 concerning our executive officers:
BERNARD MARCUS, age 70, is a co-founder of The Home Depot and serves as
Chairman of the Board. From inception of the Company in 1978 until 1997, he
served as Chairman of the Board and Chief Executive Officer, at which time the
title of CEO was passed on to Mr. Arthur M. Blank. Mr. Marcus serves as a
director on the boards of National Service Industries, Inc., Westfield America,
Inc. and DBT Online, Inc.
ARTHUR M. BLANK, age 57, has been the President, Chief Operating
Officer and a director of The Home Depot since its inception in 1978 and was
named President and CEO in 1997. He is, together with Mr. Bernard Marcus and Mr.
Kenneth G. Langone, a co-founder of the Company. Mr. Blank is a member of the
Board of Directors of Cox Enterprises, Inc. and Post Properties, Inc.
RONALD M. BRILL, age 56, has been Executive Vice President and Chief
Administrative Officer of the Company since 1995. Mr. Brill joined The Home
Depot as Controller in 1978, was elected Treasurer in 1980, Vice
President-Finance in 1981, Senior Vice President and Chief Financial Officer in
1984, Executive Vice President and CFO in 1993 and was elected as a director in
1987. Mr. Brill has announced his intention to retire in March 2001 and will not
stand for reelection to the Board upon expiration of his term in May 2000.
MARK R. BAKER, age 42, has been Group President and Senior Vice
President - Merchandising since June 1999. From 1997 until 1999, he was
President of the Midwest Division. Mr. Baker joined the Company in 1996 as Vice
President-Merchandising for the Midwest Division. Prior to joining The Home
Depot, from 1992 until 1996, Mr. Baker was an Executive Vice President -
Merchandising for HomeBase Inc. in Fullerton, California. In March 2000, Mr.
Baker was promoted to Executive Vice President and Chief Operating Officer of
Home Depot stores in the U.S.
DENNIS J. CAREY, age 53, has been Executive Vice President and Chief
Financial Officer since May 1998. From 1994 to 1998, Mr. Carey was employed by
AT&T Corp., most recently as Vice President and General Manager - Corporate
Productivity and Mergers and Acquisitions. Prior to joining AT&T, Mr. Carey held
a number of positions during his 25 year tenure with General Electric Company,
including Vice President and General Manager of International Operations.
JEFFREY W. COHEN, age 41, has been Group President - Direct Marketing
Businesses since May 1998. From January 1997 until he joined The Home Depot, Mr.
Cohen was President of Cohen & Associates Management Consultants. From 1995
through 1997, he was Executive Vice President of Harte-Hanks Direct Marketing,
and prior thereto he was a Senior Vice President - General Manager at GE Capital
Corp. He also spent seven years at American Express Company where he held
various marketing positions.
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MARSHALL L. DAY, age 56, was Senior Vice President-Finance and
Accounting from 1998 until his retirement in April 2000. Mr. Day previously
served as Senior Vice President - Chief Financial Officer from 1995 to 1998 and
as Senior Vice President - Finance from 1993 to 1995.
PATRICK FARRAH, age 56, has been Executive Vice President of
Merchandising since August 1999. Prior thereto, he was Senior Vice President of
Merchandising from 1995 until his promotion to his current position.
VERNON JOSLYN, age 48, has been Group President since June 1999. He
previously served as President of the Northeast Division from 1996 until his
most recent promotion. Mr. Joslyn also previously served as Vice
President-Operations for the Northeast Division from 1993 until 1996.
LARRY M. MERCER, age 53, is Executive Vice President of Operations. He
is responsible for the functional leadership across the entire Home Depot
enterprise, both domestically since March 1996 and internationally since January
2000. Prior to his promotion Mr. Mercer was President of the Northeast Division
for five years. Mr. Mercer joined the Company in 1979 as an Assistant Store
Manager and has risen through the ranks to his current position.
ANDERS C. MOBERG, age 50, joined the Company as Group President -
International and Global Resourcing in August 1999. Prior to such time, Mr.
Moberg was President of The IKEA Group for more than the last five years.
STEPHEN R. MESSANA, age 55, has been Senior Vice President - Human
Resources since 1993.
LAWRENCE A. SMITH, age 52, has been Senior Vice President - Legal since
1998 and Secretary since 1997. Mr. Smith has been employed by the Company since
1983 and served as Vice President - Legal prior to his promotion to his current
position. Mr. Smith is the nephew of Mr. Marcus.
DAVID SULITEANU, age 47, has served as Group President - Diversified
Businesses since April 1998. Mr. Suliteanu previously served as Vice Chairman
and Director of Stores for Macy's East, a position he held from 1993 until he
joined The Home Depot.
M. FAYE WILSON, age 62, has served as Senior Vice President - Value
Initiatives since 1998 and has served on the Board of Directors for the Company
since 1992. From 1992 until joining The Home Depot, she was an Executive Vice
President of Bank of America NT&SA. Ms. Wilson serves as a director of Acsys,
Inc. and Farmers Insurance Group.
