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HOME DEPOT, INC. - Quarter Report: 2014 August (Form 10-Q)

Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 2014
- OR -
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-8207
THE HOME DEPOT, INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
 
95-3261426
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
 
 
2455 Paces Ferry Road N.W., Atlanta, Georgia
 
30339
(Address of principal executive offices)
 
(Zip Code)
(770) 433-8211
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 x 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 x No ¨
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.
Large accelerated filer x
 
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 x
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
1,345,921,559 shares of common stock, $0.05 par value, as of August 19, 2014
 

Table of Contents

THE HOME DEPOT, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements

THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
amounts in millions, except share and per share data
August 3,
2014
 
February 2,
2014

ASSETS
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
4,216

 
$
1,929

Receivables, net
1,637

 
1,398

Merchandise Inventories
11,665

 
11,057

Other Current Assets
973

 
895

Total Current Assets
18,491

 
15,279

Property and Equipment, at cost
39,603

 
39,064

Less Accumulated Depreciation and Amortization
16,477

 
15,716

Net Property and Equipment
23,126

 
23,348

Goodwill
1,295

 
1,289

Other Assets
567

 
602

Total Assets
$
43,479

 
$
40,518


LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts Payable
$
7,165

 
$
5,797

Accrued Salaries and Related Expenses
1,325

 
1,428

Sales Taxes Payable
583

 
396

Deferred Revenue
1,503

 
1,337

Income Taxes Payable
357

 
12

Current Installments of Long-Term Debt
34

 
33

Other Accrued Expenses
1,872

 
1,746

Total Current Liabilities
12,839

 
10,749

Long-Term Debt, excluding current installments
16,702

 
14,691

Other Long-Term Liabilities
1,953

 
2,042

Deferred Income Taxes
528

 
514

Total Liabilities
32,022

 
27,996


STOCKHOLDERS’ EQUITY
 
 
 
Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.766 billion shares at August 3, 2014 and 1.761 billion shares at February 2, 2014; outstanding: 1.346 billion shares at August 3, 2014 and 1.380 billion shares at February 2, 2014
88

 
88

Paid-In Capital
8,217

 
8,402

Retained Earnings
25,324

 
23,180

Accumulated Other Comprehensive Income
91

 
46

Treasury Stock, at cost, 420 million shares at August 3, 2014 and 381 million shares at February 2, 2014
(22,263
)
 
(19,194
)
Total Stockholders’ Equity
11,457

 
12,522

Total Liabilities and Stockholders’ Equity
$
43,479

 
$
40,518

See accompanying Notes to Consolidated Financial Statements.

3
Table of Contents

THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended
 
Six Months Ended
amounts in millions, except per share data
August 3,
2014
 
August 4,
2013
 
August 3,
2014
 
August 4,
2013
NET SALES
$
23,811

 
$
22,522

 
$
43,498

 
$
41,646

Cost of Sales
15,650

 
14,801

 
28,452

 
27,246

GROSS PROFIT
8,161

 
7,721

 
15,046

 
14,400


Operating Expenses:
 
 
 
 
 
 
 
Selling, General and Administrative
4,298

 
4,294

 
8,492

 
8,477

Depreciation and Amortization
415

 
409

 
829

 
811

Total Operating Expenses
4,713

 
4,703

 
9,321

 
9,288


OPERATING INCOME

3,448

 
3,018

 
5,725

 
5,112

Interest and Other (Income) Expense:
 
 
 
 
 
 
 
Interest and Investment Income
(17
)
 
(2
)
 
(117
)
 
(5
)
Interest Expense
208

 
174

 
399

 
338

Interest and Other, net
191

 
172

 
282

 
333


EARNINGS BEFORE PROVISION FOR
INCOME TAXES
3,257

 
2,846

 
5,443

 
4,779

Provision for Income Taxes
1,207

 
1,051

 
2,014

 
1,758

NET EARNINGS
$
2,050

 
$
1,795

 
$
3,429

 
$
3,021

 
 
 
 
 
 
 
 
Weighted Average Common Shares
1,346

 
1,434

 
1,358

 
1,452

BASIC EARNINGS PER SHARE

$
1.52

 
$
1.25

 
$
2.53

 
$
2.08

Diluted Weighted Average Common Shares
1,353

 
1,443

 
1,365

 
1,462

DILUTED EARNINGS PER SHARE

$
1.52

 
$
1.24

 
$
2.51

 
$
2.07

Dividends Declared per Share
$
0.47

 
$
0.39

 
$
0.94

 
$
0.78

See accompanying Notes to Consolidated Financial Statements.


4
Table of Contents

THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) 
 
Three Months Ended
 
Six Months Ended
amounts in millions
August 3,
2014
 
August 4,
2013
 
August 3,
2014
 
August 4,
2013
Net Earnings
$
2,050

 
$
1,795

 
$
3,429

 
$
3,021

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Foreign Currency Translation Adjustments
15

 
(153
)
 
55

 
(109
)
Cash Flow Hedges, net of tax
(13
)
 
1

 
(11
)
 
3

Other
1

 
—

 
1

 
(10
)
Total Other Comprehensive Income (Loss)
3

 
(152
)
 
45

 
(116
)
COMPREHENSIVE INCOME
$
2,053

 
$
1,643

 
$
3,474

 
$
2,905

See accompanying Notes to Consolidated Financial Statements.


