I'm looking to see if someone can help me with this homework. I have attached the documents that are needed. I'm not good with financial reports. Thanks

the home depot annual report 2012 AnnuAl RepoRt 2012 homedepotar.com Dear Shareholders: In Fiscal Year 2012, we grew sales for the third consecutive year, with positive sales in all three U.S. Divisions, Canada and Mexico. For the year, our comparable store sales were up 4.6 percent, total sales were up 6.2 percent, and diluted earnings per share were up 21.5 percent. These results reflect the benefit of our strategic focus and what we believe to be the beginning of the healing process for the U.S. housing market. We are pleased that by the end of 2012 we met, ahead of schedule, our financial targets of achieving a 10 percent operating profit and 15 percent return on invested capital. We have now set out new financial targets of achieving a 12 percent operating profit and a 24 percent return on invested capital by the end of fiscal 2015. The focus for our business over the past several years and going forward reflects: 1. What we are passionate about: Customer Service; 2. What we intend to be best in the world at: Product Authority for Home Improvement; and 3. What drives our economic engine: Disciplined Capital Allocation. For our strategic framework, we borrowed from Jim Collins and use the \"three-legged stool\" to refer to these priorities, and we have added Interconnected Retail as the fourth element of our strategy, recognizing that our customers want a seamless experience, online and in our stores. CUSTOMER SERVICE Each year we dedicate over 10 million hours in training for our associates. In 2012, we re-trained all of our store associates on our customer service initiative we launched in 2009 called \"Customers FIRST.\" We also enabled our store managers to customize their stores' training to focus on the elements that they felt needed the most improvement. We are pleased that we continue to see improvement in both our internal and external customer surveys. We are well on our way to our goal of having 60 percent of store hours assigned to customer service, with the remaining 40 percent assigned to completing tasks. We began this effort several years ago, when the percentages were reversed, and ended 2012 with approximately 57 percent of our hours assigned to customer facing activities. We are very proud that we set a company record this year for our highest ever Success Sharing payout. Success Sharing is our bonus program for our hourly associates, and this year we paid out approximately $195 million. The first step in customer service is making sure that we take care of our associates, and the Success Sharing program is one of the ways we do that. PRODUCT AUTHORITY Product authority begins with providing compelling values to our customers and ensuring that the products our customers want are available at the right time and in the right quantities. We have integrated our online and in-store data, pricing and assortment planning processes to enhance our customers' experience. We have also improved our inventory management systems and completed the mechanization of our Rapid Deployment Centers. Additionally, we have begun the development of new distribution centers and the enhancement of existing facilities to support direct to customer fulfillment, which we expect to complete over the next two years. These efforts have built on our strength in home improvement product authority, and we had positive customer transactions, as well as growth in our average ticket. DISCIPLINED CAPITAL ALLOCATION We have a disciplined and balanced approach to capital allocation, investing to maintain and improve the health of our business. We are committed to returning excess cash to our shareholders in the form of dividends and share repurchases. In 2012, we repurchased a total of $4 billion or 74 million shares of outstanding stock. We have also announced an increase in our quarterly dividend to $0.39, or an annual dividend of $1.56, a 34 percent increase. This is consistent with our targeted dividend principle of paying out approximately 50 percent of net earnings in dividends. We also authorized a new $17 billion share repurchase program, which replaced the previous program. Our goal is to use this authority by the end of 2015. Since 2002, we have repurchased approximately one billion shares, returning more than $37.5 billion of cash to shareholders. INTERCONNECTED RETAIL In 2012, we upgraded our online platform, enhancing the site's visual appeal and functionality. Our mobile applications have been downloaded over three million times, and we have more than 600,000 skus through our Home Depot and our Home Decorators Collection sites. We continue to enhance and improve our Buy Online, Pick-up In-Store, and Buy Online, Return In-Store programs, and we are now rolling out a Buy Online, Ship-to-Store program. Each of these capabilities improves our customers' overall shopping experience with us. We are also adding new capabilities to simplify and improve the customer experience for installation projects with our online tool MyInstall. INTERNATIONAL Our business in Canada had positive comparable store sales for every quarter of the year and is gaining share in the Canadian market. In Mexico, we opened our 100th store during the year and also continued the Mexican team's consistent record of performance, with 37 quarters of positive comparable store sales in a row. We closed our seven big box stores in China during the year. After several years of effort, we concluded that we could not make that format profitable there. 2013 We believe our business is well positioned as the U.S. housing market continues on a path to recovery. For 2013, we will continue our efforts to improve our customer service and provide compelling values. I hope as you spend time in our stores, on our website or on our mobile applications you will see continued improvement. Francis S. Blake March 28, 2013 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 3, 2013 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-8207 THE HOME DEPOT, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 95-3261426 (I.R.S. Employer Identification No.) 2455 PACES FERRY ROAD, N.W., ATLANTA, GEORGIA 30339 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (770) 433-8211 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED Common Stock, $0.05 Par Value Per Share New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No No Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the common stock of the Registrant held by non-affiliates of the Registrant on July 29, 2012 was $80.2 billion. The number of shares outstanding of the Registrant's common stock as of March 11, 2013 was 1,485,517,485 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's proxy statement for the 2013 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form 10-K to the extent described herein. THE HOME DEPOT, INC. FISCAL YEAR 2012 FORM 10-K TABLE OF CONTENTS PART I Item 1. Business Item 1A. Risk Factors 1 7 Item 1B. Unresolved Staff Comments 10 Item 2. Properties 11 Item 3. Legal Proceedings 13 Item 4. Mine Safety Disclosures 13 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14 Item 6. Selected Financial Data 