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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 FEBRUARY 2, 2003
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.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
95-3261426
(I.R.S. Employer Identification No.)
2455 PACES FERRY ROAD, ATLANTA, GEORGIA 30339-4024
(Address of Principal Executive Offices, including 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
-------------------------------------- -----------------------
Common Stock, $.05 Par Value Per Share 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 and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The aggregate market value of the Common Stock of the Registrant held
by nonaffiliates of the Registrant on August 2, 2002 was $64.5 billion.
The number of shares outstanding of the Registrant's Common Stock as
of April 1, 2003 was 2,293,783,938 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2002 Annual Report to Stockholders are
incorporated by reference in Part II. Portions of the Registrant's Proxy
Statement for the 2003 Annual Meeting of Stockholders to be held on May 30,
2003, are incorporated by reference in Part III.
CAUTIONARY STATEMENT PURSUANT TO THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements made herein regarding strategic alliances with suppliers,
implementation of store initiatives, store openings and capital expenditures
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to various risks
and uncertainties that could cause actual results to differ materially from our
historical experience and our present expectations. These risks and
uncertainties include, but are not limited to, fluctuations in and the overall
condition of the U.S. economy, stability of costs and availability of sourcing
channels, conditions affecting new store development, our ability to implement
new technologies and processes, our ability to attract, train and retain
highly-qualified associates, unanticipated weather conditions, the impact of
competition and the effects of regulatory and litigation matters. You should
not place undue reliance on such forward-looking statements as such statements
speak only as of the date on which they are made. Additional information
concerning these and other risks and uncertainties is contained in our periodic
filings with the Securities and Exchange Commission.
PART I
ITEM 1. BUSINESS
The Home Depot, Inc. ("Home Depot" or the "Company") is the world's largest
home improvement retailer and the second largest retailer in the United States,
based on net sales volume for fiscal 2002. At the end of the fiscal year ended
February 2, 2003 ("fiscal 2002"), we were operating 1,532 stores. Most of our
stores are either Home Depot(R) stores or EXPO Design Center(R) stores. A
description of each of these types of stores is as follows:
- HOME DEPOT STORES: Home Depot stores sell a wide assortment
of building materials and home improvement and lawn and
garden products and provide a number of services. Home Depot
stores average approximately 108,000 square feet of enclosed
space, with an additional approximately 22,000 square feet in
the outside garden area. At the end of fiscal 2002, we had
1,471 Home Depot stores located throughout the United States
(including Puerto Rico), Canada and Mexico. In February 2002,
the Company sold its four stores in Argentina.
- EXPO DESIGN CENTER STORES: EXPO Design Center stores sell
products and services primarily for home decorating and
remodeling projects. Unlike Home Depot stores, EXPO Design
Center stores do not sell building materials and lumber. EXPO
Design Center stores offer interior design products, such as
kitchen and bathroom cabinetry, soft and hard flooring,
appliances, window treatments, lighting fixtures and
installation services. An average EXPO Design Center has
approximately 100,000 square feet of enclosed space. At the
end of fiscal 2002, we were operating 52 EXPO Design Center
stores in the United States.
In addition to Home Depot and EXPO Design Center Stores, we also have two new
store formats focused on the professional customer called Home Depot Supply and
Home Depot Landscape Supply. At the end of fiscal 2002, we were operating five
Home Depot Supply stores and three Home Depot Landscape Supply stores. We also
have one test store located in Texas called The Home Depot Floor Store(SM) that
sells only flooring products.
We operate four wholly-owned subsidiaries, Georgia Lighting, Inc., Apex Supply
Company, Inc., Your "other" Warehouse, Inc. and HD Builder Solutions Group,
Inc. Georgia Lighting(R), a specialty lighting designer, distributor and
retailer, has five showroom locations in Georgia. Apex Supply
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Company is a wholesale supplier of plumbing, HVAC, appliances and other related
professional products with 23 locations in Florida, Georgia, South Carolina and
Tennessee. Your "other" Warehouse(R) is a plumbing distributor that focuses on
special order fulfillment through its five distribution centers and one call
center located in Louisiana and Nevada. HD Builder Solutions Group, Inc.
provides products and arranges flooring installation services for professional
homebuilders through 16 locations in Maryland, Virginia, New Jersey, Ohio,
Pennsylvania, Kentucky, Florida, Colorado and Arizona. This business was
acquired in October 2002 when the Company acquired substantially all of the
assets of FloorWorks, Inc. and Arvada Hardwood Floor Company, and all of the
common stock of Floors, Inc.
In addition to these subsidiaries, we offer products through two direct
marketing subsidiaries. Maintenance Warehouse(R), a wholly-owned subsidiary, is
a direct marketer of maintenance, repair and operations products serving
primarily the multi-family housing and lodging facilities management market.
The company fills orders through its 21 distribution centers, which are located
in the United States. National Blinds & Wallpaper(SM), a wholly-owned subsidiary
operating under the name Designplace Direct(SM), is a mail order service for
wallpaper, custom window treatments and rugs.
The Home Depot, Inc. is a Delaware corporation that was incorporated in 1978.
Our Store Support Center (corporate office) is located at 2455 Paces Ferry
Road, Atlanta, Georgia 30339-4024. The telephone number is (770) 433-8211.
We maintain an internet website at www.homedepot.com. We make available on the
website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, as soon as reasonably practicable after filing such
material electronically with, or furnishing such material to, the Securities
and Exchange Commission.
We have included our website addresses throughout this filing only as textual
references. The information contained on our websites is not incorporated by
reference into this Form 10-K.
RETAIL BUSINESSES
HOME DEPOT STORES
OPERATING STRATEGY. The operating strategy of Home Depot is to offer a broad
assortment of high-quality merchandise and services 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 is very important to our marketing approach and our
ability to maintain customer satisfaction. We regularly check our competitors'
prices to ensure that our prices are competitive within each market.
CUSTOMERS. Home Depot stores serve three primary customer groups:
- 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.
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- DO-IT-FOR-ME ("D-I-F-M") CUSTOMERS: These customers are
typically homeowners who purchase materials themselves and
hire third parties to complete the project and/or
installation. We offer these customers installation services
for a variety of products through third party contractors.
