The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2010
Guidance
</pre>
<p><span class="xn-location">ATLANTA</span>, <span class="xn-chron">Aug. 17</span> /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported second quarter of fiscal 2010 net earnings of <span class="xn-money">$1.2 billion</span>, or <span class="xn-money">$0.72</span> per diluted share, compared with net earnings of <span class="xn-money">$1.1 billion</span>, or <span class="xn-money">$0.66</span> per diluted share, in the same period of fiscal 2009.</p>
<pre>
(Logo: http://photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO )
(Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO )
</pre>
<p>Sales for the second quarter totaled <span class="xn-money">$19.4 billion</span>, a 1.8 percent increase from the second quarter of fiscal 2009. Comparable store sales for the second quarter of fiscal 2010 were positive 1.7 percent, and comp sales for U.S. stores were positive 1.0 percent.</p>
<p/>
<p>"Our second quarter sales reflect the third consecutive quarter of positive same store sales. We delivered solid results as we continue to build momentum with our merchandising transformation, supply chain enhancements and customer service initiatives," said <span class="xn-person">Frank Blake</span>, chairman & CEO. "I want to thank our associates for their hard work and dedication, and I am proud to announce 97 percent of our stores qualified for success sharing, our bonus plan for hourly associates, for the first half of fiscal 2010."</p>
<pre>
Updated Fiscal 2010 Guidance
</pre>
<p>Based on its year-to-date performance and expectations for the remainder of the fiscal year, the Company updated its fiscal 2010 guidance and now expects sales to be up approximately 2.6 percent for the year. The Company expects diluted earnings per share from continuing operations as reported to increase by approximately 22.6 percent to <span class="xn-money">$1.90</span> for the year. This earnings per share guidance includes the benefit of the Company's year-to-date share repurchases, but excludes the impact of future share repurchases.</p>
<p/>
<p>The Home Depot will conduct a conference call today at <span class="xn-chron">9 a.m. ET</span> 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.</p>
<p/>
<p>At the end of the second quarter, the Company operated a total of 2,244 retail stores, which included 1,976 The Home Depot stores in the <span class="xn-location">United States</span> (including the Commonwealth of <span class="xn-location">Puerto Rico</span>, the territory of the <span class="xn-location">U.S. Virgin Islands</span> and the territory of <span class="xn-location">Guam</span>), 179 stores in <span class="xn-location">Canada</span>, 80 stores in <span class="xn-location">Mexico</span> and 9 stores in <span class="xn-location">China</span>. 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.</p>
<p/>
<p>To provide clarity, internally and externally, about the Company's operating performance for recently completed fiscal periods, the Company supplemented its reporting with non-GAAP financial measures to reflect the impact of the store rationalization charges, business rationalization charges, related restructuring charges and the charge related to the extension of the Company's guarantee of a third party senior secured loan.</p>
<p/>
<p>The Company believes that these non-GAAP financial measures better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP financial measures to the corresponding GAAP measures can be found attached to this press release and at earnings.homedepot.com.</p>
<p/>
<p>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, commodity price inflation and deflation, implementation of store 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, timing of the completion of the recapitalization, the ability to issue debt securities on terms and at rates acceptable to us, store openings and closures 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 place undue reliance 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 <span class="xn-chron">January 31, 2010</span>, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended <span class="xn-chron">May 2, 1010</span>.</p>
<p/>
<p>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.</p>
<p/>
<p> </p>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST
2, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
</pre>
<p> </p>
<pre>
Three Months
Ended % Increase
8-1-10 8-2-09 (Decrease)
------ ------ ----------
NET SALES $19,410 $19,071 1.8%
Cost of Sales 12,828 12,683 1.1
------ ------
GROSS PROFIT 6,582 6,388 3.0
</pre>
<p> </p>
<pre>
Operating Expenses:
Selling, General and
Administrative 4,127 4,121 0.1
Depreciation and
