SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2001
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
Commission file number 1-8207
Full title of the plan and the address of the plan, if different from that of the issuer named below:
The Home Depot FutureBuilder
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
The Home Depot, Inc., 2455 Paces Ferry Road, NW, Atlanta, GA 30339
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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The Home Depot FutureBuilder |
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Date: June 26, 2002 |
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/s/ Lawrence A. Smith |
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By: Lawrence A. Smith |
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Member, Administrative Committee |
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THE HOME DEPOT FUTUREBUILDER
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors’ Report Thereon)
THE HOME DEPOT FUTUREBUILDER
Table of Contents
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Schedule of Assets Held for Investment Purposes at End of Year |
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The Administrative Committee
The Home Depot FutureBuilder:
We have audited the accompanying statements of net assets available for benefits of The Home Depot FutureBuilder (the Plan) as of December 31, 2001 and 2000 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s administrative committee. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Plan’s administrative committee, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of The Home Depot FutureBuilder at December 31, 2001 and 2000 and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in the schedule of assets held for investment purposes at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s administrative committee. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
April 19, 2002
Atlanta, Georgia
THE HOME DEPOT FUTUREBUILDER
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
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2001 |
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2000 |
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Assets: |
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Investments (note 5) |
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$ |
2,057,637,265 |
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1,805,025,999 |
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Receivables: |
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Employee contributions receivable |
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34,049 |
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— |
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Employer contributions receivable |
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18,599 |
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— |
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Other receivable |
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325,339 |
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280,007 |
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Total receivables |
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377,987 |
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280,007 |
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Total assets |
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2,058,015,252 |
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1,805,306,006 |
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Liabilities: |
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Accrued liabilities |
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17,877 |
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160,512 |
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Other payable |
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— |
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96,977 |
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Total liabilities |
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17,877 |
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257,489 |
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Net assets available for benefits |
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$ |
2,057,997,375 |
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1,805,048,517 |
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See accompanying notes to financial statements.
2
THE HOME DEPOT FUTUREBUILDER
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2001 and 2000
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2001 |
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2000 |
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Additions (reductions) to net assets attributed to: |
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Investment income (loss): |
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Realized gain on sale or distribution of common stock of The Home Depot, Inc. |
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$ |
57,642,597 |
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69,624,095 |
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Realized (loss) gain on sale of shares of registered investment companies |
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(6,305,584 |
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18,740,198 |
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Net unrealized appreciation (depreciation) in fair value of investments (note 5) |
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96,463,007 |
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(854,909,344 |
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Interest income |
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5,652,697 |
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4,764,443 |
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Dividends |
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5,404,301 |
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6,709,657 |
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Total investment income (loss) |
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158,857,018 |
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(755,070,951 |
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Contributions: |
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Participants |
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162,466,233 |
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147,351,418 |
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Employer |
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85,668,814 |
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75,369,790 |
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Total contributions |
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248,135,047 |
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222,721,208 |
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Total additions (reductions) |
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406,992,065 |
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(532,349,743 |
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Deductions from net assets attributed to: |
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Benefits paid to participants |
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150,356,914 |
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137,745,447 |
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Administrative expenses |
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3,686,293 |
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5,690,397 |
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Total deductions |
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154,043,207 |
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143,435,844 |
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Net increase (decrease) |
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252,948,858 |
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(675,785,587 |
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Net assets available for benefits: |
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Beginning of year |
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1,805,048,517 |
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2,480,834,104 |
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End of year |
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$ |
2,057,997,375 |
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1,805,048,517 |
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See accompanying notes to financial statements.
