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
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Commission file number 1-8207
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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 for Puerto Rico
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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 for Puerto Rico
Date: June 26, 2003
/s/ Ileana L. Connally
-----------------------------------
By: Ileana L. Connally
Member of The Home Depot
FutureBuilder for Puerto Rico
Administrative Committee
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Financial Statements and Supplemental Schedule
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
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
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2002 11
Independent Auditors' Report
The Administrative Committee
The Home Depot FutureBuilder for Puerto Rico:
We have audited the accompanying statements of net assets available for benefits
of The Home Depot FutureBuilder for Puerto Rico (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 for Puerto Rico 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
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 FOR PUERTO RICO
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
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Assets:
Investments (note 5) $686,552 825,538
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Receivables:
Employer contributions receivable 3,226 --
Employee contributions receivable 5,008 --
Other receivable 67 458
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Total receivables 8,301 458
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Liabilities:
Accrued liabilities 6,615 --
Payable to broker -- 19,604
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Net assets available for benefits $688,238 806,392
======== ========
See accompanying notes to financial statements.
2
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2002 and 2001
2002 2001
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Additions (reductions) to net assets attributed to:
Investment income (loss):
Net (depreciation) appreciation in fair value of investments
(note 5) $(418,864) 69,188
Interest and dividend income 5,803 3,554
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Total investment income (loss) (413,061) 72,742
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Contributions:
Participants 246,718 242,807
Employer 155,747 178,075
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402,465 420,882
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Total (reductions) additions (10,596) 493,624
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Deductions from net assets attributed to:
Benefits paid to participants 107,346 38,918
Administrative expenses 212 24
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Total deductions 107,558 38,942
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Net (decrease) increase (118,154) 454,682
Net assets available for benefits:
Beginning of year 806,392 351,710
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End of year $ 688,238 806,392
========= =========
See accompanying notes to financial statements.
3
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
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 for
Puerto Rico (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 Home Depot Puerto Rico, Inc. (the Company), a wholly
owned subsidiary of The Home Depot, Inc. (the Parent 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
intended to qualify under Section 1165 of the Puerto Rico Internal
Revenue Code of 1994, as amended. The Plan is subject to certain
provisions of the Employee Retirement Income Security Act of 1974
(ERISA), excluding provisions of ERISA applicable only to plans
qualified under Section 401(a) of the U.S. Internal Revenue Code.
The Plan is administered by the Administrative Committee made up
of employees of The Home Depot U.S.A., Inc. Banco Popular has been
appointed the Trustee of the Plan, and as such administers the
assets of the Plan. Effective April 1, 2002, the assets of The
Home Depot Futurebuilder for Puerto Rico were added to the Master
Trust, which includes The Home Depot Futurebuilder and the
Maintenance Warehouse Futurebuilder.
(b) Contributions
Under the employee stock ownership portion of the Plan,
contributions were made solely by the Company and at the
discretion of Home Depot Puerto Rico, Inc. Board of Directors
(ESOP contributions). The Company made its final ESOP contribution
in February 1999.
Participants may contribute up to 10% 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 Home Depot
Puerto Rico, Inc. 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 FOR PUERTO RICO
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:
Years Vesting
of service percentage
------------ ----------
3 20%
4 40
5 60
6 80
7 or more 100
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, or termination of service for
any other reason, 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 lesser of $50,000 or 50% of
their total vested 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 account balances are used to pay Plan expenses
or reduce future employer contributions. In 2002 and 2001,
employer contributions were reduced by forfeitures of $1,261 and
$1,864, respectively.
(h) Administrative Expenses
Certain administrative expenses of the Plan are paid by the
Company. These costs include legal, accounting, and certain
administrative fees.
(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.
(Continued)
5
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Notes to Financial Statements
December 31, 2002 and 2001
(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 Home Depot, Inc. 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. Effective April 1, 2002, the investments are valued on
a daily basis.
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 revenue and
expenses during the reporting period. Actual results could differ
from those estimates.
(e) Reclassifications
Certain balances in the prior year have been reclassified to
conform with the current year presentation.
(f) 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.
(3) Puerto Rico Income Taxes
The Puerto Rico Department of Treasury has determined and informed the
Company by a letter dated January 4, 1999 that the Plan is designed in
accordance with applicable sections of the Puerto Rico Internal Revenue
Code of 1994 (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.
(Continued)
6
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Notes to Financial Statements
December 31, 2002 and 2001
(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. In the event of plan termination, participants will
become 100% vested in their accounts.
(5) Investments
The Plan's investments are held by 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 by the stock
market 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 United States.
- Primco IRT Stable Value Fund - Funds are primarily
invested in high-quality short-term debt obligations
that mature within one to three years.
