Exhibit 99.1
(THE HOME DEPOT(R) LOGO)
THE HOME DEPOT ANNOUNCES
RECORD RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 2005
Record Fiscal 2005 Net Income of $5.8 Billion
Record Fiscal 2005 Earnings Per Share of $2.72, up 20.4
Percent
Record Fiscal 2005 Sales of $81.5 Billion, up 11.5 Percent
Record Fiscal 2005 Gross Margin of 33.5 Percent
Record Fiscal 2005 Operating Margin of 11.5 Percent
Record Fiscal 2005 Average Ticket of $57.98
ATLANTA, Feb. 21 -- The Home Depot(R) (NYSE: HD), the world's largest home
improvement retailer, today reported record results for the fourth quarter and
fiscal year 2005 based on strong performance in its core retail stores, its
services business, Home Depot Direct and the continued expansion of the Home
Depot Supply platform.
For the fourth quarter of fiscal 2005, the Company's diluted earnings per share
rose 27.7 percent to a record $0.60 on net earnings of $1.3 billion, compared
with $0.47 on net earnings of $1.0 billion reported for the same period in
fiscal 2004. Sales for the fourth quarter of fiscal 2005 totaled $19.5 billion,
a 15.9 percent increase from the fourth quarter of fiscal 2004. Comparable store
sales for the fourth quarter of fiscal 2005 increased 5.5 percent.
For fiscal 2005, diluted earnings per share increased 20.4 percent to $2.72
on net earnings of $5.8 billion, compared to diluted earnings per share of $2.26
on net earnings of $5.0 billion in fiscal 2004. Sales for fiscal 2005 increased
to $81.5 billion, an 11.5 percent increase over fiscal 2004, and comparable
store sales for the year grew 3.8 percent.
"Our performance in 2005 reflects the hard work and dedication of our 345,000
associates, and I want to personally thank them for another year of record
results. We are grateful to our loyal customers and suppliers who continue to
make us the No. 1 home improvement retailer in the world," said Bob
Nardelli, chairman, president & CEO. "In 2006, we will capitalize on our strong
momentum and continue to deliver sustainable, predictable and
profitable growth."
"This year was one of significant growth," said Carol Tome, executive vice
president and CFO. "In 2005, we maintained our disciplined approach to capital
allocation, investing $3.9 billion back into our business, spending $2.5 billion
to acquire 21 companies and returning nearly $3.9 billion to shareholders in the
form of dividends and share repurchases."
Since its share repurchase program began in 2002, the Company has repurchased
277 million, or over 12 percent, of its outstanding shares and spent $9.7
billion under its $11 billion share repurchase authorization. During this same
period, the Company more than doubled its dividend paid to shareholders and in
January 2006, announced a 50 percent increase in its annual dividend to 60 cents
a share. Cumulatively, over the past five years, the Company has returned over
58 percent of its net earnings to shareholders in the form of dividends and
share repurchases.
At the end of fiscal 2005, The Home Depot reported total assets of $44 billion,
total stockholders' equity of $27 billion; and a return on invested capital of
22.4 percent, up 90 basis points from the prior year.
ENHANCING THE CORE
By creating a compelling shopping experience for customers, average ticket grew
to a record $57.98 for fiscal year 2005, an increase of 5.6 percent over the
prior year. For the fourth quarter of fiscal 2005, average ticket was $57.20, an
increase of 5.7 percent compared to the same quarter during the previous year
and represents an approximate $10 increase over the last five years.
"The continuous introduction of new and innovative products that bring more
features and benefits to customers and our efforts to make stores easier to
navigate and fun to shop drove average ticket," said Tom Taylor, executive vice
president, Merchandising & Marketing. "In 2005, we broadened our assortment and
enhanced the store appearance, which resulted in a differentiated shopping
experience for our customers."
