THE HOME DEPOT, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

	~~Page~~
				Page
Part I. Financial Information

Item 1.		Financial Statements			3

		CONSOLIDATED STATEMENTS OF ~~EARNINGS~~EARNINGS— Three ~~and Nine~~ Months Ended ~~November 2,~~May 3, 2009 and May 4, 2008 ~~and October 28, 2007~~			3

		CONSOLIDATED BALANCE ~~SHEETS~~SHEETS— As of ~~November 2, 2008~~May 3, 2009 and February ~~3, 2008~~1, 2009			4

		CONSOLIDATED STATEMENTS OF CASH ~~FLOWS~~FLOWS— ~~Nine~~Three Months Ended ~~November 2,~~May 3, 2009 and May 4, 2008 ~~and October 28, 2007~~			5

		CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~INCOME— Three ~~and Nine~~ Months Ended ~~November 2,~~May 3, 2009 and May 4, 2008 ~~and October 28, 2007~~			6

		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			7 – 9 8

		REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	10		9

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	11		10 – 17 15

Item 3.		Quantitative and Qualitative Disclosures about Market Risk	17		16

Item 4.		Controls and Procedures	17		16


Part II. Other Information			18

Item 1.		Legal Proceedings			17

Item 1A.		Risk Factors	18		17

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	19		18

Item 4.		Submission of Matters to a Vote of Security Holders			19 – 20

Item 6.		Exhibits	20		21

Signatures				21	22

Index to Exhibits			22		23
EX-3.2
EX-12.1
EX-15.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(Amounts In Millions, Except Per Share Data)

Three Months Ended

Nine Months Ended

November 2,
2008

October 28,
2007

November 2,
2008

October 28,
2007

NET SALES

$
17,784

$
18,961

$
56,681

$
59,690

Cost of Sales

11,790

12,622

37,651

39,747

GROSS PROFIT

5,994

6,339

19,030

19,943

Operating Expenses:

Selling, General and Administrative

4,225

4,144

13,595

12,700

Depreciation and Amortization

446

431

1,342

1,250

Total Operating Expenses

4,671

4,575

14,937

13,950

OPERATING INCOME

1,323

1,764

4,093

5,993

Interest (Income) Expense:

Interest and Investment Income

(6
)
(29
)
(13
)
(67
)
Interest Expense

157

154

485

497

Interest, net

151

125

472

430

EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES

1,172

1,639

3,621

5,563

Provision for Income Taxes

416

568

1,307

2,024

EARNINGS FROM CONTINUING OPERATIONS

756

1,071

2,314

3,539

EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX

—

20

—

185

NET EARNINGS

$
756

$
1,091

$
2,314

$
3,724

Weighted Average Common Shares

1,681

1,810

1,681

1,910

BASIC EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$
0.45

$
0.59

$
1.38

$
1.85

BASIC EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS

$
—

$
0.01

$
—

$
0.10

BASIC EARNINGS PER SHARE

$
0.45

$
0.60

$
1.38

$
1.95

Diluted Weighted Average Common Shares

1,687

1,815

1,686

1,918

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$
0.45

$
0.59

$
1.37

$
1.85

DILUTED EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS

$
—

$
0.01

$
—

$
0.10

DILUTED EARNINGS PER SHARE

$
0.45

$
0.60

$
1.37

$
1.94

Dividends Declared Per Share

$
0.225

$
0.225

$
0.675

$
0.675

~~Note: The sum of Diluted Earnings per Share from Continuing Operations and Diluted Earnings Per Share from Discontinued Operations may not total Diluted Earnings Per Share due to rounding.~~


	Three Months Ended
	May 3,			May 4,
	2009			2008
Net Sales	$	16,175		$	17,907
Cost of Sales		10,725			11,835

Gross Profit		5,450			6,072

Operating Expenses:
Selling, General and Administrative		4,042			4,900
Depreciation and Amortization		428			444

Total Operating Expenses		4,470			5,344


Operating Income		980			728

Interest (Income) Expense:
Interest and Investment Income		(5	)		(3	)
Interest Expense		180			167

Interest, net		175			164


Earnings Before Provision for Income Taxes		805			564
Provision for Income Taxes		291			208

Net Earnings	$	514		$	356


Weighted Average Common Shares		1,683			1,679
Basic Earnings Per Share	$	0.31		$	0.21

Diluted Weighted Average Common Shares		1,689			1,683
Diluted Earnings Per Share	$	0.30		$	0.21

Dividends Declared Per Share	$	0.225		$	0.225

See accompanying Notes to Consolidated Financial Statements.