3
THE HOME DEPOT FUTUREBUILDER
December 31, 2001 and 2000
(1) Description of the Plan
The following is a brief description of The Home Depot FutureBuilder (the Plan). Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
(a) General
The Plan is a defined contribution plan covering substantially all employees of The Home Depot, Inc. and subsidiaries (the Company). Employees are eligible to become participants on the first quarterly entry date (January 1, April 1, July 1, and October 1) following the completion of one year of service. The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
(b) Contributions
Under the employee stock ownership portion of the Plan, contributions were made solely by the Company and at the discretion of the Company’s Board of Directors (ESOP contributions). During February 1999, the Company made its final ESOP contribution.
Under the 401(k) portion of the Plan, participants may contribute up to 15% of pretax annual compensation, as defined in the Plan. Participants may also contribute amounts representing distributions from other qualified defined benefit plans or contribution plans. The Company provides matching contributions of 150% of the first 1% of base compensation contributed by a participant and 50% of the next 2% to 5% of base compensation contributed by a participant. Additional amounts may be contributed at the option of the Company’s Board of Directors. The matching Company contribution is initially invested in Home Depot, Inc. common stock and may be diversified at the discretion of the participants.
(c) Participant Accounts
The Plan maintains a separate account for each participant, to which contributions, forfeitures, and investment performance are allocated.
(d) Vesting
An employee becomes 100% vested upon death, retirement at age 65, total or permanent disability, or if the Plan is terminated. If an employee leaves the service of the Company for reasons other than stated above, vesting for the ESOP contributions and earnings thereon is based on years of service, as follows:
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Years of service |
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Vesting |
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3 |
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20 |
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4 |
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40 |
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5 |
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60 |
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6 |
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80 |
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7 or more |
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100 |
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Under the 401(k) portion of the Plan, participants are immediately vested in their contributions and net value changes thereon. Vesting in the Company’s matching and discretionary contributions and net value changes thereon is based on years of vesting service. A participant is 100% vested after three years of vesting service.
(e) Payment of Benefits
Upon retirement, death, disability, or termination of service for any other reason, participants may elect to receive a lump-sum payment of their vested account balance in the form of cash or securities at the market value on the date of distribution.
(f) Participant Loans Receivable
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lessor of $50,000 or 50% of their account balance. Loan terms range from one to four years. The loans bear interest at a rate commensurate with local prevailing rates.
(g) Forfeited Accounts
Forfeited nonvested accounts are used to first reduce Plan expenses and then to reduce future employer contributions. In 2001 and 2000, $3,718,821 and $6,100,000, respectively, in forfeitures were used to reduce Plan expenses.
(2) Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Plan in preparing its financial statements.
(a) General
The Plan is administered by an Administrative Committee made up of employees of the Company. Effective April 2000, the Plan changed the trustee of the Plan from Wachovia Bank, N.A. to The Northern Trust Company. The Trustee holds, controls, manages, and administers the assets of the Plan.
(b) Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis of accounting.
(c) Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices, which represents the net asset value of shares held by the Plan at year-end. The Company common stock is valued at its quoted market price as obtained from the New York Stock Exchange. Securities transactions are accounted for on the trade date. The investment in short-term investment funds of The Northern Trust Company is reported at fair value as determined by The Northern Trust Company based on the quoted market prices of the securities in the fund.
The Plan also invests in highly liquid, interest-bearing short-term investments which consist primarily of money market funds.
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Participant loans are carried at cost which approximates fair value.
(d) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(e) Reclassifications
Certain balances in prior years have been reclassified to conform with the current year presentation.
(3) Federal Income Taxes
The Internal Revenue Service has determined and informed the Company by a letter dated April 9, 2002, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Administrative Committee of the Plan believes the Plan is designed and is
currently being operated in compliance with the applicable requirements of the IRC.
(4) Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and terminate the Plan subject to provisions of ERISA. In the event of plan termination, participants will become 100% vested in their accounts.
(5) Investments
The Plan’s investments are held by the Trustee of the Plan, The Northern Trust Company. A description of the assets of the Plan follows:
Participant Directed
• Primco IRT Stable Value Fund — Funds are primarily invested in short-term debt obligations that mature within one to three years.
