Three Statement Model

Home Depot
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Integrated Financial Statements
The Home Depot, Inc.
amounts in millions, except per share data
Historical Historical Projected Projected Projected Projected Projected
INCOME STATEMENT 2011 2012 2013 2014 2015 2016 2017
Revenue 70,395 74,754 78,492 82,416 86,537 90,864 95,407
Growth (%) NA 6.2% 5.0% 5.0% 5.0% 5.0% 5.0%
Cost of Goods Sold 46,133 48,912 51,398 53,968 56,667 59,500 62,475
% of Sales 65.5% 65.4% 65.5% 65.5% 65.5% 65.5% 65.5%
Gross Profit 24,262 25,842 27,093 28,448 29,870 31,364 32,932
% of Sales 34.5% 34.6% 34.5% 34.5% 34.5% 34.5% 34.5%
Operating Expenses (SG&A) 16,028 16,508 17,602 18,483 19,407 20,377 21,396
SG&A as % of Sales 22.8% 22.1% 22.4% 22.4% 22.4% 22.4% 22.4%
Depreciation & Amortization (D&A) 1,573 1,568 1,700 1,785 1,874 1,968 2,067
Total Operating Expenses 17,601 18,076 19,303 20,268 21,281 22,345 23,462
% of Sales 25.0% 24.2% 24.6% 24.6% 24.6% 24.6% 24.6%
Operating Income (EBIT) 6,661 7,766 7,791 8,180 8,589 9,019 9,470
Operating Profit Margin (%) 9.5% 10.4% 9.9% 9.9% 9.9% 9.9% 9.9%
Interest and Other (Income) Expense:
Interest and Investment Income (13) (20) - - - - -
Interest Expense ON 606 632 553 523 548 594 658
Other - (67) - - - - -
Interest and Other, net 593 545 553 523 548 594 658
Earnings Before Taxes 6,068 7,221 7,238 7,657 8,041 8,425 8,812
Provision for Income Taxes 2,185 2,686 2,533 2,680 2,814 2,949 3,084
Tax Rate NM NM 35.0% 35.0% 35.0% 35.0% 35.0%
Net Income 3,883 4,535 4,705 4,977 5,227 5,476 5,728
Net Profit Margin (%) 5.52% 6.07% 5.99% 6.04% 6.04% 6.03% 6.00%
Operating Income (EBIT) 6,661 7,766 7,791 8,180 8,589 9,019 9,470
Depreciation & Amortization 1,573 1,568 1,700 1,785 1,874 1,968 2,067
EBITDA 8,234 9,334 9,491 9,965 10,464 10,987 11,536
EBITDA Margin (%) 11.7% 12.5% 12.1% 12.1% 12.1% 12.1% 12.1%
Diluted Wtd Avg Shares (millions) ON 1,570 1,511 1,461 1,411 1,361 1,311 1,261
Earnings Per Share $ 2.47 $ 3.00 $ 3.22 $ 3.53 $ 3.84 $ 4.18 $ 4.54
BALANCE SHEET 2011 2012 2013 2014 2015 2016 2017
Current Assets
Cash 1,987 2,494 648 250 250 250 250
Accounts Receivable 1,245 1,395 1,426 1,498 1,573 1,651 1,734
Merchandise Inventories 10,325 10,710 11,379 11,948 12,545 13,173 13,831
Other Current Assets 963 773 943 990 1,039 1,091 1,146
Total Current Assets 14,520 15,372 14,396 14,686 15,407 16,165 16,961
Fixed Assets
PP&E, Net of Accum. Depreciation 24,448 24,069 24,169 24,384 24,709 25,141 25,675
Notes Receivable 135 140 140 140 140 140 140
Goodwill 1,120 1,170 1,170 1,170 1,170 1,170 1,170
Other Assets 295 333 333 333 333 333 333
TOTAL ASSETS 40,518 41,084 40,208 40,712 41,760 42,949 44,278
Current Liabilities
Accounts Payable 4,856 5,376 5,530 5,806 6,097 6,401 6,721
Accrued Salaries and Related Expenses 1,372 1,414 1,507 1,583 1,662 1,745 1,832
Sales Taxes Payable 391 472 466 489 514 539 566
Deferred Revenue 1,147 1,270 1,306 1,372 1,440 1,512 1,588
Income Taxes Payable 23 22 22 22 22 22 22
Current Installments of Long-Term Debt 30 1,321 81 75 3,133 73 75
Other Accrued Expenses 1,557 1,587 1,701 1,786 1,876 1,969 2,068