~~Table of Contents~~

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

~~(Amounts In Millions, Except Share and Per Share Data)~~

November 2,
2008

February 3,
2008

ASSETS

Current Assets:

Cash and Cash Equivalents

$
864

$
445

Short-Term Investments

10

12

Receivables, net

1,490

1,259

Merchandise Inventories

11,869

11,731

Other Current Assets

1,374

1,227

Total Current Assets

15,607

14,674

Property and Equipment, at cost

36,804

36,412

Less Accumulated Depreciation and Amortization

10,022

8,936

Net Property and Equipment

26,782

27,476

Notes Receivable

37

342

Goodwill

1,175

1,209

Other Assets

561

623

Total Assets

$
44,162

$
44,324

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Short-Term Debt

$
—

$
1,747

Accounts Payable

6,773

5,732

Accrued Salaries and Related Expenses

1,044

1,094

Sales Taxes Payable

431

445

Deferred Revenue

1,263

1,474

Income Taxes Payable

365

60

Current Installments of Long-Term Debt

1,016

300

Other Accrued Expenses

1,989

1,854

Total Current Liabilities

12,881

12,706

Long-Term Debt, excluding current installments

10,353

11,383

Other Long-Term Liabilities

1,978

1,833

Deferred Income Taxes

554

688

Total Liabilities

25,766

26,610

STOCKHOLDERS’ EQUITY

Common Stock, par value $0.05; Authorized: 10 billion shares; Issued: 1.706 billion shares at November 2, 2008 and 1.698 billion shares at February 3, 2008; Outstanding: 1.695 billion shares at November 2, 2008 and 1.690 billion shares at February 3, 2008

85

85

Paid-In Capital

5,988

5,800

Retained Earnings

12,518

11,388

Accumulated Other Comprehensive Income

177

755

Treasury Stock, at cost, 11 million shares at November 2, 2008 and 8 million shares at February 3, 2008

(372
)
(314
)
Total Stockholders’ Equity

18,396

17,714

Total Liabilities and Stockholders’ Equity

$
44,162

$
44,324


(Amounts In Millions, Except Share and Per Share Data)	May 3,			February 1,
	2009			2009
ASSETS
Current Assets:
Cash and Cash Equivalents	$	2,214		$	519
Short-Term Investments		6			6
Receivables, net		1,283			972
Merchandise Inventories		11,428			10,673
Other Current Assets		1,383			1,192

Total Current Assets		16,314			13,362


Property and Equipment, at cost		36,458			36,477

Less Accumulated Depreciation and Amortization		10,564			10,243

Net Property and Equipment		25,894			26,234

Notes Receivable		35			36
Goodwill		1,134			1,134
Other Assets		390			398

Total Assets	$	43,767		$	41,164


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	6,901		$	4,822
Accrued Salaries and Related Expenses		1,077			1,129
Sales Taxes Payable		493			337
Deferred Revenue		1,251			1,165
Income Taxes Payable		359			289
Current Installments of Long-Term Debt		1,768			1,767
Other Accrued Expenses		1,699			1,644

Total Current Liabilities		13,548			11,153


Long-Term Debt, excluding current installments		9,667			9,667
Other Long-Term Liabilities		2,242			2,198
Deferred Income Taxes		316			369

Total Liabilities		25,773			23,387


STOCKHOLDERS’ EQUITY
Common Stock, par value $0.05; Authorized: 10 billion shares; Issued: 1.714 billion shares at May 3, 2009 and 1.707 billion shares at February 1, 2009; Outstanding: 1.703 billion shares at May 3, 2009 and 1.696 billion shares at February 1, 2009		86			85
Paid-In Capital		6,092			6,048
Retained Earnings		12,226			12,093
Accumulated Other Comprehensive Loss		(38	)		(77	)
Treasury Stock, at cost, 11 million shares at May 3, 2009 and February 1, 2009		(372	)		(372	)


Total Stockholders’ Equity		17,994			17,777

Total Liabilities and Stockholders’ Equity	$	43,767		$	41,164

See accompanying Notes to Consolidated Financial Statements.