- PROFESSIONAL CUSTOMERS: These customers are professional
remodelers, general contractors, repairmen and tradesmen. In
many stores 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
products during the year, including both national brand name and proprietary
items. The following table shows the percentage of revenues of each major
product group (and related services) for each of the last three fiscal years:
Percentage of Revenues for
Fiscal Year Ended
----------------------------------
Feb. 2, Feb. 3, Jan. 28,
Product Group 2003 2002 2001
- ------------- ------- ------- --------
Building materials, lumber and millwork .... 23.1% 23.6% 23.6%
Plumbing, electrical and kitchen ........... 28.7 28.1 27.6
Hardware and seasonal ...................... 27.4 27.6 28.3
Paint, flooring and wall coverings ......... 20.8 20.7 20.5
----- ----- -----
Total ...................................... 100.0% 100.0% 100.0%
===== ===== =====
We buy our store merchandise from vendors located throughout the world. 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 a global sourcing merchandise program to source high-quality
products directly from overseas manufacturers, which gives our customers a
broader selection of products and better values while enhancing our gross
margin. Our product development merchants travel internationally to identify
opportunities to purchase items directly for our stores. Additionally, we have
opened two sourcing offices located in Shanghai and Shenzhen, China, and have a
product development merchant located in Bonn, Germany. These initiatives enable
us to improve product quality, to import products not currently available to
our customers and to offer products at a lower price than would otherwise be
available if purchased from third-party importers. We currently source products
from more than 500 factories in approximately 40 countries.
To complement and enhance our current product selection, we have formed
strategic alliances and exclusive relationships with certain suppliers to
market products under a variety of well-recognized brand names. At the end of
fiscal year 2002, we offered a number of proprietary and exclusive brands,
including, but not limited to, John Deere(R) lawn and garden tractors;
Thomasville(R) kitchen and bathroom cabinets; Silestone(R) countertops;
RIDGID(R) power tools; Behr Premium Plus(R) paint; Mill's Pride(R) cabinets;
Husky(R) hand tools; GE SmartWater(TM) water heaters; Philips(R) light bulbs;
Toro(R) lawn mowers; Vigoro(R) lawn care products GAF(R) roofing products,
Honda(R) lawn mowers and Lithonia Lighting(TM) fluorescent lighting products.
In the future, we may consider additional strategic alignments with other
suppliers and will continue to assess opportunities to expand the range of
products available under brand names that are exclusive to the Home Depot.
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AT-HOME SERVICES. Home Depot stores offer a variety of installed sales and home
maintenance programs through its At-Home Services(R) business. This service
targets the Do-It-For-Me customer who will select and purchase materials for a
project and prefers the Company to arrange professional installation. We
implement our installed sales programs through independent qualified
contractors and strategic partners in the U.S., Canada and Mexico. These
programs include the installation of products that are sold in our stores, such
as carpeting, hard flooring, cabinets and solid surface countertops, as well as
the installation by strategic partners of products such as roofing, generators
and furnace and central air systems.
STORE-RELATED PROGRAMS. 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 and programs aimed at supporting store operations during
fiscal 2002, including:
- Professional Business Customer Initiative. We are committed
to being the supplier of choice to a variety of professional
customers, including remodelers, carpenters, plumbers,
painters, electricians, building maintenance professionals
and designers. During fiscal 2002, we continued to expand our
"Pro" initiative, which adds service-related programs to our
stores that are designed to increase sales to professional
customers. Stores participating in the program have 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 delivery. Additionally, during the hours when
professionals typically shop, these stores have assigned
sales associates in certain departments to assist these
customers. To better serve our professional customers, we
have also increased quantities of existing products typically
purchased by professionals in bulk quantities, and we offer
certain items in each department packaged in bulk to offer
additional savings. While aimed at the professional customer,
this program also enables 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. 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 2002,
we had expanded the Pro initiative into 1,135 stores, 600 of
which were added during the year. We anticipate that during
fiscal 2003, we will expand this initiative to more than 204
additional stores.
- SPI Program. During fiscal 2002, we implemented the Service
Performance Improvement or "SPI" program in all of our new
stores. Through the program, certain associates are assigned
specific tasks, allowing others to focus on assisting
customers. Additionally, we schedule associates to receive
shipments and stock merchandise when our stores are closed or
during hours when they have fewer customers.
- Appliance Sales. During fiscal 2002, we continued the
roll-out of our appliance sales program to our stores in the
U.S. Through this program we sell appliances manufactured by
General Electric(R), Maytag(R) and other manufacturers
through 1,500 to 2,000 feet of dedicated appliance selling
space in selected stores. We display and stock the more
popular appliances in our stores and offer the ability to
special order over 2,300 additional products through computer
kiosks located in the stores. Through the computer kiosks 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. 743 of our stores had appliance showrooms at
the end of fiscal 2002, and we anticipate adding the
appliance sales program to an additional 671 stores by the
end of fiscal 2003.
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- Designplace Initiative. We continued to implement our
Designplace initiative during fiscal 2002, rolling the
initiative out to an additional 668 stores. The initiative
offers an enhanced shopping experience to our design and
decor customers by providing personalized service from
specially trained associates and enhanced merchandise
selection in an attractive setting. We expect to add the
Designplace initiative to an additional 556 stores during
fiscal 2003.
- Tool Rental. As part of our efforts to satisfy a broad range
of the needs of our professional and 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
rent the tools on an hourly, daily, weekly or monthly basis.
Our associates who work in the tool rental area receive
special training in the use and maintenance of the tools. At
the end of fiscal 2002, we offered tool rental service in 601
stores compared to 466 stores at the end of fiscal 2001. By
the end of fiscal 2003, we anticipate having tool rental
services in approximately 800 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.
- Customer Contact Center. During fiscal 2001, we began testing
the use of a customer contact center to assist with
expediting special orders and managing installation projects.
The customer contact center also supports the sale and
installation of water heaters and HVAC equipment nationwide.
Calls come into the center where customer service
representatives assist customers with product selection and
scheduling installations. The orders are then fulfilled
through our stores. We believe that the customer contact
center will allow us to provide better customer service, both
in our stores and on the phone, while reducing costs. We
anticipate continuing this test during fiscal 2003.
- 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 that focus on
D-I-Y projects, such as installing garbage disposals, laying
patio pavers or building a deck. In addition to the clinics,
we offer Home Depot University(SM), which 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 Workshop(SM)
program, children are instructed in tool safety and complete a
small building project, such as 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 2002, we were operating 1,370 Home Depot
stores in the United States, including Puerto Rico. During fiscal 2002, we
opened 167 new Home Depot stores in the U.S. Although these new store openings
occurred primarily in existing markets, we continued our geographic expansion
by opening stores in a number of new markets.
