Document and Entity Information
Document and Entity Information | ||
3 Months Ended
May. 02, 2010 | May. 28, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-05-02 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | HD | |
Entity Registrant Name | HOME DEPOT INC | |
Entity Central Index Key | 0000354950 | |
Current Fiscal Year End Date | --01-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,680,353,844 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
May. 02, 2010 | 3 Months Ended
May. 03, 2009 |
NET SALES | $16,863 | $16,175 |
Cost of Sales | 11,069 | 10,725 |
GROSS PROFIT | 5,794 | 5,450 |
Operating Expenses: | ||
Selling, General and Administrative | 4,078 | 4,042 |
Depreciation and Amortization | 411 | 428 |
Total Operating Expenses | 4,489 | 4,470 |
OPERATING INCOME | 1,305 | 980 |
Interest and Other (Income) Expense: | ||
Interest and Investment Income | (4) | (5) |
Interest Expense | 142 | 180 |
Other | 51 | |
Interest and Other, net | 189 | 175 |
EARNINGS BEFORE PROVISION FOR INCOMETAXES | 1,116 | 805 |
Provision for Income Taxes | 391 | 291 |
NET EARNINGS | $725 | $514 |
Weighted Average Common Shares | 1,677 | 1,683 |
BASIC EARNINGS PER SHARE | 0.43 | 0.31 |
Diluted Weighted Average Common Shares | 1,688 | 1,689 |
DILUTED EARNINGS PER SHARE | 0.43 | 0.3 |
Dividends Declared Per Share | 0.23625 | 0.225 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | May. 02, 2010
| Jan. 31, 2010
|
Current Assets: | ||
Cash and Cash Equivalents | $2,436 | $1,421 |
Short-Term Investments | 6 | 6 |
Receivables, net | 1,342 | 964 |
Merchandise Inventories | 11,479 | 10,188 |
Other Current Assets | 1,383 | 1,321 |
Total Current Assets | 16,646 | 13,900 |
Property and Equipment, at cost | 37,653 | 37,345 |
Less Accumulated Depreciation and Amortization | 12,249 | 11,795 |
Net Property and Equipment | 25,404 | 25,550 |
Goodwill | 1,192 | 1,171 |
Other Assets | 377 | 256 |
Total Assets | 43,619 | 40,877 |
Current Liabilities: | ||
Accounts Payable | 7,051 | 4,863 |
Accrued Salaries and Related Expenses | 1,154 | 1,263 |
Sales Taxes Payable | 544 | 362 |
Deferred Revenue | 1,225 | 1,158 |
Income Taxes Payable | 400 | 108 |
Current Installments of Long-Term Debt | 2,021 | 1,020 |
Other Accrued Expenses | 1,582 | 1,589 |
Total Current Liabilities | 13,977 | 10,363 |
Long-Term Debt, excluding current installments | 7,676 | 8,662 |
Other Long-Term Liabilities | 2,356 | 2,140 |
Deferred Income Taxes | 239 | 319 |
Total Liabilities | 24,248 | 21,484 |
STOCKHOLDERS' EQUITY | ||
Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.720 billion shares at May 2, 2010 and 1.716 billion shares at January 31, 2010; outstanding: 1.686 billion shares at May 2, 2010 and 1.698 billion shares at January 31, 2010 | 86 | 86 |
Paid-In Capital | 6,321 | 6,304 |
Retained Earnings | 13,552 | 13,226 |
Accumulated Other Comprehensive Income | 506 | 362 |
Treasury Stock, at cost, 34 million shares at May 2, 2010 and 18 million shares at January 31, 2010 | (1,094) | (585) |
Total Stockholders' Equity | 19,371 | 19,393 |
Total Liabilities and Stockholders' Equity | $43,619 | $40,877 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
May. 02, 2010
| Jan. 31, 2010
| |
Common Stock, par value | 0.05 | 0.05 |
Common Stock, authorized | 10,000,000,000 | 10,000,000,000 |
Common Stock, issued | 1,720,000,000 | 1,716,000,000 |
Common Stock, outstanding | 1,686,000,000 | 1,698,000,000 |
Treasury Stock, shares | 34,000,000 | 18,000,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
May. 02, 2010 | 3 Months Ended
May. 03, 2009 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Earnings | $725 | $514 |
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities: | ||
Depreciation and Amortization | 438 | 453 |
Stock-Based Compensation Expense | 64 | 54 |
Changes in Assets and Liabilities: | ||
Increase in Receivables, net | (367) | (337) |
Increase in Merchandise Inventories | (1,227) | (734) |
Increase in Other Current Assets | (66) | (127) |
Increase in Accounts Payable and Accrued Expenses | 2,131 | 1,798 |
Increase in Deferred Revenue | 61 | 82 |
Increase in Income Taxes Payable | 289 | 67 |
Decrease in Deferred Income Taxes | (63) | (94) |
Other | 54 | 51 |
Net Cash Provided by Operating Activities | 2,039 | 1,727 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital Expenditures | (167) | (172) |
Proceeds from Sales of Property and Equipment | 27 | 70 |
Proceeds from Sales and Maturities of Investments | 19 | |
Net Cash Used in Investing Activities | (140) | (83) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments of Long-Term Debt | (5) | (4) |
