Home Depot 2000 Annual Report Download - page 30

Notes to Consolidated Financial Statements (continued)
The Home Depot, Inc. and Subsidiaries
The following table summarizes options outstanding under the
various stock option plans at January 28, 2001, January 30, 2000
and January 31, 1999 and changes during the fiscal years ended on
these dates (shares in thousands):
Weighted
Number Average
of Shares Option Price
Outstanding at February 1, 1998 65,727 $ 10.08
Granted 21,041 21.63
Exercised (11,640) 9.07
Cancelled (3,536) 13.89
Outstanding at January 31, 1999 71,592 13.45
Granted 14,006 37.81
Exercised (13,884) 10.88
Cancelled (3,295) 18.88
Outstanding at January 30, 2000 68,419 18.79
Granted 14,869 49.78
Exercised (14,689) 13.15
Cancelled (2,798) 30.51
Outstanding at January 28, 2001 65,801 $ 26.46
Exercisable 27,856 $ 15.80
The following table summarizes information regarding stock options
outstanding as of January 28, 2001 (shares in thousands):
Weighted Weighted Weighted
Average Average Average
Range of Options Remaining Outstanding Options Exercisable
Exercise Prices Outstanding Life (Years) Option Price Exercisable Option Price
$ 6.00 to 10.00 12,814 3.9 $ 8.80 12,073 $ 8.80
10.00 to 16.00 10,919 6.0 11.50 5,876 11.50
16.00 to 24.00 15,170 7.0 21.00 6,329 20.40
24.00 to 40.00 12,457 8.1 37.30 2,021 36.90
40.00 to 60.00 14,441 9.6 49.80 1,557 41.20
65,801 7.0 $ 26.46 27,856 $ 15.80
In addition, the Company had 30,856,904 shares available for future
grants under the Employee Stock Purchase Plan (“ESPP”) at
January 28, 2001. The ESPP enables the Company to grant substan-
tially all full-time associates options to purchase up to 129,618,750
shares of common stock, of which 98,761,846 shares have been exer-
cised from inception of the plan, at a price equal to the lower of 85%
of the stock’s fair market value on the first day or the last day of the
purchase period. Shares purchased may not exceed the lesser of 20%
of the associate’s annual compensation, as defined, or $25,000 of
common stock at its fair market value (determined at the time such
option is granted) for any one calendar year. Associates pay for the
shares ratably over a period of one year (the purchase period) through
payroll deductions, and cannot exercise their option to purchase any
of the shares until the conclusion of the purchase period. In the event
an associate elects not to exercise such options, the full amount
withheld is refundable. During fiscal 2000, options for 5,395,900
shares were exercised at an average price of $34.33 per share. At
January 28, 2001, there were 2,924,541 options outstanding, net of
cancellations, at an average price of $42.57 per share.
Note 5. Leases
The Company leases certain retail locations, office space, warehouse
and distribution space, equipment and vehicles. While the majority of
the leases are operating leases, certain retail locations are leased
under capital leases. As leases expire, it can be expected that in the
normal course of business, leases will be renewed or replaced.
The Company has two operating lease agreements totaling $882 mil-
lion comprised of an initial lease agreement of $600 million and a
follow-on agreement of $282 million. The Company financed a portion
of its new stores opened from fiscal 1997 through 2000, as well as
office buildings in fiscal 1999 and 2000, under the operating lease
agreements. Under both agreements, the lessor purchases the prop-
erties, pays for the construction costs and subsequently leases the facil-
ities to the Company. The lease term for the $600 million agreement
expires in 2004 and includes four 2-year renewal options. The lease for
the $282 million agreement expires in 2008 with no renewal options.
Both lease agreements provide for substantial residual value guar-
antees and include purchase options at original cost on each property.
The Company also leases an import distribution facility, including its
related equipment, under an operating lease arrangement. The lease
for the import distribution facility expires in 2005 and has four
5-year renewal options. The lease agreement provides for substantial
residual value guarantees and includes purchase options at the higher
of the cost or fair market value of the assets.
The maximum amount of the residual value guarantees relative to
the assets under the lease agreements described above is projected
to be $799 million. As the leased assets are placed into service, the
Company estimates its liability under the residual value guarantees
and records additional rent expense on a straight-line basis over the
remaining lease terms.
Total rent expense, net of minor sublease income for the fiscal years
ended January 28, 2001, January 30, 2000 and January 31, 1999
was $479 million, $389 million and $321 million, respectively. Real
estate taxes, insurance, maintenance and operating expenses appli-
cable to the leased property are obligations of the Company under the
building leases. Certain of the store leases provide for contingent
rentals based on percentages of sales in excess of specified mini-
mums. Contingent rentals for the fiscal years ended January 28,
2001, January 30, 2000 and January 31, 1999 were approximately
$9 million, $11 million and $11 million, respectively.