EXHIBIT 99.1
[HOME DEPOT LOGO]
THE HOME DEPOT CONTINUES STRONG PERFORMANCE
AND ANNOUNCES RECORD SECOND QUARTER RESULTS
RECORD SALES OF $20 BILLION
RECORD SECOND QUARTER NET EARNINGS OF $1.5 BILLION
INCREASES FISCAL 2004 EPS GROWTH GUIDANCE TO 14-17 PERCENT
- 25% EPS Growth to $0.70
- 11% Sales Growth to $20 Billion
- 4.8% Comparable Store Sales Growth
- 12.3% Operating Margin
ATLANTA, AUGUST 17, 2004 - The Home Depot(R), the world's largest home
improvement retailer, today reported record second quarter net earnings of $1.5
billion, $0.70 per diluted share, up 25 percent, for second quarter fiscal 2004,
compared to $0.56 per diluted share, for second quarter fiscal 2003. Excluding
the impact of the adoption of EITF 02-16, diluted earnings per share would have
been $0.71, or 27 percent higher than last year.
Sales for the period increased $2.0 billion, or 11 percent, to $20.0
billion. Comparable store sales rose 4.8 percent, with strength across all
geographic regions. "Our business strategy of enhancing the core, extending the
business and expanding our markets is clearly driving consistent, profitable
sales growth. For the first time in our company's 25-year history, we achieved
$20 billion in sales in a single quarter. This achievement demonstrates that our
knowledgeable associates are delivering on our company's core purpose: to
improve everything we touch," said Bob Nardelli, chairman, president & CEO.
The company ended the quarter with $38.3 billion in total assets,
including $3.7 billion in cash and stockholders' equity of $22.5 billion. The
company announced that it completed its $6 billion share repurchase program in
the second quarter. Earlier this month, the company's board of directors
authorized an additional $1 billion share repurchase program, bringing the total
to $7 billion.
"Our company remains committed to creating and returning value to our
shareholders, as evidenced by our financial results and our dividend and share
repurchase programs," added Nardelli. "In the first six months of the year, we
have returned $2.8 billion to our shareholders in the form of dividends and
share repurchases."
Return on invested capital was 20.4 percent, up 260 basis points from
the second quarter last year.
"In addition to our record sales during the second quarter, the company
had record operating margin of 12.3 percent, one of the highest in retail,
reflecting strong gross margin expansion and good expense control," said Carol
Tome, executive vice president, CFO.
In the first half of the year, 52% of the company's stores, along with
four store support centers, achieved a payout through The Home Depot's Success
Sharing bonus plan. With this program, The Home Depot will be paying out $30
million in September, almost twice as much as was paid out last year.
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The company reiterated its fiscal 2004 sales growth guidance of 10-12
percent and increased its fiscal 2004 EPS growth guidance from 10-14 percent to
14-17 percent.
ENHANCING THE CORE
"Strong sales and average ticket growth during our busiest shopping
season suggest our distinctive product assortment and knowledgeable associates
offered a compelling shopping experience," said John Costello, executive vice
president, Merchandising and Marketing. "We are particularly pleased with the
breadth of our sales growth across the store."
Average ticket increased 8.2 percent, or $4.13, to $54.73, a second
quarter record. The company experienced average ticket growth in every selling
category.
"From the front-end to the back-end of our stores, The Home Depot is
enhancing the shopping experience, streamlining operations, and driving business
efficiency as never before with unprecedented investments in technology," said
Bob DeRodes, executive vice president, CIO.
Information Technology highlights include:
- Implemented SAP's core financial systems, improving processing
and analytical capabilities
- Completed the rollout of our new human resource management
system
- Expanded self-checkout to more than 830 stores, with nearly
250 million transactions to date
- Announced plans to open a new technology center in Austin,
Texas
EXTENDING THE BUSINESS/EXPANDING MARKETS
The Home Depot continued to execute its strategy through the following
accomplishments:
- Grew services revenue by approximately 27 percent to $883
million
- Acquired White Cap Construction Supply, Inc., which now
operates 74 Pro distribution branches across the country
- Continued expansion of tool rental centers to 925 locations
- Completed the purchase of 20 Home Mart stores in Mexico,
bringing the total to 42 stores in the $15 billion Mexican
market
- Opened 48 new stores, bringing the total store count to 1,788
- Announced plans to enter the retail market in China
Finally, as the Olympic and Paralympic Games ramp up in Athens, Greece,
The Home Depot is proud to support 71 participating associates from the
company's Olympic Job Opportunities Program.
The Home Depot will conduct a conference call today to discuss
information included in this news release and related matters at 9:00 a.m. EDT.