Proceeds from Sales of Common Stock | 11 | 2 |
Repurchases of Common Stock | (508) | |
Cash Dividends Paid to Stockholders | (399) | (381) |
Other Financing Activities | 8 | 426 |
Net Cash (Used in) Provided by Financing Activities | (893) | 43 |
Increase in Cash and Cash Equivalents | 1,006 | 1,687 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 9 | 8 |
Cash and Cash Equivalents at Beginning of Period | 1,421 | 519 |
Cash and Cash Equivalents at End of Period | $2,436 | $2,214 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | |||||||||||||||||||
In Millions | 3 Months Ended
May. 02, 2010 | 3 Months Ended
May. 03, 2009 | |||||||||||||||||
Net Earnings | $725 | $514 | |||||||||||||||||
Other Comprehensive Income: | |||||||||||||||||||
Foreign Currency Translation Adjustments | 151 | 41 | |||||||||||||||||
Cash Flow Hedges | (7) | [1] | (3) | [1] | |||||||||||||||
Unrealized Gain on Investments | 1 | [1] | |||||||||||||||||
Total Other Comprehensive Income | 144 | 39 | |||||||||||||||||
Comprehensive Income | $869 | $553 | |||||||||||||||||
[1]These components of comprehensive income are reported net of income taxes. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
3 Months Ended
May. 02, 2010 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form10-Q and do not include all of the information and footnotes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Companys Annual Report on Form10-K for the year ended January31, 2010, as filed with the Securities and Exchange Commission. Business The Home Depot,Inc. and its subsidiaries (the Company) operate The Home Depot stores, which are full-service, warehouse-style stores averaging approximately 105,000 square feet in size. The stores stock approximately 30,000 to 40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers and professional customers. Valuation Reserves As of May2, 2010 and January31, 2010, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material. Reclassifications Certain amounts in the prior fiscal period have been reclassified to conform with the presentation adopted in the current fiscal period. |
DEBT GUARANTEE EXTENSION
DEBT GUARANTEE EXTENSION | |
3 Months Ended
May. 02, 2010 | |
DEBT GUARANTEE EXTENSION | 2. DEBT GUARANTEE EXTENSION In connection with the sale of HD Supply, Inc. (HD Supply) on August30, 2007, the Company guaranteed a $1.0billion senior secured amortizing term loan (guaranteed loan) of HD Supply. The Company is responsible for up to $1.0billion and any unpaid interest in the event of nonpayment by HD Supply. The guaranteed loan is collateralized by certain assets of HD Supply. The original expiration date of the guarantee was August30, 2012. On March19, 2010, the Company amended the guarantee to extend the expiration date to April1, 2014. The fair value of the guarantee at August30, 2007 was $16 million and was recorded as a liability of the Company in Other Long-Term Liabilities. The extension of the guarantee increased the fair value of the guarantee to $67 million, resulting in a $51 million charge to Interest and Other, net, for the first quarter of fiscal 2010. |
RATIONALIZATION CHARGES
RATIONALIZATION CHARGES | |
3 Months Ended
May. 02, 2010 | |
RATIONALIZATION CHARGES | 3. RATIONALIZATION CHARGES In fiscal 2008, the Company reduced its square footage growth plans to improve free cash flow, provide stronger returns for the Company and invest in its existing stores to continue improving the customer experience. As a result of this store rationalization plan, the Company determined that it would no longer pursue the opening of approximately 50 U.S. stores that had been in its new store pipeline. The Company expects to dispose of or sublet these pipeline locations over varying periods. The Company also closed 15 underperforming U.S. stores in the second quarter of fiscal 2008, and the Company expects to dispose of or sublet those locations over varying periods. Also in fiscal 2008, the Company announced that it would exit its EXPO, THD Design Center, Yardbirds and HD Bath businesses (the Exited Businesses) in order to focus on its core The Home Depot stores. The Company closed the Exited Businesses in the first quarter of fiscal 2009, and expects to dispose of or sublet those locations over varying periods. These steps impacted approximately 5,000 associates in those locations, their support functions and their distribution centers. Finally, in January 2009 the Company also restructured its support functions to