The Home Depot Announces Tender Offer for 250 Million Shares; Presents Updated 2007 Financial Outlook

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    ATLANTA, July 10 /PRNewswire-FirstCall/ -- The Home Depot(R), the
 world's largest home improvement retailer, today announced the launch of a
 tender offer for 250 million shares of its common stock at a price range of
 $39.00 to $44.00 per share. In addition, the Company updated its fiscal
 2007 sales and earnings per share guidance.
     (Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO )
     "The two key areas of focus for our capital allocation strategy are to
 invest in our core retail stores and to return capital to our
 shareholders," said Frank Blake, chairman and CEO. "Despite a challenging
 housing environment, we remain committed to both, and today's tender launch
 is a clear demonstration of our commitment to returning cash to
 shareholders."
     Tender Offer
     On June 19, 2007, the Company announced a recapitalization plan whereby
 its board of directors authorized a $22.5 billion increase in its share
 repurchase program. It is the Company's intention to repurchase up to $22.5
 billion in shares as soon as practicable. As part of its plan, the
 Company's board of directors authorized a self-tender offer for the
 purchase of up to 250 million shares of the Company's common stock. The
 tender price range is $39.00 to $44.00 per share. The tender offer is
 scheduled to expire on August 16, 2007, and is subject to the terms and
 conditions described in the Offer to Purchase and offering materials.
     Under terms of the tender offer, shareholders are given an opportunity
 to specify prices, within the stated price range, at which they are willing
 to tender shares. Upon receipt of the tenders, The Home Depot will select a
 final price that enables it to purchase up to the stated amount of shares
 from those shareholders who agreed to sell at or below the Company-selected
 price. There is no guarantee that shares tendered will be purchased. The
 Home Depot may purchase up to an additional 39.5 million shares in the
 tender offer without extending the tender offer.
     The Home Depot said the tender offer will give shareholders who are
 considering the sale of all or a portion of their shares an opportunity to
 determine the price, within a range, at which they are willing to sell. If
 the Company purchases their shares, the shareholders who tender may avoid
 the normal transaction costs associated with market sales. The Company is
 not making any recommendation to its shareholders regarding the tendering
 of shares.
     The purchase price for the shares in the tender is expected to be
 funded with proceeds from the sale of HD Supply and cash on hand.
     The Lead Dealer Manager for the tender offer is Lehman Brothers and the
 Co-Dealer Manager is Merrill Lynch & Co. The Information Agent for the
 tender offer is D.F. King & Co., Inc. The Depositary for the tender offer
 is Computershare, Inc.
     Updated 2007 Financial Outlook
     The Company also updated its 2007 financial targets to reflect HD
 Supply as a discontinued operation. In May, the Company said that it
 expected earnings per share to be down 9% for the year. This guidance
 included an estimated eighteen cents of earnings per share contribution
 from HD Supply for the last six months of fiscal 2007. Had the Company
 excluded the HD Supply earnings contribution at that time, its earnings per
 share guidance would have been a decline of 15% for fiscal 2007. Given the
 announced sale of HD Supply and based on weaker conditions in the housing
 market, the Company said that it now expects its earnings per share to
 decline by 15-18% for fiscal 2007, with total retail sales down 1-2% and
 comparable store sales down mid-single digit. The Company also stated that
 it would open approximately 108 new stores in fiscal 2007. Finally, the
 Company expects its operating margin to contract by 120-150 basis points
 due to negative same store sales and its continued investment in its core
 retail operations.
     The fiscal 2007 earnings per share targets reflect 52 weeks and do not
 include the impact of the 53rd week. The Company will have 53 weeks of
 operating results in its fiscal 2007 financial results. The Company
 projects that the 53rd week will add approximately three cents to its
 consolidated earnings per share guidance for fiscal 2007. Additionally, the
 Company's earnings per share guidance does not include the gain on the sale
 of HD Supply or any earnings per share accretion arising from the announced