Amortization 406 434 (6.5)
--- ---
Total Operating Expenses 4,533 4,555 (0.5)
----- -----
</pre>
<p> </p>
<p> OPERATING INCOME 2,049 1,833 11.8</p>
<p> </p>
<pre>
Interest and Other (Income)
Expense:
Interest and Investment
Income (3) (6) (50.0)
Interest Expense 151 167 (9.6)
</pre>
<p> </p>
<pre>
Other - - -
--- ---
Interest and Other, net 148 161 (8.1)
--- ---
</pre>
<p> </p>
<pre>
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 1,901 1,672 13.7
</pre>
<p> </p>
<pre>
Provision for Income Taxes 709 556 27.5
--- ---
</pre>
<p> </p>
<p> </p>
<pre>
NET EARNINGS $1,192 $1,116 6.8%
====== ======
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Weighted Average Common
Shares 1,653 1,683 (1.8)%
</pre>
<p> </p>
<p>BASIC EARNINGS PER SHARE <span class="xn-money">$0.72</span> <span class="xn-money">$0.66</span> 9.1</p>
<p> </p>
<pre>
Diluted Weighted Average
Common Shares 1,663 1,691 (1.7)%
</pre>
<p> </p>
<p>DILUTED EARNINGS PER SHARE <span class="xn-money">$0.72</span> <span class="xn-money">$0.66</span> 9.1</p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months
SELECTED HIGHLIGHTS Ended % Increase
-----------------------
8-1-10 8-2-09 (Decrease)
------ ------ ----------
Number of Customer
Transactions 369 362 1.9%
Average Ticket (actual) $52.30 $52.25 0.1
Weighted Average Weekly
Sales
per Operating Store (in
thousands) $662 $650 1.8
Square Footage at End of
Period 235 235 -
Capital Expenditures $240 $181 32.6
Depreciation and
Amortization (1) $428 $458 (6.6)%
</pre>
<p> </p>
<p> </p>
<pre>
%
Six Months Ended Increase
8-1-10 8-2-09 (Decrease)
------ ------ ----------
NET SALES $36,273 $35,246 2.9%
Cost of Sales 23,897 23,408 2.1
------ ------
GROSS PROFIT 12,376 11,838 4.5
</pre>
<p> </p>
<pre>
Operating Expenses:
Selling, General and
Administrative 8,205 8,163 0.5
Depreciation and
Amortization 817 862 (5.2)
--- ---
Total Operating
Expenses 9,022 9,025 -
----- -----
</pre>
<p> </p>
<p> OPERATING INCOME 3,354 2,813 19.2</p>
<p> </p>
<pre>
Interest and Other
(Income) Expense:
Interest and
Investment Income (7) (11) (36.4)
Interest Expense 293 347 (15.6)
Other 51 - N/M
--- ---
Interest and Other,
net 337 336 0.3
--- ---
</pre>
<p> </p>
<pre>
EARNINGS BEFORE
PROVISION FOR INCOME
TAXES 3,017 2,477 21.8
</pre>
<p> </p>
<pre>
Provision for Income
Taxes 1,100 847 29.9
----- ---
</pre>
<p> </p>
<pre>
NET EARNINGS $1,917 $1,630 17.6%
====== ======
</pre>
<p> </p>
<p> </p>
<pre>
Weighted Average
Common Shares 1,666 1,684 (1.1)%
</pre>
<p> </p>
<pre>
BASIC EARNINGS PER
SHARE $1.15 $0.97 18.6
</pre>
<p> </p>
<pre>
Diluted Weighted
Average Common Shares 1,676 1,690 (0.8)%
</pre>
<p> </p>
<pre>
DILUTED EARNINGS PER
SHARE $1.14 $0.96 18.8
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
%
SELECTED HIGHLIGHTS Six Months Ended Increase
-------------------
8-1-10 8-2-09 (Decrease)
------ ------ ----------
Number of Customer
Transactions 692 672 3.0%
Average Ticket
(actual) $52.41 $52.45 (0.1)
Weighted Average
Weekly Sales
per Operating Store
(in thousands) $621 $600 3.5
Square Footage at End
of Period 235 235 -
Capital Expenditures $407 $353 15.3
Depreciation and
Amortization (1) $866 $911 (4.9)%
</pre>
<p> </p>
<pre>
(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.
N/M - Not Meaningful
</pre>
<p> </p>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN
ADJUSTMENTS (NON-GAAP)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST
2, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data)
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended 8-1-10
-------------------------
As
Actuals Adjustment Adjusted
(Non-
------- ---------- GAAP)
------
</pre>
<p> </p>
<p> Net Sales <span class="xn-money">$19,410</span> $- <span class="xn-money">$19,410</span></p>
<p> </p>
<p> Gross Profit 6,582 - 6,582</p>
<p> </p>
<p> Total Operating Expenses 4,533 - 4,533</p>
<p> </p>
<p> Operating Income 2,049 - 2,049</p>
<p> </p>
<p> Interest and Other, net 148 - 148</p>
<p> </p>
<p> Net Earnings <span class="xn-money">$1,192</span> $- <span class="xn-money">$1,192</span></p>
<p> </p>
<pre>
Diluted Earnings Per
Share $0.72 $- $0.72
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended 8-2-09
-------------------------
As
Actuals Adjustments(2) Adjusted
(Non-
------- ------------- GAAP)
------
</pre>
<p> </p>
<p> Net Sales <span class="xn-money">$19,071</span> $- <span class="xn-money">$19,071</span></p>
<p> </p>
<p> Gross Profit 6,388 (1) 6,389</p>
<p> </p>
<p> Total Operating Expenses 4,555 19 4,536</p>
<p> </p>
<p> Operating Income 1,833 (20) 1,853</p>
<p> </p>
<p> Interest and Other, net 161 - 161</p>
<p> </p>
<p> Net Earnings <span class="xn-money">$1,116</span> $(11) <span class="xn-money">$1,127</span></p>
<p> </p>
<pre>
Diluted Earnings Per
Share $0.66 $(0.01) $0.67