Total Current Liabilities 9,376 11,462 10,613 11,133 14,743 12,262 12,872
Long Term Liabilities
Revolving Credit Facility (Line of Credit) - - - 136 984 5,234 6,797
Long Term Debt, Net of Current Installments 10,758 9,475 9,436 9,451 6,408 6,425 6,440
Other Long-Term Liabilities 2,146 2,051 2,051 2,051 2,051 2,051 2,051
Deferred Income Taxes 340 319 319 319 319 319 319
TOTAL LIABILITIES 22,620 23,307 22,419 23,090 24,505 26,291 28,479
Common Stock 87 88
Additional Paid In Capital 6,966 7,948
Retained Earnings 17,246 20,038
Accumulated Other Comprehensive Income 293 397
Treasury Stock (6,694) (10,694)
TOTAL EQUITY 17,898 17,777 17,788 17,622 17,255 16,658 15,799
TOTAL LIABILITIES & EQUITY 40,518 41,084 40,208 40,712 41,760 42,949 44,278
Check - - - - - - -
BALANCE SHEET ASSUMPTIONS Project With: Using
Accounts Receivable Revenue DSO 6.5 6.8 6.6 6.6 6.6 6.6 6.6
Merchandise Inventory Days COGS DIO 81.7 79.9 80.8 80.8 80.8 80.8 80.8
Other Current Assets Revenue % of Rev 1.4% 1.0% 1.2% 1.2% 1.2% 1.2% 1.2%
Accounts Payable COGS DPO 38.4 40.1 39.3 39.3 39.3 39.3 39.3
Accrued Salaries and Related Expenses SG&A Days 31.2 31.3 31.3 31.3 31.3 31.3 31.3
Sales Taxes Payable Revenue DSO 2.0 2.3 2.2 2.2 2.2 2.2 2.2
Deferred Revenue Revenue DSO 5.9 6.2 6.1 6.1 6.1 6.1 6.1
Other Accrued Expenses COGS Days 12.3 11.8 12.1 12.1 12.1 12.1 12.1
CASH FLOW STATEMENT 2011 2012 2013 2014 2015 2016 2017
CASH FLOW FROM OPERATING ACTIVITIES
Net Income 4,705 4,977 5,227 5,476 5,728
Add Back Non-Cash Items
Depreciation & Amortization 1,700 1,785 1,874 1,968 2,067
 Goodwill Impairment - - - - -
Stock-Based Compensation Expense 200 200 200 200 200
Changes in Working Capital
Accounts Receivable (31) (71) (75) (79) (83)
Merchandise Inventories (669) (569) (597) (627) (659)
Other Current Assets (170) (47) (49) (52) (55)
Accounts Payable 154 276 290 305 320
Accrued Salaries and Related Expenses 93 75 79 83 87
Sales Taxes Payable (6) 23 24 26 27
Deferred Revenue 36 65 69 72 76
Income Taxes Payable - - - - -
Other Accrued Expenses 114 85 89 94 98
Net Cash Provided by Operating Activities 6,126 6,801 7,131 7,466 7,807
CASH FLOW FROM INVESTING ACTIVITIES
Capital Expenditures - Purchase of PP&E (1,800) (2,000) (2,200) (2,400) (2,600)
Proceeds from Sales of PP&E - - - - -
Purchases of Investments / Businesses - - - - -
Proceeds from Sales of Investments / Businesses - - - - -
Net Cash Used in Investing Activities (1,800) (2,000) (2,200) (2,400) (2,600)
CASH FLOW FROM FINANCING ACTIVITIES
Revolving Credit Facility (Line of Credit) - 136 848 4,250 1,563
Current Installments of Long-Term Debt (1,240) (6) 3,058 (3,060) 2
Long Term Debt (39) 15 (3,043) 17 15
Repurchases of Common Stock (3,864) (4,233) (4,608) (5,012) (5,451)
Cash Dividends Paid (1,411) (1,493) (1,568) (1,643) (1,718)
Other Financing Activities 382 382 382 382 382
Net Cash Provided by (Used in) Finance Activities (6,172) (5,198) (4,931) (5,066) (5,207)
Net Cash Flow (1,846) (398) - - -
Beginning Cash Balance 2,494 648 250 250 250
Ending Cash Balance 648 250 250 250 250

Supporting Schedules
The Home Depot, Inc.
