The Home Depot Announces Third Quarter Results; Increases Quarterly Dividend by 16%; Updates Capital Allocation Principles and Lifts Fiscal Year 2011 Guidance

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ATLANTA, Nov. 15, 2011 /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported third quarter of fiscal 2011 net earnings of $934 million, or $0.60 per diluted share, compared with net earnings of $834 million, or $0.51 per diluted share, in the same period of fiscal 2010. For the third quarter of fiscal 2011, diluted earnings per share increased 17.6 percent from the prior year.

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    (Logo: http://photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO )

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Sales for the third quarter totaled $17.3 billion, a 4.4 percent increase from the third quarter of fiscal 2010. Comparable store sales for the third quarter of fiscal 2011 were positive 4.2 percent, and comp sales for U.S. stores were positive 3.8 percent.

"Our third quarter was driven by strength in our core categories and storm-related sales as well as strong operating performance," said Frank Blake, chairman & CEO. "We will continue to invest in our core initiatives to provide customers with exceptional customer service and great product values. I would like to thank our associates for their hard work and dedication."

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    Dividend Increase

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The Company today announced that its board of directors declared a 16 percent increase in its quarterly dividend to 29 cents per share. "As a reflection of our progress on the Company's strategic initiatives, the board increased the dividend for the second time this year and has established new capital allocation targets in support of our commitment to create value for our shareholders," said Blake. The dividend is payable on December 15, 2011, to shareholders of record on the close of business on December 1, 2011. This is the 99th consecutive quarter the Company has paid a cash dividend.

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    Capital Allocation Principles

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Combined with today's third quarter earnings announcement, the Company updated its capital allocation principles:

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    --  Dividend Principle:  Targeting a dividend payout ratio of
approximately
        50 percent, up from a prior target of 40 percent.
    --  Share Repurchase Principle: After meeting the needs of the business,
        will use excess cash to repurchase shares, with the intent of
        completing the remaining $6.8 billion of share repurchases under its
        current authorization by the end of fiscal 2014.
    --  Return on Invested Capital Principle: Maintain a high return on
        invested capital, with a goal of reaching 15 percent (before share
        repurchases) by the end of fiscal 2013.

    Targeted Capital Structure

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The Company announced that it will target a total adjusted debt/EBITDAR ratio of 2.0x. Total adjusted debt includes debt on the balance sheet plus 8x operating rents and certain contingent liabilities, while EBITDAR is defined as earnings before interest, taxes, depreciation, amortization and rent expense.

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    Updated Fiscal 2011 Guidance

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The Company confirmed that it expects fiscal 2011 sales will be up approximately 2.5 percent from fiscal 2010. Based on its year-to-date performance and outlook for the balance of the year, the Company raised its fiscal 2011 diluted earnings-per-share guidance and now expects diluted earnings-per-share to grow by approximately 18 percent to $2.38 for the year.

The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at earnings.homedepot.com.

At the end of the third quarter, the Company operated a total of 2,246 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.

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Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company and the timing of its completion, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, guidance for fiscal 2011 and beyond and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties - many of which are beyond our control or are currently unknown to us - as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 30, 2011.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

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                                                THE HOME DEPOT, INC. AND
SUBSIDIARIES
                                                 CONSOLIDATED STATEMENTS OF
EARNINGS
                           FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER
30, 2011 AND OCTOBER 31, 2010
                                                             (Unaudited)
                                  (Amounts in Millions Except Per Share Data
and as Otherwise Noted)
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                                                   Three Months               
%
                                                      Ended                %
Increase                Nine Months Ended                      Increase
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                                              10-30-11       10-31-10       
(Decrease)        10-30-11      10-31-10   (Decrease)
                                              --------       --------       
----------        --------      --------   ----------
    NET SALES                                  $17,326        $16,598         
4.4  %          $54,381       $52,871     2.9  %
    Cost of Sales                               11,365         10,913         
4.1            35,716        34,810       2.6
                                                ------         ------         
------        ------
      GROSS PROFIT                               5,961          5,685         
4.9            18,665        18,061       3.3
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    Operating Expenses:
       Selling, General and
        Administrative                           3,956          3,837         
3.1            12,151        12,042       0.9
       Depreciation and
        Amortization                               390            400         
(2.5)            1,183         1,217      (2.8)
                                                   ---            ---         
-----         -----
         Total Operating Expenses                4,346          4,237         
2.6            13,334        13,259       0.6
                                                 -----          -----         
------        ------
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OPERATING INCOME 1,615 1,448 11.5 5,331 4,802 11.0

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    Interest and Other
     (Income) Expense:
      Interest and Investment
       Income                                       (4)            (4)        
-                (9)          (11)    (18.2)
      Interest Expense                             162            146         
11.0               452           439       3.0
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      Other                                          -              -         
-                 -            51    (100.0)
                                                   ---            ---         
---           ---
         Interest and Other, net                   158            142         
11.3               443           479      (7.5)
                                                   ---            ---         
---           ---
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    EARNINGS BEFORE
     PROVISION FOR INCOME
     TAXES                                       1,457          1,306         
11.6             4,888         4,323      13.1
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    Provision for Income
     Taxes                                         523            472         
10.8             1,779         1,572      13.2
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13.0
      NET EARNINGS                                $934           $834         
12.0  %           $3,109        $2,751         %
                                                  ====           ====         
======        ======
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    Weighted Average Common
     Shares                                      1,540          1,637         
(5.9) %            1,572         1,657    (5.1) %
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BASIC EARNINGS PER SHARE $0.61 $0.51 19.6 $1.98 $1.66 19.3