• Barclay’s Global Investors Equity Index Stock Fund — Funds are invested in shares of a registered investment company that invests in the common stocks included in the Standard & Poor’s 500 Index.
• Putnam New Opportunities Fund — Funds are invested in shares of a registered investment company that invests primarily in common stocks which are believed to have the potential to grow at an above-average pace over time.
• Templeton Foreign Fund — Funds are invested in shares of a registered investment company that invests in stocks and debt obligations of companies and governments outside the U.S.
• Invesco Total Return Fund — Funds are invested in shares of a registered investment company that invests in bonds, common stocks, and high-quality short-term to intermediate-term debt obligations.
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• The Home Depot, Inc. Common Stock Fund — Funds are invested in common stock of The Home Depot, Inc.
The fair value of individual investments that represent 5% or more of the Plan’s net assets are as follows:
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2001 |
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2000 |
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The Home Depot, Inc. Common Stock Fund |
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$ |
365,268,348 |
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406,412,682 |
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The Home Depot, Inc. Common Stock* |
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1,337,897,425 |
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1,105,700,274 |
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Putnam New Opportunities Fund |
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82,330,937 |
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91,301,261 |
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*Non-Participant Directed
Investments in the Putnam New Opportunities Fund did not exceed 5% of the Plan’s net assets at December 31, 2001.
During 2001 and 2000, the Plan’s investments (depreciated) appreciated in value as follows:
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2001 |
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2000 |
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Net unrealized (depreciation) appreciation in fair market value: |
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Registered investment funds |
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$ |
(28,919,268 |
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(63,335,045 |
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Common stock |
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125,382,275 |
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(791,574,299 |
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Net change in fair market value |
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$ |
96,463,007 |
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(854,909,344 |
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Non-Participant Directed
The Home Depot, Inc. Common Stock is comprised of shares of The Home Depot, Inc.’s common stock, representing the Company’s matching and ESOP contributions. These shares have been allocated to individual participant accounts. Participants may immediately transfer the Company’s matching contributions to other investment funds. Each participant who has completed five years of service and attained the age of 55 may transfer ESOP contributions to other investment funds. Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
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2001 |
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2000 |
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Net assets: |
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The Home Depot, Inc. Common Stock |
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$ |
1,337,897,425 |
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1,105,700,274 |
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Changes in net assets: |
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Net appreciation (depreciation) |
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$ |
255,534,465 |
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(650,773,748) |
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Contributions |
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85,668,814 |
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75,369,790 |
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Benefits paid to participants |
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(109,006,128) |
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(78,763,493) |
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$ |
232,197,151 |
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(654,167,451) |
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7
(6) Investment in Master Trust
Effective December 15, 1999, a Master Trust was established for the investment of assets of the Plan and another company-sponsored retirement plan for the Maintenance Warehouse, a wholly owned subsidiary of the Company. At December 31, 2001, the Plan’s interest in the net assets of the Master Trust was approximately 99%.
