SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] 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, 2002
OR
[ ] 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
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
The Home Depot FutureBuilder
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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
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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.
The Home Depot FutureBuilder
Date: June 26, 2003
/s/ Ileana L. Connally
------------------------------------------
By: Ileana L. Connally
Member of The Home Depot
FutureBuilder Administrative Committee
THE HOME DEPOT FUTUREBUILDER
Financial Statements and Supplemental Schedule
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
THE HOME DEPOT FUTUREBUILDER
TABLE OF CONTENTS
PAGE
----
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) -
December 31, 2002 12
INDEPENDENT AUDITORS' REPORT
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, 2002 and 2001, 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 as of December 31, 2002 and 2001, 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 performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
the Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December
31, 2002 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.
/s/ KPMG LLP
Atlanta, Georgia
April 4, 2003
THE HOME DEPOT FUTUREBUILDER
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
-------------- --------------
Assets:
Investments (note 5) $1,206,699,491 2,057,637,265
-------------- --------------
Receivables:
Employee contributions receivable 1,816,126 34,049
Employer contributions receivable 3,070,676 18,599
Other receivable 443,101 325,339
-------------- --------------
Total receivables 5,329,903 377,987
-------------- --------------
Total assets 1,212,029,394 2,058,015,252
-------------- --------------
Liabilities:
Accrued liabilities 74,404 17,877
Due to broker 2,770,796 --
-------------- --------------
Total liabilities 2,845,200 17,877
-------------- --------------
-------------- --------------
Net assets available for benefits $1,209,184,194 2,057,997,375
============== ==============
See accompanying notes to financial statements.
2
THE HOME DEPOT FUTUREBUILDER
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2002 and 2001
2002 2001
--------------- ---------------
Additions (reductions) to net assets attributed to:
Investment income (loss):
Net (depreciation) appreciation in fair value
of investments (note 5) $ (936,140,665) 147,800,020
Interest income 9,882,930 5,652,697
Dividends 6,867,334 5,404,301
--------------- ---------------
Total investment income (loss) (919,390,401) 158,857,018
--------------- ---------------
Contributions:
Participants 162,052,454 162,466,233
Employer 93,239,629 85,668,814
--------------- ---------------
Total contributions 255,292,083 248,135,047
--------------- ---------------
Total (reductions) additions (664,098,318) 406,992,065
--------------- ---------------
Deductions from net assets attributed to:
Benefits paid to participants 179,915,153 150,356,914
Administrative expenses 4,799,710 3,686,293
--------------- ---------------
Total deductions 184,714,863 154,043,207
--------------- ---------------
Net (decrease) increase (848,813,181) 252,948,858
Net assets available for benefits:
Beginning of year 2,057,997,375 1,805,048,517
--------------- ---------------
End of year $ 1,209,184,194 2,057,997,375
=============== ===============
See accompanying notes to financial statements.
3
THE HOME DEPOT FUTUREBUILDER
Notes to Financial Statements
December 31, 2002 and 2001
(1) DESCRIPTION OF THE PLAN
The following is a brief description of The Home Depot FutureBuilder (the
Plan). Participants should refer to the summary plan description 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 12 months of service and 1,000 hours. The Plan
excludes leased employees, nonresident aliens, and employees covered
by a collective bargaining trust. The Plan is subject to certain
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan is administered by the Administrative Committee
made up of employees of Home Depot U.S.A., Inc.
(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). The
Company made its final ESOP contribution in February 1999.
Under the 401(k) portion of the Plan, participants may contribute up
to 50% of pretax annual compensation, as defined in the Plan.
Participants may also contribute amounts representing eligible
rollover distributions from other qualified retirement plans. The
Company provides matching contributions of 150% of the first 1% of
eligible compensation contributed by a participant and 50% of the
next 2% to 5% of eligible 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 The 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.
(continued)
4
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(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:
VESTING
YEARS OF SERVICE PERCENTAGE
---------------- ----------
3 20%
4 40
5 60
6 80
7 or more 100
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) DISTRIBUTIONS
Upon retirement, death, disability, termination of service for any
other reason, or certain in-service distributions at age 65,
participants or beneficiaries 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
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 2002 and 2001,
$2,715,096 and $3,718,821, respectively, in forfeitures were used to
reduce Plan expenses.
