Home Depot 2006 Annual Report Download - page 48

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business, Consolidation and Presentation
The Home Depot, Inc. and its subsidiaries (the ‘‘Company’’) operate The Home Depot stores, which
are full-service, warehouse-style stores averaging approximately 105,000 square feet in size. The stores
stock approximately 35,000 to 45,000 different kinds of building materials, home improvement supplies
and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers, home
improvement contractors, tradespeople and building maintenance professionals. In addition, the
Company operates EXPO Design Center stores (‘‘EXPO’’), which offer products and services primarily
related to design and renovation projects, and The Home Depot Landscape Supply stores, which
service landscape professionals and garden enthusiasts with lawn, landscape and garden products. At
the end of fiscal 2006, the Company was operating 2,147 stores in total, which included 1,872 The
Home Depot stores, 34 EXPO Design Center stores, 11 The Home Depot Landscape Supply stores
and two The Home Depot Floor Stores in the United States, including the territories of Puerto Rico
and the Virgin Islands (‘‘U.S.’’), 155 The Home Depot stores in Canada, 61 The Home Depot stores in
Mexico and 12 The Home Depot stores in China.
Additionally, HD Supply, through the Company’s wholly-owned subsidiaries, distributes products and
sells installation services primarily to business-to-business customers, including home builders,
professional contractors, municipalities and maintenance professionals. HD Supply consists of four
major platforms: 1) infrastructure, including waterworks and utilities; 2) construction, including
construction supply, lumber and building materials, electrical, plumbing/HVAC and interiors;
3) maintenance, including facilities maintenance and industrial PVF; and 4) repair and remodel.
The Company operates its business in two reportable segments, Retail and HD Supply. See Note 12 for
further information on the Company’s segments. The Consolidated Financial Statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31.
Fiscal years ended January 28, 2007 (‘‘fiscal 2006’’), January 29, 2006 (‘‘fiscal 2005’’) and January 30,
2005 (‘‘fiscal 2004’’) include 52 weeks.
Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the
reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported
amounts of revenues and expenses in preparing these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from these estimates.
Fair Value of Financial Instruments
The carrying amounts of Cash and Cash Equivalents, Receivables, Short-Term Debt and Accounts
Payable approximate fair value due to the short-term maturities of these financial instruments. The fair
value of the Company’s investments is discussed under the caption ‘‘Short-Term Investments’’ in this
Note 1. The fair value of the Company’s Long-Term Debt is discussed in Note 4.
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