 tender offer.
     "While we expect the housing market to remain challenging for the rest
 of 2007 and into 2008, we plan to continue our reinvestment plans for the
 long-term health of our business, understanding that it will put short-term
 pressure on earnings," said Carol Tome, CFO and executive vice president -
 corporate services. "We are confident that over the long term, we will
 deliver productivity improvements and enhance returns on invested capital
 as the investments take hold."
     The Home Depot will hold a retail update today at 9 a.m. to discuss
 information included in this news release and related matters. The meeting
 will be webcast live at homedepot.com in the Investor Relations section.
 The webcast will be archived and available at the same location.
     The Home Depot(R) is the world's largest home improvement specialty
 retailer, with 2,192 retail stores in all 50 states, the District of
 Columbia, Puerto Rico, U.S. Virgin Islands, 10 Canadian provinces, Mexico
 and China. In fiscal 2006, The Home Depot had sales of $90.8 billion and
 earnings of $5.8 billion. The Company employs approximately 364,000
 associates. The Home Depot's stock is traded on the New York Stock Exchange
 ( HD) and is included in the Dow Jones industrial average and Standard
 & Poor's 500 index. HDE
     This communication is for information purposes only and does not
 constitute an offer to buy or the solicitation of an offer to sell shares
 of The Home Depot's common stock. The Home Depot's offer to buy shares of
 Home Depot common stock is being made only pursuant to the Offer to
 Purchase and the related materials dated July 10, 2007, as amended and
 supplemented from time to time. Shareholders should read the Offer to
 Purchase and the related materials carefully because they contain important
 information. Shareholders may obtain a free copy of the tender offer
 statement on Schedule TO, the Offer to Purchase and other documents filed
 with the Securities and Exchange Commission at the Commission's Web site at
 www.sec.gov. Shareholders also may obtain a copy of these documents,
 without charge, from the information agent, D. F. King & Co., Inc., by
 calling toll-free: 800-628-8536.
     Certain statements contained herein, including any statements related
 to the sale of HD Supply, the planned recapitalization of the Company,
 continuation of reinvestment plans, capital allocation principles, targeted
 capital structure, state of the home improvement market, state of the
 housing market, sales growth, earnings and earnings per share guidance for
 fiscal 2007 through fiscal 2010, constitute "forward-looking statements" as
 defined in the Private Securities Litigation Reform Act of 1995. These
 statements are based on currently available information and are based on
 our current expectations and projections about future events. These risks
 and uncertainties include, but are not limited to: the successful
 divestiture of HD Supply, including timing of the close of such
 transaction; the success of the tender offer; economic conditions in North
 America; conditions affecting customer transactions and average ticket,
 including, but not limited to, weather conditions; improving and
 streamlining operations and customers' in-store experience; and the impact
 of competition. Undue reliance should not be placed on such forward-looking
 statements as they speak only as of the date hereof, and we undertake no
 obligation to update these statements to reflect subsequent events or
 circumstances except as may be required by law. Additional information
 regarding these and other risks and uncertainties is contained in our
 periodic filings with the SEC, including our Annual Report on Form 10-K for
 the fiscal year ended January 28, 2007 and in the Offer to Purchase related
 to the tender offer.
        2007 Updated EPS Guidance
 
        Fiscal 2006                                                      $2.79
 
        Feb EPS Growth Guidance                  Down 4 - 9%      $2.68 - 2.54
 
        May EPS Growth Guidance                  Down 9%                 $2.54
 
        Less HD Supply Contribution in 2H 07                            ($0.18)
 
        May EPS Guidance Adjusted for HD Supply  Down 15%                $2.36
 
        Current View 1)                          Down 15 - 18% 2) $2.30 - 2.36
 
        1) Excludes gain on sale of HD Supply, 53rd week and impact of
           recapitalization
        2) Continuing operations down 12% - 15%.  Excludes 53rd week and impact
           of recapitalization
 
 

SOURCE The Home Depot