~~Table of Contents~~

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts In Millions)

Nine Months Ended

November 2,
2008

October 28,
2007

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Earnings

$
2,314

$
3,724

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:

Depreciation and Amortization

1,432

1,425

Impairment related to Store Rationalization Charges

313

—

Stock-Based Compensation Expense

155

180

Changes in Assets and Liabilities, net of the effects of acquisitions and disposition:

Increase in Receivables, net

(225
)
(186
)
Increase in Merchandise Inventories

(365
)
(1,313
)
Increase in Other Current Assets

(72
)
(211
)
Increase in Accounts Payable and Accrued Expenses

1,102

1,105

Decrease in Deferred Revenue

(192
)
(19
)
Increase in Income Taxes Payable

298

471

Decrease in Deferred Income Taxes

(164
)
(297
)
Other

198

283

Net Cash Provided by Operating Activities

4,794

5,162

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital Expenditures

(1,411
)
(2,518
)
Payments for Businesses Acquired, net

—

(13
)
Proceeds from Sale of Business, net

—

8,337

Proceeds from Sales of Property and Equipment

128

130

Purchases of Investments

(83
)
(11,217
)
Proceeds from Sales and Maturities of Investments

2

10,892

Net Cash (Used in) Provided by Investing Activities

(1,364
)
5,611

CASH FLOWS FROM FINANCING ACTIVITIES:

(Repayments of) Proceeds from Short-Term Borrowings, net

(1,740
)
748

Repayments of Long-Term Debt

(308
)
(17
)
Proceeds from Sale of Common Stock

55

222

Repurchase of Common Stock

(70
)
(10,814
)
Cash Dividends Paid to Stockholders

(1,141
)
(1,330
)
Other

209

374

Net Cash Used in Financing Activities

(2,995
)
(10,817
)

Increase (Decrease) in Cash and Cash Equivalents

435

(44
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents

(16
)
(21
)
Cash and Cash Equivalents at Beginning of Period

445

600

Cash and Cash Equivalents at End of Period

$
864

$
535


	Three Months Ended
	May 3,			May 4,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings	$	514		$	356
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization		453			474
Impairment Related to Rationalization Charges		-			313
Stock-Based Compensation Expense		54			52
Changes in Assets and Liabilities:
Increase in Receivables, net		(337	)		(322	)
Increase in Merchandise Inventories		(734	)		(926	)
Increase in Other Current Assets		(127	)		(96	)
Increase in Accounts Payable and Accrued Expenses		1,798			1,965
Increase in Deferred Revenue		82			108
Increase in Income Taxes Payable		67			277
Decrease in Deferred Income Taxes		(94	)		(222	)
Other		51			122

Net Cash Provided by Operating Activities		1,727			2,101


CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures		(172	)		(449	)
Proceeds from Sales of Property and Equipment		70			10
Proceeds from Sales and Maturities of Investments		19			1

Net Cash Used in Investing Activities		(83	)		(438	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of Short-Term Borrowings, net		-			(1,249	)
Repayments of Long-Term Debt		(4	)		(9	)
Proceeds from Sale of Common Stock		2			15
Cash Dividends Paid to Stockholders		(381	)		(379	)
Other		426			267

Net Cash Provided by (Used in) Financing Activities		43			(1,355	)


Increase in Cash and Cash Equivalents		1,687			308
Effect of Exchange Rate Changes on Cash and Cash Equivalents		8			14
Cash and Cash Equivalents at Beginning of Period		519			445

Cash and Cash Equivalents at End of Period	$	2,214		$	767

See accompanying Notes to Consolidated Financial Statements.

~~Table of Contents~~

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Amounts In Millions)

Three Months Ended

Nine Months Ended

November 2,
2008

October 28,
2007

November 2,
2008

October 28,
2007

Net Earnings

$
756

$
1,091

$
2,314

$
3,724

Other Comprehensive (Loss) Income:

Foreign Currency Translation Adjustments

(554
)
275

(574
)
557

Cash Flow Hedges (1)

(8
)
1

(3
)
1

Unrealized Loss on Investments (1)

(1
)
—

(1
)
—

Total Other Comprehensive (Loss) Income

(563
)
276

(578
)
558

Comprehensive Income

$
193

$
1,367

$
1,736

$
4,282


	Three Months Ended
	May 3,			May 4,
	2009			2008
Net Earnings	$	514		$	356
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments		41			(41	)
Cash Flow Hedges⁽¹⁾		(3	)		(3	)
Unrealized Gain on Investments⁽¹⁾		1			-

Total Other Comprehensive Income (Loss):		39			(44	)

Comprehensive Income	$	553		$	312

~~(1) These components of comprehensive income are reported net of income taxes.~~


(1)		These components of comprehensive income are reported net of income taxes.