Significant merchandising accomplishments in 2005 include:
- - Introduced LG appliances, one of the fastest growing appliance lines
in the United States
- - Grew core appliance market share from 8.1 percent to 9.7 percent on a
12-month rolling basis according to an independent third party research
company
- - Introduced new and exclusive 28-volt Milwaukee and 18-volt Makita
lithium ion cordless power tools, which offer more power, less weight and
longer run times for professionals and serious do-it-yourselfers
- - Launched an expanded paint palette through Behr's Colores Origenes and
Ralph Lauren's metallic and suede paints
- - Expanded the outdoor living assortment, with fashion-forward innovation in
patio furniture and grills
- - Continued proprietary, exclusive brand leadership through Hampton Bay,
Thomasville, Pegasus, RIDGID and Ryobi products
- - Continued store modernization, including improved signage,
point-of-purchase information and resets across a variety of categories
The Home Depot's merchandising successes in 2005 were bolstered by store
technology initiatives that increased efficiency across the store. Significant
technology initiatives in 2005 include:
- - Completed the rollout of back-end scanned receiving to all U.S. and
Canadian stores
- - Commenced vendor certification for certified receiving
- - Continued installation of self-checkout registers, now in 1,272 stores
- - Grew centralized automated replenishment to 20 percent of store sales
- - Implemented a Special Order Services Initiative pilot in 285 stores and
the Tampa Call Center
In addition, through its regular "Voice of the Customer" surveys, the Company
saw continued improvement in every key attribute, such as associate engagement,
speed of checkout, associate know-how and merchandise selection.
EXTENDING THE BUSINESS
Building on the growing demand for do-it-for-me services, The Home Depot's
services business grew 21.4 percent during fiscal 2005, driven by strong growth
in installation categories such as countertops, roofing/gutters, kitchens,
windows and HVAC.
During the fourth quarter, the Company acquired Chem-Dry, the world's largest
carpet and upholstery cleaning franchisor. Chem-Dry has nearly 4,000 franchises
worldwide, including 2,500 in the United States and services 10,000 homes every
day. Chem-Dry is a perfect extension to the company's services business.
Significant accomplishments in extending the business in 2005 include:
- - Increased product offerings on homedepot.com to more than 30,000 products;
the site now averages three million visits per week
- - Launched two unique direct-to-customer brands: 10 Crescent Lane
(10crescentlane.com) and Paces Trading Company (pacestradingcompany.com),
offering quality home decor and lighting options, respectively, both
through innovative catalogs and e-commerce sites
- - Opened 179 new stores, including five relocations
- - Opened its 2,000th store, including the 54th store in Mexico
In 2005, the Company opened 20 net new stores in Canada and 10 net new stores in
Mexico. As of year-end, approximately 9.4 percent of the Company's store base
was located outside of the U.S. The Company maintains its leadership position as
the No. 1 home improvement retailer in Canada, Mexico and the United States.
EXPANDING THE MARKET
In 2005, The Home Depot continued to expand its market through continued growth
in Home Depot Supply, which represents approximately 5 percent of the Company's
sales. Home Depot Supply experienced triple-digit growth for fiscal 2005
strengthening its position in the Maintenance, Repair and Operations (MRO),
Builder, and Professional Supply platforms.
Home Depot Supply's financial success was fueled by organic and acquisitive
growth. Acquisitions in the fourth quarter of fiscal 2005 included:
- - Southwest Rebar, a leading rebar fabricator and construction supply
distributor with three locations in Arizona. With Southwest Rebar, White
Cap now operates 103 branches in 23 states, further strengthening its
professional supply presence.
- - Traditional Floor Covering, a leading flooring installer with four
locations in Florida. With Traditional Floor Covering, Creative Touch
Interiors now operates 37 branches in 14 states and sells to 18 of the top
20 homebuilders.
- - Sesco/Quesco Electric Supply, an 80-year old distributor of electrical
supplies with four locations in Toronto, Ontario. With Sesco/Quesco
Electric Supply, the MRO companies operate 206 branches in 45 states and
provinces in the United States and Canada.
In January 2006, the Company announced its intent to acquire Hughes Supply, a
leading distributor of construction and repair products. Hughes Supply will more
than double the size of Home Depot Supply with projected 2006 combined sales
approaching $12 billion. The acquisition is anticipated to close in April.
More information about Home Depot Supply can be found on the Company's website
at homedepot.com under the Investor Relations section.
OTHER NOTABLE EVENTS
In 2005, the Company further strengthened its long-standing commitment to giving
back in the communities it serves across North America.
Corporate citizenship
- - Committed more than $9 million in cash and materials to 2005's hurricane
relief, recovery and rebuilding efforts through the combined efforts of The
Home Depot, The Home Depot Foundation, The Homer Fund and the Company's
supplier partners.
- - Partnered with the American Red Cross for a three-year, $6.6 million
program to support hurricane relief and disaster education efforts.
- - Partnered with Hands On Network to lead a national movement to increase
volunteerism by 10 percent and add 6.4 million new volunteers during the
next two years. In September 2005, 29 organizations participated in the
Corporate Month of Service, with more than 850,000 volunteer hours of
service logged. Associates from The Home Depot contributed more than
321,000 volunteer hours through 1,288 service projects throughout North
America.