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Item 2. PROPERTIES
The following tables show the number of Home Depot store locations by state in
the United States and internationally as of January 30, 2000:
Number of Stores
State in State
----------------------------------------------------------
Alabama 8
Alaska 1
Arizona 23
Arkansas 3
California 122
Colorado 14
Connecticut 14
Delaware 3
Florida 83
Georgia 44
Hawaii 1
Idaho 4
Illinois 31
Indiana 4
Iowa 3
Kansas 5
Kentucky 6
Louisiana 14
Maine 4
Maryland 20
Massachusetts 23
Michigan 34
Minnesota 13
Mississippi 5
Missouri 13
Montana 1
Nevada 8
New Hampshire 5
New Jersey 35
New Mexico 5
New York 47
North Carolina 20
Ohio 28
Oklahoma 6
Oregon 10
Pennsylvania 32
Puerto Rico 2
Rhode Island 1
South Carolina 12
Tennessee 21
Texas 72
Utah 6
Vermont 1
Virginia 22
Washington 18
Wisconsin 9
-------
Subtotal 856
-------
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Number of Stores
International Location in Location
-------------------------------------------------------------
Canadian Provinces
Alberta 8
British Columbia 9
Manitoba 2
Ontario 33
Saskatchewan 1
Latin America
Chile 4
-----
Subtotal 57
-----
TOTAL HOME DEPOT STORES 913
=====
The following table shows the number of EXPO Design Center store locations by
state as of January 30, 2000:
Number of Stores
State in State
-------------------------------------------------------------
California 3
Florida 3
Georgia 2
New York 1
Texas 5
Virginia 1
-----
TOTAL EXPO DESIGN
CENTER STORES 15
=====
Additionally, as of January 30, 2000, we were operating two Villager's Hardware
test stores, six Georgia Lighting retail locations and 21 Apex Supply locations.
Of our 930 Home Depot stores, EXPO Design Center stores and Villager's Hardware
stores at January 30, 2000, approximately 77% were owned (including those owned
subject to a ground lease) consisting of approximately 77,000,000 square feet
and approximately 23% were leased consisting of approximately 23,000,000 square
feet. In recent years, we have increased the relative percentage of new stores
that are owned. Although we take advantage of lease financing opportunities, we
generally prefer to own stores because of greater operating control and
flexibility, generally lower occupancy costs and certain other economic
advantages.
Our executive, corporate staff and accounting offices occupy approximately
1,300,000 square feet of leased and owned space in Atlanta, Georgia. In
addition, as of January 30, 2000, we occupied an aggregate of approximately
1,087,000 square feet, of which approximately 236,000 square feet is owned and
approximately 851,000 square feet is leased, for divisional store support
centers and subsidiary customer support centers. These support centers are
located in Orange and San Leandro, California; Tampa, Florida; Atlanta, Georgia;
Arlington Heights, Illinois; Canton, Massachusetts; Plymouth, Michigan; South
Plainfield, New Jersey; Dallas, Texas; Tukwila,
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Washington; Scarborough, Ontario, Burnaby, and British Columbia, Canada;
Santiago, Chile; and Buenos Aires, Argentina.
At January 30, 2000, we utilized approximately 7,424,000 square feet of
warehousing and distribution space, of which approximately 710,000 is owned and
approximately 6,714,000 is leased.
We believe that at the end of existing lease terms, our current leased space can
be either relet or replaced by alternate space for lease or purchase that is
readily available.
Item 3. LEGAL PROCEEDINGS
We have litigation arising from the normal course of business. In our opinion,
this litigation will not materially affect our consolidated financial position
or our results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of fiscal 1999.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Since April 19, 1984, our common stock has been listed on the New York Stock
Exchange under the symbol "HD." The table below sets forth the low and high
sales prices of our common stock on the New York Stock Exchange Composite Tape
as reported in THE WALL STREET JOURNAL and the quarterly cash dividends declared
per share of common stock during the periods indicated.
Price Range* Cash
--------------------- Dividends
Low High Declared*
--- ---- ---------
FISCAL YEAR 1997
First Quarter ended May 4, 1997 $11.00 $13.03 $.013
Second Quarter ended August 3, 1997 12.75 16.67 .017
Third Quarter ended November 2, 1997 15.69 18.88 .017
Fourth Quarter ended February 1, 1998 17.65 20.55 .017
FISCAL YEAR 1998
First Quarter ended May 3, 1998 $20.42 $24.23 $.017
Second Quarter ended August 2, 1998 22.56 32.67 .020
Third Quarter ended November 1, 1998 21.08 30.63 .020
Fourth Quarter ended January 31, 1999 28.75 41.33 .020
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FISCAL YEAR 1999
First Quarter ended May, 2, 1999 $35.88 $45.29 $.020
Second Quarter ended August 1, 1999 36.75 46.63 .027
Third Quarter ended October 31, 1999 35.75 52.33 .027
Fourth Quarter ended January 30, 2000 49.92 69.75 .040
- ----------
*On December 30, 1999, there was a three-for-two stock split on all shares of
stock owned by stockholders as of December 2, 1999. On July 2, 1998, there was a
two-for-one stock split on all shares of stock owned by stockholders as of June
11, 1998. On July 3, 1997, there was a three-for-two stock split on all shares
of stock owned by stockholders as of June 12, 1997. The stock prices and
dividends in the table set forth above have been adjusted to reflect these
splits.