(h) ADMINISTRATIVE EXPENSES
Certain administrative expenses of the Plan are paid by the Company.
These costs include legal, accounting, and certain administrative
fees.
(continued)
5
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(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) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the
accrual basis of accounting.
(b) INVESTMENT VALUATION AND INCOME RECOGNITION
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's 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.
Participant loans are carried at cost which approximates fair value.
The Plan's investments include funds which invest in various types
of investment securities and in various companies within various
markets. Investment securities are exposed to several risks, such as
interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could
materially affect the amounts reported in the Plan's financial
statements and supplemental schedule.
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(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) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Plan's investments are stated at fair value. In addition, the
carrying amount of receivables/payables is a reasonable
approximation of the fair value due to the short-term nature of
these instruments.
(continued)
6
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(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) PLAN 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
- The Home Depot, Inc. Common Stock Fund - Funds are invested in
common stock of The Home Depot, Inc.
- 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.
- Dodge & Cox Stock Fund - Funds are invested in shares of a
registered investment company that invests in common stocks of
companies that the Fund's managers believe to be temporarily
undervalued but have favorable long-term growth prospects.
- IRT Core Balanced Fund - Funds are invested in shares of a
registered investment company that invests in a combination of
equity and fixed income securities.
- 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.
- T. Rowe Price Small Cap Stock Fund - Funds are invested in shares of
a registered investment company that invests in common stocks of
smaller, faster-growing companies that are believed to offer strong
potential earnings growth or are undervalued.
- 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.
- Primco IRT Stable Value Fund - Funds are primarily invested in
short-term debt obligations that mature within one to three years.
(continued)
7
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
The fair value of individual investments that represent 5% or more of the
Plan's net assets at December 31, 2002 and 2001 are as follows:
2002 2001
------------- -------------
The Home Depot, Inc. Common Stock $ 589,836,377 1,337,897,425*
The Home Depot, Inc. Common Stock Fund 208,485,907 365,268,348
Putnam New Opportunities Fund 68,315,619 82,330,937
Primco IRT Stable Value Fund 100,751,128 48,544,930
*Nonparticipant-directed
Investments in the Putnam New Opportunities Fund and the Primco IRT Stable
Value Fund did not exceed 5% of the Plan's net assets at December 31,
2001.
During 2002 and 2001, the Plan's investments (depreciated) appreciated in
fair value as follows:
2002 2001
------------- -----------
Net (depreciation) appreciation in fair value:
Registered investment funds $ (54,972,387) (35,224,852)
The Home Depot, Inc. common stock (881,168,278) 183,024,872
------------- -----------
Net (depreciation) appreciation in fair value $(936,140,665) 147,800,020
============= ===========
(continued)
8
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NONPARTICIPANT-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. Prior to May 1, 2002, each participant who had completed five
years of service and attained the age of 55 were eligible to transfer ESOP
contributions to other investment funds. Effective May 1, 2002, the
Company amended the Plan to allow all participants to immediately transfer
the Company's ESOP contributions to other investment funds. Information
about the net assets and the significant components of the changes in net
assets (without consideration of year-end contribution receivables)
relating to The Home Depot, Inc. common stock (includes
nonparticipant-directed investments) for the period ended April 30, 2002
and the year ended December 31, 2001 is as follows:
2002 2001
--------------- ---------------
Net assets - The Home Depot, Inc. Common Stock -
January 1 $ 1,337,897,425 1,105,700,274
Changes in net assets:
Net (depreciation) appreciation (94,626,182) 267,882,474
Contributions 30,752,975 85,668,814
Benefits paid to participants (51,397,558) (109,006,128)
Cash transfer to other funds (8,381,139) (12,348,009)
--------------- ---------------
Net assets - The Home Depot, Inc. Common Stock -
April 30, 2002 and December 31, 2001 $ 1,214,245,521 1,337,897,425
=============== ===============
The Company's matching contribution has always been allowed to be
transferred into other investment funds.