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 PART II Item 7A. Quantitative and Qualitative Disclosures About Market Risk 26 Item 8. Financial Statements and Supplementary Data 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 51 Item 9A. Controls and Procedures 51 Item 9B. Other Information 51 Item 10. Directors, Executive Officers and Corporate Governance 52 Item 11. Executive Compensation 53 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 53 Item 13. Certain Relationships and Related Transactions, and Director Independence 53 Item 14. Principal Accountant Fees and Services 53 Exhibits, Financial Statement Schedules 54 Signatures 57 PART III PART IV Item 15. CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements regarding our future performance constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain initiatives, continuation of share repurchase programs, net earnings performance, earnings per share, capital allocation and expenditures, liquidity, return on invested capital, management of relationships with our suppliers and vendors, stock-based compensation expense, the effect of accounting charges, the effect of adopting certain accounting standards, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties - many of which are beyond our control or are currently unknown to us - as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, "Risk Factors," and elsewhere in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission ("SEC"). PART I Item 1. Business. Introduction The Home Depot, Inc. is the world's largest home improvement retailer based on Net Sales for the fiscal year ended February 3, 2013 ("fiscal 2012"). The Home Depot stores sell a wide assortment of building materials, home improvement products and lawn and garden products and provide a number of services. The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. As of the end of fiscal 2012, we had 2,256 The Home Depot stores located throughout the United States including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam, Canada and Mexico. When we refer to "The Home Depot," the "Company," "we," "us" or "our" in this report, we are referring to The Home Depot, Inc. and its consolidated subsidiaries. The Home Depot, Inc. is a Delaware corporation that was incorporated in 1978. Our Store Support Center (corporate office) is located at 2455 Paces Ferry Road, N.W., Atlanta, Georgia 30339. Our telephone number is (770) 433-8211. We maintain an Internet website at www.homedepot.com. We make available on our website, free of charge, our Annual Reports to shareholders, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5, and amendments to those reports, as soon as reasonably practicable after filing such documents with, or furnishing such documents to, the SEC. We include our website addresses throughout this filing for reference only. The information contained on our websites is not incorporated by reference into this report. For information on key financial highlights, including historical revenues, profits and total assets, see the "Five-Year Summary of Financial and Operating Results" on page F-1 of this report and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." 1 Our Business Operating Strategy In fiscal 2012, we continued to execute on our strategy focused on the following key initiatives: Customer Service. Our customer service initiative is anchored on the principles of creating an emotional connection with our customers, putting customers first, taking care of our associates and simplifying the business. We underscored the importance of this initiative in fiscal 2012 by retraining all U.S. store associates on our Customers FIRST program prior to the Spring selling season. During fiscal 2012, we continued to invest in information technology and made certain strategic acquisitions to serve our customers more effectively. Through these efforts, we have continually improved our customer satisfaction survey results. We also sought to maintain competitive wages and incentive opportunities to attract, retain and motivate our associates. Product Authority. Our product authority initiative is facilitated by our merchandising transformation and portfolio strategy, which is focused on delivering product innovation, assortment and value. In fiscal 2012, we introduced a wide range of innovative new products to our professional and do-it-yourself customers, while remaining focused on offering every day values in our stores. Disciplined Capital Allocation, Productivity and Efficiency. We have advanced this initiative through building bestin-class competitive advantages in information technology and supply chain. During fiscal 2012, we completed the mechanization of our Rapid Deployment Center ("RDC") network, and we continue to focus on operating and optimizing our supply chain network. We also advanced this initiative through our continued focus on disciplined capital allocation and expense control, which drove higher returns on invested capital and allowed us to return value to shareholders through share repurchases and dividends. Interconnected Retail. As customers increasingly expect to be able to buy how, when and where they want, we believe that providing a seamless shopping experience across multiple channels, with an expanded array of merchandise, will be a key enabler for future success. The interconnected retail initiative is woven throughout our business and connects our other three key initiatives. In fiscal 2012, we launched several projects to support this initiative, starting in the first quarter with the rollout of a significant upgrade to our website, which enhanced the layout, visual appearance and responsiveness of the site. We also began construction of a new distribution center to support direct-to-customer fulfillment, with a second distribution center also under development, and we added new customer call centers in Utah and Georgia. Lastly, we introduced new programs, such as Buy Online, Return In Store ("BORIS") and Buy Online, Ship to Store ("BOSS"), to expand upon Buy Online, Pick-Up In Store ("BOPIS"), which we introduced in fiscal 2011. Customer Service Our Customers. The Home Depot stores serve three primary customer groups, and we have different customer service approaches to meet their particular needs: Do-It-Yourself ("D-I-Y") Customers. These customers are typically home owners who purchase products and complete their own projects and installations. Our associates assist these customers with specific product and installation questions both in our stores and through online resources and other media designed to provide product and project knowledge. We also offer a variety of clinics and workshops both to impart this knowledge and to build an emotional connection with our D-I-Y customers. Do-It-For-Me ("D-I-F-M") Customers. These customers are typically home owners who purchase materials themselves and hire third parties to complete the project or installation. Our stores offer a variety of installation services targeted at D-I-F-M customers who select and purchase products and installation of those products from us in the store. Our installation programs include products such as carpeting, flooring, cabinets, countertops and water heaters. In addition, we provide professional installation of a number