The Company paid its first cash dividend on June 22, 1987, and has paid
dividends during each subsequent quarter. Future dividend payments will depend
on the Company's earnings, capital requirements, financial condition and other
factors considered relevant by the Board of Directors.
The number of record holders of The Home Depot's Common Stock as of April 14,
2000 was 196,126 (excluding individual participants in nominee security position
listings).
RECENT SALES OF UNREGISTERED SECURITIES
In September 1999, the Company issued $500 million of its 6 1/2% Senior Notes
due September 24, 2004 in a transaction not registered under the Securities Act
of 1933. The transaction was exempt from registration under Section 4(2) of the
Securities Act. The Senior Notes were subsequently exchanged for identical notes
registered under the Securities Act.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of The Home Depot, Inc. for and as of
the end of each of the periods indicated in the five-year period ended January
30, 2000 have been derived from the audited consolidated financial statements of
The Home Depot, Inc., which consolidated financial statements have been audited
by KPMG LLP. The selected consolidated financial data should be read in
conjunction with the consolidated financial statements of The Home Depot, Inc.,
including the notes to those consolidated financial statements, and the audit
reports of KPMG LLP, which are incorporated by reference elsewhere herein.
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Fiscal Year (1)
--------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(amounts in millions)
Net Sales ......................... $38,434 $30,219 $24,156 $19,535 $15,470
Net Earnings ...................... 2,320 1,614 1,160(2) 938 732
Diluted Earnings per Share(3) ..... 1.00 0.71 0.52(2) 0.43 0.34
Total Assets ...................... 17,081 13,465 11,229 9,342 7,354
Long-Term Debt .................... 750 1,566 1,303 1,247 720
Cash Dividends per Share(3) ....... 0.11 0.08 0.06 0.05 0.04
(1) Fiscal 1995, 1996, 1997, 1998 and 1999 refer to the fiscal years ended
January 28, 1996; February 2, 1997; February 1, 1998; January 31, 1999;
and January 30, 2000, respectively. Fiscal year 1996 consisted of 53
weeks; all other fiscal years noted consisted of 52 weeks.
(2) Includes the effect of a $104 million pre-tax non-recurring charge.
(3) All per share data have been adjusted for a three-for-two stock split
on December 30, 1999.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The data below reflect selected sales data, the percentage relationship between
sales and major categories in the Consolidated Statements of Earnings and the
percentage change in the dollar amounts of each of the items.
PERCENTAGE
INCREASE (DECREASE)
IN DOLLAR AMOUNTS
FISCAL YEAR(1) ------------------------
SELECTED CONSOLIDATED ------------------------------------------- 1999 1998
STATEMENTS OF EARNINGS DATA 1999 1998 1997 vs. 1998 vs. 1997
----------- ----------- ----------- --------- ---------
NET SALES ........................................... 100.0% 100.0% 100.0% 27.2% 25.1%
GROSS PROFIT ........................................ 29.7 28.5 28.1 32.6 26.9
OPERATING EXPENSES:
Selling and Store Operating(2) .................. 17.8 17.7 17.8 27.9 24.1
Pre-Opening ..................................... 0.3 0.3 0.3 28.4 35.4
General and Administrative ...................... 1.7 1.7 1.7 30.3 24.7
Non-Recurring Charge ............................ -- -- 0.4 NM(3) NM(3)
----------- ----------- ----------- --------- ---------
Total Operating Expenses ..................... 19.8 19.7 20.2 28.1 21.7
----------- ----------- ----------- --------- ---------
OPERATING INCOME ............................. 9.9 8.8 7.9 42.6 40.3
INTEREST INCOME (EXPENSE):
Interest and Investment Income ................. 0.1 0.1 0.2 23.3 (31.8)
Interest Expense ............................... (0.1) (0.1) (0.2) (24.3) (11.9)
----------- ----------- ----------- --------- ---------
Interest, net .............................. -- -- -- (228.6) (450.0)
----------- ----------- ----------- --------- ---------
Earning Before Income Taxes ................ 9.9 8.8 7.9 43.3 39.8
Income Taxes ........................................ 3.9 3.5 3.1 42.7 40.9
----------- ----------- ----------- --------- ---------
NET EARNINGS ................................. 6.0% 5.3% 4.8% 43.7% 39.1%
----------- ----------- ----------- --------- ---------
SELECTED CONSOLIDATED SALES DATA(4)
Number of Transactions (000s) ....................... 797,229 665,125 550,226 19.9% 20.9%
Average Sale per Transaction ........................ $ 47.87 $ 45.05 $ 43.63 6.3 3.3
Weighted Average Weekly Sales Per Operating Store ... $ 876,000 $ 844,000 $ 829,000 3.8 1.8
Weighted Average Sales per Square Foot .............. $ 422.53 $ 409.79 $ 405.56 3.1 1.0
- ----------------------
(1) Fiscal years 1999, 1998 and 1997 refer to the fiscal years ended
January 30, 2000; January 31, 1999; and February 1, 1998, respectively.
(2) Minority interest has been reclassified to selling and store operating
expenses.
(3) Not meaningful.
(4) Excludes wholly-owned subsidiaries: Apex Supply Company, Georgia
Lighting, Maintenance Warehouse and National Blinds and Wallpaper.