5
Table of Contents

THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended
amounts in millions
August 3,
2014
 
August 4,
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Earnings
$
3,429

 
$
3,021

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
 
 
 
Depreciation and Amortization
896

 
877

Stock-Based Compensation Expense
119

 
116

Changes in Assets and Liabilities, net of the effect of acquisition:
 
 
 
Receivables, net
(239
)
 
(153
)
Merchandise Inventories
(589
)
 
(419
)
Other Current Assets
(111
)
 
(51
)
Accounts Payable and Accrued Expenses
1,366

 
1,278

Deferred Revenue
164

 
114

Income Taxes Payable
446

 
140

Deferred Income Taxes
54

 
(78
)
Other
(250
)
 
(127
)
Net Cash Provided by Operating Activities
5,285

 
4,718


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital Expenditures
(631
)
 
(599
)
Proceeds from Sales of Investments
112

 
—

Payments for Business Acquired, net
—

 
(13
)
Proceeds from Sales of Property and Equipment
16

 
16

Net Cash Used in Investing Activities
(503
)
 
(596
)

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from Long-Term Borrowings, net of discount
1,981

 
1,994

Repayments of Long-Term Debt
(21
)
 
(17
)
Repurchases of Common Stock
(3,500
)
 
(4,346
)
Proceeds from Sales of Common Stock
148

 
150

Cash Dividends Paid to Stockholders
(1,285
)
 
(1,143
)
Other Financing Activities
181

 
154

Net Cash Used in Financing Activities
(2,496
)
 
(3,208
)

Change in Cash and Cash Equivalents
2,286

 
914

Effect of Exchange Rate Changes on Cash and Cash Equivalents
1

 
11

Cash and Cash Equivalents at Beginning of Period
1,929

 
2,494

Cash and Cash Equivalents at End of Period
$
4,216

 
$
3,419

See accompanying Notes to Consolidated Financial Statements.


6
Table of Contents
THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 2, 2014, as filed with the Securities and Exchange Commission.
Business
The Home Depot, Inc. and its subsidiaries (the "Company") operate The Home Depot stores, which are full-service, warehouse-style stores averaging approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. The stores stock approximately 30,000 to 40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers and professional customers. The Company also offers over 700,000 products through its websites, including Home Depot, Home Decorators Collection and Blinds.com.
Valuation Reserves
As of August 3, 2014 and February 2, 2014, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material.
2.
LONG-TERM DEBT
In June 2014, the Company issued $1.0 billion of 2.00% senior notes due June 15, 2019 (the "2019 notes") at a discount of $4 million and $1.0 billion of 4.40% senior notes due March 15, 2045 (the "2045 notes") at a discount of $15 million (together, the "June 2014 issuance"). Interest on the 2019 notes is due semi-annually on June 15 and December 15 of each year, beginning December 15, 2014. Interest on the 2045 notes is due semi-annually on March 15 and September 15 of each year, beginning September 15, 2014. The net proceeds of the June 2014 issuance were used for general corporate purposes, including repurchases of shares of the Company's common stock. The $19 million discount associated with the June 2014 issuance is being amortized over the term of the notes using the effective interest rate method. Issuance costs associated with the June 2014 issuance were approximately $14 million and are being amortized over the term of the notes.
The notes may be redeemed by the Company at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date. The redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed, and (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date, as defined in the respective notes. Additionally, if a Change in Control Triggering Event occurs, as defined in the notes, holders of the notes have the right to require the Company to redeem those notes at 101% of the aggregate principal amount of the notes plus accrued interest up to the redemption date. The Company is generally not limited under the indenture governing the notes in its ability to incur additional indebtedness or required to maintain financial ratios or specified levels of net worth or liquidity. Further, while the indenture governing the notes contains various restrictive covenants, none are expected to impact the Company's liquidity or capital resources.
3.
INVESTMENT IN HD SUPPLY HOLDINGS, INC.
At the end of fiscal 2013, the Company owned 16.3 million shares of HD Supply Holdings, Inc. ("HD Supply") common stock, which represented approximately 8% of the shares of HD Supply common stock outstanding. This investment is accounted for using the cost method, as there are significant restrictions in place on the Company's ability to sell or transfer its HD Supply shares. The restrictions are controlled by the three largest shareholders of HD Supply (the "Principal Shareholders"). The carrying value of the HD Supply shares was impaired by the Company to a zero cost basis in fiscal 2009. During the first quarter of fiscal 2014, the Principal Shareholders elected to sell shares in a secondary public offering of HD Supply common stock. Under the terms of a registration rights agreement among the Company, HD Supply and the Principal Shareholders, the Company had the right to include a portion of its shares in the offering, and the Company elected to do so. As a result, the restrictions on 3.9 million shares were lifted so that they could be sold in the offering. The Company received $97 million of proceeds from the sale of these shares and recognized a corresponding gain in the first quarter of fiscal 2014.

