Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
___________________
(Mark One):
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______
Commission file number 001-08207
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
___________________
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
Atlanta, Georgia 30339
THE HOME DEPOT FUTUREBUILDER
Table of Contents
Report of Independent Registered Public Accounting Firm
The Administrative Committee
The Home Depot FutureBuilder:
We have audited the accompanying statements of net assets available for benefits of The Home Depot FutureBuilder (the Plan) as of December 31, 2016 and 2015, 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 the standards of the Public Company Accounting Oversight Board (United States). 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 management, 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 Plan as of December 31, 2016 and 2015, and the changes in net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
The supplemental information in the accompanying schedules, Schedule H, Line 4a – Schedule of Delinquent Participant Contributions for the Year Ended December 31, 2016 and Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2016, have been subjected to audit procedures performed in conjunction with the audit of the Plan's 2016 financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements, but includes supplemental information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan's Administrative Committee. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedules, Schedule H, Line 4a – Schedule of Delinquent Participant Contributions for the Year Ended December 31, 2016 and Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2016, are fairly stated in all material respects in relation to the 2016 financial statements as a whole.
/s/ KPMG LLP
Atlanta, Georgia
June 15, 2017
THE HOME DEPOT FUTUREBUILDER
Statements of Net Assets Available for Benefits
|
| | | | | | | |
| December 31, |
amounts in thousands
| 2016 | | 2015 |
| | | |
Plan's interest in Master Trust at fair value | $ | 5,787,258 |
| | $ | 5,304,796 |
|
Plan's interest in Master Trust at contract value | 504,272 |
| | 471,368 |
|
Plan's interest in Master Trust | 6,291,530 |
| | 5,776,164 |
|
| | | |
Receivables: | | | |
Notes receivable from participants | 203,693 |
| | 195,902 |
|
Participant contributions receivable | 874 |
| | 6,308 |
|
Employer contributions receivable | 174 |
| | 2,953 |
|
Total receivables | 204,741 |
| | 205,163 |
|
| | | |
Net assets available for benefits | $ | 6,496,271 |
| | $ | 5,981,327 |
|
See accompanying notes to the financial statements.
THE HOME DEPOT FUTUREBUILDER
Statements of Changes in Net Assets Available for Benefits
|
| | | | | | | |
| Years Ended December 31, |
amounts in thousands | 2016 | | 2015 |
Additions to net assets attributed to: | | | |
Investment income: | | | |
Plan's interest in income of Master Trust | $ | 441,126 |
| | $ | 181,148 |
|
Interest on notes receivable from participants | 7,658 |
| | 7,355 |
|
Total investment income | 448,784 |
| | 188,503 |
|
Contributions: | | | |
Participant | 440,122 |
| | 487,404 |
|
Employer | 176,842 |
| | 167,281 |
|
Total contributions | 616,964 |
| | 654,685 |
|
Total additions | 1,065,748 |
| | 843,188 |
|
Deductions from net assets attributed to: | | | |
Benefits paid to participants | 531,457 |
| | 515,037 |
|
Administrative expenses | 19,347 |
| | 18,451 |
|
Total deductions | 550,804 |
| | 533,488 |
|
Net increase | 514,944 |
| | 309,700 |
|
Net assets available for benefits: | | | |
Beginning of year | 5,981,327 |
| | 5,671,627 |
|
End of year | $ | 6,496,271 |
| | $ | 5,981,327 |
|
See accompanying notes to the financial statements.
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
| |
(1) | Description of the Plan |
The following is a brief description of The Home Depot FutureBuilder (the "Plan"). Participants should refer to the Plan document or the summary plan description for a more complete description of the Plan's provisions.
The Plan is a defined contribution retirement plan covering substantially all U.S. associates of The Home Depot, Inc., the Plan sponsor, and subsidiaries (collectively, the "Company").
Associates are eligible to participate in the Plan for purposes of making before-tax and/or after-tax (Roth) contributions after completing 90 days of service. Temporary associates are eligible to participate in the Plan for purposes of making before-tax and/or after-tax (Roth) contributions on the first day of the calendar quarter beginning on or following the completion of one year of service and 1,000 hours. Participants are eligible for the Company's matching contributions on the first day of the calendar quarter (January 1, April 1, July 1, and October 1) beginning on or after the earlier of (i) the date the associate completes one year of service and 1,000 hours; or (ii) the date the associate completes two years of service, regardless of hours worked. The Plan excludes leased associates, nonresident aliens, independent contractors, and associates covered by a collective bargaining agreement, unless the terms of the collective bargaining agreement require that the associate be eligible to participate in the Plan. The Plan is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended. The Plan is administered by the Administrative Committee, the members of which are officers of Home Depot U.S.A., Inc., a wholly-owned subsidiary of The Home Depot, Inc. The Northern Trust Company is the Trustee of the Plan.