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RESULTS OF OPERATIONS
For an understanding of the significant factors that influenced the Company's
performance during the past three fiscal years, the following discussion should
be read in conjunction with the consolidated financial statements and the notes
to consolidated financial statements presented in our Annual Report to
Stockholders for the fiscal year ended January 30, 2000, which are incorporated
herein by reference.
FISCAL YEAR ENDED JANUARY 30, 2000 COMPARED TO JANUARY 31, 1999
Net sales for fiscal 1999 increased 27.2% to $38.4 billion from $30.2 billion in
fiscal 1998. This increase was attributable to, among other things, full year
sales from the 138 new stores opened during fiscal 1998, a 10% comparable
store-for-store sales increase, and 169 new store openings and six store
relocations during fiscal 1999.
Gross profit as a percent of sales was 29.7% for fiscal 1999 compared to 28.5%
for fiscal 1998. The rate increase was primarily attributable to a lower cost of
merchandise resulting from product line reviews and increased sales of imported
products, other merchandising initiatives begun in prior years and continued
during fiscal 1999, and sales mix shifts to higher gross margin product
categories and assortments. In addition, inventory and refund systems
improvements and more effective training resulted in better inventory shrink
results and lower product markdowns.
Operating expenses as a percent of sales were 19.8% for fiscal 1999 compared to
19.7% for fiscal 1998. Selling and store operating expenses as a percent of
sales increased to 17.8% in fiscal 1999 from 17.7% in fiscal 1998. The increase
was primarily attributable to higher store selling payroll expenses resulting
from market wage pressures and an increase in employee longevity, as well as to
the Company's continued investment in new customer service initiatives. In
addition, medical costs increased due to higher family enrollment in the
Company's medical plans, increased claims and higher prescription drug costs.
The Company's strong financial performance during fiscal 1999 also resulted in
higher bonus expenses as a percent of sales. Credit card discounts increased as
a result of higher penetrations of credit card sales and increases in
non-private label discount rates. Partially offsetting these increases were
lower net advertising expenses resulting from higher cooperative advertising
participation by vendors and economies realized from the increased use of
national advertising.
Pre-opening expenses as a percent of sales were 0.3% for both fiscal 1999 and
1998. The Company opened 169 new stores and relocated six stores in fiscal 1999,
compared to 138 new stores and four store relocations in fiscal 1998.
Pre-opening expenses averaged $643,000 per store in fiscal 1999 compared to
$618,000 per store in fiscal 1998. The higher average expense was primarily due
to the opening of more EXPO Design Center stores and expansion into certain new
Home Depot markets, which involved longer pre-opening periods and higher
training, travel and relocation costs.
General and administrative expenses as a percent of sales were 1.7% for both
fiscal 1999 and 1998. Incremental expenses related to long-term growth and
business planning initiatives,
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including Internet development, international operations and the opening of four
new divisional offices, were offset by efficiencies realized from increased
sales.
Interest and investment income as a percent of sales was 0.1% for both fiscal
1999 and 1998. Interest expense as a percent of sales was 0.1% for both
comparable periods.
The Company's combined federal and state effective income tax rate decreased to
39.0% for fiscal 1999 from 39.2% for fiscal 1998. The decrease was attributable
to higher tax credits in fiscal 1999 compared to fiscal 1998.
Net earnings as a percent of sales were 6.0% for fiscal 1999 compared to 5.3%
for fiscal 1998, reflecting a higher gross profit rate partially offset by
higher operating expenses as a percent of sales as described above. Diluted
earnings per share were $1.00 for fiscal 1999 compared to $0.71 for fiscal 1998.
FISCAL YEAR ENDED JANUARY 31, 1999 COMPARED TO FEBRUARY 1, 1998
Net sales for fiscal 1998 increased 25.1% to $30.2 billion from $24.2 billion in
fiscal 1997. This increase was attributable to, among other things, full year
sales from the 112 new stores opened during fiscal 1997, a 7% comparable
store-for-store sales increase, and 138 new store openings and four store
relocations during fiscal 1998. One store opened during fiscal 1998 was
subsequently closed during the year and reopened during fiscal 1999.
Gross profit as a percent of sales was 28.5% for fiscal 1998 compared to 28.1%
for fiscal 1997. The rate increase was primarily attributable to a lower cost of
merchandise resulting from product line reviews and other merchandising
initiatives begun in fiscal 1996 and continued through fiscal 1997 and 1998. In
addition, sales mix changes, better inventory shrink results and benefits from
import strategies contributed to the overall gross profit improvement.
Operating expenses as a percent of sales were 19.7% for fiscal 1998 compared to
20.2% for fiscal 1997. Operating expenses for fiscal 1997 included a $104
million non-recurring charge related to the settlements of a class action gender
discrimination lawsuit and three other gender discrimination lawsuits. Excluding
the non-recurring charge, operating expenses as a percent of sales were 19.8%
for fiscal 1997.
