FYI-

Tasker has approved my assumptions for the cash flow statement so we are free 
to
answer the questions.

**********************************************
Mark D. Guinney, CFA
Consultant
Watson Wyatt Investment Consulting
345 California Street, Ste. 1400
San Francisco, CA  94104
(415) 733-4487 ph.
(415) 733-4190 fax


____________________Forward Header_____________________
Subject:    Re: Home Depot case question(s)
Author: tasker@haas.berkeley.edu (Sarah Tasker)
Date:       02/06/2001 2:09 PM

Mark - I apologize for the delay in responding.  I had to fly back East due
to a family illness and had problems accessing my email from there.  Your
assumptions are fine.  As to your previous email, I think the additional
B/S data on pp 9-47 and 9-48 gives you what you need for prior years.

Hope that helps - sorry again for the delay!

Sarah Tasker

At 06:45 PM 2/4/01 -0500, you wrote:
>Professor Tasker:
>
>I've constructed a pro forma cash flow statement for the next fiscal year for
>Home Depot.  I wanted to solicit your input to see if I'm making some
incorrect
>assumptions.  I've included my work in the attached spreadsheet
(applicable work
>is shaded in gray).  The assumptions that I'm questioning are as followed:
>
>Instead of estimating net income I calculated EBIT; I did this since interest
>expense is a variable that could change given financing needs undertaken
>Taxes paid are difficult to calculate; I used previous years taxes from the
>income statement and increase it by 30% (assumed growth rate); the tax
credits
>the company enjoyed from previous years are difficult to assume
>At a minimum, I assumed that the company would have to pay for PPE on the
order
>of last year's depreciation plus 30%; I would consider this maintanence of
>assets as opposed to purchase of new assets, construction, etc.
>I calculated an additional PPE expense for 9 new stores and subtracted out
the
>$28 million in "construction in progress" from the previous year's balance
sheet
>(I assumed that this line item was construction for the new 9 sites)
>
>These are my main adjustments that I wanted to get some validation either
way so
>my group doesn't base our strategy and answers on incorrect assumptions.
>
>
>
>**********************************************
>Mark D. Guinney, CFA
>Consultant
>Watson Wyatt Investment Consulting
>345 California Street, Ste. 1400
>San Francisco, CA  94104
>(415) 733-4487 ph.
>(415) 733-4190 fax
>Attachment Converted: "c:\eudora\attach\HD.xls"
>
---------------------------- Forwarded with Changes 
---------------------------
From: tasker@haas.berkeley.edu (Sarah Tasker) at Internet
Date: 2/6/01 2:09PM -0500
To: Mark Guinney at ~WW_SFO
Subject: Re: Home Depot case question(s)
------------------------------------------------------------------------------
-