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Table of Contents
THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In the second quarter of fiscal 2014, the underwriters of the secondary public offering exercised their overallotment option to sell additional shares of HD Supply common stock to the public. As a result, the Company sold 600 thousand additional shares of HD Supply common stock and received $15 million of proceeds from the sale of these shares and recognized a corresponding gain in the second quarter of fiscal 2014. The total gain of $112 million is included in Interest and Investment Income in the accompanying Consolidated Statements of Earnings for the six months ended August 3, 2014. The remaining 11.8 million shares owned by the Company, which represent approximately 6% of the shares of HD Supply common stock outstanding, continue to be accounted for using the cost method as the restrictions on these shares remain in place.
4.
ACCELERATED SHARE REPURCHASE AGREEMENTS
In the first quarter of fiscal 2014, the Company entered into an Accelerated Share Repurchase ("ASR") agreement with a third-party financial institution to repurchase $950 million of the Company’s common stock. Under this agreement, the Company paid $950 million to the financial institution and received an initial delivery of 9.5 million shares in the first quarter of fiscal 2014. The transaction was completed later in the first quarter of fiscal 2014, at which time the Company received 2.6 million additional shares. The final number of shares delivered upon settlement of the $950 million ASR agreement was determined with reference to the average price of the Company's common stock over the term of the agreement. The $950 million of shares repurchased is included in Treasury Stock in the accompanying Consolidated Balance Sheets as of August 3, 2014.
In the second quarter of fiscal 2014, the Company entered into an ASR agreement with a third-party financial institution to repurchase $1.75 billion of the Company’s common stock. Under this agreement, the Company paid $1.75 billion to the financial institution and received an initial delivery of 16.9 million shares in the second quarter of fiscal 2014. The fair market value of the 16.9 million shares on the date of purchase was $1.32 billion and is included in Treasury Stock in the accompanying Consolidated Balance Sheets as of August 3, 2014. The remaining $430 million is included in Paid-In Capital in the accompanying Consolidated Balance Sheets as of August 3, 2014. The final number of shares delivered upon settlement of the $1.75 billion ASR agreement will be determined in the third quarter of fiscal 2014 with reference to the average price of the Company's common stock over the term of the agreement.
5.
FAIR VALUE MEASUREMENTS
The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are:
•
Level 1 –
Observable inputs that reflect quoted prices in active markets
•
Level 2 –
Inputs other than quoted prices in active markets that are either directly or indirectly observable
•
Level 3 –
Unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The assets and liabilities of the Company that are measured at fair value on a recurring basis as of August 3, 2014 and February 2, 2014 were as follows (amounts in millions):

 
Fair Value at August 3, 2014 Using
 
Fair Value at February 2, 2014 Using
 
Level 1    
 
Level 2    
 
Level 3    
 
Level 1    
 
Level 2    
 
Level 3    
Derivative agreements - assets
$
—

 
$
30

 
$
—

 
$
—

 
$
30

 
$
—

Derivative agreements - liabilities
—

 
(25
)
 
—

 
—

 
(10
)
 
—

Total
$
—

 
$
5

 
$
—

 
$
—

 
$
20

 
$
—

The Company uses derivative financial instruments from time to time in the management of its interest rate exposure on long-term debt and its exposure on foreign currency fluctuations. The fair value of the Company’s derivative financial instruments was measured using level 2 inputs.
 

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THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Long-lived assets were analyzed for impairment on a nonrecurring basis using fair value measurements with unobservable inputs (level 3). Impairment charges related to long-lived assets in the first six months of fiscal 2014 and 2013 were not material.
The aggregate fair value of the Company’s senior notes, based on quoted market prices, was $17.8 billion and $15.6 billion at August 3, 2014 and February 2, 2014, respectively, compared to a carrying value of $16.2 billion and $14.2 billion at August 3, 2014 and February 2, 2014, respectively.
6.
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
The reconciliation of basic to diluted weighted average common shares for the three and six months ended August 3, 2014 and August 4, 2013 was as follows (amounts in millions):
 
Three Months Ended
 
Six Months Ended
 
August 3,
2014
 
August 4,
2013
 
August 3,
2014
 
August 4,
2013
Weighted average common shares
1,346

 
1,434

 
1,358

 
1,452

Effect of potentially dilutive securities:
 
 
 
 
 
 
 
Stock plans
7

 
9

 
7

 
10

Diluted weighted average common shares
1,353

 
1,443

 
1,365

 
1,462

Stock plans consist of shares granted under the Company’s employee stock plans. Options to purchase 2 million and 1 million shares of common stock for the three months ended August 3, 2014 and August 4, 2013, respectively, and options to purchase 2 million and 1 million shares of common stock for the six months ended August 3, 2014 and August 4, 2013, respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive.