Selling and store operating expenses as a percent of sales decreased to 17.7% in
fiscal 1998 from 17.8% in fiscal 1997. The decrease was primarily attributable
to lower net advertising expenses resulting from higher cooperative advertising
participation by vendors, increased use of national advertising and leverage
achieved from opening stores in existing markets. In addition, improved claims
management and focus on safety programs resulted in lower workers' compensation
and general liability claims experience as a percent of sales. Also, minority
interest decreased from fiscal 1997, mainly due to the purchase of the remaining
25% of The Home Depot Canada partnership from The Molson Companies during the
first quarter of fiscal 1998. Partially offsetting these decreases were higher
medical costs from increased family enrollment in the Company's medical plans
and higher store selling payroll expenses as a percent of sales. The increase in
store selling payroll expenses was primarily due to increased sales penetrations
in
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higher margin decor categories, which require more hours and higher average pay
rates to support. Overall productivity, in terms of sales per labor hour,
increased from fiscal 1997.
Pre-opening expenses as a percent of sales were 0.3% for both fiscal 1998 and
1997. The Company opened 138 new stores and relocated four stores in fiscal
1998, and opened 112 new stores and relocated five stores in fiscal 1997.
Pre-opening expenses averaged $618,000 per store in fiscal 1998 compared to
$559,000 per store in fiscal 1997. The higher average expense resulted primarily
from the Company's initial entry into markets such as Chile, Puerto Rico and
Alaska, which involve longer pre-opening periods and higher travel and
relocation costs.
General and administrative expenses as a percent of sales were 1.7% for both
fiscal 1998 and 1997. Incremental expenses related to long-term growth and
business planning initiatives incurred in fiscal 1998 were offset by
efficiencies realized from increased sales.
Interest and investment income as a percent of sales decreased to 0.1% in fiscal
1998 from 0.2% in fiscal 1997 due to lower investment balances and lower
interest rates. Interest expense as a percent of sales was 0.1% in fiscal 1998
compared to 0.2% in fiscal 1997. The decrease from fiscal 1997 was primarily
attributable to economies realized from a 25.1% increase in sales for fiscal
1998 and higher capitalized interest resulting from a higher percentage of owned
stores under construction.
The Company's combined federal and state effective income tax rate was 39.2% for
fiscal 1998 compared to 38.9% for fiscal 1997. The increase was due to a
reduction in tax-exempt interest income as investment balances declined during
the year and to higher effective state tax rates.
Net earnings as a percent of sales were 5.3% for fiscal 1998 compared to 4.8%
for fiscal 1997, reflecting a higher gross profit rate, lower selling and store
operating expenses as a percent of sales and the non-recurring charge recorded
in fiscal 1997. Diluted earnings per share were $0.71 for fiscal 1998 compared
to $0.52 for fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from store operations provides the Company with a
significant source of liquidity. Additionally, a significant portion of the
Company's inventory is financed under vendor credit terms.
The Company plans to open approximately 200 new stores and relocate six existing
stores during fiscal 2000. It is anticipated that approximately 89% of these
locations will be owned, and the remainder will be leased. The Company also
plans to open approximately 240 stores, including relocations, in fiscal 2001.
The Company has two operating lease agreements totaling $882 million for the
purpose of financing construction costs of certain new stores. Under the
operating lease agreements, the lessor purchases the properties, pays for the
construction costs and subsequently leases the facilities to the Company. The
leases provide for substantial residual value guarantees and include purchase
options at original cost on each property. The Company financed a portion of
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25
its new stores in fiscal 1997, 1998 and 1999, as well as an office building in
fiscal 1999, under the operating lease agreements and anticipates utilizing
these facilities to finance selected new stores and an office building in fiscal
2000. In addition, some locations for fiscal 2000 will be leased individually,
and it is expected that many locations may be obtained through the acquisition
of land parcels and construction or purchase of buildings.
The cost of new stores to be constructed and owned by the Company varies widely,
principally due to land costs, and is currently estimated to average
approximately $13.2 million per location. The cost to remodel and/or fixture
stores to be leased is expected to average approximately $4.3 million per store.
In addition, each new store will require approximately $3.2 million to finance
inventories, net of vendor financing.
During fiscal 1999, the Company issued $500 million of 6 1/2% Senior Notes
("Senior Notes"). The Senior Notes are due on September 15, 2004, and pay
interest semi-annually on March 15 and September 15 of each year commencing
March 15, 2000. The Senior Notes may be redeemed by the Company at any time, in
whole or in part, at a defined redemption price plus accrued interest. The net
proceeds from the offering were used to finance a portion of the Company's
capital expenditure program, including store expansions and renovations, for
working capital needs and for general corporate purposes.
During fiscal 1999, the Company redeemed its 3 1/4% Convertible Subordinated
Notes. A total principal amount of $1.1 billion was converted into 72 million
shares of the Company's common stock. As a result, the total principal amount
converted, net of unamortized expenses of the original debt issue, was credited
to common stock at par and to additional paid-in capital in the amount of $1.1
billion.
The Company has a commercial paper program that allows borrowings up to a
maximum of $800 million. As of January 30, 2000, 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 September 2004, contains various restrictive
covenants, none of which is expected to impact the Company's liquidity or
capital resources.
As of January 30, 2000, the Company had $168 million in cash and cash
equivalents. Management believes that its current cash position, the proceeds
from short-term investments, internally generated funds, funds available from
its $800 million commercial paper program, funds available from the operating
lease agreements, and the ability to obtain alternate sources of financing
should enable the Company to complete its capital expenditure programs,
including store openings and renovations, through the next several fiscal years.