See accompanying Notes to Consolidated Financial Statements.

~~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 ~~3, 2008,~~1, 2009, 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 105,000 square feet in size. 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, home improvement contractors, tradespeople and building maintenance professionals. ~~Information related to the Company’s discontinued HD Supply business is discussed in Note 4.~~

Valuation Reserves

As of ~~November 2, 2008~~May 3, 2009 and February ~~3, 2008,~~1, 2009, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material.

~~Goodwill and Other Intangible Assets~~

~~The Company completed its annual assessment on the recoverability of Goodwill and indefinite lived intangible assets in the third quarter of fiscal 2008 and recorded no impairment charges.~~

2. ~~CHANGE IN ACCOUNTING PRINCIPLE~~

During the first nine months of fiscal 2008, the Company implemented a new enterprise resource planning (“ERP”) system, including a new inventory system, for its retail operations in Canada. Along with this implementation, the Company changed its method of accounting for Merchandise Inventories for its retail operations in Canada from the lower of cost (first-in, first-out) or market, as determined by the retail inventory method, to the lower of cost or market using a weighted-average cost method. As of the end of the third quarter of fiscal 2008, the implementation of the new inventory system and related conversion to the weighted-average cost method for Canadian retail operations was substantially complete.

The new ERP system allows the Company to utilize the weighted-average cost method which the Company believes will result in greater precision in the costing of inventories and a better matching of cost of sales with revenue generated. The effect of the change on the Merchandise Inventories and Retained Earnings balances at the end of the third quarter of fiscal 2008 was not material. Prior to the inventory system conversion, the Company could not determine the impact of the change to the weighted-average cost method and therefore, could not retroactively apply the change to periods prior to fiscal 2008.

~~Table of Contents~~

~~THE HOME DEPOT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~3. STORE~~ RATIONALIZATION CHARGES

In ~~the first quarter of~~ fiscal 2008, the Company reduced its ~~strategic plan for~~ square footage growth plans to improve free cash flow, provide stronger returns for the Company and invest in its existing stores to continue improving the customer experience. As a result of this store rationalization plan, the Company determined that it ~~will~~would no longer pursue the opening of approximately 50 U.S. stores that had been in its new store pipeline. The Company expects to dispose of or sublet these pipeline locations ~~within 30 months.~~over varying periods. The Company also ~~announced that it would close~~closed 15 underperforming U.S. stores ~~that did not meet the Company’s targeted returns. These stores closed~~ in the second quarter of fiscal 2008, and the Company expects to dispose of or sublet those locations over varying periods.

Also in fiscal 2008, the ~~stores within 30 months.~~ Company announced that it would exit its EXPO, THD Design Center, Yardbirds and HD Bath businesses (the “Exited Businesses”) in order to focus on its core The Home Depot stores. The Company closed the Exited Businesses in the first quarter of fiscal 2009, and expects to dispose of or sublet those locations over varying periods. These steps impacted approximately 5,000 associates in those locations, their support functions and their distribution centers.

Finally, in January 2009 the Company also restructured its support functions to better align the Company’s cost structure with the current economic environment. These actions impacted approximately 2,000 associates.

