Home Depot 1999 Annual Report Download - page 36

Notes to Consolidated Financial Statements (continued)
The Home Depot, Inc. and Subsidiaries
>Note 8
Lawsuit Settlements
During fiscal 1997, the Company, without admitting any wrongdoing,
entered into a settlement agreement with plaintiffs in the class action
lawsuit Butler et. al. v. Home Depot, Inc., in which the plaintiffs had
asserted claims of gender discrimination. The Company subsequently
reached agreements to settle three other lawsuits seeking class action
status, each of which involved claims of gender discrimination.
As a result of these agreements, the Company recorded a pre-tax
non-recurring charge of $104 million in fiscal 1997 and, in fiscal 1998,
made payments to settle these agreements. The payments made in
fiscal 1998 included $65 million to the plaintiff class members and
$22.5 million to the plaintiff’s attorneys in Butler, and approximately
$8 million for other related internal costs, including implementation 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 remaining $5 million for additional
training programs.
>Note 9
Commitments and Contingencies
At January 30, 2000, the Company was contingently liable for
approximately $419 million under outstanding letters of credit issued
in connection with purchase commitments.
The Company is involved in litigation arising from the normal
course of business. In management’s opinion, this litigation is not
expected to materially impact the Company’s consolidated results of
operations or financial condition.
>Note 10
Acquisitions
During the first quarter of fiscal 1998, the Company purchased,
for $261 million, the remaining 25% partnership interest held by
The Molson Companies in The Home Depot Canada. The excess
purchase price over the estimated fair value of net assets of $117 million
as of the acquisition date was recorded as goodwill and is being
amortized over 40 years. As a result of this transaction, the Company
now owns all of The Home Depot’s Canadian operations. The Home
Depot Canada partnership was formed in 1994 when the Company
acquired 75% of Aikenhead’s Home Improvement Warehouse for
approximately $162 million. The terms of the original partnership
agreement provided for a put/call option, which would have resulted
in the Company purchasing the remaining 25% of The Home Depot
Canada at any time after the sixth anniversary of the original agree-
ment. The companies reached a mutual agreement to complete the
purchase transaction at an earlier date.
During fiscal 1999, the Company acquired Apex Supply Company,
Inc. and Georgia Lighting, Inc. Both acquisitions were recorded under
the purchase method of accounting.
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>Note 11
Quarterly Financial Data (unaudited)
The following is a summary of the quarterly results of operations for the fiscal years ended January 30, 2000 and January 31, 1999 (dollars
in millions, except per share data):
Increase Basic Diluted
In Comparable Gross Net Earnings Earnings
Net Sales Store Sales Profit Earnings Per Share Per Share
Fiscal year ended January 30, 2000:
First quarter
$ 8,952 9% $ 2,566 $ 489 $0.22 $0.21
Second quarter 10,431 11% 3,029 679 0.30 0.29
Third quarter 9,877 10% 2,894 573 0.26 0.25
Fourth quarter 9,174 9% 2,922 579 0.25 0.25
Fiscal year $ 38,434 10% $ 11,411 $ 2,320 $1.03 $1.00
Fiscal year ended January 31, 1999:
First quarter $ 7,123 7% $ 1,968 $ 337 $0.15 $0.15
Second quarter 8,139 7% 2,263 467 0.21 0.21
Third quarter 7,699 7% 2,177 392 0.18 0.17
Fourth quarter 7,258 9% 2,197 418 0.19 0.18
Fiscal year $ 30,219 7% $ 8,605 $ 1,614 $0.73 $0.71