To increase customer service levels, gain incremental sales and enhance
long-term market penetration, we often open new stores near the edge of 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
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convenient locations. At the end of fiscal 2002, we believe that approximately
21% of our stores were cannibalized by certain new stores.
Canada. At the end of fiscal 2002, we were operating 89 Home Depot stores in
seven Canadian provinces. Of these stores, 11 were opened during fiscal 2002.
Mexico. In June 2002, we purchased the assets of Madereria Del Norte, a
four-store chain of home improvement stores in Juarez, Mexico. At the end of
fiscal 2002, we were operating 12 stores in Mexico.
HOME DEPOT URBAN STORES
We opened our first two urban stores in fiscal 2002. The first opened in
Brooklyn with approximately 61,000 square feet and the second opened in Staten
Island with approximately 79,000 square feet. These stores will carry
approximately 20,000 items, which are selected specifically for the
neighborhood in which the store is located. We plan to open two other urban
stores in fiscal 2003. We are continuing to analyze other urban and
high-density suburban markets throughout the country for additional sites to
test this smaller store concept.
EXPO DESIGN CENTER STORES
OPERATING STRATEGY. The operating strategy behind our EXPO Design Center stores
is to be a complete home decorating and remodeling resource. Each of these
stores offers 10 specialty businesses under one roof and features design
showrooms with full-size displays to help customers visualize the end result of
possible interior design projects. To assist our customers, we also offer
complete project management and installation services. Accordingly, we employ
associates who have expertise in designing, planning and completing decorating
and remodeling projects.
CUSTOMERS. Typically, customers at EXPO Design Center stores are middle to
upper income D-I-F-M customers, who purchase merchandise for installation by
others. Accordingly, we offer installation services for most of the products we
sell at these stores. Additionally, our trade customers are generally custom
builders, remodelers, designers and architects.
PRODUCTS. EXPO Design Center stores offer interior design products and
installation services for kitchens, baths and appliances, as well as products
for lighting, decorating and storage and organization projects.
EXPO Design Center stores offer a broad range of merchandise in an effort to
meet 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
products available at EXPO Design Center stores represent a broader and more
unique assortment of merchandise. 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.
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, as well as design professionals to help our customers design
lighting, tile and flooring, custom upholstery and bedding, 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
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contractors to complete the work. We also offer special trade services, such as
dedicated outside sales people and designers who are dedicated to helping
professional customers.
STORE GROWTH. At the end of fiscal 2002, we were operating 52 EXPO Design
Center stores, 11 of which were opened during 2002. We currently anticipate
opening two additional EXPO Design Center stores in 2003. These new stores are
expected to average approximately 90,000 square feet and will incorporate a
showroom environment.
We currently plan to open total of 206 stores during fiscal 2003, including
Home Depot stores, EXPO Design Center stores and other formats.
OTHER BUSINESSES
APEX SUPPLY COMPANY
Apex Supply Company is a wholesale distributor of plumbing, HVAC, appliances
and other related products. The Company employs approximately 570 associates
through 23 locations in Florida, Georgia, South Carolina and Tennessee. Apex
assisted us with the development of our HVAC installation program.
GEORGIA LIGHTING
Georgia Lighting is a specialty lighting designer, distributor and retailer
based in Atlanta, Georgia. The company, which has five showroom locations,
offers an extensive collection of decorative lighting fixtures, supplies,
accents and accessories to commercial and retail customers. We believe that the
acquisition of Georgia Lighting has allowed us to strengthen our sourcing,
training and merchandising in lighting for both The Home Depot and EXPO Design
Center stores. In fiscal 2003, Georgia Lighting will transfer its retail
operations to EXPO Design Center and its distribution operations to Your
"other" Warehouse.
HD BUILDER SOLUTIONS GROUP
In October 2002, we became the largest residential floor covering company
servicing the new home construction industry through our acquisition of Floors,
Inc., Arvada Hardwood Floor Company and FloorWorks, Inc. As a result of these
acquisitions, HD Builder Solutions Group has relationships with each of the top
10 homebuilders in the United States, as well as other regional and local
homebuilders. Through these operations we manage the complete new-home flooring
process, from helping the homebuilder's customer make flooring design choices
to scheduling and overseeing the installation of flooring for entire housing
developments. We currently conduct operations from 16 facilities and employ
approximately 1,100 associates.
HOME DEPOT LANDSCAPE SUPPLY
During fiscal 2002, we opened three Home Depot Landscape Supply stores in the
Atlanta, Georgia market. Home Depot Landscape Supply locations are designed to
extend the reach of Home Depot's garden departments, focusing on the
professional landscapers and avid do-it-yourself garden enthusiasts. Each
location has a heated/cooled space of about 12,000 square feet, complete with a
tool rental department, in front of a covered greenhouse. Each site also
features a 1 to 3 acre fenced-in "Pro-Yard." During fiscal 2003, we plan to
open six additional stores in Georgia and Texas.
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HOME DEPOT SUPPLY
Home Depot Supply stores offer personal service to contractors and other
professional customers by providing experienced account managers, expanded
assortments, greater quantities of merchandise and expanded delivery services.
At the end of fiscal 2002, we were operating 5 of these stores in California,
Arizona, Texas and Colorado.
MAINTENANCE WAREHOUSE
Our Maintenance Warehouse subsidiary is a leading distributor of maintenance,
repair and operating supplies to the multi-family housing and lodging
industries. Through its catalogs and direct mail programs, Maintenance
Warehouse offers approximately 12,500 items. Maintenance Warehouse, which
employs approximately 1,400 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. Orders are filled through one of Maintenance Warehouse's 21
distribution centers and are shipped for same-day or next-day delivery to
customers across the United States.
NATIONAL BLINDS & WALLPAPER
National Blinds and Wallpaper sells decor products through telephone sales
under the name Designplace Direct(SM). Designplace Direct markets primarily
through Home Depot advertising and direct mail pieces. Designplace Direct
maintains no inventory, as orders are shipped directly from the supplier to the
customer.