The Company recognized ~~$564 million in~~ total pretax charges ~~for~~of $117 million in the first ~~nine months~~quarter of fiscal 2009 and $951 million for fiscal 2008 related to these actions (collectively, the ~~store rationalization plan, including $3 million in the third quarter of fiscal 2008.~~“Rationalization Charges”). The significant components of the total expected charges and charges incurred to date are as follows ~~(in~~(amounts in millions):

Total Expected
Charges

Fiscal
2008
Charges

Total
Remaining

Asset impairments

$
313

$
313

$
—

Lease obligation costs, net

226

226

—

Inventory markdowns

10

10

—

Severance

5

5

—

Other

32

10

22

Total

$
586

$
564

$
22

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


			Fiscal		First Quarter		Estimated
	Total Expected		2008		Fiscal 2009		Remaining
	Charges		Charges		Charges		Charges
Asset impairments	$	580	$	580	$	-	$	-
Lease obligation costs, net		339		252		79		8
Severance		80		78		2		-
Other		103		41		36		26

Total	$	1,102	$	951	$	117	$	34

Inventory markdown costs in Other are included in Cost of Sales in the accompanying Consolidated Statements of Earnings, and costs related to asset impairments, lease obligations, severance and other are included in Selling, General and Administrative expenses. Asset impairment charges, including contractual costs to complete certain assets, were determined based on fair market value using market data for each individual property. Lease ~~obligations~~obligation costs represent the present value of contractually obligated rental payments offset by estimated sublet income, ~~and~~including estimates of the time required to sublease the locations. The payments related to the leased locations therefore are not generally incremental uses of cash.

~~Activity related~~

The assumptions used to ~~store rationalization charges for the first nine months of fiscal 2008 was as follows (in millions):~~

Fiscal
2008
Charges

Cash Payments

Non-cash
Uses

Balance,
November 2,
2008

Asset impairments

$
313

$
—

$
276

$
37

Lease obligation costs, net

226

38

—

188

Inventory markdowns

10

10

—

—

Severance

5

5

—

—

Other

10

8

2

—

Total

$
564

$
61

$
278

$
225

~~Table of Contents~~

~~THE HOME DEPOT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~4. DISCONTINUED OPERATIONS~~

On August 30, 2007, the Company closed the sale of HD Supply. The Company received $8.3 billion of net proceeds for the sale of HD Supply and recognized a $4 million loss, net of tax, on the sale of the business, subject to the finalization of working capital adjustments.

In connection with the sale, the Company purchased a 12.5% equity interest in the newly formed HD Supply for $325 million, which is included at cost in Other Assets in the accompanying Consolidated Balance Sheets. At the end of the third quarter of fiscal 2008, there were indications based on market conditions that the carrying value of this investment was greater thandetermine the fair ~~value at that date. The Company believes any decline in fair value~~market values used to ~~be temporary in nature,~~record asset impairment and ~~therefore has not recorded an impairment. The Company will continue to monitor the status of this investment.~~

Also in connection with the sale, the Company guaranteed a $1.0 billion senior secured loan (“guaranteed loan”) of HD Supply. The fair value of the guarantee, which was determined to be approximately $16 million, is recordedlease obligation costs include significant unobservable inputs, or Level 3 data, as a liability of the Company and included in Other Long-Term Liabilities. The guaranteed loan has a term of five years and the Company would be responsible for up to $1.0 billion and any unpaid interest in the event of non-paymentdefined by ~~HD Supply. The guaranteed loan is collateralized by certain assets of HD Supply.~~

~~In accordance with Statement~~Statements of Financial Accounting Standards No. ~~144, “Accounting~~157, “Fair Value Measurements.”

Activity related to Rationalization Charges for the ~~Impairment or Disposal~~first quarter of ~~Long-Lived Assets” (“SFAS 144”), the Company reclassified the results of HD Supply~~fiscal 2009 was as ~~discontinued operations in its Consolidated Statements of Earnings for all periods presented.~~

The following table presents Net Sales and Earnings of HD Supply which have been reclassified to discontinued operations in the Consolidated Statements of Earnings for the three and nine months ended November 2, 2008 and October 28, 2007follows (amounts in millions):

Three Months Ended

Nine Months Ended

November 2,
2008

October 28,
2007

November 2,
2008

October 28,
2007

Net Sales

$
—

$
1,156

$
—

$
7,391

Earnings (Loss) Before Provision for Income Taxes

$
—

$
(63
)
$
—

$
291

Benefit (Provision) for Income Taxes

—

87

—

(102
)
Loss on Discontinued Operations, net

—

(4
)
—

(4
)
Earnings from Discontinued Operations, net of tax

$
—

$
20

$
—

$
185


	Accrued								Accrued
	Balance,		First Quarter						Balance,
	February 1,		Fiscal 2009		Cash		Non-cash		May 3,
	2009		Charges		Uses		Uses		2009
Asset impairments	$	38	$	-	$	-	$	11	$	27
Lease obligation costs, net		213		79		6		-		286
Severance		72		2		44		-		30
Other		20		36		55		1		-

