Home Depot 2005 Annual Report Download - page 20

strategic importance, such as Trading Spaces↦, While You Were Out↦ and This Old House↦. We
extend our reach and educate our customers through proprietary publications, such as the 1-2-3↦ home
improvement book series.
We execute our marketing campaigns on both a national and local basis. Because our stores are located
throughout the U.S., Canada and Mexico, we can achieve greater efficiencies than smaller retailers by
using national advertising. At the same time, we tailor our advertising locally to respond to market
differences, both in terms of products and the competitive environment. We produce advertisements in
English, Spanish and French-Canadian.
Credit Services. We offer credit purchase programs through third-party credit providers to professional,
D-I-Y and D-I-F-M customers. In fiscal 2005, approximately 4 million new The Home Depot credit
accounts were opened, bringing the total number of The Home Depot account holders to
approximately 16 million. Proprietary credit card sales accounted for approximately 26% of store sales
in fiscal 2005. We also offer an unsecured Home Improvement Loan that gives our customers the
opportunity to finance the purchase of products and services in our stores. We believe that this loan
program not only supports large sales, such as kitchen and bath remodels, but also generates
incremental sales from our customers.
Intellectual Property. Through our wholly-owned subsidiary, Homer TLC, Inc., we have registered or
applied for registration, in a number of countries, for a variety of internet domain names, service marks
and trademarks for use in our businesses, including The Home Depot↦; Home Depot Direct;
Hampton Bay↦ fans, lighting and accessories; Glacier Bay↦ toilets, sinks and faucets; Pegasus↦ faucets
and bath accessories; Commercial Electric↦ lighting fixtures; Workforce↦ tools, tool boxes and
shelving; www.10CrescentLane.com and www.PacesTrading.com. Furthermore, through various
acquisitions and filings, we have also obtained and now maintain patent portfolios relating to certain
products and services provided by The Home Depot, and continually seek to patent or otherwise
protect selected innovations we incorporate into our products and business operations. We regard our
intellectual property as having significant value and as being an important factor in the marketing of
our brand, e-commerce, stores and new areas of business. We are not aware of any facts that could be
expected to have a material adverse affect on our intellectual property.
Quality Assurance Program. We have a quality assurance program for our directly imported globally-
sourced products. Through this program, we have established criteria for supplier and product
performance, which measures factors such as product quality and timeliness of shipments. The
performance record is made available to the factories to allow them to strive for improvement. The
quality assurance program addresses the following three main components:
• Factory: the factory development group ensures all direct import factories are assessed and
qualified to manufacture quality products that meet the expectations we have established, as well
as to assess their compliance with our policies;
• Products: the product engineering group authorizes laboratories to test products prior to
purchase and ensures that qualified inspectors conduct inspections at the factory to ensure
consistent compliance with our requirements, applicable national and international standards,
and features determined by our merchants; and
• Packages: the package-engineering group authorizes laboratories to test packaging prior to
purchase and ensures that qualified inspectors inspect packaging at the factory to ensure
consistent compliance with all relevant requirements.
Logistics. We use several mechanisms to lower distribution costs and increase our efficiencies. Import
distribution centers process our globally-sourced merchandise. At the end of fiscal 2005, we had 16
import distribution centers located in the U.S. and Canada. At the end of fiscal 2005, we also had 30
lumber distribution centers in the U.S. and Canada to support the lumber demands of our stores and
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