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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
The Home Depot, Inc.:
We have reviewed the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of August 3, 2014, the related Consolidated Statements of Earnings and Comprehensive Income for the three-month and six-month periods ended August 3, 2014 and August 4, 2013, and the related Consolidated Statements of Cash Flows for the six-month periods ended August 3, 2014 and August 4, 2013. These Consolidated Financial Statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the Consolidated Financial Statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of February 2, 2014, and the related Consolidated Statements of Earnings, Comprehensive Income, Stockholders’ Equity, and Cash Flows for the year then ended (not presented herein); and in our report dated March 27, 2014, we expressed an unqualified opinion on those Consolidated Financial Statements. In our opinion, the information set forth in the accompanying Consolidated Balance Sheet as of February 2, 2014, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.
/s/ KPMG LLP
Atlanta, Georgia
August 27, 2014


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Table of Contents

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
Certain statements contained herein 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; effects of competition; 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; implementation of store, interconnected retail and supply chain initiatives; management of relationships with our suppliers and vendors; continuation of share repurchase programs; net earnings performance; earnings per share; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the effect of accounting charges; the effect of adopting certain accounting standards; store openings and closures; 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 our Annual Report on Form 10-K for the fiscal year ended February 2, 2014 as filed with the Securities and Exchange Commission ("SEC") on March 27, 2014 ("2013 Form 10-K") and in Item 1A of Part II and elsewhere in this report. You should read such information in conjunction with our Consolidated Financial Statements and related notes and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this report. 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. Such factors could cause results to differ materially from our expectations.
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 SEC.
EXECUTIVE SUMMARY AND SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA
For the second quarter of fiscal 2014, we reported Net Earnings of $2.1 billion and Diluted Earnings per Share of $1.52 compared to Net Earnings of $1.8 billion and Diluted Earnings per Share of $1.24 for the second quarter of fiscal 2013. For the first six months of fiscal 2014, we reported Net Earnings of $3.4 billion and Diluted Earnings per Share of $2.51 compared to Net Earnings of $3.0 billion and Diluted Earnings per Share of $2.07 for the first six months of fiscal 2013.
The results for the first six months of fiscal 2014 included a $112 million pretax gain related to the sale of a portion of our equity ownership in HD Supply Holdings, Inc. ("HD Supply"), of which $97 million was recognized in the first quarter of fiscal 2014 and $15 million was recognized in the second quarter of fiscal 2014. This gain contributed $0.05 to Diluted Earnings per Share for the first six months of fiscal 2014, of which $0.04 was recognized in the first quarter of fiscal 2014 and $0.01 was recognized in the second quarter of fiscal 2014.
Net Sales increased 5.7% to $23.8 billion for the second quarter of fiscal 2014 from $22.5 billion for the second quarter of fiscal 2013. For the first six months of fiscal 2014, Net Sales increased 4.4% to $43.5 billion from $41.6 billion for the first six months of fiscal 2013. Our total comparable store sales increased 5.8% in the second quarter of fiscal 2014, driven by a 4.1% increase in our comparable store customer transactions and a 1.7% increase in our comparable store average ticket. Comparable store sales for our U.S. stores increased 6.4% in the second quarter of fiscal 2014. For the first six months of fiscal 2014, our total comparable store sales increased 4.3%, and comparable store sales for our U.S. stores increased 5.0%.
In the second quarter and first six months of fiscal 2014, we continued to focus on the following key initiatives:
Customer Service – Our focus on customer service is anchored on the principles of creating an emotional connection with customers, putting customers first, taking care of our associates and simplifying the business. In the first six months of fiscal 2014, we continued to make enhancements to our FIRST phone, an associate and customer service tool. These enhancements include plans to introduce the next generation of our FIRST phone in the second half of fiscal 2014, which will allow for internet access to assist with questions and online orders and will be equipped to complete the check-out process in the aisle for our customers.