- - Announced a three-year, $25 million partnership with KaBOOM! to create
1,000 playspaces in 1,000 days.
- - Hired 17,000 military job seekers, including veterans, separating active
duty service members, National Guard members, reservists and military
spouses through Operation Career Front, the Company's joint hiring
initiative with the U.S. departments of Defense, Labor and Veterans
Affairs.
Significant awards:
- - Recognized by the U.S. Environmental Protection Agency with its ENERGY STAR
Retail Commitment Award
- - Received the 2005 Salute to Greatness Award from The King Center for
demonstrating a commitment to social responsibility in the spirit of Dr.
Martin Luther King, Jr.
- - Ranked 4th on the HACR Corporate Responsibility Index by the Hispanic
Association for Corporate Responsibility
- - Received the 2005 Private Sector Leadership Award from the Partnership for
Public Service
- - Recognized for outstanding support of the men and women in the armed
services by the Military Officers Association of America and the United
Services Organization (USO)
- - Received the Award for Excellence for Workplace Volunteer Programs from the
Points of Light Foundation
- - Ranked No. 8 by Chief Executive magazine on its annual list of Best
Companies for Leaders
- - Ranked by FORTUNE as the No. 1 Most Admired Specialty Retailer for 2005
The Home Depot will conduct a conference call today at 9:00 a.m. EST to discuss
information included in this news release and related matters. The conference
call will be available in its entirety through a webcast and replay at
homedepot.com under the Investor Relations section.
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. At the
end of fiscal year 2005, the company employed approximately 345,000 associates
in 2,042 stores in all 50 states, the District of Columbia, Puerto Rico, 10
Canadian provinces and Mexico. The company also operates 34 EXPO Design Centers,
11 THD Landscape Supply stores, eight Contractors' Warehouse stores, three THD
Supply stores, and two THD Floor Stores. 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.
###
Certain statements contained herein, including any statements related to Net
Sales growth, increases in comparable store sales, impact of cannibalization,
commodity price inflation and deflation, implementation of store initiatives,
Net Earnings performance, including Depreciation expense, earnings per share,
stock-based compensation expense, store openings and closures, capital
allocation and expenditures, the effect of adopting certain accounting
standards, future financial reporting, financing, margins, return on invested
capital, operations after the closing of the merger with Hughes Supply, Inc.
("Hughes"), the timing and certainty of closing of the merger with Hughes, the
accounting and financial impact of the merger with Hughes, strategic direction
and the demand for our products and services, constitute "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on currently available information and are based on
our current expectations and projections about future events. These statements
are subject to risks and uncertainties that could cause actual results to differ
materially from our historical experience and expectations. These risks and
uncertainties include, but are not limited to: economic conditions in North
America; changes in our cost structure; the availability of sourcing channels
consistent with our strategy of differentiation; conditions affecting new store
development, such as our ability to find suitable store locations and obtain all
required permits; conditions affecting customer transactions and average ticket,
including, but not limited to, weather conditions; the success of our technology
initiatives in improving and streamlining operations and customers' in-store
experience; our ability to identify and respond to evolving trends in
demographics and consumer preferences; our ability to design stores that appeal
to customers; the costs of redesigning stores in light of evolving customer
expectations; the success of new store formats; the relative success of our
expansion strategy, including our ability to identify acquisition opportunities,
particularly in markets outside the United States, and our ability to complete
acquisitions on financially attractive terms and integrate them with our other
businesses (including the merger with Hughes); our ability to create appropriate
distribution channels for key sales platforms; our ability to successfully
execute our on-line strategy; our ability to attract, train and retain highly
qualified associates; the impact of new accounting standards; the impact of
competition; and decisions by management related to possible asset impairments,
regulation and litigation matters. Undue reliance should not be placed on such
forward-looking statements as
they speak only as of the date hereof and we undertake no obligation to update
these forward-looking statements to reflect subsequent events or circumstances.
Additional information regarding these and other risks and uncertainties is
contained in our periodic filings with the SEC, including our Annual Report on
Form 10-K for the fiscal year ended January 30, 2005.