Under the Plan, participants may contribute up to 50% of annual compensation, as defined in the Plan, on a before-tax basis and/or an after-tax (Roth) basis subject to regulatory limitations, and participants age 50 or older can make catch-up contributions to 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 beginning on the first day of the calendar quarter following the completion of the earlier of (i) the date the associate completes one year of service and 1,000 hours; or (ii) the date the associate completes two years of service, regardless of hours worked. Before-tax and after-tax (Roth) contributions are eligible for matching contributions. Catch-up contributions are not eligible for matching contributions. Additional amounts may be contributed at the option of the Administrative Committee. The default for investment of the Company's matching contribution if no direction is given by the participant is the participant's current investment election with respect to before-tax or after-tax (Roth) contributions. If the participant has made no affirmative investment election with respect to before-tax or after-tax (Roth) contributions, the default is the appropriate LifePath Fund based on the participant's age.
The Plan maintains a separate account for each participant, to which contributions and investment performance are allocated.
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 generally based on years of vesting service. For vesting purposes, a year of service is any calendar year in which a participant completes at least 1,000 hours of service. A participant is cliff vested 100% in the Company's matching contributions after three years of vesting service.
In addition, each participant who completes an hour of service becomes 100% vested in the Company's matching contributions upon completing five years of employment if such event precedes the vesting dates above.
A participant becomes 100% vested in the Company's matching and any discretionary contributions and net value changes thereon upon death, attaining age 65 while still employed, total or permanent disability, or if the Plan is terminated.
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
Upon death, disability, termination of service for any other reason, hardship, or attaining age 59 ½, participants or beneficiaries may elect to receive a lump-sum payment of their vested account balance at fair value on the date of distribution in the form of cash or Company stock in accordance with the terms of the Plan.
| |
(f) | Notes Receivable from Participants |
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of: (i) $50,000 minus the highest outstanding loan balance in the preceding 12 months less a $50 fee or (ii) 50% of their total vested account balance of before-tax contributions, Roth after-tax contributions, vested Company match, and rollover contributions less a $50 fee. Note terms generally range from one to four years. The notes bear interest at a rate equal to the prime rate plus 1% at the time of the note. Certain notes with terms greater than four years remain outstanding, including certain notes rolled over from retirement plans of acquired companies. Notes receivable from participants are measured at their unpaid balance plus any accrued but unpaid interest. Delinquent notes receivable from participants are reclassified as distributions based upon the terms of the Plan document and loan policy.
Forfeited nonvested account balances may be used to reduce future employer contributions and/or Plan expenses. At December 31, 2016 and 2015, unallocated forfeitures totaled $3,315,069 and $2,886,666, respectively. In 2016 and 2015, forfeitures in the amount of $2,886,666 and $2,887,158, respectively, were used to reduce employer contributions.
| |
(h) | Administrative Expenses |
Certain administrative expenses of the Plan may be paid by the Company. These costs include certain legal, accounting and administrative fees. Expenses paid by the Plan include investment management fees and other costs not paid by the Company.
(2) Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Plan in preparing its financial statements.
The accompanying financial statements have been prepared on the accrual basis of accounting. The Plan evaluated subsequent events and transactions for potential recognition in the financial statements through the date the financial statements were issued.
| |
(b) | Investment Valuation and Income Recognition |
The Plan invests only in the Master Trust. Investments within the Master Trust are valued as follows:
Shares of registered investment companies, separate account investments in common and preferred stock and the Schwab Personal Choice Retirement Account ("PCRA") are valued at quoted market prices, which represent the net asset value of shares held by the Master Trust at year-end.
The JP Morgan Stable Value Fund invests primarily in synthetic investment contracts and insurance company separate account contracts issued by insurance companies and banks that are fully benefit-responsive. These investments are presented at the contract value, which is equal to the principal balance plus accrued interest, of units held by the Master Trust as of December 31 in the Statements of Net Assets Available for Benefits. Additional information on the JP Morgan Stable Value Fund is discussed in Note 3.
Investments in units of collective trusts are valued at the respective net asset values as reported by such trusts. Net asset value is a readily determinable fair value of the underlying assets and is the basis for current transactions.