The conference call will be available in its entirety through a Web cast at
www.homedepot.com, and will be available through replay at the www.homedepot.com
site under the investor relations' section.
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The adjusted earnings per share included in this press release is
reconciled to the comparable generally accepted accounting principles amount in
the attached schedule. In January 2004, the company adopted EITF 02-16
"Accounting by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor." Management believes that excluding the impact of EITF
02-16 allows investors to compare the results of operations without giving
effect to this new accounting standard.
Founded in 1978, The Home Depot(R) is the world's largest home
improvement specialty retailer and the second largest retailer in the United
States, with fiscal 2003 sales of $64.8 billion. During the quarter, The Home
Depot added 48 new stores. At the end of the second quarter of fiscal 2004, the
company operated a total of 1,788 stores, including 1,569 The Home Depot stores
in the United States, 105 The Home Depot stores in Canada, and 42 The Home Depot
stores in Mexico. The company also operates 54 EXPO Design Centers, 11 The Home
Depot Landscape Supply stores, five The Home Depot Supply stores, and two The
Home Depot Floor Stores. The company employs approximately 300,000 associates
and today has stores in 50 states, the District of Columbia, Puerto Rico, eight
Canadian provinces and Mexico. Its stock is traded on the New York Stock
Exchange (NYSE:HD) and is included in the Dow Jones Industrial Average and
Standard & Poor's 500 Index.
Statements of The Home Depot's expectations for sales growth, earnings
performance, capital expenditures, store openings and demand for services in
this release constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such statements are based on currently
available operating, financial and competitive information and are subject to
various risks and uncertainties that could cause actual results to differ
materially from the company's historical experience and its 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, the company's ability to integrate the businesses it acquires, the
risk that the cost savings and any revenue synergies from acquisitions may not
be fully realized or may take longer to realize than expected, the company's
ability to implement new technologies and processes, the company's ability to
attract, train and retain highly-qualified associates, unanticipated weather
conditions, and the impact of competition and regulatory and litigation matters.
Undue reliance should not be placed on such forward-looking statements, as such
statements speak only as of the date on which they are made. Additional
information regarding these and other risks is contained in the company's
periodic filings with the Securities and Exchange Commission.
###
For more information, contact:
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Financial Community News Media
Diane Dayhoff Jerry Shields
Vice President, Investor Relations Senior Public Relations Manager
(770) 384-2666 (770) 384-2741
diane_dayhoff@homedepot.com jerry_shields@homedepot.com
THE HOME DEPOT, INC.
CONSOLIDATED BALANCE SHEETS
AS OF AUGUST 1, 2004, AUGUST 3, 2003
AND FEBRUARY 1, 2004
(AMOUNTS IN MILLIONS)
8-1-04 8-3-03 2-1-04
----------- ----------- ---------
(UNAUDITED) (UNAUDITED) (AUDITED)
ASSETS
Cash and Cash Equivalents $ 3,672 $ 5,209 $ 2,826
Short-Term Investments -- 45 26
Receivables, net 1,541 1,379 1,097
Merchandise Inventories 9,857 8,621 9,076
Other Current Assets 397 313 303
------- ------- -------
Total Current Assets 15,467 15,567 13,328
Property and Equipment, net 20,961 18,263 20,063
Other Assets 1,903 782 1,046
------- ------- -------
TOTAL ASSETS $38,331 $34,612 $34,437
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $ 7,603 $ 5,875 $ 5,159
Accrued Salaries and Related Expenses 953 873 801
Other Current Liabilities 4,371 3,641 3,594
------- ------- -------
Total Current Liabilities 12,927 10,389 9,554
Long-Term Debt 1,124 1,327 856
Other Long-Term Liabilities 1,830 963 1,620
------- ------- -------
Total Liabilities 15,881 12,679 12,030
Total Stockholders' Equity 22,450 21,933 22,407
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $38,331 $34,612 $34,437
======= ======= =======
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2004 AND AUGUST 3, 2003