of products sold through our in-home sales programs, such as roofing, siding, windows, furnaces and central air systems. Professional Customers. These customers are primarily professional remodelers, general contractors, repairmen, small business owners and tradesmen. We offer a variety of special programs to these customers, including delivery and will-call services, dedicated staff, expanded credit programs, designated parking spaces close to store entrances and bulk pricing programs for both online and in-store purchases. We recognize the unique service needs of the professional customer and use our expertise to facilitate their buying experience. In fiscal 2012, we undertook a number of projects and new developments to enhance our customers' shopping experiences. In addition to retraining our associates on the Customers FIRST program, we rolled out the "First Phone Junior" to all of our 2 stores. This version combines the communication features of a phone with the product and inventory lookup features of our First Phone, but without its complex business analytics and product ordering features. We can now spread the basic functionality and customer service benefits of the First Phone throughout the store at a lower cost. We also implemented a new "Store to Store" feature, which allows our associates to look up inventory in other stores, reserve the inventory and complete the sales transaction for the customer. We continued to take tasking out of the stores so that our associates can focus on assisting customers. To improve our labor efficiency, we have developed tools for automated, in-aisle inventory management to replace our former manual, paper-driven processes. As of the end of fiscal 2012, approximately 57% of our store labor hours were dedicated to customer-facing activity, with a goal of reaching 60% by the end of fiscal 2013. In fiscal 2012, we continued to automate our special order and installation process to improve transparency and communication and to simplify the customer experience, and we launched MyInstall on our website, which allows our customers to schedule appointments and track their projects online. Our recent strategic acquisitions are also aimed at improving our customers' home improvement experiences. Red Beacon, acquired at the end of fiscal 2011, is a website that helps our D-I-F-M customers find professionals to help them complete home improvement projects. This acquisition enables us to deliver on consumer expectations by making it easier to get these projects done; it allows us to help our professional customers find jobs; and it builds relationships with our customers. We also acquired two companies that provided services to our customers - a flooring measurement company and a kitchen and bath refacing company. These acquisitions enable us to strengthen and unify our customers' home services experience under The Home Depot brand. We help our professional, D-I-Y and D-I-F-M customers finance their projects by offering private label credit products in our stores through third-party credit providers. In fiscal 2012, our customers opened approximately 2.5 million new The Home Depot private label credit accounts, and at fiscal year end the total number of The Home Depot active account holders was approximately 10 million. Private label credit card sales accounted for approximately 22% of sales in fiscal 2012. In addition, to improve customer convenience at the register, we completed our rollout of PayPal as an in-store payment option and, in certain stores, implemented a program for customers to receive an electronic copy of their receipt. Our Associates. Our associates are key to our customer service initiative. We empower our associates to deliver excellent customer service through our Customers FIRST training program, and we have a number of Company-sponsored programs to recognize stores and individual associates for exceptional customer and community service. At the end of fiscal 2012, we employed approximately 340,000 associates, of whom approximately 21,000 were salaried, with the remainder compensated on an hourly or temporary basis. To attract and retain qualified personnel, we seek to maintain competitive salary and wage levels in each market we serve. We measure associate satisfaction regularly and maintain multiple means of ensuring effective communications with our associates. We believe that our employee relations are very good. Product Authority Our Products. Our product portfolio strategy is aimed at delivering innovation, assortment and value. A typical The Home Depot store stocks approximately 30,000 to 40,000 products during the year, including both national brand name and proprietary items. We also offer over 600,000 products through our Home Depot and Home Decorators Collection websites. To enhance our merchandising capabilities, we continued to make improvements to our information technology tools in fiscal 2012 to give our merchants and suppliers greater visibility into category and item performance and to continue to increase the localized assortment in our stores. We also acquired BlackLocus, Inc., a data analytics and pricing firm, which will bring additional tools and capabilities to support our merchandising team. In fiscal 2012, we introduced a number of innovative and distinctive products to our customers at attractive values. Examples of these new products include the second generation of EcoSmart LED light bulbs, including the only Daylight Downlight LED sold in retail; an improved version of Behr Premium Ultra Interior Paint & Primer in One; appliances from Electrolux, Whirlpool and Frigidaire; the second generation of Ryobi lithium battery technology for power tools; a "click version" of tile with realistic wood looks from TrafficMaster Allure; and one inch cellular window blinds under our Home Decorators Collection brand. During fiscal 2012, we offered a number of proprietary and exclusive brands across a wide range of departments, such as Husky hand tools and tool storage, Defiant door locks, Everbilt hardware fasteners, Hampton Bay lighting and fans, Vigoro lawn care products, RIDGID and Ryobi power tools and Glacier Bay bath fixtures. We also introduced the HDX brand in February 2012, with products in the tools and hardware, storage and cleaning categories. We will continue to assess strategic alliances and relationships with suppliers and opportunities to expand the range of products available under brand names that are exclusive to The Home Depot. 