The Company's common stock is valued at its quoted market price as obtained from the New York Stock Exchange.
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
Securities transactions are accounted for on a trade date basis. The investment in short-term investment funds of The Northern Trust Company is reported at fair value as determined by The Northern Trust Company based on the quoted market prices of the securities in the fund.
Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
The Plan's investments include funds that 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, credit, and individual country and currency 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 schedules.
Benefits are recorded when paid.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Administrative Committee of the Plan 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 additions to and deductions from net assets available for benefits during the reporting period. Actual results could differ from those estimates.
| |
(e) | Fair Value of Financial Instruments |
The Plan's investments are stated at fair value, with the exception of the Plan's investment in the fully benefit-responsive investment contracts held by the Master Trust, which are stated at contract value, within the Statements of Net Assets Available for Benefits. In addition, the carrying amount of notes receivable from participants is a reasonable approximation of the fair value due to the short-term nature of these instruments.
As a result of the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2015-12, as described in "Recent Accounting Pronouncements" below, the Plan's investment in the JP Morgan Stable Value Fund, described in Note 3, is presented at contract value, rather than fair value, in the Statements of Net Assets Available for Benefits. Accordingly, certain amounts in the prior year have been reclassified to conform with the presentation adopted in the current year.
| |
(g) | Recent Accounting Pronouncements |
Recently Issued Accounting Pronouncements Not Yet Adopted
In February 2017, the FASB issued ASU No. 2017-06, "Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force)", which will require reporting of the Plan's interest in the Master Trust and the change in the fair value of that interest as separate line items on the statements of net assets available for benefits and the statements of changes in net assets available for benefits. The Plan will also have to disclose the master trust's investments measured at fair value by general type of investment. ASU 2017-06 is effective for fiscal years beginning after December 15, 2018; retrospective application is required and early adoption is permitted. The Company is evaluating the effect that ASU 2017-06 will have on the Plan's financial statements and related disclosures.
Recently Adopted Accounting Pronouncements
In July 2015, the FASB issued ASU No. 2015-12, "Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965)", which designates contract value as the only required measure for fully benefit-responsive contracts (Part I, Fully Benefit-Responsive Investment Contracts), simplifies the investment disclosure requirements (Part II, Plan Investment Disclosure) and provides a measurement date practical expedient for employee benefit plans (Part III,
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
Measurement Date Practical Expedient). The Company adopted Part I and Part II of ASU No. 2015-12 on a retrospective basis on January 1, 2016, and they did not have a material impact on its financial statements and related disclosures. The Company did not elect to adopt the practical expedient available under Part III of ASU No. 2015-12.
In May 2015, the FASB issued ASU No. 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)", which eliminates the requirement to categorize an investment in the fair value hierarchy if its fair value is measured at net asset value per share using a practical expedient. The Company adopted ASU No. 2015-07 on a retrospective basis on January 1, 2016, and it did not have a material impact on its financial statements and related disclosures.
(3) JP Morgan Stable Value Fund
Through the Master Trust, the Plan invests in a separate account, the JP Morgan Stable Value Fund (the "Fund"), which owns fully benefit-responsive investment contracts. As a result of the adoption of ASU No. 2015-12, the Plan's investment in the Fund is presented at contract value, rather than fair value, in the Statements of Net Assets Available for Benefits.
A synthetic investment contract, also known as a wrap contract, is an investment contract issued by an insurance company or other financial institution, designed to provide a contract value "wrapper" around a portfolio of bonds or other fixed income securities that are owned by the Fund. The assets underlying the Fund's wrap contracts are units of fixed income collective investment trusts issued by credit worthy financial institutions. An insurance company separate account is a book value contract issued from within an insurance company separate account, held by Metlife, that bundles the book value wrap contract and underlying fixed income portfolio. The contract is backed by a portfolio of marketable fixed income securities owned by MetLife, but segregated and insulated from the general account. These contracts provide that realized and unrealized gains and losses on the underlying assets are not reflected immediately in the net assets of the Fund, but rather are amortized, over the duration of the underlying assets, through adjustments to the future interest crediting rate. The interest crediting rate is determined quarterly and is primarily based on the current yield to maturity of the covered investments, plus or minus amortization of the difference between the market value and the contract value of the covered investments over the duration of the covered investments at the time of computation. Metlife, the issuer, guarantees that all qualified participant withdrawals will occur at contract value.