Summarized financial information of the Master Trust as of December 31, 2001 and 2000 is as follows:
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2001 |
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2000 |
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Assets: |
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Investments |
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$ |
2,069,938,920 |
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1,815,071,250 |
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Receivables: |
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Employer contributions receivable |
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690,296 |
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839,221 |
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Employee contributions receivable |
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34,049 |
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— |
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Other receivable |
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325,339 |
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327,687 |
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Total receivables |
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1,049,684 |
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1,166,908 |
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Total assets |
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2,070,988,604 |
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1,816,238,158 |
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Liabilities: |
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Accrued liabilities |
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17,877 |
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160,512 |
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Other payable |
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— |
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96,977 |
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Total liabilities |
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17,877 |
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257,489 |
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Net assets available for benefits |
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$ |
2,070,970,727 |
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1,815,980,669 |
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Investment income and administrative expenses related to the Master Trust are allocated to the individual plans based upon actual activity for each of the plans. Investment income for the Master Trust for the years ended December 31, 2001 and 2000 is as follows:
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2001 |
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2000 |
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Investment income: |
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Realized gain on sale or distribution of common stock of The Home Depot, Inc. |
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$ |
57,642,597 |
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69,624,095 |
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Realized (loss) gain on sale of shares of registered investment companies |
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(6,305,584 |
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18,740,198 |
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Net unrealized appreciation (depreciation) in fair value of investments |
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95,352,277 |
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(857,708,413 |
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Dividends and interest income |
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11,123,625 |
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11,525,344 |
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Total |
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$ |
157,812,915 |
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(757,818,776 |
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8
(7) Related Party Transactions
Certain Plan investments include shares of common stock issued by The Home Depot, Inc., the Plan Sponsor. At December 31, 2001 and 2000, the Plan held a combined total of 33,388,860 and 33,096,864 shares valued at approximately $51.01 and $45.6875 per share, respectively. As the Plan Sponsor, these transactions qualify as party-in-interest.
Other Plan investments include units of short-term investment funds managed by The Northern Trust Company. The Northern Trust Company is the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest.
(8) Plan Amendments and Other Plan Changes
On November 21, 2001, the Administrative Committee of The Home Depot FutureBuilder adopted an amendment to bring the Plan in compliance with the General Agreement on Tariffs and Trades as amended in 1994, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform Act of 1998 (collectively known as GUST).
Also on November 21, 2001, the Administrative Committee of The Home Depot FutureBuilder adopted an amendment to allow the Company to take advantage of provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 expanding the circumstances under which a corporation may deduct dividends paid to an ESOP.
Effective January 1, 2002, the Plan was amended to increase the maximum percentage of pretax contributions that participants can contribute each year to the Plan from 1% to 50% of eligible pay (subject to other Plan limitations).
Effective February 1, 2002, the investment committee of The Home Depot FutureBuilder replaced the Invesco Total Return Fund with the IRT Core Balanced Fund. The change was the result of the underperformance of the Invesco Fund. The investment committee also added two new funds to the plan: Dodge & Cox Stock Fund and the T. Rowe Price Small Cap Stock Fund.
Effective April 1, 2002, the assets of The Home Depot FutureBuilder for Puerto Rico were added to the Master Trust. Three defined contribution plans of the Company will now be in one Master Trust.
The board of directors has approved an amendment to the Plan that will allow each participant to diversify the investment of all or a portion of his/her ESOP account from the Company stock fund among the other investment funds. This amendment became effective subsequent to the Plan’s year-end.
9
THE HOME DEPOT FUTUREBUILDER
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2001
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Identity of issue |
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Description of investment |
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Current value |
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*The Home Depot, Inc. Common Stock |
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26,228,140 shares of common stock |
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$ |
1,337,897,425 |
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*The Home Depot, Inc. Common Stock Fund |
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7,160,720 shares of common stock |
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365,268,348 |
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Barclay’s Global Investors Equity Index Stock Fund |
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1,900,982 shares of registered investment company |
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61,895,973 |
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Invesco Total Return Fund |
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1,442,076 shares of registered investment company |
|
36,066,315 |
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Putnam New Opportunities Fund |
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2,009,052 shares of registered investment company |
|
82,330,937 |
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Templeton Foreign Fund |
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2,442,219 shares of registered investment company |
|
22,405,528 |
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Primco IRT Stable Value Fund |
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48,544,930 shares of registered investment company |
|
48,544,930 |
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*Participant loans |
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Loans with interest rates ranging from 7% to 12% and maturity dates through December 31, 2009 |
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66,752,054 |
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*The Northern Trust Company |
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Short-term investment funds |
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36,475,755 |
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Total investments |
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$ |
2,057,637,265 |
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*Indicates party-in-interest to the Plan.
See accompanying independent auditor’s report.
10