THE HOME DEPOT FLOOR STORE
During fiscal 2000, we opened a test store in Plano, Texas that offers only
flooring products. The Home Depot Floor Store's merchandise assortment includes
carpet, ceramic, wood, laminate and vinyl flooring. We continue to analyze the
results of this test.
YOUR "OTHER" WAREHOUSE
Acquired in November 2001, Your "other" Warehouse is a distributor of special
order faucet and plumbing fixture products, serving both Home Depot and other
third party resellers. Your "other" Warehouse carries over 36,000 products from
over 100 plumbing vendors, including Kohler(R), American Standard(R) and other
major manufacturers. Your "other" Warehouse operates five distribution
facilities and a call center.
INTERNET
Our primary website is located at www.homedepot.com. The site offers an
assortment of products available for sale on-line, information about projects
and our products, calculators to estimate the amount and kinds of materials
needed to complete a project, as well as information about our Company and
links to our other on-line businesses. As with our stores, the focus of our
website is customer service. We believe our Internet site provides us with an
opportunity to build relationships with our customers, educate our customers,
improve service, provide convenient shopping from home and increase store
sales. Customers may also order select products from www.expo.com, the website
of our EXPO Design Center stores, and obtain information about these stores and
the products and services they offer.
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Through www.homedepot.com, we offer an assortment of approximately 18,000 items
for sale. These items are chosen based on their potential for online sales and
their ability to be delivered via United Parcel Service(R) and FedEx(R).
Managing product selection and pricing nationally allows us to promote the same
product and price to all www.homedepot.com visitors and allows us to leverage
certain online marketing channels that reach across many or all Home Depot
store pricing markets.
During fiscal 2002, we enhanced the content of the website associated with our
At-Home Services Division to describe each of the services offered and added
the capability to allow potential customers to conveniently sign up online for
in-home consultations. We anticipate continuing to improve the quality and
quantity of services-related content on the site.
In fiscal 2002, the website www.homedepot.ca was launched to service our
Canadian customers. The site is informational only and provides information on
The Home Depot, a store locator, as well as a link to www.homedepot.com. The
website is bilingual (English and French) to service our customers in Canada's
two official languages.
STORE SUPPORT SERVICES
INFORMATION TECHNOLOGIES. During fiscal 2002, the Company increased its focus
on the information technology needs of our growing business and family of
companies. Currently we provide business information through extensive
fault-tolerant, high-speed networks and through an array of approximately
135,000 personal computers, 7,000 servers and 125,000 other network-connected
devices. These systems provide store, corporate, financial, merchandising and
other back office function support.
During fiscal 2002, the Company began the installation of self-checkout
systems, as well as a total replacement and upgrade of our POS systems. In
addition, store managers received new tools for labor planning, staffing,
scheduling and workload management to better allocate associates to support
customer service and improve execution of in-store initiatives. The Company
also deployed automated tools to assist our merchants with assortment planning,
pricing, markdown management and space management. We have also implemented an
enterprise-wide data warehouse to capture, manage and report information
relating to our customers and associates. We believe these system enhancements
will provide more efficient customer check-out and returns, store-based
inventory management, rapid order replenishment, labor planning support and
improved analytical tools.
While our technology investments are primarily focused on our stores, we are
also making technology improvements in logistics and the administrative
functions of the Company. During fiscal 2002, we continued multi-year projects
to upgrade our human resources and enterprise financial systems. We believe
these investments will help us manage and control the growth and increasing
complexity of our business, as well as provide more comprehensive management
reporting.
ASSOCIATE DEVELOPMENT. At the end of fiscal 2002, we employed over 280,000
associates, of whom approximately 17,000 were salaried, with the remainder
compensated on an hourly basis. Approximately 63% of our associates are
employed on a full-time basis. We believe that our employee relations are good.
To attract and retain qualified personnel, we seek to maintain competitive
salary and wage levels in each market area. Store managers have access to
information regarding competitive salary rates in their respective markets.
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We develop our training programs in a continuing effort to service the needs of
our associates. These programs, including mandatory product knowledge training
classes, are designed to increase associates' knowledge of merchandising
departments and products, and to educate, develop and test the skills of those
associates who are interested in being promoted. Because we 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
managers to discuss the development of assistant managers and certain
department heads and consider possible candidates for promotion.
We have implemented programs in our stores and divisional offices to ensure we
hire and promote the most qualified associates in a non-discriminatory way. One
of the most significant programs we have is our annual Human Resources Review
process, which assesses leaders and teams, reviews succession planning and
executive pipeline, high potential associates, staffing, retention, diversity,
training and compliance. The program is closely linked to our Performance
Management Process, which evaluates the performance, leadership and potential
of all associates. We also maintain a list of qualified associates who are
interested in new assignments and of qualified outside applicants that can be
reviewed when positions become available.
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
Olympic(R) games, The Home Depot Center, CBS(R) College Football and home and
garden shows. We extend our reach and educate our customers through proprietary
publications, such as the 1-2-3(SM) home improvement book series and Style
Ideas(SM) magazine.
We execute our marketing campaigns on both a national and local basis. Because
the vast majority of 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.
CREDIT SERVICES. Home Depot offers credit purchase programs through third-party
credit providers to both professional customers and D-I-Y and D-I-F-M
customers. In fiscal 2002, 3.3 million of these new Home Depot credit accounts
were opened, bringing the total number of Home Depot account holders to
approximately 12 million. Proprietary credit card sales accounted for
approximately 23% of all Home Depot sales in fiscal 2002. We also offer an
unsecured Home Improvement Loan that gives our customers the opportunity to
purchase products and services in our stores. We believe that this loan program
not only increases large sales, such as kitchen and bath remodels, but also
generates incremental sales from our customers.
INTELLECTUAL PROPERTY. Through our wholly-owned subsidiary, Homer TLC, Inc., we
have registered or applied for registration for a variety of trade names,
service marks, trademarks and copyrights for use in our business, including The
Home Depot(R), the "Homer"(R) character, EXPO Design Center(R) stores, Hampton
Bay(R) fans, lighting and accessories, Glacier Bay(R) toilets, sinks and
faucets, Pegasus(R) faucets and bath accessories, Traffic Master(R) carpet,
Commercial Electric(R) lighting fixtures, Workforce(R) tools, tool boxes and
shelving and PremiumCut(R) lumber. We regard our intellectual property as
having significant value and as being an important factor in the marketing of
our Company and our stores. We are not aware of any facts that could be
expected to negatively impact our intellectual property.