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Table of Contents

Product Authority – Our focus on product authority is facilitated by our merchandising transformation and portfolio strategy, which is aimed at delivering product innovation, assortment and value. As part of this effort, we are implementing new merchandising assortment planning and pricing tools to better assort products within stores with similar attributes based on local preferences, regulations and demographics.
We also continued to introduce innovative new products and great values to our customers. This includes plans to launch a new light bulb reset, which will add 26 new SKUs to our assortment, and introduce new products for the connected home, such as garage door openers, thermostats and water heaters.
Disciplined Capital Allocation, Productivity and Efficiency – Our approach to driving productivity and efficiency is advanced through continuous operational improvement in the stores and our supply chain, disciplined capital allocation and building shareholder value through higher returns on invested capital and total value returned to shareholders in the form of dividends and share repurchases. During the first six months of fiscal 2014, we introduced our new Customer Order Management system. This system is designed to provide greater visibility into and improved execution of special orders by our associates and a more seamless experience for our customers. We intend to roll this system out to all U.S. stores by the end of fiscal 2014.
During the second quarter of fiscal 2014, we entered into a $1.75 billion Accelerated Share Repurchase (“ASR”) agreement and received an initial delivery of 16.9 million shares of our common stock. Also in the second quarter of fiscal 2014, we repurchased 6.2 million shares of our common stock through the open market. During the first six months of fiscal 2014, we repurchased a total of 38.9 million shares of our common stock for $3.5 billion through ASR agreements and the open market.
We opened one new store in Mexico during the second quarter of fiscal 2014, for a total store count of 2,264 at the end of the quarter. As of the end of the second quarter of fiscal 2014, a total of 287 of our stores, or 12.7%, were located in Canada and Mexico.
We generated $5.3 billion of cash flow from operations in the first six months of fiscal 2014. This cash flow, along with $2.0 billion of long-term debt issued in the second quarter of fiscal 2014, was used to fund $3.5 billion of share repurchases, pay $1.3 billion of dividends and fund $631 million in capital expenditures.
Our return on invested capital (computed on net operating profit after tax for the trailing twelve months and the average of beginning and ending long-term debt and equity) was 21.9% for the second quarter of fiscal 2014 compared to 19.1% for the second quarter of fiscal 2013.
Interconnected Retail – Our focus on interconnected retail, which connects our other three key initiatives, is based on building a competitive and seamless platform across all commerce channels. During the first six months of fiscal 2014, we continued to enhance our website and mobile experience, resulting in improved customer satisfaction scores and online sales conversion rates. Sales from our online channels increased over 38% for the second quarter and first six months of fiscal 2014 compared to the same periods last year and represented approximately 4.2% of our total Net Sales at the end of the quarter.


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We believe the selected sales data, the percentage relationship between Net Sales and major categories in the Consolidated Statements of Earnings and the percentage change in the dollar amounts of each of the items presented below are important in evaluating the performance of our business operations.

 
% of Net Sales
 
% Increase (Decrease)
in Dollar Amounts
 
Three Months Ended
 
Six Months Ended
 
 
August 3, 2014
 
August 4, 2013
 
August 3, 2014
 
August 4, 2013
 
Three Months
 
Six Months
NET SALES
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
5.7
%
 
4.4
 %
GROSS PROFIT
34.3

 
34.3

 
34.6

 
34.6

 
5.7

 
4.5

Operating Expenses:
 
 
 
 


 


 
 
 
 
Selling, General and Administrative
18.1

 
19.1

 
19.5

 
20.4

 
0.1

 
0.2

Depreciation and Amortization
1.7

 
1.8

 
1.9

 
1.9

 
1.5

 
2.2

Total Operating Expenses
19.8

 
20.9

 
21.4

 
22.3

 
0.2

 
0.4

 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
14.5

 
13.4

 
13.2

 
12.3

 
14.2

 
12.0

Interest and Other (Income) Expense:
 
 
 
 
 
 
 
 
 
 
 
Interest and Investment Income
(0.1
)
 
—

 
(0.3
)
 
—

 
N/M

 
N/M

Interest Expense
0.9

 
0.8

 
0.9

 
0.8

 
19.5

 
18.0

Interest and Other, net
0.8

 
0.8

 
0.6

 
0.8

 
11.0

 
(15.3
)
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS BEFORE PROVISION FOR INCOME TAXES
13.7

 
12.6

 
12.5

 
11.5

 
14.4

 
13.9

Provision for Income Taxes
5.1

 
4.7

 
4.6

 
4.2

 
14.8

 
14.6

NET EARNINGS
8.6
 %
 
8.0
 %
 
7.9
 %
 
7.3
 %
 
14.2
%
 
13.5
 %

SELECTED SALES DATA
 
 
 
 
 
 
 
 
 
 
 
Number of Customer Transactions (in millions)
409.7

 
393.2

 
754.2

 
730.3

 
4.2
%
 
3.3
 %
Average Ticket
$
58.43

 
$
57.39

 
$
58.05

 
$
57.32

 
1.8
%
 
1.3
 %
Sales per Square Foot
$
403.90

 
$
382.99

 
$
368.92

 
$
355.56

 
5.5
%
 
3.8
 %
Comparable Store Sales Increase (%)(1)
5.8
 %
 
10.7
 %
 
4.3
 %
 
7.7
 %
 
N/A

 
N/A

Online Sales (% of Net Sales)(2)
4.2
 %
 
3.2
 %
 
4.2
 %
 
3.2
 %
 
38.5
%
 
38.6
 %
Note: Certain percentages may not sum to totals due to rounding.
 —————
(1)
Includes Net Sales at locations open greater than 12 months, including relocated and remodeled stores and online sales, and excluding closed stores. Retail stores become comparable on the Monday following their 365th day of operation. Comparable store sales is intended only as supplemental information and is not a substitute for Net Sales or Net Earnings presented in accordance with generally accepted accounting principles.
(2)
Consists of Net Sales generated online through our websites, including Home Depot, Home Decorators Collection and Blinds.com, for products delivered to customer locations or picked up in stores through our Buy Online, Pick-up In Store ("BOPIS") and Buy Online, Ship to Store ("BOSS") programs.
N/A – Not Applicable
N/M – Not Meaningful