YEAR 2000
During fiscal 1999, the Company addressed a universal situation commonly
referred to as the "Year 2000 Problem." The Company implemented extensive
testing of its own systems and also assessed the year 2000 compliance status of
certain third parties, including vendors and infrastructure providers. To date,
the Company has not experienced any material year 2000
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system problems, nor does it believe there will be any future material adverse
impact to the Company's business, operations or financial condition related to
the Year 2000 Problem.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," effective for all fiscal quarters of fiscal
years beginning after June 15, 1999.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.
133," which deferred implementation of SFAS 133 by one year. Consequently, SFAS
133 will be effective for all fiscal quarters of fiscal years beginning after
June 15, 2000.
SFAS 133 requires all derivatives to be carried on the balance sheet at fair
value. Changes in the fair value of derivatives must be recognized in the
Company's Consolidated Statements of Earnings when they occur; however, there is
an exception for derivatives that qualify as hedges as defined by SFAS 133. If a
derivative qualifies as a hedge, a company can elect to use "hedge accounting"
to eliminate or reduce the income statement volatility that would arise from
reporting changes in a derivative's fair value. Adoption of SFAS 133 is not
expected to materially impact the Company's reported financial results.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Certain statements we make in this report, and other written or oral statements
made by or on behalf of the Company, may constitute "forward-looking statements"
within the meaning of the federal securities laws. Words or phrases such as
"should result," "are expected to," "we estimate," "we project," or similar
expressions are intended to identify forward-looking statements. Examples of
such statements in this report include descriptions of our plans with respect to
new store openings and relocations, our plans to enter new markets and
expectations relating to our continuing growth. These statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from the Company's historical experience and its present expectations
or projections. Management believes that these forward-looking statements are
reasonable; however, you should not place undue reliance on such statements.
Such statements speak only as of the date they are made, and we undertake no
obligation to publicly update or revise any forward-looking statement, whether
as a result of future events, new information or otherwise.
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The following are some of the factors that could cause the Company's actual
results to differ materially from the expected results described in the
Company's forward-looking statements:
o Adverse or unanticipated weather conditions, which may affect the
Company's overall level of sales and sales of particular lines of
products, such as building materials, lumber and lawn and garden
supplies.
o Instability of costs and availability of sourcing channels, which may
affect the prices that the Company pays for certain commodity products,
such as lumber and plywood, as well as the Company's ability to improve
its mix of merchandise. Our cost of sales is affected by our ability to
maintain favorable arrangements and relationships with our suppliers.
Our sources of supply may be affected by trade restrictions, tariffs,
currency exchange rates, transport costs and capacity, and other
factors affecting domestic and international markets.
o Our ability to attract, train and retain highly qualified associates to
staff both existing and new stores.
o Conditions affecting the availability, acquisition, development and
ownership of real estate, including local zoning and land use issues,
environmental regulations and general conditions in the commercial real
estate market.
o General economic conditions, which affect consumer confidence and home
improvement and home-building spending, including interest rates, the
overall level of economic activity, the availability of consumer credit
and mortgage financing and unemployment rates.
o The impact of competition, including competition for customers,
locations and products and in other important aspects of our business.
Our primary competitors include chains of electrical, plumbing and
building materials supply houses, lumber yards, home improvement
stores and other local, regional or national hardware stores, as well
as discount department stores and any other channel of distribution
that offers products that we sell. Our business is highly competitive,
and we may face new types of competitors as we enter new markets or
lines of business.
o Changes in laws and regulations, including changes in accounting
standards, tax statutes or regulations and environmental and land use
regulations, and uncertainties of litigation.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have not entered into any transactions using derivative financial instruments
or derivative commodity instruments and believe that our exposure to market risk
associated with other financial instruments (such as investments and borrowings)
and interest rate risk is not material.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
We refer you to the "Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Stockholders' Equity and Comprehensive
Income," "Consolidated
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Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Independent Auditors' Report" contained in our Annual Report to Stockholders
for the fiscal year ended January 30, 2000.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
We refer you to our Proxy Statement for the 2000 Annual Meeting of Stockholders
under the heading "Election of Directors and Director Biographies," "Director
Biographies" and "Board of Directors Information." Biographical information on
our executive officers is contained in Item I of this Annual Report on Form
10-K.
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Item 11. EXECUTIVE COMPENSATION
We refer you to the information in our Proxy Statement for the 2000 Annual
Meeting of Stockholders under the heading "Executive Compensation."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We refer you to the information in our Proxy Statement for the 2000 Annual
Meeting of Stockholders under the heading "Stock Ownership."
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We refer you to the information in our Proxy Statement for the 2000 Annual
Meeting of Stockholders under the heading "Insider Transactions."
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements are incorporated by reference from pages 22
through 33 of our Annual Report to Stockholders for the fiscal year ended
January 30, 2000, as provided in Item 8 hereof:
- Consolidated Statements of Earnings for the fiscal years ended
January 30, 2000; January 31, 1999 and February 1, 1998.
- Consolidated Balance Sheets as of January 30, 2000 and January
31, 1999.
- Consolidated Statements of Stockholders' Equity and
Comprehensive Income for the fiscal years ended January 30,
2000, January 31, 1999 and February 1, 1998.
- Consolidated Statements of Cash Flows for the fiscal years
ended January 30, 2000, January 31, 1999 and February 1, 1998.