3 From our Store Support Center, we maintain a global sourcing program to obtain high-quality products directly from manufacturers around the world. Our merchant team identifies and purchases innovative products directly for our stores. Additionally, we have three sourcing offices located in the Chinese cities of Shanghai, Shenzhen and Dalian, as well as sourcing offices in Gurgaon, India; Rome, Italy; Monterrey, Mexico and Toronto, Canada. Quality Assurance. We have both quality assurance and engineering resources that are dedicated to overseeing the quality of all of our products, whether they are directly imported, locally or globally sourced or proprietary branded products. Through these programs, we have established criteria for supplier and product performance that are designed to ensure that our products comply with applicable international, federal, state and local safety, quality and performance standards. We also have a Supplier Social and Environmental Responsibility Program designed to ensure that our suppliers adhere to the highest standards of social and environmental responsibility. Energy Saving Products and Programs. As an industry leader, The Home Depot is committed to doing the right thing for our customers and the environment. By providing consumers a selection of environmentally preferred products that help them save money, energy and water, we are helping to ensure a more sustainable future. Through our Eco Options Program introduced in 2007, we have created product categories that allow consumers to easily identify products that meet specifications for energy efficiency, water conservation, healthy home, clean air and sustainable forestry. As of the end of fiscal 2012, our Eco Options Program has certified over 5,000 products. Through this program, we sell products such as ENERGY STAR refrigerators, dishwashers, compact fluorescent light ("CFL") bulbs, EcoSmart LED light bulbs, programmable thermostats, tankless "on demand" water heaters and other products, enabling our customers to save on their utility bills. LED light bulbs, which use approximately 85% less energy and last up to 20 years longer than traditional incandescent bulbs, continued to be one of our fastest growing categories for the year. We estimate that in fiscal 2012, sales of ENERGY STAR qualified products helped consumers save over $700 million in annual utility costs. We also helped our customers save water through sales of WaterSense-labeled bath faucets, showerheads, aerators and toilets. Through the sales of these products, we estimate that we have helped consumers save over 30 billion gallons of water and over $200 million in water bills. In fiscal 2012, we made extensive updates to the Eco Options page on our website to enable us to address growing customer demand for environmentally responsible and cost-saving products and projects. The newly enhanced site increases consumer awareness of the environmental impacts of various products, provides educational tips and identifies "green" projects. The site also helps consumers identify products included in the Eco Options program, and it now includes a calculator to enable consumers to determine energy and water savings achievable by making small changes in their homes. In partnership with the U.S. Green Building Council, we launched a website in fiscal 2012 to help our customers easily identify products with potential Leadership in Energy and Environmental Design ("LEED") point values. At the end of fiscal 2012, we had approximately 3,500 "LEED for Homes" products sold in our stores and online. The website, found at www.leed.homedepot.com, is designed to simplify the complexities of building green and arm our customers with the tools needed to navigate the LEED for Homes programs by providing tips, informative videos and educational content. We continue to offer our nationwide, in-store CFL bulb recycling program launched in 2008. This service is offered to customers free of charge and is available in all U.S. stores. We also maintain an in-store rechargeable battery recycling program. Launched in 2001 and currently done in partnership with Call2Recycle, this program is also available to customers free of charge in all stores throughout the U.S. Through these recycling programs, in fiscal 2012 we helped recycle over 600,000 pounds of CFL bulbs and over 852,000 pounds of rechargeable batteries collected from our customers. In fiscal 2012, we also recycled over 98,000 lead acid batteries collected from our customers under our lead acid battery exchange program, as well as approximately 173,000 tons of cardboard through a nationwide cardboard recycling program across our U.S. stores. 4 Net Sales of Major Product Groups. The following table shows the percentage of Net Sales of each major product group (and related services) for each of the last three fiscal years: Percentage of Net Sales for Fiscal Year Ended February 3, January 29, January 30, 2013 2012 2011 Product Group Plumbing, electrical and kitchen Hardware and seasonal Building materials, lumber and millwork Paint and flooring Total 30.8% 29.4 20.6 19.2 100.0% 30.5% 29.5 21.1 18.9 100.0% 30.0% 29.4 21.7 18.9 100.0% Net Sales outside the U.S. were $8.4 billion, $8.0 billion and $7.5 billion for fiscal 2012, 2011 and 2010, respectively. Longlived assets outside the U.S. totaled $3.1 billion, $3.1 billion and $3.2 billion as of February 3, 2013, January 29, 2012 and January 30, 2011, respectively. Seasonality. Our business is subject to seasonal influences. Generally, our highest volume of sales occurs in our second fiscal quarter, and the lowest volume occurs during our fourth fiscal quarter. Fiscal 2012 included 53 weeks, rather than 52 weeks. As a result, our fourth fiscal quarter in 2012 included an extra week, which increased sales for that quarter. Competition. Our industry is highly competitive, with competition based primarily on customer service, price, store location and appearance, and quality, availability and assortment of merchandise. Although we are currently the world's largest home improvement retailer, in each of the markets we serve there are a number of other home improvement stores, electrical, plumbing and building materials supply houses and lumber yards. With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national hardware stores, mail order firms, warehouse clubs, independent building supply stores and, to a lesser extent, other retailers, as well as with installers of home improvement products. In addition, we face growing competition from online and multichannel retailers. Intellectual Property. Our business has one of the most recognized brands in North America. As a result, we believe that The Home Depot trademark has significant value and is an important factor in the marketing of our products, e-commerce, stores and business. We have registered or applied for registration of trademarks, service marks, copyrights and internet domain names, both domestically and internationally, for use in our business. We also maintain patent portfolios relating to some of our products and services and seek to patent or otherwise protect innovations we incorporate into our products or business operations. Disciplined Capital Allocation, Productivity and Efficiency Logistics. Our supply chain operations are focused on creating a competitive advantage through ensuring product availability for our customers, effectively using our investment in inventory, and managing total supply chain costs. Our fiscal 2012 initiatives have been to further optimize and efficiently operate our network, build new logistics capabilities and improve our inventory management systems and processes. Our distribution strategy is to provide the optimal flow path for a given product. RDCs play a key role in optimizing our network as they allow for aggregation of product needs for multiple stores to a single purchase order and then rapid allocation and deployment of inventory to individual stores upon arrival at the RDC. This results in a simplified ordering process and improved transportation and inventory