Home Depot 2005 Annual Report Download - page 68

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8. BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
The reconciliation of basic to diluted weighted average common shares for fiscal 2005, 2004 and 2003
was as follows (amounts in millions):
Fiscal Year Ended
January 29, January 30, February 1,
2006 2005 2004
Weighted average common shares 2,138 2,207 2,283
Effect of potentially dilutive securities:
Stock Plans 996
Diluted weighted average common shares 2,147 2,216 2,289
Stock plans include shares granted under the Company’s employee stock plans as described in Note 5
to the consolidated financial statements. Options to purchase 55.1 million, 49.1 million and 67.9 million
shares of common stock at January 29, 2006, January 30, 2005 and February 1, 2004, respectively, were
excluded from the computation of Diluted Earnings per Share because their effect would have been
anti-dilutive.
9. COMMITMENTS AND CONTINGENCIES
At January 29, 2006, the Company was contingently liable for approximately $1.3 billion under
outstanding letters of credit issued for certain business transactions, including insurance programs, trade
and construction contracts. The Company’s letters of credit are primarily performance-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.
10. ACQUISITIONS
The following acquisitions completed by the Company were all accounted for under the purchase
method of accounting. Pro forma results of operations for fiscal 2005, 2004 and 2003 would not be
materially different as a result of these acquisitions and therefore are not presented.
In August 2005, the Company acquired National Waterworks, Inc., a leading distributor of products
used to build, repair and maintain water and wastewater transmission systems. The aggregate purchase
price of this acquisition was $1.4 billion.
The Company completed several other acquisitions during fiscal 2005, 2004 and 2003, primarily adding
professional service capabilities to Home Depot Supply. The total aggregate purchase price for
acquisitions, including National Waterworks, Inc., in fiscal 2005, 2004 and 2003 was $2.6 billion,
$729 million and $248 million, respectively. Accordingly, the Company recorded Cost in Excess of the
Fair Value of Net Assets Acquired related to the acquisitions of $1.9 billion, $554 million and
$231 million for fiscal 2005, 2004 and 2003, respectively, in the accompanying Consolidated Balance
Sheets.
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