Total	$	343	$	117	$	105	$	12	$	343

5.3. BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES

The reconciliation of basic to diluted weighted average common shares for the three ~~and nine~~ months ended ~~November 2,~~May 3, 2009 and May 4, 2008 ~~and October 28, 2007~~ was as follows (amounts in millions):

Three Months Ended

Nine Months Ended

November 2,
2008

October 28,
2007

November 2,
2008

October 28,
2007

Weighted average common shares

1,681

1,810

1,681

1,910

Effect of potentially dilutive securities:

Stock Plans

6

5

5

8

Diluted weighted average common shares

1,687

1,815

1,686

1,918


	Three Months Ended
	May 3,		May 4,
	2009		2008
Weighted average common shares		1,683		1,679
Effect of potentially dilutive securities:
Stock plans		6		4

Diluted weighted average common shares		1,689		1,683

Stock plans include shares granted under the Company’s employee stock plans. Options to purchase ~~50.3~~53.5 million and ~~46.9~~53.3 million shares of common stock for the three months ended ~~November 2,~~May 3, 2009 and May 4, 2008, ~~and October 28, 2007, respectively, and options to purchase 51.9 million and 41.2 million shares of common stock for the nine months ended November 2, 2008 and October 28, 2007,~~ respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive.

~~Table of Contents~~

THE HOME DEPOT, INC. AND SUBSIDIARIES

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 ~~November 2, 2008,~~May 3, 2009, and the related Consolidated Statements of Earnings, Cash Flows and Comprehensive Income for the three-month ~~and nine-month~~ periods ended ~~November 2, 2008~~May 3, 2009 and ~~October 28, 2007, and the related Consolidated Statements of Cash Flows for the nine-month periods ended November 2, 2008 and October 28, 2007.~~May 4, 2008. 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 ~~3, 2008,~~1, 2009, and the related Consolidated Statements of Earnings, Stockholders’ Equity and Comprehensive Income, and Cash Flows for the year then ended (not presented herein); and in our report dated March ~~28, 2008,~~26, 2009, 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 ~~3, 2008,~~1, 2009, 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
June 3, 2009

~~/s/ KPMG LLP~~

~~Atlanta, Georgia~~

~~December 3, 2008~~

~~Table of Contents~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Certain statements regarding our future performance ~~made~~constitute “forward-looking statements” as defined in ~~this report are forward-looking statements.~~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, impact of cannibalization, store openings and closures, state of the economy, state of the residential construction, ~~and~~ housing ~~markets, state of the~~and home improvement ~~market,~~markets, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of charges, the planned recapitalization of the Company, timing of the completion of such recapitalization and the ability to issue debt securities on terms and at rates acceptable to us.

Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. Such 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. ~~Some of the material~~Such risks and uncertainties ~~that could cause actual results to differ materially from our expectations and projections~~ include, but are not limited ~~to: economic conditions in North America and in other countries where we operate; changes in our cost structure; our ability~~ to, attract, train and retain highly qualified associates; significant changes to labor laws, including the possible adoption of the Employee Free Choice Act of 2007; risks associated with our distribution strategies and planned RDC roll-out; conditions affecting customer transactions and average ticket, including, but not limited to, improving and streamlining operations, customers’ in-store experience and other factorsthose described in Item 1A, “Risk Factors” ofand elsewhere in our Annual Report on Form 10-K for the fiscal year ended February 1, 2009 as filed with the Securities and Exchange Commission (“SEC”) on April ~~3, 2008. You should read such information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item~~ 2, ~~and our Financial Statements and related notes in Item 1.~~2009 (“Form 10-K”). The risks and uncertainties described in the Form 10-K include the considerable risks associated with the current economic environment and the possible adverse effects on the Company’s results of operations and financial condition.