For more information contact:
Financial Community News Media
Diane Dayhoff Jerry Shields
Vice President of Investor Relations 770-384-2741, jerry_shields@homedepot.com
770-384-2666 Paula Smith
diane_dayhoff@homedepot.com 770-384-3791, paula_c_smith@homedepot.com
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND YEARS ENDED JANUARY 29, 2006 AND JANUARY 30, 2005
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
THREE MONTHS ENDED % INCREASE YEARS ENDED % INCREASE
1-29-06 1-30-05 (DECREASE) 1-29-06 1-30-05 (DECREASE)
--------- --------- --------- --------- --------- ----------
NET SALES $ 19,489 $ 16,812 15.9% $ 81,511 $ 73,094 11.5%
Cost of Sales 12,896 11,063 16.6 54,191 48,664 11.4
--------- --------- --------- ---------
GROSS PROFIT 6,593 5,749 14.7 27,320 24,430 11.8
Operating Expenses:
Selling, General and Administrative 4,132 3,750 10.2 16,485 15,256 8.1
Depreciation and Amortization 413 332 24.4 1,472 1,248 17.9
--------- --------- --------- ---------
Total Operating Expenses 4,545 4,082 11.3 17,957 16,504 8.8
--------- --------- --------- ---------
OPERATING INCOME 2,048 1,667 22.9 9,363 7,926 18.1
Interest Income (Expense):
Interest and Investment Income 8 10 (20.0) 62 56 10.7
Interest Expense (35) (21) 66.7 (143) (70) 104.3
--------- --------- --------- ---------
Interest, net (27) (11) 145.5 (81) (14) 478.6
--------- --------- --------- ---------
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 2,021 1,656 22.0 9,282 7,912 17.3
Provision for Income Taxes 736 615 19.7 3,444 2,911 18.3
--------- --------- --------- ---------
NET EARNINGS $ 1,285 $ 1,041 23.4% $ 5,838 $ 5,001 16.7%
========= ========= ========= =========
Weighted Average Common Shares 2,119 2,188 (3.2)% 2,138 2,207 (3.1)%
BASIC EARNINGS PER SHARE $ 0.61 $ 0.48 27.1% $ 2.73 $ 2.27 20.3%
Diluted Weighted Average Common Shares 2,128 2,199 (3.2)% 2,147 2,216 (3.1)%
DILUTED EARNINGS PER SHARE $ 0.60 $ 0.47 27.7% $ 2.72 $ 2.26 20.4%
SELECTED HIGHLIGHTS THREE MONTHS ENDED % INCREASE YEARS ENDED % INCREASE
1-29-06 1-30-05 (DECREASE) 1-29-06 1-30-05 (DECREASE)
------- -------- ------------ ----------- ------- -----------
Number of Customer Transactions (1) 308 296 4.1% 1,330 1,295 2.7%
Average Ticket (1) $ 57.20 $ 54.13 5.7 $ 57.98 $ 54.89 5.6
Weighted Average Weekly Sales
per Operating Store (000's) (1) $ 676 $ 667 1.3 $ 763 $ 766 (0.4)
Square Footage at End of Period (1) 215 201 7.0 215 201 7.0
Capital Expenditures $ 1,028 $ 1,170 (12.1) $ 3,881 $ 3,948 (1.7)
Depreciation and Amortization (2) $ 445 $ 348 27.9% $ 1,579 $ 1,319 19.7%
(1) Excludes all non-store locations 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.
(2) Includes depreciation of distribution centers and tool rental equipment
included in Cost of Sales and amortization of deferred financing costs
included in Interest Expense.
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 29, 2006 AND JANUARY 30, 2005
(AMOUNTS IN MILLIONS)
1-29-06 1-30-05
(UNAUDITED) (AUDITED)
----------- ---------
ASSETS
Cash and Short-Term Investments $ 807 $ 2,165
Receivables, net 2,396 1,499
Merchandise Inventories 11,401 10,076
Other Current Assets 742 533
------- -------
Total Current Assets 15,346 14,273
------- -------
Property and Equipment, net 24,901 22,726
Cost in Excess of the Fair Value of Net Assets Acquired, net 3,286 1,394
Other Assets 949 627
------- -------
TOTAL ASSETS $44,482 $39,020
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-Term Debt $ 900 $ --
Accounts Payable 6,032 5,766
Accrued Salaries and Related Expenses 1,176 1,055
Current Installments of Long-Term Debt 513 11
Other Current Liabilities 4,280 3,623
------- -------
Total Current Liabilities 12,901 10,455
------- -------
Long-Term Debt 2,672 2,148
Other Long-Term Liabilities 2,000 2,259
------- -------
Total Liabilities 17,573 14,862
------- -------
Total Stockholders' Equity 26,909 24,158
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $44,482 $39,020
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