Home Depot 1999 Annual Report Download

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1999 Annual Report

Table of contents

  • Page 1
    evolve 1999 Annual Report cov3 re:

  • Page 2
    ... 1999. The Company has been publicly held since 1981. The Home Depot stock trades on the New York Stock Exchange under the ticker symbol "HD" and is included in the Dow Jones Industrial Average and the Standard & Poor's 500 Index. Contents Letter to Stockholders 2 | Business Overview 8 | Management...

  • Page 3
    Responding and changing to meet customer needs is what The Home Depot is all about. Our evolution continues, as we work to become a total solutions provider to all home improvement customers.

  • Page 4
    ...23.7% 24.8% 30.4% 30.5% 27.9% Net Earnings as a Percent of Sales 6.0% 1999 5.3% 1998 5.1% 1997* Pretax Earnings as a Percent of Sales 9.9% 1999 8.8% 1998 8.3% 1997* Return on Invested Capital 19.3% 22.5% 1999 1998 17.0% 1997* *Excludes the effect of a $104 million non-recurring charge.

  • Page 5
    .... > Opened 160 Home Depot stores and 7 EXPO Design Center stores. > Opened first two Villager's Hardware test stores. > Acquired Georgia Lighting and Apex Supply Company. > Launched an environmentally responsible wood purchasing policy. > Introduced enhanced Home Depot Web site. > Became a member of...

  • Page 6
    view 2

  • Page 7
    ... year of record earnings and our strongest year-over-year earnings gain since 1992. We are firmly positioned to continue this pattern of consistent growth. New stores are planned to open at a steady rate of 21- 22%. When combined with many new initiatives to enhance customer service, sales and...

  • Page 8
    ... at value prices - available only at The Home Depot. Nearly 50,000 customers sharpened their do-ityourself skills at Home Depot UniversitySM, a four-week customer education program that premiered in all our stores during fiscal 1999. In addition, we added tool rental centers to 104 stores during...

  • Page 9
    ... design, sourcing, merchandising and training programs. Home Depot and EXPO Design Center stores are benefiting today from this acquisition in all four areas. In January 2000, we acquired Apex Supply Company, a wholesale distributor of plumbing, HVAC and related products. Going forward, we plan...

  • Page 10
    ... Depot 20 years ago, EXPO is poised to revolutionize this segment of the home improvement market. We also learned more about serving the hardware convenience customer. During fiscal 1999, we opened two Villager's Hardware test stores in New Jersey. Designed primarily to serve smaller project or home...

  • Page 11
    ... its global presence, sustaining the environment will become an even more important issue for the Company and our vendor partners. During fiscal 1999, The Home Depot celebrated its 20th year of business. We have achieved so much in just 20 years of history. But even more opportunity exists for us in...

  • Page 12
    ... for sale on the Internet in select markets during fiscal 2000. new During fiscal 1999, 65 stores participated in a test offering of home improvement loans. Based on the success of this test in driving and supporting major product sales, the Company is finalizing plans to expand this program to...

  • Page 13
    ... our home services programs, primarily by making the entire process smoother for customers. The Home Depot currently offers nine core installation programs in all of its stores, and is in the process of expanding additional installation services for roofing, vinyl siding and replacement windows. As...

  • Page 14
    ... pick-up and delivery services; credit programs; and associates dedicated to the professional business customer generated incremental sales and operating profits in three test markets, and was expanded to 10 more markets during the year. By the end of fiscal 1999, The Home Depot was finalizing plans...

  • Page 15
    Home Depot University debuted in all stores during fiscal 1999. This comprehensive, four-week program enhances the skills of our customers in areas such as planning and completing kitchens, bathrooms or decks. re: think Store associates attend weekly product knowledge classes, gaining knowledge ...

  • Page 16
    During fiscal 1999, The Home Depot acquired Apex Supply Company and Georgia Lighting. These companies have the expertise and resources to allow The Home Depot to increase its penetration of the professional plumbing and lighting markets. re: create 12

  • Page 17
    ... home improvement needs. Every day we look for opportunities to do it in a bigger way. At the end of fiscal 1999, 74 Home Depot stores were open 24 hours a day to serve customers. One hundred seventy-one stores were testing new staffing formulas designed to enhance sales and service, and 11 stores...

  • Page 18
    ... and rebuilding supplies to relief agencies, and sent more than 50,000 gallons of water to affected people. We were also in Oklahoma City following devastating tornadoes, rebuilding roofs, planting trees and clearing roads. Home Depot associates extend helping hands more often than just in times of...

  • Page 19
    Home Depot associates help to build a better world through disaster relief efforts and participation in programs such as Habitat for Humanity. Wood studs certified by the Forest Stewardship Council premiered in Home Depot stores in the Northeast region during fiscal 1999. re: solve 15

  • Page 20
    ... other housing and building-related products market in North America. Our large and growing industry provides significant opportunities for continued growth. grow During fiscal 1999, The Home Depot opened 169 new stores, the equivalent of one new store every 52 hours. We currently plan to grow to...

  • Page 21
    ... encouragement for successful long-term international growth. Today, The Home Depot is the strongest home improvement brand in the world. From stores, to Home Depot home improvement books, to corporate gift certificate incentive programs, to powerful sponsorships like NASCAR's® Tony Stewart, CBS...

  • Page 22
    ... change in the dollar amounts of each of the items. Selected Consolidated Statements of Earnings Data Fiscal 1999 Year (1) 1997 Percentage Increase (Decrease) in Dollar Amounts 1999 vs. 1998 1998 vs. 1997 1998 Net Sales Gross Profit Operating Expenses: Selling and Store Operating(2) Pre-Opening...

