Home Depot 2004 Annual Report Download - page 17

Management’s Discussion and Analysis of
Results of Operations and Financial Condition (continued)
The Home Depot, Inc. and Subsidiaries
15The Home Depot, Inc.
We generated $6.9 billion of cash flow from operations in fiscal
2004. In addition to the aforementioned investments of $3.9 billion
in capital expenditures and $727 million for acquisitions, we also
returned $3.8 billion to our shareholders in the form of dividends
and share repurchases. Our financial condition remains strong as
evidenced by our $2.2 billion in Cash and Short-Term Investments
at January 30, 2005. At the end of fiscal 2004, our total debt-to-
equity ratio was 8.9% and our return on invested capital
(computed on beginning Long-Term Debt and Equity for the trailing
four quarters) was 21.5% compared to 20.4% at the end of fiscal
2003, a 110 basis point improvement.
We believe the selected sales data, the percentage relationship
between Net Sales and major categories in the Consolidated
Statements of Earnings and the percentage change in the dollar
amounts of each of the items presented below is important in eval-
uating the performance of our business operations. We operate in
one business segment and believe the information presented in our
Management’s Discussion and Analysis of Results of Operations
and Financial Condition provides an understanding of our business
segment, our operations and our financial condition.
% Increase (Decrease)
% of Net Sales In Dollar Amounts
Fiscal Year
(1)
2004 2003
2004 2003 2002 vs.2003 vs.2002
NET SALES 100.0% 100.0% 100.0% 12.8% 11.3%
Gross Profit 33.4 31.8 31.1 18.7 13.7
Operating Expenses:
Selling and Store Operating 20.7 19.4 19.4 20.0 11.6
General and Administrative 1.9 1.8 1.7 22.1 14.4
Total Operating Expenses 22.6 21.2 21.1 20.2 11.9
OPERATING INCOME 10.8 10.6 10.0 15.8 17.4
Interest Income (Expense):
Interest and Investment Income 0.1 0.1 0.1 (5.1) (25.3)
Interest Expense (0.1) (0.1) (0.0) 12.9 67.6
Interest, net –– 0.1 366.7 (107.1)
EARNINGS BEFORE PROVISION FOR INCOME TAXES 10.8 10.6 10.1 15.6 16.5
Provision for Income Taxes 4.0 4.0 3.8 14.7 15.0
NET EARNINGS 6.8% 6.6% 6.3% 16.2% 17.5%
SELECTED SALES DATA
Number of Customer Transactions (000s)(2) 1,295,185 1,245,721 1,160,994 4.0% 7.3%
Average Ticket(2) $ 54.89 $ 51.15 $ 49.43 7.3 3.5
Weighted Average Weekly Sales per Operating Store(2) $ 766,000 $ 763,000 $ 772,000 0.4 (1.2)
Weighted Average Sales per Square Foot(2) $375.26 $370.87 $370.21 1.2 0.2
Comparable Store Sales Increase (%)(3) 5.4% 3.8% 0% N/A N/A
(1) Fiscal years 2004, 2003 and 2002 refer to the fiscal years ended January 30, 2005, February 1, 2004 and February 2, 2003, respectively. Fiscal years 2004, 2003 and
2002 include 52 weeks.
(2) Excludes all subsidiaries operating under The Home Depot Supply brand (Apex Supply Company, Inc., The Home Depot Supply, Inc., Your Other Warehouse, LLC, White Cap
Industries, Inc. and HD Builder Solutions Group, Inc.) since their inclusion may cause distortion of the data presented due to operational differences from our retail stores.
The total number of the excluded locations and their total square footage are immaterial to our total number of locations and total square footage.
(3) Includes net sales at locations open greater than 12 months, including relocated and remodeled stores, and net sales of all the subsidiaries of The Home Depot, Inc.
Stores and subsidiaries become comparable on the Monday following their 365th day of operation. We believe comparable store sales is a meaningful measurement of our
operating performance and is a common measurement of operating performance in the retail industry. This measurement is intended only as supplemental information, and
is not a substitute for net sales or net earnings presented in accordance with generally accepted accounting principles.