better align the Companys cost structure. These actions impacted approximately 2,000 associates. The Company recognized total pretax charges of $146 million for fiscal 2009, including $117 million in the first quarter of fiscal 2009, and $951 million for fiscal 2008 related to these actions (collectively, the Rationalization Charges). The Company did not incur any charges related to these actions in the first quarter of fiscal 2010 and does not expect any further charges related to these actions. Activity related to Rationalization Charges for the first quarter of fiscal 2010 was as follows (amounts in millions): AccruedBalance January31,2010 CashUses Non-cashUses AccruedBalance May2,2010 Asset impairments $23 $ $ $23 Lease obligation costs, net 191 14 177 Total $214 $14 $ $200 Costs related to asset impairments and lease obligations are included in Selling, General and Administrative expenses. Asset impairment charges, including contractual costs to complete certain assets, were determined based on fair market value using market data for each individual property. Lease obligation costs represent the present value of contractually obligated rental payments offset by estimated sublet income, including estimates of the time required to sublease the locations. The payments related to the leased locations therefore are not generally incremental uses of cash. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
3 Months Ended
May. 02, 2010 | |
FAIR VALUE MEASUREMENTS | 4.FAIR VALUE MEASUREMENTS The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liabilitys fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1 Observable inputs that reflect quoted prices in active markets Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3 Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions Assets and Liabilities Measured at Fair Value on a Recurring Basis The assets and liabilities of the Company that are measured at fair value on a recurring basis as of May2, 2010 and January31, 2010 are as follows (amounts in millions): FairValueatMay2,2010Using FairValueatJanuary31,2010Using Level1 Level2 Level3 Level1 Level2 Level3 Available-for-sale securities $6 $ $ $6 $ $ Derivative agreements - assets 30 15 Derivative agreements - liabilities (65) (4) Total $6 $(35) $ $6 $11 $ The Companys available-for-sale securities are recorded at fair value based on current market rates (level 1) and are included in Short-Term Investments in the accompanying Consolidated Balance Sheets. The Company uses derivative financial instruments from time to time in the management of its interest rate exposure on long-term debt and its exposure on foreign currency fluctuations. The fair value of the Companys derivative financial instruments is measured using level 2 inputs. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The assets and liabilities of the Company that are measured at fair value on a nonrecurring basis as of May2, 2010 are as follows (amounts in millions): FairValueasof May2,2010 Level 3 ThreeMonthsEnded May2,2010 Gains(Losses) Store Rationalization lease obligation costs, net $(177) $ Guarantee of HD Supply loan (67) (51) Total $(244) $(51) Lease obligation costs included in the Companys Rationalization Charges were measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3), as further discussed in Note 3. The guarantee of the HD Supply loan was measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3), as further discussed in Note 2. Long-lived assets were analyzed for impairment on a nonrecurring basis using fair value measurements with unobservable inputs (level 3). Impairment charges related to long-lived assets in the first quarter of fiscal 2010 were |
BASIC AND DILUTED WEIGHTED AVER
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | |
3 Months Ended
May. 02, 2010 | |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | 5. BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES The reconciliation of basic to diluted weighted average common shares for the three months ended May2, 2010 and May3, 2009 was as follows (amounts in millions): ThreeMonthsEnded May2, 2010 May3, 2009 Weighted average common shares 1,677 1,683 Effect of potentially dilutive securities: Stock plans 11 6 Diluted weighted average common shares 1,688 1,689 Stock plans include shares granted under the Companys employee stock plans. Options to purchase 38million and 54million shares of common stock for the three months ended May2, 2010 and May3, 2009, respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive. |