management. To enhance our RDC network, we continued adding mechanization, and at the end of fiscal 2012, all 18 of our U.S. RDCs were mechanized. We also expanded our U.S. transload program for imported products to four facilities operated by third parties near ocean ports. Transload facilities allow us to improve our import logistics costs and inventory management by enabling imported product to flow through our RDC network. Over the past several years, we have centralized our inventory planning and replenishment function and implemented new forecasting and replenishment technology. This has helped us to improve our in-stock rates and our inventory productivity at the same time. At the end of fiscal 2012, over 91% of our U.S. store products were ordered through central replenishment. In addition to our 18 RDCs in the U.S., at the end of fiscal 2012, we operated 33 bulk distribution centers, which handle products distributed optimally on flat bed trucks, in the U.S. and Canada. We also operated 36 conventional distribution centers, which include stocking, direct fulfillment and specialty distribution centers, in the U.S., Canada and Mexico. We remain committed to leveraging our supply chain capabilities to fully utilize and optimize our improved logistics network. 5 Commitment to Environmentally Responsible Operations. The Home Depot is committed to conducting business in an environmentally responsible manner. This commitment impacts all areas of our business, including energy usage, supply chain, store construction and maintenance, and, as noted above under "Energy Saving Products and Programs," product selection and delivery of product knowledge to our customers. In fiscal 2012, we continued to implement strict operational standards that establish energy efficient practices in all of our U.S. facilities. These include HVAC unit temperature regulation and adherence to strict lighting schedules, which are the largest sources of energy consumption in our stores, as well as use of energy management systems in each store to monitor energy efficiency. We estimate that by implementing and utilizing these energy saving programs, we have saved over 5.5 billion kilowatt hours (kWh) since 2004, and we are on track to meet our goal of a 20% reduction in kWh per square foot in our U.S. stores by 2015. Through our supply chain efficiencies described above under "Logistics," we are targeting a 20% reduction in our domestic supply chain greenhouse gas emissions from 2008 to 2015, which would equate to annual fuel savings of approximately 25 million gallons. We also continued to monitor our "carbon footprint" from the operation of our stores as well as from our transportation and supply chain activities. Through our energy conservation and supply chain initiatives, we reduced our absolute carbon emissions by approximately 777,000 metric tons in 2011 compared to 2010. With respect to construction of our stores, we partnered with the U.S. Green Building Council and have built seven LEED for New Construction certified or similarly certified stores. In 2012, we opened a new store in Lodi, California and used a grant from the U.S. Department of Energy to help design, monitor and verify the energy savings at that store. The building is designed to consume substantially less energy than the 2007 90.1 ASHRAE standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers, an international society that sets forth HVAC and refrigeration standards to promote sustainability. We also implemented a rainwater reclamation pilot in 2010. As of the end of fiscal 2012, we have retrofitted 81 of our stores with reclamation tanks to collect rainwater and condensation from HVAC units and garden center roofs, which is in turn used to water plants in our outside garden centers. In September 2011, we opened a store in St. Croix in the U.S. Virgin Islands with both ground mount and roof mount solar panel systems, and we estimate the combined total annual energy production of these systems to be over 580 megawatt hours. Our efforts have resulted in a number of environmental awards and recognitions. For example, in 2012, we were named "Retail Partner of the Year" by the ENERGY STAR division of the U.S. Environmental Protection Agency (the "EPA") for our overall excellence in energy efficiency, and we received the EPA's WaterSense "2012 Associate Education Excellence Award." We were also recognized as a "High Performer" by the Carbon Disclosure Project. We are strongly committed to maintaining a safe shopping and working environment for our customers and associates and protecting the environment of the communities in which we do business. Our Environmental, Health & Safety ("EH&S") function is dedicated to ensuring the health and safety of our customers and associates, with trained associates who evaluate, develop, implement and enforce policies, processes and programs on a Company-wide basis. Our EH&S policies are woven into our everyday operations and are part of The Home Depot culture. Some common program elements include: daily store inspection checklists (by department); routine follow-up audits from our store-based safety team members and regional, district and store operations field teams; equipment enhancements and preventative maintenance programs to promote physical safety; departmental merchandising safety standards; training and education programs for all associates, with varying degrees of training provided based on an associate's role and responsibilities; and awareness, communication and recognition programs designed to drive operational awareness and understanding of EH&S issues. Interconnected Retail Our interconnected retail initiative supports and connects our three other key initiatives. In fiscal 2012, we focused on leveraging technology to improve our customer's retail experience and provide better access to and information about our products. As described above, these efforts included information technology solutions that take tasks out of the store and free our associates to devote more time to customer-facing activities. They also included significant website enhancements that allow customers to more easily find and purchase an expanded array of products and provide them with flexibility and convenience for their purchases (for example, through our BOPIS, BORIS, BOSS and "Store to Store" programs). Through our website, which can be accessed through computers, tablets, smart phones and other mobile devices, customers can purchase products and track their installation projects through MyInstall and can connect with our associates and with one another to gain product and project knowledge in areas that are important to them. For example, in fiscal 2012, we updated the Eco Options page on our website to provide more information for our environmentally-minded customers, and we had convenience in mind when we introduced a mobile application that allows our customers to select and purchase products quickly. Furthermore, to increase the productivity and efficiency of our associates, merchants and suppliers and ensure that 6 the right product is in the right place to meet our customers' needs, we continued to develop our distribution forecasting and replenishment system for enhanced inventory management. Item 1A. Risk Factors. The