amounts in millions, except per share data
DEBT SCHEDULE 2011 2012 2013 2014 2015 2016 2017
Revolving Credit Facility (Line of Credit)
Cash Balance @ Beg of Year (End of Last Year) 2,494 648 250 250 250
Plus: Free Cash Flow from Operations and Investing 4,326 4,801 4,931 5,066 5,207
Plus: Free Cash Flow from Financing (BEFORE L.O.C.) (6,172) (5,335) (5,779) (9,316) (6,770)
Less: Minimum Cash Balance 250 250 250 250 250
Total Cash Available or (Required) from L.O.C. 398 (136) (848) (4,250) (1,563)
Revolving Credit Facility (Line of Credit) - - - 136 984 5,234 6,797
Interest Rate on Line of Credit 5.0% 5.0% 5.0% 5.0% 5.0%
Interest Expense on Line of Credit - 3 28 155 301
Long Term Debt
5.25% Notes due December 16, 2013
Beg. Balance 1,286 - - - -
Issuance - - - - -
(Repayment of Principal) (1,286) - - - -
Ending Balance 1,286 - - - - -
Interest Rate 5.25% 5.25% 5.25% 5.25% 5.25%
Interest Expense 34 - - - -
5.40% Notes due March 1, 2016
Beg. Balance 3,058 3,058 3,058 3,058 -
Issuance - - - - -
(Repayment of Principal) - - - (3,058) -
Ending Balance 3,058 3,058 3,058 3,058 - -
Interest Rate 5.40% 5.40% 5.40% 5.40% 5.40%
Interest Expense 165 165 165 83 -
3.95% Notes due September 15, 2020
Beg. Balance 499 499 499 499 499
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance 499 499 499 499 499 499
Interest Rate 3.95% 3.95% 3.95% 3.95% 3.95%
Interest Expense 20 20 20 20 20
4.40% Notes due April 1, 2021
Beg. Balance 998 998 998 998 998
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance 998 998 998 998 998 998
Interest Rate 4.40% 4.40% 4.40% 4.40% 4.40%
Interest Expense 44 44 44 44 44
5.875% Notes due December 16, 2036
Beg. Balance 2,962 2,962 2,962 2,962 2,962
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance 2,962 2,962 2,962 2,962 2,962 2,962
Interest Rate 5.88% 5.88% 5.88% 5.88% 5.88%
Interest Expense 174 174 174 174 174
5.40% Notes due September 15, 2040
 Beg. Balance 499 499 499 499 499
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance 499 499 499 499 499 499
Interest Rate 5.40% 5.40% 5.40% 5.40% 5.40%
Interest Expense 27 27 27 27 27
5.95% Notes due April 1, 2041
Beg. Balance 996 996 996 996 996
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance 996 996 996 996 996 996
Interest Rate 5.95% 5.95% 5.95% 5.95% 5.95%
Interest Expense 59 59 59 59 59
New Notes
Beg. Balance - - - - -
Issuance - - - - -
(Repayment of Principal) - - - - -
Ending Balance - - - - - -
Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00%
Interest Expense - - - - -
Capital Leases and Other
Beg. Balance 498 505 514 529 544
Issuance 90 90 90 90 90
(Repayment of Principal) (83) (81) (75) (75) (73)
Ending Balance 498 505 514 529 544 561
Interest Rate 6.00% 6.00% 6.00% 6.00% 6.00%
