Home Depot 2001 Annual Report Download

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2001 Annual Report

Table of contents

  • Page 1
    2001 Annual Repor t

  • Page 2
    ... 2001 SALES OF $53.6 BILLION. AT THE CLOSE OF FISCAL 2001, THE HOME DEPOT OPERATED 1,333 RETAIL LOCATIONS, INCLUDING 1,201 HOME DEPOT STORES IN THE UNITED STATES, 78 HOME DEPOT STORES IN CANADA, AND EIGHT HOME DEPOT STORES IN MEXICO AND ARGENTINA. THE COMPANY ALSO OPERATED 41 EXPO DESIGN CENTERS...

  • Page 3
    ...a golden opportunity by being fired as president of what was then the nation's largest home improvement company. A door opened to a new vision of retailing, in which warehouse merchandising, contractor pricing and knowledgeable service would enable customers to take control of their home improvement...

  • Page 4
    ... LIKENESS. This image is made up of 2,025 photographs of Home Depot associates gathered during the 2002 Home Depot Managers Road Show, a series of meetings between senior leaders, district and store managers from Home Depot stores across the country. The road show format was invented and perfected...

  • Page 5
    ... annual dividend 25%, allowing stockholders to benefit from the strong cash flows we produce. We reinvested more than $3.3 billion into our business through new stores, systems enhancements, and other initiatives. The Home Depot opened 204 new stores and added 40,000 incremental associates to staff...

  • Page 6
    ... in 2001 it validated our key initiatives, including: Service Performance Improvement (SPI) - We implemented SPI across every division between June and October, the largest single shift in operating practice in Home Depot history. By receiving and processing inventory at night, SPI makes more hours...

  • Page 7
    ... shift our store management focus from "operating a box" to "managing a business." Every Home Depot associate received a special lesson in leadership this year from our Olympic Job Opportunity Program (OJOP) athletes who competed in the 2002 Olympic and Paralympic Winter Games. I'm sure you share...

  • Page 8
    PA I N T + D E C O R KITCHEN + BATH FLOORING LUMBER PLUMBING L I G H T I N G + FA N S LAWN + GARDEN BUILDING MATERIALS ELECTRICAL 6 M I L L WO R K TOOL RENTAL

  • Page 9
    ... to complete your project, small or large. No wonder our customers rang up more than a billion transactions in 2001.Yet, our stores give more than great customer service. Exploring the store, you see clearly printed signage, conveniently placed displays and wide, safe aisles. Our stores provide more...

  • Page 10
    ...customer service effort called Service Performance Improvement, or SPI, which rolled out to all Home Depot stores in 2001. The key: associates focus fully on serving customers while the store is open, and only after hours do they turn to tasks such as unloading trucks with forklifts and re-stocking...

  • Page 11
    ... Depot. During 2001, we expanded the management team and resources to support a more aggressive rollout of our pro initiative. At the end of fiscal 2001, 535 stores were offering pro-specific product assortments, credit programs and enhanced will-call and delivery services through a pro desk staffed...

  • Page 12
    ...our competitors. In 2001, we realigned our merchandising structure to leverage the buying power and scale of The Home Depot while improving our neighborhood product assortment, pricing, and service across all stores.While we centralized purchasing, our divisional offices retained responsibility for...

  • Page 13
    The Home Depot currently offers installation programs for products including carpet, hard flooring, kitchen cabinets, countertops, exterior doors, garage doors, appliances, window treatments, water heaters, roofing, windows, vinyl siding, HVAC, generators, and many more in all of our stores. ...

  • Page 14
    12

  • Page 15
    ... new business areas. By identifying new customers, developing new store formats and building new product and sales capabilities,The Home Depot can extend its business into markets that go beyond the core retail format. Stores like EXPO Design Centers offer product and project growth opportunities...

  • Page 16
    ... & REMODELING RESOURCE EXPO Design Centers offer eight specialty showrooms under one roof, including lighting, appliances, tile, wood flooring and carpeting, bath, home accessories, window treatment, seasonal and kitchen products, all combined with full design and installation services. Over...

  • Page 17
    ... by the end of fiscal year 2001, and it will become even sharper going forward. familyfriendly stores To serve in-town residents, for example, we have recently introduced a new store format in Brooklyn. This "urban store" design offers Home Depot products and services in a compact format, with...

  • Page 18
    BUILDING BUSINESS-TOBUSINESS RELATIONSHIPS In 2001, The Home Depot began to aggregate and coordinate our ability to serve other business customers, from the professional remodeller to the largest companies in North America. Under the umbrella of Home Depot Supply, The Home Depot can gain growth ...

  • Page 19
    .... By 2003, The Home Depot expects to be operating up to 15 of these facilities serving the majority of our stores and providing cost leverage across the business. At The Home Depot, "e-commerce" stands for "efficient commerce." By routing web-based orders through existing stores, we can offer 20,000...

  • Page 20
    ... the E+ Program in the spring of 2001. The Home Depot's nationwide energy conservation initiative, this program includes clinics, signage, catalog pages and merchandise displays that demonstrate a variety of energy saving projects for homeowners. Our web site www.homedepot.com/energy contains over...

  • Page 21
    ...; January 28, 2001; and January 30, 2000, respectively. Excludes Apex Supply Company, Georgia Lighting, Maintenance Warehouse, Your "other" Warehouse and National Blinds and Wallpaper. Adjusted to reflect the first 52 weeks of the 53-week fiscal year in 2001. The Home Depot, Inc. and Subsidiaries...