risks and uncertainties described below could materially and adversely affect our business, financial condition and results of operations and could cause actual results to differ materially from our expectations and projections. You should read these Risk Factors in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 and our Consolidated Financial Statements and related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations. Sustained uncertainty regarding current economic conditions and other factors beyond our control could adversely affect demand for our products and services, our costs of doing business and our financial performance. Our financial performance depends significantly on the stability of the housing, residential construction and home improvement markets, as well as general economic conditions, including changes in gross domestic product. Adverse conditions in or sustained uncertainty about these markets or the economy could adversely impact consumer confidence, causing our customers to delay purchasing or determine not to purchase home improvement products and services. Other factors - including high levels of unemployment and foreclosures, interest rate fluctuations, fuel and other energy costs, labor and healthcare costs, the availability of financing, the state of the credit markets, including mortgages, home equity loans and consumer credit, weather, natural disasters and other conditions beyond our control - could further adversely affect demand for our products and services, our costs of doing business and our financial performance. Strong competition could adversely affect prices and demand for our products and services and could decrease our market share. We operate in markets that are highly competitive. We compete principally based on customer service, price, store location and appearance, and quality, availability and assortment of merchandise. In each market we serve, there are a number of other home improvement stores, electrical, plumbing and building materials supply houses and lumber yards. With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national hardware stores, mail order firms, warehouse clubs, independent building supply stores and, to a lesser extent, other retailers, as well as with installers of home improvement products. In addition, we face growing competition from online and multichannel retailers as our customers increasingly use computers, tablets, smart phones and other mobile devices to shop online. Intense competitive pressures from one or more of our competitors or our inability to adapt effectively and quickly to a changing competitive landscape could affect our prices, our margins or demand for our products and services. If we are unable to timely and appropriately respond to these competitive pressures, including through maintenance of superior customer service and customer relationships, our market share and our financial performance could be adversely affected. We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect our relationship with customers, the demand for our products and services, and our market share. It is difficult to successfully predict the products and services our customers will demand. The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics, consumer preferences, expectations and needs, and unexpected weather conditions, while also managing inventory levels. Further, we have an aging store base that requires maintenance to deliver the shopping environment our customers desire. Failure to maintain attractive stores and to timely identify or effectively respond to changing consumer preferences, expectations and home improvement needs could adversely affect our relationship with customers, the demand for our products and services, and our market share. Our success depends upon our ability to attract, train and retain highly qualified associates while also controlling our labor costs. Our customers expect a high level of customer service and product knowledge from our associates. To meet the needs and expectations of our customers, we must attract, train and retain a large number of highly qualified associates while at the same time controlling labor costs. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs, as well as the impact of legislation or regulations governing labor relations or healthcare benefits. In addition, we compete with other retail businesses for many of our associates in hourly positions, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction. These positions have historically had high turnover rates, which can lead to increased training and retention costs. There is no assurance that we will be able to attract or retain highly qualified associates in the future. 7 We rely on third party suppliers. If we fail to identify and develop relationships with a sufficient number of qualified suppliers, or if our current suppliers experience financial difficulties, our ability to timely and efficiently access products that meet our high standards for quality could be adversely affected. We buy our products from suppliers located throughout the world. Our ability to continue to identify and develop relationships with qualified suppliers who can satisfy our high standards for quality and our need to access products in a timely and efficient manner is a significant challenge. Our ability to access products also can be adversely affected by political instability, the financial instability of suppliers (particularly in light of continuing economic difficulties in various regions of the world), suppliers' noncompliance with applicable laws, trade restrictions, tariffs, currency exchange rates, supply disruptions, shipping interruptions or costs, and other factors beyond our control. If we are unable to effectively manage and expand our alliances and relationships with selected suppliers of brand name products, we may be unable to effectively execute our strategy to differentiate ourselves from our competitors. As part of our focus on product differentiation, we have formed strategic alliances and exclusive relationships with selected suppliers to market products under a variety of well-recognized brand names. If we are unable to manage and expand these alliances and relationships or identify alternative sources for comparable products, we may not be able to effectively execute product differentiation. If we do not maintain the security of customer, associate, supplier or company information, we could damage our reputation, incur substantial additional costs and become subject to litigation. Our information systems are vulnerable to an increasing threat of continually evolving cybersecurity risks. Any significant compromise or breach of our data security could significantly damage our reputation, cause the disclosure of confidential customer, associate, supplier or company information, and result in significant costs, lost sales, fines and lawsuits. While we have implemented systems and processes to protect against unauthorized access to secured data and prevent data loss, there is no guarantee that these procedures are adequate to safeguard against all data security breaches. The regulatory environment related to information security, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs. A failure of a