The Plan's interest in the underlying fixed income collective investment trusts in which the Fund invests is calculated by applying the Fund's ownership percentage in these underlying fixed income collective investment trusts to the total fair value of the underlying fixed income collective investment trusts. The underlying assets owned by the Fund consist primarily of readily marketable fixed income securities with quoted market prices.
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the Plan document (including complete or partial Plan termination or merger with another plan), (2) changes to the Plan's prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the Plan sponsor or other Plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (4) the failure of the Master Trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan's Administrative Committee does not believe that any events that would limit the Plan's ability to transact at contract value with the issuer are probable of occurring.
(4) Tax Status
The Internal Revenue Service ("IRS") has determined and informed the Company by a letter dated October 28, 2013 that the Plan and Master Trust are designed in accordance with applicable sections of the Internal Revenue Code ("IRC"), and therefore are exempt from federal income taxes. As discussed in Note 9, the Plan has been amended since receiving the determination letter. However, the Administrative Committee of the Plan believes the Plan and Master Trust continue to be designed and are currently being operated in compliance with the applicable requirements of the IRC. In the 2016 plan year, the Company filed for a new IRS determination letter and is currently awaiting a response.
U.S. generally accepted accounting principles require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan's Administrative Committee has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2016, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the Plan's financial statements. The Plan is subject to routine
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
audits by taxing jurisdictions; the Plan is currently under an IRS audit for the 2015 and 2014 plan years. The Plan's Administrative Committee believes it is no longer subject to income tax examinations for years prior to 2013.
(5) Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and terminate the Plan subject to the provisions of ERISA. In the event the Plan is terminated, participants will become 100% vested in their accounts.
(6) Investments
The Plan's investments are held in a Master Trust by the Trustee of the Plan, The Northern Trust Company, as more fully described in Note 7. Plan participants may direct the investment of their accounts on a daily basis in a number of investment options available under the Plan. A description of the Plan's investment options follows:
| |
• | The Home Depot, Inc. Common Stock Fund - Fund invests in common stock of The Home Depot, Inc. Effective September 17, 2008, this fund was frozen with respect to new contributions. |
| |
• | TimesSquare Mid-Cap Growth Strategy Fund - Fund is a separate account that invests in common and preferred stock of U.S. mid-sized companies that display strong growth prospects. |
| |
• | T. Rowe Price Institutional Large-Cap Growth Fund - Fund is a separate account that invests in the common stock of large-cap growth companies that the portfolio management team believes offer above average rates of earnings and cash flow growth and are believed to have the ability to sustain earnings momentum even during times of slow economic growth. |
| |
• | TS&W Small-Cap Value Fund - Fund is a separate account that invests in common stocks of small-cap companies that are believed to be undervalued relative to the market and industry peers. |
| |
• | Stephens Small-Cap Growth Fund - Fund is a separate account that invests in common stocks of small-cap companies that exhibit an attractive combination of growth and value. |
| |
• | JP Morgan Stable Value Fund - Fund invests in high quality fixed income securities (see Note 3). |
| |
• | Wedge Mid-Cap Value Fund - Fund is a collective trust that invests in securities that seek to outperform the Russell Mid-Cap Value Index from a total return perspective over a full market cycle. |
| |
• | BlackRock LifePath Portfolios - Fund is a collective trust that invests in stocks, bonds, real estate and commodities. |
| |
• | BlackRock U.S. Debt Index Fund - Fund is a collective trust that invests in a diversified portfolio of debt securities seeking to match the Barclays Capital U.S. Aggregate Bond Index, including U.S. Treasury and federal agency bonds, corporate bonds, residential and commercial mortgage-backed securities and asset-backed securities. |
| |
• | BlackRock Equity Index Fund - Fund is a collective trust that invests in the common stocks included in the Standard & Poor's 500 Index. |
| |
• | BlackRock Balanced Fund - Fund is a synthetic fund that invests approximately 60% of its assets in the BlackRock Equity Index Fund (which invests in equity securities - stocks) with the remainder of the fund invested in the BlackRock U.S. Debt Index Fund (which invests in fixed income securities - bonds). |
| |
• | Dodge & Cox Stock Fund - Fund invests in 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. |
| |
• | Dodge & Cox International Stock Fund - Fund invests in a registered investment company that invests in a diversified portfolio of equity securities issued by non-U.S. companies to provide long-term growth. |
| |
• | Schwab PCRA - The brokerage window provides the freedom to invest in a wide range of investment choices, including no-load, no transaction-fee mutual funds, stocks listed on major exchanges, exchange-traded funds and individual bonds, certificates of deposit and other fixed income investments. |
The Master Trust's investments in separate accounts and collective trust funds are not subject to restrictions regarding redemptions, and there are no unfunded commitments to the funds. There are no restrictions on the ability of investors to redeem any of the above investments at December 31, 2016 and 2015.
