Home Depot 2006 Annual Report Download - page 24

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dismissed his complaint. The Court has preliminarily appointed a lead plaintiff, and the lead plaintiff
has filed an amended complaint in each of the remaining five actions. Relief sought in the amended
complaint includes unspecified damages and costs and attorney’s fees. The defendants have filed a
motion to dismiss the amended complaint. The Company believes these actions are without merit and
intends to defend them vigorously.
In the second and third quarters of fiscal 2006, three purported, but as yet uncertified, class actions
were filed against the Company, The Home Depot FutureBuilder Administrative Committee and
certain of the Company’s current and former directors and employees in federal court in Brooklyn,
New York alleging breach of fiduciary duty in violation of the Employee Retirement Income Security
Act of 1974 in connection with the Company’s return-to-vendor and stock option practices. These
actions were transferred to the U.S. District Court for the Northern District of Georgia in Atlanta.
These actions were brought by certain former employees of the Company and seek unspecified
damages, costs, attorneys’ fees and equitable and injunctive relief. The Company believes these actions
are without merit and intends to defend them vigorously.
In the second and third quarters of fiscal 2006, six shareholder derivative actions were filed nominally
on behalf of the Company against certain current and former officers and directors in the Superior
Court of Fulton County, Georgia, alleging breach of fiduciary duty, abuse of control, gross
mismanagement, waste of corporate assets, and unjust enrichment in connection with the Company’s
return-to-vendor, stock option, and compensation practices. Such actions were filed by alleged
shareholders of the Company. Relief sought in each action includes unspecified damages, injunctive
relief, disgorgement of profits, benefits and compensation obtained by the defendants, costs, and
attorney’s fees. Subsequently, one joint amended complaint was filed on behalf of all plaintiffs
encompassing all the various claims and seeking the same relief. The defendants have moved to dismiss
or alternatively stay the litigation.
In the first quarter of fiscal 2007, one additional shareholder derivative action was filed nominally on
behalf of the Company against certain of the Company’s current directors and its former chief
executive officer in the U.S. District Court for the Northern District of Georgia in Atlanta, alleging
breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust
enrichment in connection with the Company’s stock option and compensation practices. The action was
filed by alleged shareholders of the Company. Relief sought in the action includes unspecified damages,
injunctive relief, punitive damages, and costs and attorneys’ fees.
In compliance with SEC disclosure requirements, the environmental proceedings set forth below involve
potential monetary sanctions of $100,000 or more. Although the Company cannot predict the outcome
of these proceedings, it does not expect any such outcome to have a material adverse effect on its
consolidated financial condition or results of operations.
In January 2003, Home Depot U.S.A., Inc., a wholly-owned subsidiary of the Company, received a
request for information from the U.S. Environmental Protection Agency (‘‘EPA’’) regarding alleged
pollutant discharges during construction activities at certain The Home Depot stores. The EPA
subsequently referred this matter to the U.S. Department of Justice (‘‘DOJ’’). The DOJ and the
Company are currently discussing the potential settlement of this matter.
In April 2005, the Company received subpoenas from the State of New York’s Office of Attorney
General seeking documents and testimony related to the sale and handling of pesticides. The Company
is cooperating fully with the Office of Attorney General and believes it is indemnified if monetary
sanctions are imposed.
In July 2005, the Company received a grand jury subpoena from the United States Attorney’s Office in
Los Angeles, California, seeking documents and information relating to the Company’s handling,
storage and disposal of hazardous waste. California state and local government authorities are also
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