key information technology system or process could adversely affect our business. We rely extensively on information technology systems, some of which are managed by third-party service providers, to analyze, process and manage transactions and data. We also rely heavily on the integrity of this data in managing our business. We or our service providers could experience errors, interruptions, delays or cessations of service in key portions of our information technology infrastructure, which could significantly disrupt our operations and be expensive, time consuming and resource-intensive to remedy. Disruptions in our customer-facing technology systems could impair our interconnected retail strategy and give rise to negative customer experiences. Through our information technology developments, we are able to provide an improved overall shopping environment and a multichannel experience that empowers our customers to shop and interact with us from computers, tablets, smart phones and other mobile communication devices. We use our website both as a sales channel for our products and also as a method of providing product, project and other relevant information to our customers to drive both in-store and online sales. We have multiple online communities and knowledge centers that allow us to inform, assist and interact with our customers. Multichannel retailing is continually evolving and expanding, and we must effectively respond to changing customer expectations and new developments. Disruptions, failures or other performance issues with these customer-facing technology systems could impair the benefits that they provide to our online and in-store business and negatively affect our relationship with our customers. The implementation of our supply chain and technology initiatives could disrupt our operations in the near term, and these initiatives might not provide the anticipated benefits or might fail. We have made, and we plan to continue to make, significant investments in our supply chain and technology. These initiatives are designed to streamline our operations to allow our associates to continue to provide high quality service to our customers, while simplifying customer interaction and providing our customers with a more interconnected retail experience. The cost and potential problems and interruptions associated with the implementation of these initiatives, including those associated with managing third-party service providers and employing new web-based tools and services, could disrupt or reduce the efficiency of our operations in the near term. In addition, our improved supply chain and new or upgraded technology might not provide the anticipated benefits, it might take longer than expected to realize the anticipated benefits, or the initiatives might fail altogether. 8 Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business. A disruption within our logistics or supply chain network, including damage or destruction to our distribution centers, could adversely affect our ability to deliver inventory in a timely manner, which could impair our ability to meet customer demand for products and result in lost sales or damage to our reputation. Such a disruption could negatively impact our financial performance or financial condition. If we are unable to manage effectively our installation service business, we could suffer lost sales and be subject to fines, lawsuits and damaged reputation. We act as a general contractor to provide installation services to our D-I-F-M customers through third-party installers. As such, we are subject to regulatory requirements and risks applicable to general contractors, which include management of licensing, permitting and quality of our third-party installers. We have established processes and procedures that provide protections beyond those required by law to manage these requirements and ensure customer satisfaction with the services provided by our third-party installers. If we fail to manage these processes effectively or provide proper oversight of these services, we could suffer lost sales, fines and lawsuits, as well as damage to our reputation, which could adversely affect our business. Our costs of doing business could increase as a result of changes in, increased enforcement of, or adoption of new federal, state or local laws and regulations. We are subject to various federal, state and local laws and regulations that govern numerous aspects of our business. Recently, there have been a large number of legislative and regulatory initiatives and reforms, as well as increased enforcement of existing laws and regulations by federal, state and local agencies. Changes in, increased enforcement of, or adoption of new federal, state or local laws and regulations governing minimum wage or living wage requirements, other wage, labor or workplace regulations, the sale of some of our products, transportation, logistics, taxes, energy costs or environmental matters could increase our costs of doing business or impact our store operations. Healthcare reform under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 could adversely impact our labor costs and our ability to negotiate favorable terms under our benefit plans for our associates. If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in our international operations. Our ability to successfully conduct retail operations in, and source from, international markets is affected by many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing international operations. Our international operations, including any expansion in international markets, may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations and other legal and regulatory constraints, as well as political and economic conditions. Risks inherent in international operations also include, among others, potential adverse tax consequences, greater difficulty in enforcing intellectual property rights, risks associated with the Foreign Corrupt Practices Act and local anti-bribery law compliance, challenges in our ability to identify and gain access to local suppliers and the impact of foreign currency exchange rates and fluctuations. The inflation or deflation of commodity prices could affect our prices, demand for our products, our sales and our profit margins. Prices of certain commodity products, including lumber and other raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. Rapid and significant changes in commodity prices may affect the demand for our products, our sales and our profit margins. Our ability to obtain additional financing on favorable terms, if needed, could be adversely affected by the volatility in the capital markets. We obtain and manage liquidity from the positive cash flow we generate from our operating activities and our access to capital markets, including our commercial paper programs supported by a back-up credit facility with a consortium of banks. There is no assurance that our ability to obtain additional financing through the capital markets, if needed, will not be adversely impacted due to economic conditions. New or incremental tightening in the credit markets, low liquidity and volatility in the capital markets could result in diminished availability of credit, higher cost of borrowing and lack of confidence in the equity market, making it more difficult to obtain additional financing on terms that are favorable to us. 9 Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition. Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, impairment of goodwill and other intangible assets, inventories, lease obligations, self-insurance, tax matters and litigation, are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change our reported or expected financial performance or financial condition. We are involved in a number of legal proceedings, and while we cannot predict the outcomes of those proceedings and other contingencies with certainty, some of these outcomes may adversely affect our operations or increase our costs. We are involved in a number of legal proceedings, including government inquiries and investigations, and consumer, employment, tort and other litigation that arise from time to time in the ordinary course of business. Litigation is inherently unpredictable, and the outcome of some of these proceedings and other contingencies could require us to take or refrain from taking actions which could adversely affect our operations or could result in excessive verdicts. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management's attention and resources from other matters. Item 1B. Unresolved Staff Comments. Not applicable. 10 Item 2. Properties. The following tables show locations of the 1,976 The Home Depot stores located in the U.S. and its territories and the 280 The Home Depot stores outside the U.S. at the end of fiscal 2012: U.S. Locations Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Number of Stores U.S. Locations 28 7 56 14 232 46 29 9 1 153 90 1 7 11 76 24 10 16 14 27 11 41 45 70 33 14 34 Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virgin Islands Virginia Washington West Virginia Wisconsin Wyoming Total U.S. 11 Number of Stores 6 8 21 20 67 13 100 40 1 70 16 27 70 8 8 25 1 39 178 22 3 2 49 45 6 27 5 1,976 International Locations Canada: Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Ontario Prince Edward Island Quebec Saskatchewan Total Canada Number of Stores International Locations Mexico: Aguascalientes Baja California Norte Baja California Sur Chiapas Chihuahua Coahuila Colima Distrito Federal Durango Guanajuato 27 26 6 3 1 4 86 1 22 4 180 Guerrero Hidalgo Jalisco Michoacn Morelos Nuevo Len Puebla Queretaro Quintana Roo San Luis Potosi Sinaloa Sonora State of Mexico Tabasco Tamaulipas Tlaxcala Veracruz Yucatan Total Mexico Number of Stores 1 5 2 2 5 5 2 7 1 4 1 1 6 2 2 10 4 3 1 1 3 4 14 1 5 1 6 1 100 During fiscal 2012, we opened three new The Home Depot stores in the U.S., including one relocation. We also opened nine new stores in Mexico. We closed seven stores in China. Of our 2,256 stores operating at the end of fiscal 2012, approximately 90% were owned (including those owned subject to a ground lease) consisting of approximately 209.8 million square feet, and approximately 10% of such stores were leased consisting of approximately 24.7 million square feet. Additionally, at the end of fiscal 2012, we had six Home Decorators Collection locations in Georgia, Illinois, Kansas, Missouri, New Jersey and Oklahoma, and one specialty paint and flooring location in Tianjin, China. At the end of fiscal 2012, we operated 153 warehouses and distribution centers located in 35 states or provinces, consisting of approximately 37.2 million square feet, of which approximately 1.2 million is owned and approximately 36.0 million is leased. Our executive, corporate staff, divisional staff and financial offices occupy approximately 2.2 million square feet of leased and owned space in Atlanta, Georgia. At the end of fiscal 2012 including the offices in Atlanta, we occupied an aggregate of approximately 3.5 million square feet, of which approximately 2.1 million square feet is owned and approximately 1.4 million square feet is leased, for store support centers and customer support centers. 12 Item 3. Legal Proceedings. We are reporting the following proceedings to comply with SEC regulations, which require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions of $100,000 or more. As previously reported, in September 2010, the Company was contacted by district attorneys in three counties in California within the South Coast Air Quality Management District (the "SCAQMD") and the City of Los Angeles regarding allegations that the Company sold products in those counties with VOC (volatile organic compound) levels in excess of amounts permitted by SCAQMD rules. In June 2011, two related complaints were filed in the Superior Court of California - County of Los Angeles against the Company. The first action was brought by the SCAQMD and alleges that the Company sold products with higher-than-permitted VOC levels. This action seeks $30 million in civil penalties and injunctive relief. The second action was brought by the Los Angeles City Attorney and the district attorneys of each of Orange, Riverside and San Bernardino counties and alleges that the Company engaged in unfair business practices and false advertising when selling these products. This action seeks unspecified civil penalties and injunctive relief. Both actions are scheduled to be tried together as a bench trial in May 2013. In March 2013, we tentatively reached a joint settlement agreement to resolve these actions for an aggregate of $6.9 million, plus $1.1 million in fees and costs. The settlement requires the approval of the trial court. Item 4. Mine Safety Disclosures. Not applicable. 13 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Since April 19, 1984, our common stock has been listed on the New York Stock Exchange, trading under the symbol "HD." The Company paid its first cash dividend on June 22, 1987, and has paid cash dividends during each subsequent quarter. Future dividend payments will depend on the Company's earnings, capital requirements, financial condition and other factors considered relevant by the Board of Directors. The table below sets forth the high and low sales prices of our common stock on the New York Stock Exchange and the quarterly cash dividends declared per share of common stock for the periods indicated. Price Range High Low Cash Dividends Declared Fiscal Year 2012 First Quarter Ended April 29, 2012 Second Quarter Ended July 29, 2012 Third Quarter Ended October 28, 2012 Fourth Quarter Ended February 3, 2013 $ $ $ $ 52.03 53.71 63.20 67.82 $ $ $ $ 44.39 47.02 51.39 60.65 $ $ $ $ 0.29 0.29 0.29 0.39 Fiscal Year 2011 First Quarter Ended May 1, 2011 Second Quarter Ended July 31, 2011 Third Quarter Ended October 30, 2011 Fourth Quarter Ended January 29, 2012 $ $ $ $ 38.48 37.46 37.22 45.41 $ $ $ $ 35.68 33.47 28.51 35.54 $ $ $ $ 0.25 0.25 0.29 0.29 As of March 11, 2013, there were approximately 146,000 shareholders of record of our common stock and approximately 1,066,000 additional "street name" holders whose shares are held of record by banks, brokers and other financial institutions. 14 Stock Performance Graph The graph and table below present the Company's cumulative total shareholder returns relative to the performance of the Standard & Poor's 500 Composite Stock Index and the Standard & Poor's Retail Composite Index for the five-year period commencing February 1, 2008, the last tradin