  • Page 23
    ... was primarily due to the opening of more EXPO Design Center stores and expansion into certain new Home Depot markets, which involved longer pre-opening periods and higher training, travel and relocation costs. General and administrative expenses as a percent of sales were 1.7% for both fiscal 1999...

  • Page 24
    ... average pay rates to support. Overall productivity, in terms of sales per labor hour, increased from fiscal 1997. Pre-opening expenses as a percent of sales were 0.3% for both fiscal 1998 and 1997. The Company opened 138 new stores and relocated 4 stores in fiscal 1998, and opened 112 new stores...

  • Page 25
    ..., the Company had $168 million in cash and cash equivalents. Management believes that its current cash position, the proceeds from short-term investments, internally generated funds, funds available from its $800 million commercial paper program, funds available from the operating lease agreements...

  • Page 26
    ... of Earnings The Home Depot, Inc. and Subsidiaries amounts in millions, except per share data January 30, 2000 Fiscal Year Ended January 31, 1999 February 1, 1998 Net Sales Cost of Merchandise Sold Gross Profit Operating Expenses: Selling and Store Operating Pre-Opening General and Administrative...

  • Page 27
    ... January 31, 1999 Assets Current Assets: Cash and Cash Equivalents Short-Term Investments, including current maturities of long-term investments Receivables, net Merchandise Inventories Other Current Assets Total Current Assets Property and Equipment, at cost: Land Buildings Furniture, Fixtures and...

  • Page 28
    ... 1997 Shares Sold Under Employee Stock Purchase and Option Plans, net of retirements (note 4) Tax Effect of Sale of Option Shares by Employees Net Earnings Translation Adjustments Immaterial Pooling of Interests Shares Purchased for Compensation Plans (notes 4 and 6) Cash Dividends ($0.063 per share...

  • Page 29
    ... in fiscal 1999, 1998 and 1997, respectively Purchase of Remaining Interest in The Home Depot Canada Payments for Businesses Acquired, net Proceeds from Sales of Property and Equipment Purchases of Investments Proceeds from Maturities of Investments Advances Secured by Real Estate, net Net...

  • Page 30
    ...of Significant Accounting Policies The Company operates Home Depot stores, which are full-service, warehouse-style stores averaging approximately 108,000 square feet in size. The stores stock approximately 40,000 to 50,000 different kinds of building materials, home improvement supplies and lawn and...

  • Page 31
    ... costs include the estimated loss on the sale of land and buildings, the book value of abandoned fixtures, equipment and leasehold improvements, and a provision for the present value of future lease obligations, less estimated sub-lease income. Stock Compensation Statement of Financial Accounting...

  • Page 32
    ...imputed market price at January 30, 2000. The estimated fair value of all other long-term borrowings was approximately $441 million compared to the carrying value of $279 million. These fair values were estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate...

  • Page 33
    ...Employee Stock Plans The 1997 Omnibus Stock Incentive Plan ("1997 Plan") provides that incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock and deferred shares may be issued to selected associates, officers and directors of the Company. The maximum number...

  • Page 34
    ... residual value guarantees and include purchase options at original cost on each property. The Company financed a portion of its new stores in fiscal 1997, 1998 and 1999, as well as an office building in fiscal 1999, under the operating lease agreements. The Company anticipates utilizing these...

  • Page 35
    ... certain service requirements. The Company makes weekly matching cash contributions to purchase shares of the Company's common stock, up to specified percentages of associates' contributions as approved by the Board of Directors. During fiscal 1988, the Company established a leveraged Employee Stock...

  • Page 36
    ... or enhancement of certain human resources programs, as well as the settlement terms of the three other lawsuits. Payments made in fiscal 1999 totaled $3.4 million primarily related to internal costs for human resources staffing and training for store associates. The Company expects to spend the...

  • Page 37
    ... accounting controls, which is supported by an internal audit program and is designed to provide reasonable assurance, at an appropriate cost, that the Company's assets are safeguarded and transactions are properly recorded. This system is continually reviewed and modified in response to changing...

  • Page 38
    ..., President and Chief Executive Officer, BellSouth Corporation In January 2000, Business Week magazine ranked The Home Depot in the top ten of a list of the "25 Best Boards of Directors in America." Members of The Home Depot Board of Directors are required to visit five stores per quarter to stay...

  • Page 39
    ... Store Support Center The Home Depot, Inc. 2455 Paces Ferry Road, NW Atlanta, GA 30339-4024 Telephone: 770-433-8211 Direct Stock Purchase/Dividend Reinvestment Plan New investors may make an initial investment and stockholders of record may acquire additional shares of The Home Depot common stock...

  • Page 40
    ... Book value per share ($) (3) Long-term debt to equity (%) Current ratio Inventory turnover Return on invested capital (%) (2) Statement of Cash Flows Data Depreciation and amortization Capital expenditures Cash dividends per share ($) (3) Store Data (5) Number of stores Square footage at year-end...

  • Page 41
    ... share for fiscal 1997, including a $104 million non-recurring charge, were $0.52 (see note 8 of the Notes to Consolidated Financial Statements). Apex Supply Company, Georgia Lighting, Maintenance Warehouse, and National Blinds and Wallpaper. (6) Adjusted to reflect the first 52 weeks of the 53-week...

  • Page 42
    ... with The Home Depot's commitment to preserving the environment, this annual report is printed on paper created in partnership with Lyons Falls Pulp and Paper Company. The paper is certified in accordance with the principles and criteria of the Forest Stewardship Council. This certification ensures...