  • Page 22
    ...Depot store in fiscal 2001. Under SPI our stores receive and handle inventory at night, allowing our associates to spend more time with customers during peak selling hours. In addition, our Pro program was in 535 of our Home Depot stores at the end of fiscal 2001, providing dedicated store resources...

  • Page 23
    ... to the opening of more EXPO Design Center stores and expansion of Home Depot stores into certain new markets including international locations, which involved longer pre-opening periods and higher training, travel and relocation costs. General and administrative expenses as a percent of sales were...

  • Page 24
    ... off-balance sheet leases. We issue letters of credit for insurance programs, import purchases and construction contracts. Under certain off-balance sheet leases for retail locations, office buildings and distribution centers, we have provided residual value guarantees. The estimated maximum amount...

  • Page 25
    ... returns based on the historical return levels. The methodology used is consistent with other retailers. We believe that our estimate for sales returns is an accurate reflection of future returns. When we collect payment from customers before ownership of the merchandise has passed or the service...

  • Page 26
    ...Income Taxes NET EARNINGS BASIC EARNINGS PER SHARE Weighted Average Number of Common Shares Outstanding $ DILUTED EARNINGS PER SHARE $ $ Weighted Average Number of Common Shares Outstanding Assuming Dilution See accompanying notes to consolidated financial statements. 24 The Home Depot, Inc...

  • Page 27
    ... Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Other Accrued Expenses Deferred Revenue Income Taxes ...Stock, par value $0.05. Authorized: 10,000,000,000 shares; issued and outstanding - 2,345,888,000 shares at February 3, 2002 and 2,323,747,000 shares at January 28, 2001...

  • Page 28
    ... Shares Issued Under Employee Stock Purchase and Option Plans Tax Effect of Sale of Option Shares by Employees Net Earnings Translation Adjustments Unrealized Loss on Derivatives Stock Compensation Expense Unearned Compensation Cash Dividends ($0.17 per share) Comprehensive Income for Fiscal 2001...

  • Page 29
    ... Sale of Common Stock, net Cash Dividends Paid to Stockholders Minority Interest Contributions to Partnership Net Cash (Used In) Provided by Financing Activities Effect of Exchange Rate Changes on Cash and Cash Equivalents Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents...

  • Page 30
    ... that are sold primarily to do-it-yourselfers, but also to home improvement contractors, tradespeople, and building maintenance professionals. In addition, the Company operates EXPO Design Center stores, which offer products and services primarily related to design and renovation projects, and...

  • Page 31
    ...the acquired operation. The amount of goodwill impairment, if any, is measured based on projected discounted cash flows using a discount rate reflecting the Company's average cost of funds. IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews REVENUES The Company recognizes revenue, net of estimated...

  • Page 32
    ... expenses are translated at the average monthly exchange rates, and equity transactions are translated using the actual rate on the day of the transaction. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities...

  • Page 33
    .... The Company recorded stock compensation expense related to deferred stock units in the amount of $16 million and $6 million in fiscal 2001 and 2000, respectively. The per share weighted average fair value of stock options granted during fiscal years 2001, 2000 and 1999 was $20.51, The Home Depot...

  • Page 34
    ... affiliated with the Company, its management or officers. The Company financed a portion of its new stores opened in fiscal 1997 through 2001, as well as a distribution center and office buildings, under these lease agreements. Under both agreements, the lessor purchases the properties, pays for the...

  • Page 35
    ... the Internal Revenue Code. The Company funds the 401(k) Restoration Plan through contributions made to a "rabbi trust," which are then used to purchase shares of the Company's common stock in the open market. Compensation expense related to this plan for fiscal years 2001, 2000 and 1999 was not...

  • Page 36
    ... sale, the Company received proceeds comprised of cash and secured notes. An impairment charge of $45 million was recorded in selling and store operating expenses in fiscal 2001 to write down the net assets of The Home Depot Argentina S.R.L. to fair value. During fiscal 2000, Maintenance Warehouse...

  • Page 37
    ... to associates its policies for conducting business affairs in a lawful and ethical manner. The financial statements of the Company have been audited by KPMG LLP , independent auditors. Their accompanying report is based upon an audit conducted in accordance with auditing standards generally...

  • Page 38
    ... per operating store (in thousands)(4) Weighted average sales per square foot ($)(4,6) Number of customer transactions(4) Average sale per transaction ($)(4) Number of associates at year-end (actual) (1) (2) (3) $ Fiscal years 2001 and 1996 consisted of 53 weeks; all other fiscal years reported...

  • Page 39
    ...National Blinds and Wallpaper. Excludes payments for businesses acquired (net, in millions) for fiscal 2001 ($190), fiscal 2000 ($26), fiscal 1999 ($101), fiscal 1998 ($6) and fiscal 1997 ($61). Adjusted to reflect the first 52 weeks of the 53-week fiscal years in 2001 and 1996. The Home Depot, Inc...

  • Page 40
    ... Store Support Center, or access the Company's web site. QUA RT E R LY S TO C K P R I C E R A N G E First Quarter Second Quarter Third Quarter Fourth Quarter KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308 S TO C K E X C H A N G E L I S T I N G New York Stock Exchange Trading symbol...

  • Page 41
    ... 4, 5* Lead Director; Chairman of the Board, Chief Executive Officer and President Invemed Associates, Inc. Committee Membership: 1 2 3 4 5 6 * Audit Compensation Executive Human Resources Nominating & Corporate Governance IT Advisory Council Chair Bernard Marcus 3* Co-Founder The Home Depot, Inc...

  • Page 42
    www.homedepot.com The Home Depot 2455 Paces Ferry Road, NW Atlanta, Georgia 30339-4024 USA 770.433.8211 2700-AR-02