- Notes to Consolidated Financial Statements.
- Independent Auditors' Report.
2. FINANCIAL STATEMENT SCHEDULES
All schedules are omitted as the required information is inapplicable or the
information is presented
27
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in the consolidated financial statements or related notes.
(b) REPORTS ON FORM 8-K
There were no Current Reports on Form 8-K filed during the fourth quarter of
fiscal 1999.
(c) EXHIBITS
Exhibits marked with an asterisk (*) are incorporated by reference to exhibits
or appendices previously filed with the SEC, as indicated by the references in
brackets.
*3.l Restated Certificate of Incorporation of The Home Depot, Inc.,
as amended. [FORM 10-Q FOR THE FISCAL QUARTER ENDED MAY 2,
1999, EXHIBIT 3.1]
3.2 By-laws, as amended and restated.
*10.1 Credit Agreement dated September 17, 1999 (the "Credit
Agreement") by and among The Home Depot, Inc., Bank of
America, N.A., as Administrative Agent, Wachovia Bank, N.A.,
as Syndication Agent, First Union National Bank and The Bank
of New York, as Co-Documentation Agents, and banks party
thereto. [FORM 10-Q FOR THE FISCAL QUARTER ENDED OCTOBER 31,
1999, EXHIBIT 10.1]
10.2 Assignment and Acceptance of the Credit Agreement dated
February 23, 2000 by and among The Home Depot, Inc., the banks
party thereto, Bank of America, N.A., as Administrative Agent,
Wachovia Bank, N.A., as Syndication Agent, and First Union
National Bank and Bank of New York, as Co-Documentation
Agents.
10.3 Assignment and Acceptance of the Credit Agreement dated March
31, 2000 by and among The Home Depot, Inc., the banks party
thereto, Bank of America, N.A., as Administrative Agent,
Wachovia Bank, N.A., as Syndication Agent, and First Union
National Bank and The Bank of New York, as Co-Documentation
Agents.
*10.4 +Corporate Office Management Bonus Plan of the Registrant
dated March 1, 1991. [FORM 10-K FOR THE FISCAL YEAR ENDED
FEBRUARY 1, 1998, EXHIBIT 10.2]
*10.5 +Employee Stock Purchase Plan, as amended. [APPENDIX A TO
REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS HELD MAY 31, 1995]
*10.6 +Senior Officers' Bonus Pool Plan, as amended. [APPENDIX A TO
REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS HELD MAY 26, 1999]
*10.7 +Executive Officers' Bonus Plan. [APPENDIX B TO REGISTRANT'S
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS HELD
MAY 27, 1998]
*10.8 +The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan. [FORM
10-K FOR THE FISCAL YEAR ENDED FEBRUARY 1, 1998, EXHIBIT 10.5]
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*10.9 +Executive Medical Reimbursement Plan, effective January 1,
1992. [FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 1999,
EXHIBIT 10.7]
*10.10 +The Home Depot ESOP Restoration Plan. [FORM 10-K FOR THE
FISCAL YEAR ENDED JANUARY 29, 1995, EXHIBIT 10.8]
*10.11 Participation Agreement dated as of October 22, 1998 among The
Home Depot, Inc. as Guarantor; Home Depot U.S.A., Inc. as
Lessee; HD Real Estate Funding Corp. II as Facility Lender;
Credit Suisse Leasing 92A L.P. as Lessor; The Bank of New York
as Indenture Trustee; and Credit Suisse First Boston
Corporation and Invemed Associates, Inc. as Initial
Purchasers. [FORM 10-K FOR THE YEAR ENDED JANUARY 31, 1999,
EXHIBIT 10-10.]
*10.12 Participation Agreement dated as of June 25, 1996 among The
Home Depot, Inc. as Guarantor; Home Depot U.S.A., Inc. as
Lessee and Construction Agent; HD Real Estate Funding Corp. as
Facility Lender; the lenders named on the Schedule thereto as
Lenders; Credit Suisse First Boston Corporation as Agent Bank
and Lender; and Credit Suisse Leasing 92A L.P. as Lessor.
[FORM 10-K FOR THE YEAR ENDED JANUARY 31, 1999, EXHIBIT 10.11]
*10.13 First Amendment and Supplement to the Participation Agreement
dated as of May 8, 1997 among The Home Depot, Inc. as
Guarantor; Home Depot U.S.A., Inc. as Lessee and Construction
Agent; HD Real Estate Funding Corp. as Facility Lender; the
lenders named on the Schedule thereto as Lenders; Credit
Suisse First Boston Corporation as Agent Bank and Lender; and
Credit Suisse Leasing 92A L.P. as Lessor. [FORM 10-K FOR THE
YEAR ENDED JANUARY 31, 1999, EXHIBIT 10-12.]