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
(7) Investment in Master Trust
The assets of the Plan are invested in a Master Trust. At December 31, 2016 and 2015, the Plan's interest in the net assets of the Master Trust was over 99%, with The Home Depot FutureBuilder for Puerto Rico, the defined contribution retirement plan covering substantially all associates of Home Depot Puerto Rico, Inc., holding the remaining interest. 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.
The net assets of the Master Trust were as follows (amounts in thousands):
|
| | | | | | | |
| December 31, |
| 2016 | | 2015 |
Assets: | | | |
Investments at fair value: | | | |
Common stocks | $ | 1,800,480 |
| | $ | 1,886,743 |
|
Collective trust funds | 2,832,545 |
| | 2,422,698 |
|
Registered investment funds | 1,069,642 |
| | 920,655 |
|
Brokerage window | 99,019 |
| | 86,777 |
|
Total investments at fair value | 5,801,686 |
| | 5,316,873 |
|
| | | |
Fully benefit-responsive investment at contract value | 508,000 |
| | 474,793 |
|
| | | |
Receivables: | | | |
Due from broker | — |
| | 889 |
|
Other receivables | 1,236 |
| | 295 |
|
Total receivables | 1,236 |
| | 1,184 |
|
Total assets | 6,310,922 |
| | 5,792,850 |
|
Liabilities: | | | |
Accrued liabilities | 2,017 |
| | 1,739 |
|
Due to broker | 985 |
| | — |
|
Total liabilities | 3,002 |
| | 1,739 |
|
| | | |
Net assets | $ | 6,307,920 |
| | $ | 5,791,111 |
|
Investment income for the Master Trust was as follows (amounts in thousands):
|
| | | | | | | |
| Years Ended December 31, |
| 2016 | | 2015 |
Investment Income: | | | |
Net appreciation in fair value of investments | $ | 381,160 |
| | $ | 125,659 |
|
Dividends and interest income | 60,930 |
| | 55,733 |
|
Total investment income | $ | 442,090 |
| | $ | 181,392 |
|
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
The following tables set forth by level within the fair value hierarchy the Master Trust's investments measured at fair value on a recurring basis. Investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
|
| | | | | | | | | | | |
| Investments at Fair Value as of December 31, 2016 |
amounts in thousands
| Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Total |
| | | | | |
Common stocks | $ | 1,800,480 |
| | $ | — |
| | $ | 1,800,480 |
|
Collective trust funds | 45,417 |
| | 2,787,128 |
| | 2,832,545 |
|
Registered investment funds | 1,069,642 |
| | — |
| | 1,069,642 |
|
Brokerage window | 99,019 |
| | — |
| | 99,019 |
|
Total investments at fair value | $ | 3,014,558 |
| | $ | 2,787,128 |
| | $ | 5,801,686 |
|
|
| | | | | | | | | | | |
| Investments at Fair Value as of December 31, 2015 |
amounts in thousands
| Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Total |
| | | | | |
Common stocks | $ | 1,886,743 |
| | $ | — |
| | $ | 1,886,743 |
|
Collective trust funds | 51,041 |
| | 2,371,657 |
| | 2,422,698 |
|
Registered investment funds | 920,655 |
| | — |
| | 920,655 |
|
Brokerage window | 86,777 |
| | — |
| | 86,777 |
|
Total investments at fair value | $ | 2,945,216 |
| | $ | 2,371,657 |
| | $ | 5,316,873 |
|
(8) Related-Party Transactions
Certain Plan investments included in the Master Trust include shares of common stock issued by The Home Depot, Inc., the Plan sponsor. At December 31, 2016 and 2015, the Plan held a combined total of 7,865,093 and 8,560,504 shares valued at approximately $134.08 and $132.25 per share, respectively. Additionally, dividends received through the Master Trust by the Plan include dividends paid by The Home Depot, Inc. totaling $22,628,386 and $21,094,826 for the years ended December 31, 2016 and 2015, respectively. These transactions constitute party-in-interest transactions since The Home Depot, Inc. is the Plan sponsor.
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 a Plan fiduciary, and therefore, these transactions constitute party-in-interest transactions. The Plan paid fees to The Northern Trust Company of $756,603 and $748,492 for the years ended December 31, 2016 and 2015, respectively.