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RESULTS OF OPERATIONS
Net Sales for the second quarter of fiscal 2014 increased 5.7% to $23.8 billion from $22.5 billion for the second quarter of fiscal 2013. For the first six months of fiscal 2014, Net Sales increased 4.4% to $43.5 billion from $41.6 billion for the comparable period of fiscal 2013. The increase in Net Sales for the second quarter and first six months of fiscal 2014 reflects the impact of positive comparable store sales driven by customer transactions and average ticket growth. Total comparable store sales increased 5.8% for the second quarter of fiscal 2014 on top of an increase of 10.7% for the second quarter of fiscal 2013. For the first six months of fiscal 2014, total comparable stores sales increased 4.3% on top of an increase of 7.7% for the same period of fiscal 2013.
The positive comparable store sales for the second quarter and first six months of fiscal 2014 reflect a number of factors, including the execution of our key initiatives, continued strength in our maintenance and repair categories, and an improved U.S. and Canadian home improvement market. All of our departments posted positive comparable store sales for the second quarter and first six months of fiscal 2014. Comparable store sales for our Tools, Millwork, Outdoor Garden, Electrical, Kitchen and Bath product categories were above or at the Company average for the second quarter of fiscal 2014. Further, our comparable store customer transactions increased 4.1% and 3.2% for the second quarter and first six months of fiscal 2014, respectively, and our comparable store average ticket increased 1.7% and 1.1% for the second quarter and first six months of fiscal 2014, respectively, due in part to strong sales in big ticket purchases, such as appliances, windows, water heaters and wood and laminate flooring.
Gross Profit increased 5.7% to $8.2 billion for the second quarter of fiscal 2014 from $7.7 billion for the second quarter of fiscal 2013. Gross Profit increased 4.5% to $15.0 billion for the first six months of fiscal 2014 from $14.4 billion for the first six months for fiscal 2013. Gross Profit as a percent of Net Sales was 34.3% for the second quarter of both fiscal 2014 and 2013. For the first six months of both fiscal 2014 and 2013, Gross Profit as a percent of Net Sales was 34.6%. Gross profit margin for the second quarter and first six months of fiscal 2014 reflects higher levels of co-op allowances and rebates and benefits from sales mix changes, offset by higher shrink and deleverage within our supply chain due to higher transportation costs.
Selling, General and Administrative expenses ("SG&A") were $4.3 billion for the second quarter of both fiscal 2014 and 2013, and were $8.5 billion for the first six months of both fiscal 2014 and 2013. As a percent of Net Sales, SG&A was 18.1% for the second quarter of fiscal 2014 compared to 19.1% for the second quarter of fiscal 2013. For the first six months of fiscal 2014, SG&A as a percent of Net Sales was 19.5% compared to 20.4% for the same period last year. The decrease in SG&A as a percent of Net Sales for the second quarter and first six months of fiscal 2014 reflects expense leverage resulting from the positive comparable store sales environment, strong expense controls, and lower management bonuses and workers' compensation expenses than last year.
Depreciation and Amortization increased 1.5% to $415 million for the second quarter of fiscal 2014 from $409 million for the second quarter of fiscal 2013. For the first six months of fiscal 2014, Depreciation and Amortization increased 2.2% to $829 million from $811 million for the same period of fiscal 2013. Depreciation and Amortization as a percent of Net Sales was 1.7% for the second quarter of fiscal 2014 compared to 1.8% for the second quarter of 2013, and was 1.9% for the first six months of both fiscal 2014 and 2013. Depreciation and Amortization as a percent of Net Sales for the second quarter and first six months of fiscal 2014 reflects expense leverage in the positive comparable store sales environment, offset by higher depreciation related to capital expenditures that in recent years have been more heavily weighted toward technology assets, which have shorter depreciable lives.
Operating Income increased 14.2% to $3.4 billion for the second quarter of fiscal 2014 from $3.0 billion for the second quarter of fiscal 2013. Operating Income increased 12.0% to $5.7 billion for the first six months of fiscal 2014 from $5.1 billion for the first six months of fiscal 2013.
For the second quarter of fiscal 2014, we recognized $191 million of Interest and Other, net, compared to $172 million for the second quarter of fiscal 2013. We recognized $282 million of Interest and Other, net, for the first six months of fiscal 2014 compared to $333 million for the same period last year. Interest and Other, net, as a percent of Net Sales was 0.8% for the second quarter of both fiscal 2014 and 2013. For the first six months of fiscal 2014, Interest and Other, net, as a percent of Net Sales was 0.6% compared to 0.8% for the same period last year. These results reflect additional interest expense incurred in the second quarter and first six months of fiscal 2014 on the long-term debt issued in September 2013 and June 2014. This was offset by a $112 million pretax gain in the first six months of fiscal 2014 related to the sale of a portion of our equity ownership in HD Supply.
Our combined effective income tax rate was 37.0% for the first six months of fiscal 2014 compared to 36.8% for the first six months of fiscal 2013.