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    Diluted Weighted Average
     Common Shares                               1,548          1,646         
(6.0) %            1,581         1,667    (5.2) %
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    DILUTED EARNINGS PER
     SHARE                                       $0.60          $0.51         
17.6             $1.97         $1.65      19.4
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                                                   Three Months               
%                                          %
    SELECTED HIGHLIGHTS                               Ended               
Increase            Nine Months Ended                    Increase
    -------------------
                                              10-30-11       10-31-10      
(Decrease)          10-30-11      10-31-10   (Decrease)
                                              --------       --------      
----------          --------      --------   ----------
    Number of Customer
     Transactions                                325.3          321.6         
1.2  %          1,014.5       1,013.3      0.1 %
    Average Ticket (actual)                     $53.03         $51.47         
3.0            $53.50        $52.11       2.7
    Weighted Average Weekly
     Sales
        per Operating Store (in
         thousands)                               $590           $567         
4.1              $620          $603       2.8
    Square Footage at End of
     Period                                        235            235         
-               235           235         -
    Capital Expenditures                          $351           $282         
24.5              $820          $689      19.0
    Depreciation and
     Amortization (1)                             $416           $426         
(2.3) %           $1,265        $1,292    (2.1) %
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    (1) Includes depreciation of distribution centers and tool rental
equipment included
     in Cost of Sales and amortization of deferred
          financing costs included in Interest Expense.


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                           THE HOME DEPOT, INC. AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS
               AS OF OCTOBER 30, 2011, OCTOBER 31, 2010 AND JANUARY 30, 2011
                                        (Unaudited)
                                   (Amounts in Millions)
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                                               10-30-11       10-31-10      
1-30-11
                                               --------       --------      
-------
     ASSETS
       Cash and Cash Equivalents                  $2,234         $1,425       
$545
       Receivables, net                            1,384          1,295       
1,085
       Merchandise Inventories                    10,717         10,993       
10,625
       Other Current Assets                        1,143          1,363       
1,224
          Total Current Assets                    15,478         15,076       
13,479
                                                  ------         ------       
------
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       Property and Equipment, net                24,532         25,050       
25,060
       Goodwill                                    1,072          1,180       
1,187
       Other Assets                                  417            435       
399
          TOTAL ASSETS                           $41,499        $41,741      
$40,125
                                                 =======        =======      
=======
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     LIABILITIES AND
      STOCKHOLDERS' EQUITY
       Accounts Payable                           $5,669         $5,714       
$4,717
       Accrued Salaries and Related
        Expenses                                   1,227          1,168       
1,290
       Current Installments of
        Long-Term Debt                                44          1,023       
1,042
       Other Current Liabilities                   3,646          3,455       
3,073
          Total Current Liabilities               10,586         11,360       
10,122
                                                  ------         ------       
------
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       Long-Term Debt                             10,739          8,752       
8,707
       Other Long-Term Liabilities                 2,405          2,514       
2,407
          Total Liabilities                       23,730         22,626       
21,236
                                                  ------         ------       
------
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       Total Stockholders' Equity                 17,769         19,115       
18,889
          TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY                  $41,499        $41,741      
$40,125
                                                 =======        =======      
=======


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                       THE HOME DEPOT, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE NINE MONTHS ENDED OCTOBER 30, 2011 AND OCTOBER 31, 2010
                                    (Unaudited)
                               (Amounts in Millions)
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                                                         Nine Months Ended
                                                     10-30-11      10-31-10
                                                     --------      --------
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Earnings                                        $3,109        $2,751
    Reconciliation of Net Earnings to Net Cash Provided by
     Operating Activities:
         Depreciation and Amortization                   1,265         1,292
         Stock-Based Compensation Expense                  157           161
         Changes in Working Capital and Other            1,160          (218)
         Net Cash Provided by Operating Activities       5,691         3,986
                                                         -----         -----
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    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                  (820)         (689)
    Proceeds from Sale of Business, net                    101             -
    Other                                                   36            65
         Net Cash Used in Investing Activities            (683)         (624)
                                                          ----          ----
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    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Long-Term Borrowings, net of
     discount                                            1,994           998
    Repayments of Long-Term Debt                        (1,021)       (1,023)
    Repurchases of Common Stock                         (3,056)       (1,974)
    Cash Dividends Paid to Stockholders                 (1,187)       (1,184)
    Other                                                  (27)         (183)
        Net Cash Used in Financing Activities           (3,297)       (3,366)
                                                        ------        ------
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Change in Cash and Cash Equivalents 1,711 (4)

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    Effect of Exchange Rate Changes on Cash and
     Cash Equivalents                                      (22)            8
    Cash and Cash Equivalents at the Beginning of
     the Period                                            545         1,421
                                                           ---         -----
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    Cash and Cash Equivalents at the End of the
     Period                                             $2,234        $1,425
                                                        ======        ======




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SOURCE The Home Depot

For further information: Financial Community, Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, diane_dayhoff@homedepot.com, News Media, Ron DeFeo Senior Director of Corporate Communications 770-384-3179, ron_defeo@homedepot.com Web Site: http://www.homedepot.com


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