11
QUALITY ASSURANCE PROGRAM. For our globally sourced products that we directly
import, we have a quality assurance program. Through this program, we have
established criteria for vendor or factory and product performance, which
measure factors including product quality, timely shipments and fill rate. The
performance record is made available to the factories to allow them to strive
for improvement. The quality assurance program has four components:
- we authorize laboratories to test products prior to purchase
to ensure compliance with requirements;
- we develop and document product requirements, based on test
results, applicable national and international standards and
features determined by our merchants;
- we assess the capability of factories to manufacture quality
products that meet the expectations we have developed, as
well as to assess their compliance with Home Depot policies;
and
- we routinely assess product quality and factory performance
by conducting inspections at the factory on shipments to
assure continued compliance with our product requirements.
LOGISTICS. We use several mechanisms to lower distribution costs and increase
our efficiencies. Import distribution centers process our globally-sourced
merchandise. At the end of fiscal 2002, we had eight import distribution
centers located in the United States and Canada. At the end of fiscal 2002, we
also had 30 lumber distribution centers in the United States and Canada to
support the lumber demands of our stores. During fiscal 2002, we opened seven
transit facilities, increasing our transit facility network to ten. At these
facilities, we receive merchandise from manufacturers and immediately cross
dock it onto trucks for delivery to our stores. We plan to add between four and
six transit facilities in fiscal 2003. The transit facility network will
provide service to all stores in the continental United States and to eastern
Canada by the end of 2003. We also operate other specialty distribution centers
for specific merchandise needs. The distribution centers and transit facilities
allow us to provide high service levels to our stores at relatively low costs.
At the end of fiscal 2002, approximately 30% of the merchandise shipped to our
stores was processed through our network of distribution centers and transit
facilities. As our networks evolve, we expect to increase the percent of
merchandise processed by our facilities. The remaining merchandise will be
shipped directly from our vendors to our stores.
In addition to replenishing merchandise supplies at our stores, we also provide
delivery services directly to our customers. We continually assess
opportunities to improve our distribution network to better satisfy the needs
of our stores and our customers and to lower costs.
SAFETY. We are committed to maintaining a safe environment for our customers
and associates. Our Safety Department consists of a team of directors and
managers in the field focused primarily on education and training, as well as
an Atlanta-based team of dedicated safety professionals who evaluate and
implement policies and processes Company-wide. Our Safety Department is
responsible for managing our Company's safety program, which is implemented in
conjunction with store-level associates, store and Division management, and the
Human Resources and Merchandising Departments. The primary elements of our
safety program are (1) establishment of safety standards and processes for all
aspects of store operations and merchandising, (2) effective training of
appropriate associates on all applicable standards and (3) monitoring
compliance with established safety standards.
12
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 home improvement stores, electrical,
plumbing and building materials supply houses and lumber yards. 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 the impact on our sales by our competitors. We estimate that
our share of the home improvement industry is approximately 10% and we believe
that we are an effective and significant competitor in our markets.
13
ITEM 2. PROPERTIES
The following tables show locations of the 1,370 Home Depot stores in the
United States and the 101 stores outside of the United States at the end of
fiscal 2002:
U.S. Locations Number of Stores
- -------------- ----------------
Alabama 15
Alaska 2
Arizona 37
Arkansas 5
California 163
Colorado 28
Connecticut 21
Delaware 5
District of Columbia 1
Florida 109
Georgia 56
Hawaii 4
Idaho 8
Illinois 47
Indiana 19
Iowa 6
Kansas 12
Kentucky 11
Louisiana 18
Maine 8
Maryland 35
Massachusetts 33
Michigan 59
Minnesota 25
Mississippi 7
Missouri 23
Montana 5
Nebraska 5
Nevada 14
New Hampshire 12
New Jersey 56
New Mexico 9
New York 76
North Carolina 33
North Dakota 1
Ohio 55
Oklahoma 10
Oregon 15
Pennsylvania 48
Puerto Rico 8
Rhode Island 5
South Carolina 18
South Dakota 1
Tennessee 25
Texas 121
Utah 12
Vermont 2
Virginia 34
Washington 25
Wisconsin 21
Wyoming 2
- -------------------- -----
Total U.S. 1,370
International
Locations Number of Stores
- ------------- ----------------
Canada:
Alberta 10
British Columbia 12
Manitoba 3
Nova Scotia 2
Ontario 49
Quebec 11
Saskatchewan 2
- -------------------- ---
Total Canada 89
Mexico:
Nuevo Leon 3
Chihuahua 4
Distrito Federal 1
Baja California 2
San Luis Potosi 1
Sinaloa 1
- -------------------- -----
Total Mexico 12
14
The following table shows the number of the EXPO Design Center stores in the
U.S. at the end of fiscal 2002:
U.S. Locations Number of Stores
- -------------- ----------------------
California 14
Colorado 1
Florida 5
Georgia 3
Illinois 5
Kansas 1
Maryland 2
Massachusetts 2
Michigan 3
Missouri 1
New Jersey 3
New York 5
Tennessee 1
Texas 5
Virginia 1
- -------------------------- --
Total EXPO Design Center 52
Additionally, at the end of fiscal 2002, we were operating five Georgia
Lighting showroom locations that are open to the public, all of which are
located in Georgia; 23 Apex Supply locations, of which two are located in
Florida, 15 are located in Georgia, four are located in Tennessee and two are
located in South Carolina; five Home Depot Supply Stores located in California,
Arizona, Texas and Colorado; three Home Depot Landscape Supply stores located
in Georgia; one The Home Depot Floor Store location in Texas; and six Your
"other" Warehouse locations in Louisiana and Nevada.
HD Builder Solutions Group conducts its operations through 16 distribution
centers located in Arizona, Colorado, Florida, Kentucky, Maryland, New Jersey,
Ohio, Pennsylvania and Virginia. Maintenance Warehouse conducts its operations
through 21 distribution centers located in Arizona, California, Colorado,
Connecticut, Florida, Georgia, Maryland, Missouri, Ohio, Texas, Virginia,
Washington and Wisconsin.
Of our 1,532 Home Depot stores, EXPO Design Center stores, Home Depot Landscape
Supply, Home Depot Supply and The Home Depot Floor Store, at fiscal 2002 year
end, approximately 82% were owned (including those owned subject to a ground
lease) consisting of approximately 137,001,000 square feet, and approximately
18% were leased consisting of approximately 29,122,000 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. 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.