(6) INVESTMENT IN MASTER TRUST
Effective December 15, 1999, a Master Trust was established for the
investment of assets of the Plan and two other company-sponsored
retirement plans for wholly owned subsidiary, Maintenance
Warehouse/America Corp. As discussed in note 8, assets of The Home Depot
FutureBuilder for Puerto Rico were transferred into the Master Trust on
April 1, 2002. At December 31, 2002 and 2001, the Plan's interest in the
net assets of the Master Trust was approximately 99%.
(continued)
9
THE HOME DEPOT FUTUREBUILDER
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
Summarized financial information of the Master Trust as of December 31,
2002 and 2001 is as follows:
2002 2001
-------------- --------------
Assets:
Investments $1,218,130,415 2,069,938,920
Receivables:
Employee contributions receivable 1,821,134 34,049
Employer contributions receivable 3,633,115 690,296
Other receivable 443,168 325,339
-------------- --------------
Total receivables 5,897,417 1,049,684
-------------- --------------
Total assets 1,224,027,832 2,070,988,604
-------------- --------------
Liabilities:
Accrued liabilities 81,019 17,877
Payable to broker 2,770,796 --
-------------- --------------
Total liabilities 2,851,815 17,877
-------------- --------------
Net assets available for benefits $1,221,176,017 2,070,970,727
============== ==============
Net assets, 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, 2002 and 2001 is as follows:
2002 2001
------------- -------------
Investment income (loss):
Net (depreciation) appreciation in fair value
of investments $(941,057,070) 146,689,290
Dividends and interest income 16,836,110 11,123,625
------------- -------------
Total investment income (loss) $(924,220,960) 157,812,915
============= =============
(7) RELATED PARTY TRANSACTIONS
Certain Plan investments include shares of common stock issued by The Home
Depot, Inc., the Plan Sponsor. At December 31, 2002 and 2001, the Plan
held a combined total of 33,318,960 and 33,388,860 shares valued at
approximately $23.96 and $51.01 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.
(continued)
10
THE HOME DEPOT FUTUREBUILDER
Notes to Financial Statements
December 31, 2002 and 2001
(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 15% 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 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 and its subsidiaries are now in one Master Trust.
Effective May 1, 2002, the Administrative Committee of the Plan adopted an
amendment to the Plan to 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.
Effective October 31, 2002 following the acquisition of Floors, Inc.,
Arvada Hardwood Floor Company, and HD Builder Solutions Group, Inc.,
employees of Floors, Inc., Arvada Hardwood Floor Company, and HD Builder
Solutions Group, Inc. were eligible to participate in the Plan.
(9) SUBSEQUENT EVENT
Effective January 1, 2003, employees of Floorworks, Inc. and Home Depot
Services, LLC were eligible to participate in the Plan.
Effective March 3, 2003, the investment committee of the Plan replaced the
Putnam New Opportunities Fund with the Artisan Mid-Cap Fund.
11
THE HOME DEPOT FUTUREBUILDER
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
DESCRIPTION CURRENT
IDENTITY OF ISSUE OF INVESTMENT VALUE
----------------------------------------- ------------------------------------------------------ ---------------
*The Home Depot, Inc. Common Stock 24,617,545 shares of common stock $ 589,836,377
*The Home Depot, Inc. Common
Stock Fund 8,701,415 shares of common stock 208,485,907
Barclay's Global Investors Equity Index
Stock Fund 2,339,442 shares of registered investment company 59,398,440
Dodge & Cox Stock Fund 164,933 shares of registered investment company 14,522,377
IRT Core Balanced Fund 4,541,993 shares of registered investment company 40,151,222
Putnam New Opportunities Fund 2,402,941 shares of registered investment company 68,315,619
T. Rowe Price Small-Cap Stock Fund 514,111 shares of registered investment company 11,022,536
Templeton Foreign Fund 3,145,828 shares of registered investment company 26,141,831
Primco IRT Stable Value Fund 100,751,128 shares of registered investment company 100,751,128
Participant loans Loans with interest rates ranging from
5.75% to 12.0% and maturity dates
through January 18, 2007 68,463,855
*The Northern Trust Company Short-term investment funds 19,610,199
--------------
Total investments $1,206,699,491
==============
*Indicates party-in-interest to the Plan.
See accompanying independent auditors' report.
12
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
23 Consent of KPMG LLP
99 Section 906 Certification