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Diluted Earnings per Share were $1.52 and $2.51 for the second quarter and first six months of fiscal 2014, respectively, compared to $1.24 and $2.07 for the second quarter and first six months of fiscal 2013, respectively. Diluted Earnings per Share for the second quarter and first six months of fiscal 2014 reflect $0.01 and $0.05, respectively, of benefit related to the sale of a portion of our equity ownership in HD Supply.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from operations provides us with a significant source of liquidity. During the first six months of fiscal 2014, Net Cash Provided by Operating Activities was $5.3 billion compared to $4.7 billion for the same period in fiscal 2013. This increase was primarily due to a $408 million increase in Net Earnings resulting from higher comparable store sales and expense controls and cash generated through working capital efficiency.
Net Cash Used in Investing Activities for the first six months of fiscal 2014 was $503 million compared to $596 million for the same period in fiscal 2013. This change was primarily due to $112 million of proceeds from the sale of a portion of our equity ownership in HD Supply and a $13 million decrease in Payments for Business Acquired partially offset by a $32 million increase in Capital Expenditures in the first six months of fiscal 2014 compared to the same period last year.
Net Cash Used in Financing Activities for the first six months of fiscal 2014 was $2.5 billion compared to $3.2 billion for the same period of fiscal 2013. This change was primarily the result of $846 million less in repurchases of common stock, partially offset by $142 million more in cash dividends paid to stockholders in the first six months of fiscal 2014 compared to the same period last year.
In June 2014, we issued $1.0 billion of 2.00% senior notes due June 15, 2019 (the "2019 notes") at a discount of $4 million and $1.0 billion of 4.40% senior notes due March 15, 2045 (the "2045 notes") at a discount of $15 million (together, the "June 2014 issuance"). Interest on the 2019 notes is due semi-annually on June 15 and December 15 of each year, beginning December 15, 2014. Interest on the 2045 notes is due semi-annually on March 15 and September 15 of each year, beginning September 15, 2014. The net proceeds of the June 2014 issuance were used for general corporate purposes, including repurchases of shares of our common stock.
In the first quarter of fiscal 2014, we entered into an ASR agreement with a third-party financial institution to repurchase $950 million of our common stock. Under this agreement, we paid $950 million to the financial institution and received a total of 12.1 million shares in the first quarter of fiscal 2014. The final number of shares delivered upon settlement of the $950 million ASR agreement was determined with reference to the average price of our common stock over the term of the agreement.
In the second quarter of fiscal 2014, we entered into an ASR agreement with a third-party financial institution to repurchase $1.75 billion of our common stock. Under this agreement, we paid $1.75 billion to the financial institution and received an initial delivery of 16.9 million shares in the second quarter of fiscal 2014. The final number of shares delivered upon settlement of the $1.75 billion ASR agreement will be determined in the third quarter of fiscal 2014 with reference to the average price of our common stock over the term of the agreement. In the first six months of fiscal 2014, we also repurchased 9.9 million additional shares of our common stock for $800 million in the open market.
We have commercial paper programs that allow for borrowings up to $2.0 billion. In connection with the programs, we have a back-up credit facility with a consortium of banks for borrowings up to $2.0 billion. The credit facility expires in July 2017 and contains various restrictive covenants. At August 3, 2014, we were in compliance with all of the covenants, and they are not expected to impact our liquidity or capital resources. As of August 3, 2014, there were no borrowings outstanding under the commercial paper programs or the related credit facility.
As of August 3, 2014, we had $4.2 billion in Cash and Cash Equivalents. We believe that our current cash position, access to the debt capital markets and cash flow generated from operations should be sufficient not only for our operating requirements but also to enable us to complete our capital expenditure programs and fund dividend payments, share repurchases and any required long-term debt payments through the next several fiscal years. In addition, we have funds available from our commercial paper programs and the ability to obtain alternative sources of financing.

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RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU No. 2014-09"), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. ASU No. 2014-09 supersedes most existing revenue recognition guidance in U.S. GAAP. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. The guidance permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures.

Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Our exposure to market risks results primarily from fluctuations in interest rates. There have been no material changes to our exposure to market risks from those disclosed in our 2013 Form 10-K.

Item 4.
Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended August 3, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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Table of Contents

PART II. OTHER INFORMATION

Item 1.
Legal Proceedings
We are reporting the following proceeding 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.  Except as set forth below, there were no other material changes during the second quarter of fiscal 2014 to our disclosure in Item 3 of our 2013 Form 10-K.
In June 2014, the Company received a proposed consent order and fine from the New York State Department of Environmental Conservation related to the sale of a mildew treatment product that had not been properly registered for sale in the state of New York.  In August 2014, the Company resolved the matter by signing a consent order imposing a civil fine of $100,000.