Our executive, corporate staff and financial offices occupy approximately
1,774,000 square feet of leased and owned space in Atlanta, Georgia. In
addition, at the end of fiscal 2002, we occupied an aggregate of approximately
3,301,000 square feet, of which approximately 759,000 square feet is owned and
approximately 2,542,000 square feet is leased, for divisional store support
centers, subsidiary store support centers and subsidiary customer support
centers. At the end of fiscal 2002,
15
the primary support centers were located in Orange, California; Tampa, Florida;
Atlanta, Georgia; Arlington Heights, Illinois; Canton, Massachusetts; South
Plainfield, New Jersey; Dallas, Texas; Tukwila, Washington; Scarborough,
Ontario and Quebec, Canada; Monterrey and Juarez, Mexico; and Shenzen and
Shanghai, China.
At the end of fiscal 2002, we utilized approximately 12,398,000 square feet of
warehousing and distribution space, of which approximately 3,166,000 is owned
and approximately 9,232,000 is leased.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of its business, but is not currently a party to any legal proceeding
that management believes will have a material adverse effect on our
consolidated financial position or our results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2002.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to
the section entitled "Corporate and Stockholder Information" in the Company's
2002 Annual Report, and is also attached in Exhibit 13.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information required by this item is incorporated herein by reference to
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Selected Consolidated Statements of
Earnings Data" in the Company's 2002 Annual Report, and attached in Exhibit 13
hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information required by this item is incorporated herein by reference to
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition" in the Company's 2002 Annual Report, and is
also attached in Exhibit 13 hereto.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference to
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Quantitative and Qualitative Disclosures
about Market Risk" in the Company's 2002 Annual Report, and is also attached in
Exhibit 13 hereto.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to
the sections entitled "Consolidated Statements of Earnings," "Consolidated
Balance Sheets," "Consolidated Statements of Stockholders' Equity and
Comprehensive Income," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements" and "Independent Auditors' Report" in the
Company's 2002 Annual Report, and is also attached in Exhibit 13 hereto.
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
Information concerning the directors of the Company and compliance with Section
16(a) of the Securities and Exchange Act of 1934, as amended, is incorporated
herein by reference to the sections entitled "Board of Directors Information,"
"Election of Directors" and "General - Compliance with Section 16(a) Beneficial
Ownership Reporting Requirements," in the Company's Proxy Statement for the
Annual Meeting of Stockholders to be held on May 30, 2003 (the "Proxy
Statement"). The Company intends to file the Proxy Statement within 120 days
after the end of its fiscal year.
EXECUTIVE OFFICERS
Executive officers of The Home Depot are elected by, and serve at the pleasure
of, the Board of Directors. At the end of fiscal 2002, the Executive Officers
of the Company were as follows:
ROBERT L. NARDELLI, age 54, has been President and Chief Executive Officer
since December 2000 and Chairman since January 1, 2002. Prior thereto, Mr.
Nardelli served as President and Chief Executive Officer of GE Power Systems, a
division of General Electric Company, since 1995. Mr. Nardelli serves as a
director of The Coca-Cola Company.
FRANCIS S. BLAKE, age 53, has been Executive Vice President - Business
Development and Corporate Operations since March 2002. He was formerly the
Deputy Secretary of Energy from May 2001 until March 2002. From June 2000 until
May 2001 he was a Senior Vice President at General Electric Company and was
Vice President of GE Power Systems, a division of General Electric Company,
from February 1996 until June 2000.
JOHN H. COSTELLO, age 55, has been Executive Vice President - Chief Marketing
Officer since November 2002. He was previously the Advisor and Chief Global
Marketing Officer for Yahoo! from September 2001 until November 2002. From
September 1999 until August 2001 he was the Chief Executive Officer of MVP.com.
He was President of AutoNation from December 1998 until August 1999 and Senior
Executive Vice President of Sears from April 1993 until December 1998.
ROBERT P. DERODES, age 52, has been Executive Vice President - Information
Technology and Chief Information Officer since February 2002. He previously
served as President and Chief Executive Officer of Delta Technology, Inc. and
Chief Information Officer for Delta Airlines, Inc. from September 1999 until
February 2002. From February 1995 until September 1999 he was Senior
17
Vice President - Operations and Technology for Delta Technology, Inc. From
February 1995 to September 1999, he served as Senior Technology Officer at
Citibank for the Card Products Group.
DENNIS M. DONOVAN, age 54, has been Executive Vice President - Human Resources
since April 2001. From October 1998 until that time he served as Senior Vice
President - Human Resources of Raytheon Company, and from February 1986 until
September 1998 he served as Vice President - Human Resources of GE Power
Systems, a division of General Electric Company.
JERRY W. EDWARDS, age 61, has been Executive Vice President - Merchandising
since February 2002. From August 2001 until that time he was Senior Vice
President - Merchandising. He served as President of the South American
Division from November 2000 until August 2001 and President of the Southwest
Division from January 1999 until November 2000. From January 1997 until
December 1998 he was Vice President - Merchandising of the Southwest Division.
FRANK L. FERNANDEZ, age 52, has been Executive Vice President - Corporate
Secretary & General Counsel since April 2001. From 1990 until that time he was
managing partner at Fernandez, Burstein, Tuckzinski and Collura, P.C., in
Albany, New York.
TROY A. RICE, age 39, has been Senior Vice President - Operations since August
2002. He was previously President of the Northwest Division from August 2001
until August 2002. From July 1999 until August 2001 he was a Regional Vice
President. From August 1996 to July 1999 he was a District Manager.
CAROL B. TOME, age 46, has been Executive Vice President and Chief Financial
Officer since May 2001, and prior thereto had been Senior Vice President -
Finance and Accounting/Treasurer since February 2000. From 1995 until 2000, she
served as Vice President and Treasurer. From 1992 until 1995, when she joined
The Home Depot, Ms. Tome was Vice President and Treasurer of Riverwood
International Corporation. Ms. Tome serves as a director of United Parcel
Service, Inc.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation," "Compensation Committee Report,"
"Board of Directors Information" and "General - Compensation Committee
Interlocks and Insider Participation" in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the
sections entitled "Beneficial Ownership of Common Stock" and "Executive
Compensation" in the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation" and "General - Insider Transactions"
in the Company's Proxy Statement.