*10.14 Master Modification Agreement dated as of April 20, 1998 among
The Home Depot, Inc. as Guarantor; Home Depot U.S.A., Inc., as
Lessee and Construction Agent; HD Real Estate Funding Corp.,
as Facility Lender; Credit Suisse Leasing 92A L.P. as Lessor;
the lenders named on the Schedule thereto as Lenders; and
Credit Suisse First Boston Corporation as Agent Bank. [FORM
10-K FOR THE YEAR ENDED JANUARY 31, 1999, EXHIBIT 10.13]
*10.15 Indenture, dated as of September 27, 1999 among The Home
Depot, Inc., Credit Suisse First Boston Corporation and
Invemed Associates. [FORM S-4 (FILE NO. 333-89935) FILED
OCTOBER 29, 1999, EXHIBIT 4.1]
*10.16 +Supplemental Executive Choice Program, effective January 1,
1999. [FORM 10-K FOR THE YEAR ENDED JANUARY 31, 1999, EXHIBIT
10.14]
*11 Computation of Earnings Per Common and Common Equivalent
Share. [ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR
ENDED JANUARY 30, 2000, FILED HEREWITH AS EXHIBIT 13, NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, NOTE 7]
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32
13 The Registrant's Annual Report to Stockholders for the fiscal
year ended January 30, 2000. Only those portions of said
report which are specifically designated in this Form 10-K as
being incorporated by reference are being electronically filed
pursuant to the Securities Exchange Act of 1934.
*21 List of Subsidiaries of the Registrant. [FORM 10-K FOR THE
FISCAL YEAR ENDED FEBRUARY 1, 1998, EXHIBIT 21]
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution of this Form
10-K Annual Report have been granted and are filed herewith as
follows:
Power of Attorney from Frank Borman.
Power of Attorney from John L. Clendenin.
Power of Attorney from Berry R. Cox.
Power of Attorney from William S. Davila.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from Bonnie G. Hill.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule. [FILED ELECTRONICALLY WITH SEC ONLY.]
- ----------
+Management contract or compensatory plan or arrangement required to be filed as
an exhibit to this form pursuant to Item 14(c) of this report.
30
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Arthur M. Blank
----------------------------------
(Arthur M. Blank, President & CEO)
Date: April 20, 2000
-------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant, The Home Depot, Inc., and in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ Bernard Marcus Chairman of the Board April 20, 2000
- ----------------------------------
(Bernard Marcus)
/s/ Arthur M. Blank President & CEO April 20, 2000
- ---------------------------------- and Director
(Arthur M. Blank) (Principal Executive Officer)
/s/ Ronald M. Brill Executive Vice President,
- ---------------------------------- Chief Administrative Officer, Assistant April 20, 2000
(Ronald M. Brill) Secretary and Director
/s/ Dennis Carey Executive Vice President and April 20, 2000
- ---------------------------------- Chief Financial Officer (Principal Financial
(Dennis Carey) Officer)
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Signature Title Date
--------- ----- ----
/s/ Carol B. Tome Senior Vice President-Finance April 20, 2000
- ---------------------------------- and Accounting (Principal
(Carol B. Tome) Accounting Officer)
* Director
- ----------------------------------
(Frank Borman)
* Director
- ----------------------------------
(John L. Clendenin)
* Director
- ----------------------------------
(Berry R. Cox)
* Director
- ----------------------------------
(William Davila)
* Director
- ----------------------------------
(Milledge A. Hart, III)
* Director
- ----------------------------------
(Bonnie G. Hill)
* Director
- ----------------------------------
(Kenneth G. Langone)
* Director
- ----------------------------------
(M. Faye Wilson)
* The undersigned, by signing his name hereto, does hereby sign this
report on behalf of each of the above-indicated directors of the
Registrant pursuant to powers of attorney, executed on behalf of each
such director.
By: /s/ Arthur M. Blank
-----------------------------------
(Arthur M. Blank, Attorney-in-fact)
32
35
EXHIBIT INDEX
3.2 By-laws, as amended and restated.
10.2 Assignment and Acceptance of the Credit Agreement dated
February 23, 2000 by and among The Home Depot, Inc., the banks
party thereto, Bank of America, N.A., as Administrative Agent,
Wachovia Bank, N.A., as Syndication Agent, and First Union
National Bank and Bank of New York, as Co-Documentation
Agents.
10.3 Assignment and Acceptance of the Credit Agreement dated March
31, 2000 by and among The Home Depot, Inc., the banks party
thereto, Bank of America, N.A., as Administrative Agent,
Wachovia Bank, N.A., as Syndication Agent, and First Union
National Bank and The Bank of New York, as Co-Documentation
Agents.
13 The Registrant's Annual Report to Stockholders for the fiscal
year ended January 30, 2000. Only those portions of said
report which are specifically designated in this Form 10-K as
being incorporated by reference are being electronically filed
pursuant to the Securities Exchange Act of 1934.
23 Consent of Independent Auditors.
24 Special Powers of Attorney authorizing execution of this Form
10-K Annual Report have been granted and are filed herewith as
follows:
Power of Attorney from Frank Borman.
Power of Attorney from John L. Clendenin.
Power of Attorney from Berry R. Cox.
Power of Attorney from William S. Davila.
Power of Attorney from Milledge A. Hart, III.
Power of Attorney from Bonnie G. Hill.
Power of Attorney from Kenneth G. Langone.
Power of Attorney from M. Faye Wilson.
27 Financial Data Schedule. [FILED ELECTRONICALLY WITH SEC ONLY.]
- ----------
+Management contract or compensatory plan or arrangement required to be filed as
an exhibit to this form pursuant to Item 14(c) of this report.