~~We note~~ You should read such information ~~for investors as permitted by the Private Securities Litigation Reform Act~~in conjunction with our Financial Statements and related notes in Item 1 and “Management’s Discussion and Analysis of ~~1995.~~Financial Condition and Results of Operations” in Item 2 of 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 such ~~statements.~~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 ~~third~~first quarter of fiscal ~~2008,~~2009, we reported Net Earnings ~~from Continuing Operations~~ of ~~$756~~$514 million and Diluted Earnings per Share ~~from Continuing Operations~~ of ~~$0.45~~$0.30 compared to Net Earnings ~~from Continuing Operations~~ of ~~$1.1 billion~~$356 million and Diluted Earnings per Share ~~from Continuing Operations~~ of ~~$0.59~~$0.21 for the ~~third~~first quarter of fiscal 2007. For the first nine months of fiscal 2008, we reported Net Earnings from Continuing Operations of $2.3 billion and Diluted Earnings per Share from Continuing Operations of $1.37 compared to Net Earnings from Continuing Operations of $3.5 billion and Diluted Earnings per Share from Continuing Operations of $1.85 for the first nine months of fiscal 2007. 2008. Our gross profit margin was 33.7% and our operating margin was ~~7.4%~~6.1% for the ~~third~~first quarter of fiscal ~~2008. For the first nine months of fiscal 2008, our~~2009 compared to gross profit margin ~~was 33.6%~~of 33.9% and ~~our~~ operating margin ~~was 7.2%.~~

~~As a result~~of 4.1% for the first quarter of fiscal 2008.

The results for the first quarter of fiscal 2009 and 2008 reflect the impact of several strategic actions initiated in fiscal 2008. These strategic actions include store rationalization charges related to the closing of 15 underperforming stores and the removal of approximately 50 stores from our new store opening pipeline, business rationalization charges related to the exit of our ~~store rationalization plan announced~~EXPO, THD Design Center, Yardbirds and HD Bath businesses (the “Exited Businesses”) and charges related to the restructuring of support functions (collectively, the “Rationalization Charges”). These actions resulted in pretax Rationalization Charges of $117 million in the first quarter of fiscal ~~2008, we closed 15 stores~~2009 and removed approximately 50 stores from the future growth pipeline. We recognized $564 million in total pretax charges for the first nine months of fiscal 2008 related to the store rationalization plan, including $3$543 million in the ~~third~~first quarter of fiscal 2008. ~~For the first nine months of fiscal 2008,~~Excluding these Rationalization Charges, Net Earnings ~~from Continuing Operations~~ were ~~$2.7 billion~~$587 million and Diluted Earnings per Share ~~from Continuing Operations~~ were ~~$1.58,~~$0.35 for the first quarter of fiscal 2009 compared to Net Earnings of $697 million and Diluted Earnings per Share of $0.41 for the first quarter of fiscal 2008. Also excluding the ~~store rationalization charge.~~ ~~Our~~Rationalization Charges, our gross profit margin was ~~33.6%~~34.0% for both the first quarter of fiscal 2009 and 2008 and our operating margin was ~~8.2%~~6.9% for the first ~~nine months~~quarter of fiscal ~~2008, excluding~~2009 compared to 7.1% for the ~~store rationalization charge.~~

first quarter of fiscal 2008.

Net Sales decreased ~~6.2%~~9.7% to ~~$17.8 billion for the third quarter of fiscal 2008 from $19.0 billion for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, Net Sales decreased 5.0%~~ ~~to $56.7 billion from $59.7~~$16.2 billion for the first ~~nine months~~quarter of fiscal ~~2007.~~2009 from $17.9 billion for the first quarter of fiscal 2008. The slowdown in the global economy and weakness in the U.S. residential construction and home

~~Table of Contents~~

improvement markets negatively ~~affected~~impacted our Net Sales for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2008.~~2009. Our comparable store sales declined ~~8.3%~~10.2% in the ~~third~~first quarter of fiscal ~~2008~~2009 driven primarily by a ~~5.5%~~2.6% decline in comparable store customer transactions, as well as ~~a 2.8%~~an 8.2% decline in our average ticket to ~~$55.86. Due to~~$52.67. Comparable store sales for our U.S. stores declined 8.6% in the 53^rd ~~week in fiscal 2007, the third~~first quarter of fiscal ~~2008 was negatively impacted by a seasonal timing change that reduced Net Sales by approximately $225 million and comparable store sales by approximately 120 basis points.~~2009.