ITEM 14. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Securities
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange
18
Commission's rules and forms, and that such information is accumulated and
communicated to the Company's management, including the Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
During the 90-day period prior to the date of this report, an evaluation was
performed under the supervision and with the participation of the Company's
Disclosure Committee and management, including the Chief Executive Officer and
the Chief Financial Officer, of the effectiveness of the design and operation
of the Company's disclosure controls and procedures. Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls, and no corrective
actions taken with regard to significant deficiencies or material weaknesses in
such controls, subsequent to the date of our most recent evaluation of internal
controls.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements are incorporated by reference from our
fiscal 2002 Annual Report, as provided in Item 8 hereof:
- Consolidated Statements of Earnings for the fiscal years
ended February 2, 2003, February 3, 2002 and January 28,
2001;
- Consolidated Balance Sheets as of February 2, 2003 and
February 3, 2002;
- Consolidated Statements of Stockholders' Equity and
Comprehensive Income for the fiscal years ended February 2,
2003, February 3, 2002 and January 28, 2001;
- Consolidated Statements of Cash Flows for the fiscal years
ended February 2, 2003, February 3, 2002 and January 28,
2001;
- Notes to Consolidated Financial Statements, and
- Independent Auditors' Report.
(c) Financial Statement Schedules
All schedules are omitted as the required information is inapplicable or the
information is presented in the consolidated financial statements or related
notes.
(c) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the fourth quarter of
fiscal 2002.
19
(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.
The Registrant agrees to furnish a copy of all agreements relating to long-term
debt upon request of the Commission.
*3.1 Amended and Restated Certificate of Incorporation of The Home Depot, Inc., as amended. [FORM 10-Q FOR THE FISCAL
QUARTER ENDED AUGUST 4, 2002, EXHIBIT 3.1]
*3.2 By-laws, as amended and restated. [FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 30, 2000, EXHIBIT 3.2]
*4.1 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]
*4.2 Indenture, dated as of April 12, 2001, between The Home Depot, Inc. and The Bank of New York. [FORM S-4 (FILE NO.
333-61548) FILED MAY 24, 2001, EXHIBIT 4.1]
*4.3 Form of 5-3/8% Note due April 1, 2006 [FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 3, 2002, EXHIBIT 4.2]
*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. [FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 30, 2000, EXHIBIT 10.2]
*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. [FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 30, 2000, EXHIBIT 10.3]
*10.4 +Employee Stock Purchase Plan, as amended. [FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 28, 2001, EXHIBIT 10.5]
*10.5 +Senior Officers' Bonus Pool Plan, as amended. [APPENDIX A TO REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS HELD MAY 26, 1999]
*10.6 +Executive Officers' Bonus Plan. [APPENDIX B TO REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
HELD MAY 27, 1998]
*10.7 +The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan. [FORM 10-Q FOR THE QUARTER ENDED AUGUST 4, 2002, EXHIBIT
10.1]
20
*10.8 +The Home Depot FutureBuilder Restoration Plan. [FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 3, 2002, EXHIBIT 10.10]
*10.9 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.]
*10.10 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]
*10.11 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.]
*10.12 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]
*10.13 +Supplemental Executive Choice Program, effective January 1, 1999. [FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 3,
2002, EXHIBIT 10.15]
*10.14 +Employment Agreement between Robert L. Nardelli and The Home Depot, Inc., dated as of December 4, 2000. [FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 28, 2001, EXHIBIT 10.1]
*10.15 +Promissory Note between Robert L. Nardelli and The Home Depot, Inc. dated as of December 4, 2000. [FORM 10-K FOR THE
YEAR ENDED JANUARY 28, 2001, EXHIBIT 10.18]
*10.16 +Deferred Stock Units Plan and Agreement between Robert L. Nardelli and The Home Depot, Inc., effective as of
September 17, 2001. [FORM 10-Q FOR THE QUARTER ENDED OCTOBER 28, 2001, EXHIBIT 10.2]
*10.17 Commercial Paper Dealer Agreement between Credit Suisse First Boston Corporation, as Dealer, and The Home Depot,
Inc., dated as of January 24, 2001. [FORM 10-K FOR THE YEAR ENDED JANUARY 28, 2001, EXHIBIT 10.19]
*10.18 +Non-Qualified Stock Option and Deferred Stock Unit Plan and Agreement dated as of December 4, 2001. [FORM 10-K FOR
THE YEAR ENDED JANUARY 28, 2001, EXHIBIT 10.20]
21
*10.19 +Agreement between Bernard Marcus and The Home Depot, Inc. dated as of February 22, 2001. [FORM 10-K FOR THE YEAR
ENDED JANUARY 28, 2001, EXHIBIT 10.21]
*10.20 +Employment Agreement between Dennis M. Donovan and The Home Depot, Inc., dated March 16, 2001. [FORM S-4 (FILE NO.
333-61548) FILED MAY 24, 2001, EXHIBIT 10.1]
*10.21 +Employment Agreement between Frank L. Fernandez and The Home Depot, Inc., dated April 2, 2001. [FORM S-4 (FILE NO.
333-61548) FILED MAY 24, 2001, EXHIBIT 10.2]
*10.22 +Deferred Stock Units Plan and Agreement between Frank L. Fernandez and The Home Depot, Inc. dated April 2, 2001.
[FORM S-4 (FILE NO. 333-61548) FILED MAY 24, 2001, EXHIBIT 10.3]
*10.23 +Deferred Stock Units Plan and Agreement between Dennis M. Donovan and The Home Depot, Inc., dated as of May 30,
2001. [FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 3, 2002, EXHIBIT 10.25]
*10.24 +Promissory Note between Dennis M. Donovan and The Home Depot, Inc. dated June 7, 2001. [FORM 10-K FOR THE FISCAL
YEAR ENDED FEBRUARY 3, 2002, EXHIBIT 10.26]
*10.25 +Promissory Note between Frank L. Fernandez and The Home Depot, Inc. dated June 18, 2001. [FORM 10-K FOR THE FISCAL
YEAR ENDED FEBRUARY 3, 2002, EXHIBIT 10.27]
*10.26 +Employment Agreement between Frank Blake and The Home Depot, Inc., effective as of March 9, 2002. [FORM 10-Q FOR THE
QUARTER ENDED NOVEMBER 3, 2002, EXHIBIT 10.1]
*10.27 +Employment Agreement between Robert DeRodes and The Home Depot, Inc., effective as of February 7, 2002. [FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 3, 2002, EXHIBIT 10.2]
*10.28 +Employment Agreement between John Costello and The Home Depot, Inc., effective as of September 28, 2002. [FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 3, 2002, EXHIBIT 10.3]
*10.29 +Separation Agreement and Release between Larry M. Mercer and The Home Depot, Inc., effective as of October 7, 2002.
[FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 3, 2002, EXHIBIT 10.4]
10.30 +Non-Competition Agreement between Home Depot U.S.A., Inc. and Carol Tome dated as of March 24, 2003.
10.31 +Separation Agreement and Release between Home Depot U.S.A., Inc. and Dennis J. Carey effective as of August 21, 2002.
10.32 +Consulting Agreement between Home Depot U.S.A., Inc. and Dennis J. Carey effective as of August 14, 2002.
22
10.33 Commercial Paper Dealer Agreement between Home Depot U.S.A., Inc. and Chase Securities, Inc. dated as of April 19, 2001.
10.34 +The Maintenance Warehouse FutureBuilder, together with the First, Second and Third Amendments thereto.
10.35 +The Home Depot FutureBuilder for Puerto Rico, together with the First and Second Amendments thereto.
10.36 +The Home Depot, Inc. Non-U.S. Employee Stock Purchase Plan.
10.37 +The Home Depot, Inc. Non-Employee Director's Deferred Stock Compensation Plan.
10.38 +Home Depot U.S.A., Inc. Deferred Compensation Plan for Officers.
10.39 +The Home Depot Executive Life Insurance, Death Benefit Only Plan.
10.40 +The Home Depot Executive Physical Program.
*10.41 +The Home Depot Management Incentive Plan. [APPENDIX A TO REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON MAY 30, 2003]
10.42 +The Home Depot Long-Term Incentive Plan.
*11 Computation of Earnings Per Common and Common Equivalent Share. [NOTE 7 TO THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED IN THE COMPANY'S 2002 ANNUAL REPORT TO STOCKHOLDERS FILED HEREWITH AS EXHIBIT 13.]
13 The Registrant's Annual Report to Stockholders for the fiscal year ended February 2, 2003. Only those portions of the
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, as amended.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
99.1 Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
- ---------
+ Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 15(c) of this report.
23
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/ Robert L. Nardelli
----------------------------------------
(Robert L. Nardelli, Chairman,
President & CEO)
Date: April 14, 2003
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/ Robert L. Nardelli Chairman, President & CEO April 14, 2003
- ---------------------------- (Principal Executive Officer)
(Robert L. Nardelli)
/s/ Carol B. Tome Executive Vice President and April 14, 2003
- ---------------------------- Chief Financial Officer
(Carol B. Tome) (Principal Financial Officer
and Principal Accounting Officer)
24
Signature Title Date
- --------- ----- ----
/s/ Gregory D. Brenneman Director 4/11/03
- ---------------------------- ------------------
(Gregory D. Brenneman)
/s/ Richard H. Brown Director 4/16/03
- ---------------------------- ------------------
V(Richard H. Brown)
/s/ John L. Clendenin Director 4/14/03
- ---------------------------- ------------------
V(John L. Clendenin)
/s/ Berry R. Cox Director 4/11/03
- ---------------------------- ------------------
(Berry R. Cox)
/s/ William S. Davila Director 4/10/03
- ---------------------------- ------------------
(William S. Davila)
/s/ Claudio X. Gonzalez Director 4/11/03
- ---------------------------- ------------------
(Claudio X. Gonzalez)
/s/ Richard A. Grasso Director 4/14/03
- ---------------------------- ------------------
Richard A. Grasso
/s/ Milledge A. Hart, III Director 4/14/03
- ---------------------------- ------------------
(Milledge A. Hart, III)
/s/ Bonnie G. Hill Director 4/13/03
- ---------------------------- ------------------
(Bonnie G. Hill)
/s/ Kenneth G. Langone Director 4/15/03
- ---------------------------- ------------------
(Kenneth G. Langone)
/s/ Roger S. Penske Director 4/14/03
- ---------------------------- ------------------
(Roger S. Penske)
25
CERTIFICATIONS
I, Robert L. Nardelli, certify that:
1. I have reviewed this annual report on Form 10-K of The Home Depot,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 14, 2003
/s/ Robert L. Nardelli
Robert L. Nardelli
Chairman, President and
Chief Executive Officer
CERTIFICATIONS
I, Carol B. Tome, certify that:
1. I have reviewed this annual report on Form 10-K of The Home Depot,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 4, 2003
/s/ Carol B. Tome
Carol B. Tome
Executive Vice President and
Chief Financial Officer
INDEX OF ATTACHED EXHIBITS
10.30 +Non-Competition Agreement between Home Depot U.S.A., Inc. and Carol Tome dated as of March 24, 2003.
10.31 +Separation Agreement and Release between Home Depot U.S.A., Inc. and Dennis J. Carey effective as of August 21, 2002.
10.32 +Consulting Agreement between Home Depot U.S.A., Inc. and Dennis J. Carey effective as of August 14, 2002.
10.33 Commercial Paper Dealer Agreement between Home Depot U.S.A., Inc. and Chase Securities, Inc. dated as of April 19, 2001.
10.34 +The Maintenance Warehouse FutureBuilder, together with the First, Second and Third Amendments thereto.
10.35 +The Home Depot FutureBuilder for Puerto Rico, together with the First and Second Amendments thereto.
10.36 +The Home Depot, Inc. Non-U.S. Employee Stock Purchase Plan.
10.37 +The Home Depot, Inc. Non-Employee Director's Deferred Stock Compensation Plan.
10.38 +Home Depot U.S.A., Inc. Deferred Compensation Plan for Officers.
10.39 +The Home Depot Executive Life Insurance, Death Benefit Only Plan.
10.40 +The Home Depot Executive Physical Program.
*10.41 +The Home Depot Management Incentive Plan. [APPENDIX A TO THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS ON MAY 30, 2003]
10.42 +The Home Depot Long-Term Incentive Plan.
13 The Registrant's Annual Report to Stockholders for the fiscal year ended February 2, 2003. Only those portions of the
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, as amended.
21 List of Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
99.1 Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
- ---------
+ Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 15(c) of this report.