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
THREE MONTHS ENDED % INCREASE SIX MONTHS ENDED % INCREASE
8-1-04 8-3-03 (DECREASE) 8-1-04 8-3-03 (DECREASE)
-------- -------- ---------- -------- -------- -----------
NET SALES $ 19,960 $ 17,989 11.0% $ 37,510 $ 33,093 13.3%
Cost of Merchandise Sold 13,299 12,384 7.4 25,081 22,659 10.7
-------- -------- -------- --------
GROSS PROFIT 6,661 5,605 18.8 12,429 10,434 19.1
Operating Expenses:
Selling and Store Operating 3,854 3,247 18.7 7,580 6,357 19.2
General and Administrative 350 292 19.9 646 563 14.7
-------- -------- -------- --------
Total Operating Expenses 4,204 3,539 18.8 8,226 6,920 18.9
-------- -------- -------- --------
OPERATING INCOME 2,457 2,066 18.9 4,203 3,514 19.6
Interest Income (Expense):
Interest and Investment Income 14 15 (6.7) 24 27 (11.1)
Interest Expense (17) (16) 6.3 (31) (34) (8.8)
-------- -------- -------- --------
Interest, net (3) (1) 200.0 (7) (7) 0.0
-------- -------- -------- --------
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 2,454 2,065 18.8 4,196 3,507 19.6
Provision for Income Taxes 909 766 18.7 1,553 1,301 19.4
-------- -------- -------- --------
NET EARNINGS $ 1,545 $ 1,299 18.9% $ 2,643 $ 2,206 19.8%
======== ======== ======== ========
Weighted Average Common Shares 2,207 2,295 (3.8)% 2,225 2,294 (3.0)%
BASIC EARNINGS PER SHARE $ 0.70 $ 0.57 22.8% $ 1.19 $ 0.96 24.0%
Diluted Weighted Average Common Shares 2,214 2,302 (3.8)% 2,232 2,300 (3.0)%
DILUTED EARNINGS PER SHARE $ 0.70 $ 0.56 25.0% $ 1.18 $ 0.96 22.9%
SELECTED HIGHLIGHTS THREE MONTHS ENDED % INCREASE SIX MONTHS ENDED % INCREASE
- ------------------- 8-1-04 8-3-03 (DECREASE) 8-1-04 8-3-03 (DECREASE)
------ ------ ---------- ------ ------ ---------
Number of Customer Transactions (1) 359 350 2.6% 675 646 4.5%
Average Ticket (1) $54.73 $50.60 8.2 $54.91 $50.92 7.8
Weighted Average Weekly Sales
per Operating Store (000's) (1) $ 860 $ 861 (0.1) $ 818 $ 805 1.6
Square Footage at End of Period (1) 190 173 9.8 190 173 9.8
Capital Expenditures $ 857 $ 915 (6.3) $1,537 $1,671 (8.0)
Depreciation and Amortization $ 324 $ 257 26.1% $ 636 $ 505 25.9%
(1) Excludes all subsidiaries operating under The Home Depot Supply brand (Apex
Supply Company, Maintenance Warehouse, Your "other" Warehouse, White Cap
Industries and HD Builder Solutions Group) since their inclusion may cause
distortion of the data presented due to operational differences from our retail
stores. The total number of the excluded locations and their total square
footage are immaterial to our total number of locations and total square
footage.
THE HOME DEPOT, INC.
SUPPLEMENTAL SCHEDULE
IMPACT OF EITF 02-16 *
FOR THE QUARTERS ENDED AUGUST 1, 2004 AND AUGUST 3, 2003
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
AS REPORTED IMPACT OF AS ADJUSTED AS REPORTED % INCREASE
8-1-2004 EITF 02-16 * 8-1-2004 8-3-2003 (DECREASE)
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COST OF MERCHANDISE SOLD $13,299 $ (244) $13,543 $12,384 9.4%
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GROSS PROFIT 6,661 244 6,417 5,605 14.5
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SELLING AND STORE OPERATING EXPENSES 3,854 285 3,569 3,247 9.9
------- ------- ------- ------- ----
OPERATING INCOME 2,457 (41) 2,498 2,066 20.9
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NET EARNINGS 1,545 (27) 1,572 1,299 21.0
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DILUTED EARNINGS PER SHARE $ 0.70 $ (0.01) $ 0.71 $ 0.56 26.8%
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*The table includes only those line items in the Consolidated Statements of
Earnings impacted by the adoption of EITF 02-16.
In January 2004, the Company adopted EITF 02-16 "Accounting by a Customer
(Including a Reseller) for Certain Consideration Received from a Vendor." The
impact in the second quarter of fiscal 2004 in connection with the adoption of
EITF 02-16 resulted in a reduction of Cost of Merchandise Sold of $244 million,
an increase in Selling and Store Operating Expenses of $285 million and a
reduction of Net Earnings of $27 million. The impact on the Company's Diluted
Earnings per Share was $0.01 per share in the second quarter of fiscal 2004 and
$0.03 per share in the first quarter of fiscal 2004. The Company estimates that
the impact on its Diluted Earnings per Share for the full fiscal year 2004 will
be $0.05 per share. The Company expects to recognize the remaining $0.01 per
share in the third quarter of fiscal 2004.