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended 8-1-10
-----------------------
As
Actuals Adjustment(1) Adjusted
(Non-
------- ------------ GAAP)
------
</pre>
<p> </p>
<p> Net Sales <span class="xn-money">$36,273</span> $- <span class="xn-money">$36,273</span></p>
<p> </p>
<p> Gross Profit 12,376 - 12,376</p>
<p> </p>
<p> Total Operating Expenses 9,022 - 9,022</p>
<p> </p>
<p> Operating Income 3,354 - 3,354</p>
<p> </p>
<p> Interest and Other, net 337 51 286</p>
<p> </p>
<p> Net Earnings <span class="xn-money">$1,917</span> $(33) <span class="xn-money">$1,950</span></p>
<p> </p>
<pre>
Diluted Earnings Per
Share $1.14 $(0.02) $1.16
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended 8-2-09
-----------------------
As
Actuals Adjustments(2) Adjusted
(Non-
------- ------------- GAAP)
------
</pre>
<p> </p>
<p> Net Sales <span class="xn-money">$35,246</span> <span class="xn-money">$221</span> <span class="xn-money">$35,025</span></p>
<p> </p>
<p> Gross Profit 11,838 28 11,810</p>
<p> </p>
<p> Total Operating Expenses 9,025 165 8,860</p>
<p> </p>
<p> Operating Income 2,813 (137) 2,950</p>
<p> </p>
<p> Interest and Other, net 336 - 336</p>
<p> </p>
<p> Net Earnings <span class="xn-money">$1,630</span> $(84) <span class="xn-money">$1,714</span></p>
<p> </p>
<pre>
Diluted Earnings Per
Share $0.96 $(0.05) $1.01
</pre>
<p> </p>
<pre>
(1) Adjustment is comprised of a charge related to the extension of
the Company's guarantee of a third-party senior secured loan.
</pre>
<p> </p>
<pre>
(2) Adjustments are comprised of store rationalization charges
related to the closing of 15 stores and the removal of 50 stores
from our future growth pipeline, business rationalization charges
related to the exit of EXPO, THD Design Center, Yardbirds and HD
Bath businesses, as well as net sales, gross profit and operating
expenses of those exited businesses during the period from closing
announcement to actual closing, and charges related to restructuring
of support functions.
</pre>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF AUGUST 1, 2010, AUGUST 2, 2009 AND JANUARY 31, 2010
(Unaudited)
(Amounts in Millions)
</pre>
<p> </p>
<p> </p>
<pre>
8-1-10 8-2-09 1-31-10
------ ------ -------
</pre>
<p> </p>
<pre>
ASSETS
Cash and Cash Equivalents $2,395 $3,107 $1,421
Receivables, net 1,218 1,225 964
Merchandise Inventories 10,759 10,797 10,188
Other Current Assets 1,385 1,434 1,327
Total Current Assets 15,757 16,563 13,900
------ ------ ------
</pre>
<p> </p>
<pre>
Property and Equipment, net 25,190 25,851 25,550
Goodwill 1,187 1,168 1,171
Other Assets 401 416 256
TOTAL ASSETS $42,535 $43,998 $40,877
======= ======= =======
</pre>
<p> </p>
<pre>
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $5,919 $6,018 $4,863
Accrued Salaries and Related Expenses 1,226 1,159 1,263
Current Installments of Long-Term
Debt 2,022 1,769 1,020
Other Current Liabilities 3,572 3,617 3,217
Total Current Liabilities 12,739 12,563 10,363
------ ------ ------
</pre>
<p> </p>
<pre>
Long-Term Debt 7,727 9,661 8,662
Other Long-Term Liabilities 2,624 2,605 2,459
Total Liabilities 23,090 24,829 21,484
------ ------ ------
</pre>
<p> </p>
<pre>
Total Stockholders' Equity 19,445 19,169 19,393
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $42,535 $43,998 $40,877
======= ======= =======
</pre>
<p> </p>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009
(Unaudited)
(Amounts in Millions)
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
Six Months Ended
8-1-10 8-2-09
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $1,917 $1,630
Reconciliation of Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 866 911
Stock-Based Compensation Expense 112 109
Changes in Working Capital and Other 468 678
Net Cash Provided by Operating Activities 3,363 3,328
----- -----
</pre>
<p> </p>
<pre>
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (407) (353)
Other 44 139
Net Cash Used in Investing Activities (363) (214)
---- ----
</pre>
<p> </p>
<pre>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of Common Stock (1,209) -
Cash Dividends Paid to Stockholders (793) (762)
Other (28) 233
Net Cash Used in Financing Activities (2,030) (529)
------ ----
</pre>
<p> </p>
<p>Increase in Cash and Cash Equivalents 970 2,585</p>
<p> </p>
<pre>
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 4 3
Cash and Cash Equivalents at the Beginning of
the Period 1,421 519
----- ---
</pre>
<p> </p>
<pre>
Cash and Cash Equivalents at the End of the
Period $2,395 $3,107
====== ======
For further information: Financial Community, Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, [email protected], or News Media, Ron DeFeo, Senior Director of Corporate Communications, +1-770-384-3179, [email protected] Web Site: http://www.homedepot.com
Share this article