Interest Expense 30 31 31 32 33
Total Payments for Capital Lease (Principal and Interest) 113 112 106 107 106
Total Long Term Debt
Beg. Balance 10,796 9,517 9,526 9,541 6,498
Issuance 90 90 90 90 90
(Repayment of Principal) (1,369) (81) (75) (3,133) (73)
Ending Balance 10,796 9,517 9,526 9,541 6,498 6,515
Interest Rate NM NM NM NM NM
Interest Expense 553 520 520 439 357
Total Interest Expense 553 523 548 594 658
Balance Sheet Links
Current Installments of Long-Term Debt 1,321 81 75 3,133 73 75
Long Term Debt, Net of Current Installments 9,475 9,436 9,451 6,408 6,425 6,440
Total Long Term Debt 10,796 9,517 9,526 9,541 6,498 6,515

PP&E SCHEDULE 2011 2012 2013 2014 2015 2016 2017

Beg: PP&E, Net of Accum. Depreciation 24,069 24,169 24,384 24,709 25,141
Plus: Capital Expenditures 1,800 2,000 2,200 2,400 2,600
Less: Depreciation Used To Project 1,700 1,785 1,874 1,968 2,067
Depreciation as % of Revenues 2.23% 2.10% 2.17% 2.17% 2.17% 2.17% 2.17%
Less: Sales of PP&E - - - - -
End: PP&E, Net of Accum. Depreciation 24,169 24,384 24,709 25,141 25,675

STOCKHOLDERS' EQUITY SCHEDULE 2011 2012 2013 2014 2015 2016 2017
Beg: Equity Balance 17,777 17,788 17,622 17,255 16,658
Net Income 4,705 4,977 5,227 5,476 5,728
Stock-Based Compensation Expense 200 200 200 200 200
Repurchase of Common Stock (3,864) (4,233) (4,608) (5,012) (5,451)
Option Proceeds 382 382 382 382 382
Cash Dividends (1,411) (1,493) (1,568) (1,643) (1,718)
Effects of Exchange Rates in Cash [Foreign Currency Adj.] - - - - -
End: Equity Balance 17,898 17,777 17,788 17,622 17,255 16,658 15,799
Share Repurchase Assumptions
Current Year EPS $ 3.22 $ 3.53 $ 3.84 $ 4.18 $ 4.54
Assumed Current Year P/E Multiple 20.0x 20.0x 20.0x 20.0x 20.0x
Projected Share Price $ 64.40 $ 70.55 $ 76.81 $ 83.54 $ 90.84
Shares Repurchased (millions) 97 74 60 60 60 60 60
Repurchase of Common Stock ($) 3,501 4,000 3,864 4,233 4,608 5,012 5,451
New Shares from Exercised Options
New Shares Issued from Options 11.0 21.0 10.0 10.0 10.0 10.0 10.0
Average Strike Price $ 38.24 $ 38.24 $ 38.24 $ 38.24 $ 38.24
Option Proceeds 197 679 382 382 382 382 382
Dividend Assumptions
Net Income 3,883 4,535 4,705 4,977 5,227 5,476 5,728
Cash Dividend Payout Ratio 42.0% 38.4% 30.0% 30.0% 30.0% 30.0% 30.0%
Cash Dividends 1,632 1,743 1,411 1,493 1,568 1,643 1,718
SHARES OUTSTANDING SCHEDULE 2011 2012 2013 2014 2015 2016 2017
Beg: Basic 1,499 1,449 1,399 1,349 1,299
Shares Issued from Options 10 10 10 10 10
Shares Repurchased (60) (60) (60) (60) (60)
End: Basic 1,499 1,449 1,399 1,349 1,299 1,249
Average Basic Shares 1,499 1,449 1,399 1,349 1,299 1,249
Dilutive Effects 12 12 12 12 12 12
Average Diluted Shares 1,511 1,461 1,411 1,361 1,311 1,261