Item 1A.
Risk Factors
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed under Item 1A, "Risk Factors" and elsewhere in our 2013 Form 10-K. These risks and uncertainties could materially and adversely affect our business, financial condition and results of operations. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business. There have been no material changes in the risk factors discussed in our 2013 Form 10-K.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
(a) Unregistered Sales of Equity Securities

1.
During the second quarter of fiscal 2014, the Company issued 6,461 deferred stock units under The Home Depot, Inc. Non-Employee Directors’ Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and Rule 506 of the SEC's Regulation D thereunder. The deferred stock units were credited to the accounts of those non-employee directors who elected to receive board retainers in the form of deferred stock units instead of cash during the second quarter of fiscal 2014. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in this plan.

2.
During the second quarter of fiscal 2014, the Company credited 1,402 deferred stock units to participant accounts under The Home Depot FutureBuilder Restoration Plan pursuant to an exemption from the registration requirements of the Securities Act for involuntary, non-contributory plans. The deferred stock units convert to shares of common stock on a one-for-one basis following the termination of service as described in this plan.

(b) Purchases of Equity Securities

In the first quarter of fiscal 2013, the Board of Directors authorized a $17.0 billion share repurchase program. Through the end of the second quarter of fiscal 2014, the Company has repurchased shares of its common stock having a value of approximately $12.0 billion under this program. The number and average price of shares purchased in each fiscal month of the second quarter of fiscal 2014 are set forth in the table below:
Period
 
Total
Number of
Shares
Purchased(1)
 
Average Price
Paid
Per Share(1)
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Program(2)
 
Dollar Value of
Shares that May Yet
Be Purchased 
Under the Program(2)
May 5, 2014 – June 1, 2014
 
3,230,932

 
$
79.66

 
3,205,473

 
$
6,994,669,435

June 2, 2014 – June 29, 2014(3)
 
19,869,025

 
$
78.76

 
19,863,393

 
$
5,000,026,661

June 30, 2014 – August 3, 2014
 
13,013

 
$
79.86

 
—

 
$
5,000,026,661


(1)
These amounts include repurchases pursuant to the Company’s 1997 and Amended and Restated 2005 Omnibus Stock Incentive Plans (the “Plans”). Under the Plans, participants may surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. Participants in the Plans may also exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs.

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Table of Contents

(2)
In the first quarter of fiscal 2013, the Board of Directors authorized a $17.0 billion share repurchase program that replaced the previous authorization. The program does not have a prescribed expiration date.
(3)
In the second quarter of fiscal 2014, the Company paid $1.75 billion under an ASR agreement and received an initial delivery of 16.9 million shares. The Average Price Paid Per Share was calculated using the fair market value of the shares on the date the initial shares were delivered. See Note 4 to the Consolidated Financial Statements included in this report.

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Table of Contents

Item 6.
Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in brackets. All other exhibits are filed or furnished herewith.
 
*3.1

Amended and Restated Certificate of Incorporation of The Home Depot, Inc. [Form 10-Q filed on September 1, 2011, Exhibit 3.1]
 
 
*3.2

By-Laws of The Home Depot, Inc. (Amended and Restated Effective August 21, 2014). [Form 8-K filed on August 21, 2014, Exhibit 3.2]
 
 
12.1

Statement of Computation of Ratio of Earnings to Fixed Charges.
 
 
15.1

Acknowledgement of Independent Registered Public Accounting Firm, dated August 27, 2014.
 
 
31.1

Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
 
 
31.2

Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
 
 
32.1

Certification of Chairman and Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
32.2

Certification of Chief Financial Officer and Executive Vice President – Corporate Services furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101

The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 2014, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.






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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
THE HOME DEPOT, INC.
 
 
(Registrant)
 
 
 
 
By:
/s/ FRANCIS S. BLAKE
 
 
Francis S. Blake
 
 
Chairman and Chief Executive Officer
 
 
 
 
 
/s/ CAROL B. TOMÉ
 
 
Carol B. Tomé
 
 
Chief Financial Officer and
 
 
Executive Vice President – Corporate Services
 
 
August 26, 2014
(Date)

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INDEX TO EXHIBITS
 
 
Exhibit
Description
 
Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in brackets. All other exhibits are filed or furnished herewith.
 
 
*3.1

Amended and Restated Certificate of Incorporation of The Home Depot, Inc. [Form 10-Q filed on September 1, 2011, Exhibit 3.1]
 
 
*3.2

By-Laws of The Home Depot, Inc. (Amended and Restated Effective August 21, 2014). [Form 8-K filed on August 21, 2014, Exhibit 3.2]
 
 
12.1

Statement of Computation of Ratio of Earnings to Fixed Charges.
 
 
15.1

Acknowledgement of Independent Registered Public Accounting Firm, dated August 27, 2014.
 
 
31.1

Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
 
 
31.2

Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
 
 
32.1

Certification of Chairman and Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
32.2

Certification of Chief Financial Officer and Executive Vice President – Corporate Services furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101

The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 2014, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.




21