(Continued)
7
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
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
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The Home Depot, Inc. Common Stock $ 85,532 4,502*
The Home Depot, Inc. Common Stock Fund 338,623 638,275
IRT Core Balanced Fund 36,411 --
Primco IRT Stable Value Fund 76,261 23,241
*Nonparticipant-Directed
The Home Depot, Inc. Common Stock and the IRT Core Balanced Fund did not exceed
5% of net assets at December 31, 2001.
During 2002 and 2001, the Plan's investments appreciated (depreciated) in fair
value as follows:
2002 2001
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Net (depreciation) appreciation in fair value:
Registered investment company funds $ (32,669) 5,194
Common stock (386,195) 63,994
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Net (depreciation) appreciation in fair value $(418,864) 69,188
========= =========
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. Effective
June 1, 2002, participants were allowed 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 relating to The Home
Depot, Inc. Common Stock (includes nonparticipant-directed investments) for the
period ended May 31, 2002 and the year ended December 31, 2001 is as follows:
2002 2001
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Net assets - The Home Depot, Inc. Common Stock -
January 1 $ 322,069 138,423
Changes in net assets:
Net (depreciation) appreciation (62,611) 35,439
Contributions 66,215 167,247
Payments made directly to participants (16,697) (17,164)
Cash transfer to other funds (11,422) (1,876)
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Net assets - The Home Depot, Inc. Common Stock -
May 31, 2002 and December 31, 2001 $ 297,554 322,069
========= =========
(Continued)
8
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Notes to Financial Statements
December 31, 2002 and 2001
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 two other retirement plans sponsored by The
Home Depot, Inc. and its subsidiaries. As discussed in note 1(a),
assets of the Plan were transferred into the Master Trust on April 1,
2002. At December 31, 2002, the Plan's interest in the net assets of
the Master Trust was less than 1%.
Summarized financial information of the Master Trust as of December 31,
2002 is as follows:
Assets:
Investments $1,218,130,415
Receivables:
Employee contributions receivable 1,821,134
Employer contributions receivable 3,633,115
Other receivable 443,168
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Total receivables 5,897,417
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Total assets 1,224,027,832
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Liabilities:
Accrued liabilities 81,019
Payable to broker 2,770,796
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Total liabilities 2,851,815
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Net assets available for benefits $1,221,176,017
==============
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 nine-month period ended December 31, 2002 is as follows:
Investment income (loss):
Net (depreciation) appreciation in fair value of investments $(859,179,255)
Dividends and interest income 13,007,560
-------------
Total investment loss $(846,171,695)
=============
(7) Related Party Transactions
Certain Plan investments include shares of common stock issued by the
Parent Company. At December 31, 2002 and 2001, the Plan held a combined
total of 17,703 and 12,601 shares valued at approximately $23.96 and
$51.01 per share, respectively. As the Parent of the Plan Sponsor,
these transactions qualify as party-in-interest.
(Continued)
9
THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO
Notes to Financial Statements
December 31, 2002 and 2001
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
Effective February 1, 2002, the investment committee of The Home Depot
FutureBuilder for Puerto Rico 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 Barclay's Global Investors S&P 500 Stock
Fund was changed to the Barclay's Global Investors Equity Index Stock
Fund.
Effective June 1, 2002, the Administrative Committee of the Plan
adopted 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 Home Depot, Inc. Common Stock among the other Investment
Funds.
(9) Subsequent Event
Effective March 3, 2003, the investment committee of The Home Depot
FutureBuilder for Puerto Rico replaced the Putnam New Opportunities
Fund with the Artisan Mid-Cap Fund.
10
THE HOME DEPOT
FUTUREBUILDER FOR PUERTO RICO
Schedule H, Line 4i - Schedule of
Assets (Held at End of Year)
December 31, 2002
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT VALUE
------------------------------------------------------ ----------------------------------------------------------- ----------
* The Home Depot, Inc. Common Stock 3,570 shares of common stock $ 85,532
* The Home Depot, Inc. Common Stock Fund 14,133 shares of common stock 338,623
Barclay's Global Investors Equity Index Stock Fund 422 shares of registered investment company 10,714
Dodge & Cox Stock Fund 139 shares of registered investment company 12,204
IRT Core Balanced Fund 4,119 shares of registered investment company 36,411
Putnam New Opportunities Fund 937 shares of registered investment company 26,625
T. Rowe Price Small Cap Stock Fund 318 shares of registered investment company 6,820
Templeton Foreign Fund 2,785 shares of registered investment company 23,147
Primco IRT Stable Value Fund 76,261 shares of registered investment company 76,261
Participant loans Loans with interest rates ranging from
5.69% to 10.5% and maturity dates
through April 20, 2006 70,215
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$ 686,552
==========
* Indicates party-in-interest to the Plan.
See accompanying independent auditors' report.
11
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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23 Consent of KPMG LLP
99 Section 906 Certification