Home Depot 2002 Annual Report Download - page 41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE HOME DEPOT, INC. AND SUBSIDIARIES
6EMPLOYEE BENEFIT PLANS
The Company maintains three active defined contribution
retirement plans (the “Plans”). All associates satisfying certain
service requirements are eligible to participate in the Plans.
The Company makes cash contributions each payroll period
to purchase shares of the Company’s common stock, up to
specified percentages of associates’ contributions as approved
by the Board of Directors.
The Company’s contributions to the Plans were $99 million,
$97 million and $84 million for fiscal years 2002, 2001 and
2000, respectively. At February 2, 2003, the Plans held a total
of 33 million shares of the Company’s common stock in trust for
plan participants.
The Company also maintains a restoration plan to provide
certain associates deferred compensation that they would have
received under the Plans as a matching contribution if not for the
maximum compensation limits under the Internal Revenue Code.
The Company funds the restoration plan through contributions
made to a grantor 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 2002, 2001 and 2000
was not material.
7BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES
The reconciliation of basic to diluted weighted average common
shares for fiscal years 2002, 2001 and 2000 was as follows
(amounts in millions):
Fiscal Year Ended
February 2, February 3, January 28,
2003 2002 2001
Weighted average
common shares 2,336 2,335 2,315
Effect of potentially
dilutive securities:
Stock Plans 818 37
Diluted weighted average
common shares 2,344 2,353 2,352
Stock plans include shares granted under the Company’s
employee stock purchase plans and stock incentive plans, as
well as shares issued for deferred compensation stock plans.
Options to purchase 72.1 million, 11.2 million and 10.9 million
shares of common stock at February 2, 2003, February 3, 2002
and January 28, 2001, respectively, were excluded from the
computation of diluted earnings per share because their effect
would have been anti-dilutive.
8COMMITMENTS AND CONTINGENCIES
At February 2, 2003, the Company was contingently liable
for approximately $930 million under outstanding letters of
credit issued for certain business transactions, including insur-
ance programs, import inventory purchases and construction
contracts. The Company’s letters of credit are primarily per-
formance-based and are not based on changes in variable
components, a liability or an equity security of the other party.
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.
9ACQUISITIONS AND DISPOSITIONS
In October 2002, the Company acquired substantially all
of the assets of FloorWorks, Inc. and Arvada Hardwood Floor
Company, and common stock of Floors, Inc., three flooring
installation companies primarily servicing the new home
builder industry. These acquisitions were accounted for under
the purchase method of accounting.
In June 2002, the Company acquired the assets of
Maderería Del Norte, S.A. de C.V., a four-store chain of home
improvement stores in Juarez, Mexico. The acquisition was
accounted for under the purchase method of accounting.
In fiscal 2001, the Company acquired Your “other”
Warehouse and Soluciones Para Las Casas de Mexico,
S. de R.L. de C.V. These acquisitions were accounted for
under the purchase method of accounting.
Pro forma results of operations for fiscal years 2002, 2001
and 2000 would not be materially different as a result of the
acquisitions discussed above and therefore are not presented.
In February 2002, the Company sold all of the assets of
The Home Depot Argentina S.R.L. In connection with the sale,
the Company received proceeds comprised of cash and notes.
An impairment charge of $45 million was recorded in Selling and
Store Operating Expenses in the accompanying Consolidated
Statements of Earnings in fiscal 2001 to write down the net assets
of The Home Depot Argentina S.R.L. to fair value.
In October 2001, the Company sold all of the assets of
The Home Depot Chile S.A., resulting in a gain of $31 million
included in Selling and Store Operating Expenses in the accom-
panying Consolidated Statements of Earnings.
THE HOME DEPOT, INC. 2002 ANNUAL REPORT 39