(9) Plan Amendments and Other Plan Changes
The Plan was amended and restated on August 10, 2016, effective January 1, 2016 to (i) incorporate all prior amendments into a single document, as required for submission to the IRS for favorable determination as to the Plan's continued tax-qualified status; and (ii) provide for in-Plan Roth conversions.
The Plan was amended on December 17, 2015, effective (a) January 1, 2016 to recognize a power of attorney that was executed in compliance with applicable state law; and (b) December 17, 2015 to reflect a recent acquisition and a recent name change of a participating employer.
The Plan was amended on December 31, 2014, effective January 31, 2015 to effectuate the merger of the National Blinds & Wallpaper, Inc. Associates 401(k) Savings & Profit Sharing Plan into the Plan.
THE HOME DEPOT FUTUREBUILDER
Notes to the Financial Statements
December 31, 2016 and 2015
(10) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits as presented in these financial statements to the balance presented in Form 5500 (amounts in thousands, as expected to be filed for 2016 and as filed for 2015):
|
| | | | | | | |
| December 31, |
| 2016 | | 2015 |
Net assets available for benefits | $ | 6,496,271 |
| | $ | 5,981,327 |
|
Deemed distributions | (1,769 | ) | | (1,971 | ) |
Participant withdrawals payable | (2,400 | ) | | (2,388 | ) |
Adjustment from contract value to fair value for Plan's interest in Master Trust for fully benefit-responsive investment contracts | (1,688 | ) | | (266 | ) |
Net assets - Schedule H, Part I, Line l of Form 5500 | $ | 6,490,414 |
| | $ | 5,976,702 |
|
Deemed distributions are defaulted and unpaid notes receivable from participants.
The following is a reconciliation of changes in net assets available for benefits as presented in these financial statements to the changes presented in Form 5500 (amounts in thousands, as expected to be filed for 2016 and as filed for 2015):
|
| | | | | | | |
| Years Ended December 31, |
| 2016 | | 2015 |
Increase in net assets available for benefits | $ | 514,944 |
| | $ | 309,700 |
|
Deemed distributions | 202 |
| | 297 |
|
Participant withdrawals payable | (12 | ) | | 1,820 |
|
Adjustment from contract value to fair value for Plan's interest in Master Trust for fully benefit-responsive investment contracts | (1,422 | ) | | (4,185 | ) |
Net income - Schedule H, Part II, Line k of Form 5500 | $ | 513,712 |
| | $ | 307,632 |
|
THE HOME DEPOT FUTUREBUILDER
Schedule H, Line 4a – Schedule of Delinquent Participant Contributions
For the Year Ended December 31, 2016
|
| | | | | | | | |
Participant Contributions Transferred Late to Plan | | Total that Constitute Nonexempt Prohibited Transactions | | |
Check here if late participant loan repayments are included x | | Contributions not corrected | | Contributions corrected outside VFCP | | Contributions pending correction in VFCP | | Total fully corrected under VFCP and PTE 2002-51 |
$30,292 | | — | | $30,292 | | — | | — |
See accompanying report of independent registered public accounting firm.
THE HOME DEPOT FUTUREBUILDER
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2016
|
| | | | | | | |
amounts in thousands
| | | | |
Identity of Issue, Borrower, Lessor, or Similar Party | | Description of Investment including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | | Current Value |
* | Plan's interest in Master Trust | | | | $ | 6,291,530 |
|
| Notes receivable from participants | | Notes with interest rates generally ranging from 3.25% to 9.25% and maturity dates through January 14, 2021 | | 203,693 |
|
| | | | | $ | 6,495,223 |
|
*Indicates party-in-interest included in Master Trust.
See accompanying report of independent registered public accounting firm.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
| | | | | | |
| | | | | | |
| | | The Home Depot FutureBuilder |
| | | | | | |
Date: | June 15, 2017 | | By: | | /s/ Scott C. Bomar | |
| | | | | Scott C. Bomar | |
| | | | | Member of The Home Depot | |
| | | | | FutureBuilder Administrative | |
| | | | | Committee | |
| | | | | | |
Date: | June 15, 2017 | | By: | | /s/ Scott Smith | |
| | | | | Scott Smith | |
| | | | | Member of The Home Depot | |
| | | | | FutureBuilder Administrative | |
| | | | | Committee | |
EXHIBIT INDEX
|
| | |
Exhibit | | |
Number | | Description |
| | |
23.1 | | Consent of Independent Registered Public Accounting Firm |