~~We remain committed~~

Despite the continuing difficult economic environment in the first quarter of fiscal 2009, we continued to ~~the long-term health of~~focus on our core retail business, ~~through our strategy of~~ investing in our ~~retail~~associates and stores and improving our customer service. We continued to improve our customer service by rolling out our new Customer FIRST training to all store associates and support staff in the first quarter of fiscal 2009. This training has brought simplification and focus across the business, and ~~through~~we are seeing the ~~following five key priorities:~~

~~Associate Engagement –~~ benefit of this in improved customer service ratings.

We ~~have taken a number of actions to improve associate engagement by changing~~also made significant progress on our merchandising tools in the ~~way our associates are compensated, recognized~~U.S. that helped us manage markdown and ~~rewarded, including restructuring our success sharing program, an incentive program for our hourly associates driven by individual store performance. As of~~clearance activity and better control inventory. At the end of the ~~third~~first quarter of fiscal ~~2008, 61% of~~2009, our ~~stores would be eligible to receive a success sharing payout for~~inventory had decreased by $1.2 billion from the ~~second half of fiscal 2008 compared to 57% of stores for the same period last year.~~

Product Excitement – We continue to work on our merchandising transformation by redefining how we run our business, implementing a portfolio strategy on products and creating new tools to support better merchandising decision making. As a result, we saw unit share gains against the market in several key merchandising classes. For example, insulation, carpet, ceramic tile, power tools, toilets, faucets, grills and molding all gained share in the thirdfirst quarter of fiscal 2008. ~~Many~~Additionally, our average inventory per store decreased by 8.8% at the end of ~~these classes received concentrated merchandising focus and investment, utilizing our portfolio strategy. For example, in molding, we updated~~ the ~~assortments regionally, refined~~first quarter of fiscal 2009 compared to the ~~merchandising sets, improved the value proposition and added point~~first quarter of sale information making it easier for the customer to shop and make a selection. Energy efficient products also performed well this quarter. We will continue to focus on energy efficient products as we enter the holiday season, including an expanded assortment of LED lighting. Our gift centers have strong values on hand tools sets and power tools across a variety of price points, and we are ready to service the storage and organization needs of our customers following the holidays.

Shopping Environment – We continued our store reinvestment program by completing an aggressive list of maintenance projects, including the completion of our lighting upgrade, as well as more complex repair and maintenance activities for hundreds of other stores. In addition to programmatic maintenance, our integrated field and support center teams have rolled out store standards to all stores. We developed and piloted common guidelines on store appearance and shopability, including standards for front apron merchandising, wingstack usage, signage presentation, fixturing and off-shelf product. This initiative helps reduce the amount of time our store managers spend on these issues, removes unnecessary clutter from the aisles and implements a basic consistent approach in terms of appearance.

~~Product Availability –~~last year. We continued our supply chain transformation to improve product availability. We ~~have improved our in-stock position, our inventory management systems and processes, and are rolling out new logistics processes and systems. We~~ opened our ~~fourth~~sixth Rapid Deployment Center (“RDC”) in the ~~third~~first quarter of fiscal ~~2008,~~2009, and our RDCs now serve approximately ~~400~~600 of our stores. We plan to open ~~one~~ additional ~~RDC~~RDCs in fiscal 2009 and expect that they will serve approximately 1,000 of our stores by the ~~fourth quarter~~end of fiscal ~~2008 and~~2009. We remain committed to our overall roll-out strategy for RDCs, supporting our goal of increasing our central distribution penetration.

Own the Pro – We have made significant improvements in the services we provide our pro customers, particularly through our pro bid room. The pro bid room, which is available in all of our stores, allows us to leverage the buying power of The Home Depot for the benefit of our pro customers. Our direct ship program allows us to have large orders delivered from our vendors to the customer’s job site directly, reducing handling, lead-time and costs while building loyalty with the pro customer.

We opened 14five new stores during the ~~third~~first quarter of fiscal ~~2008, including two relocations,~~2009 and ~~temporarily~~ closed ~~one store in Mexico due~~41 stores related to ~~a fire,~~our Exited Businesses, bringing our total store count to ~~2,268.~~2,238. As of the end of the ~~third~~first quarter of fiscal ~~2008, 257 stores,~~2009, 265, or approximately ~~11%~~12%, of our stores were located in Canada, Mexico or China compared to ~~236~~247, or approximately 11%, as of the end of the ~~third~~first quarter of fiscal ~~2007.~~

2008.

We generated ~~$4.8~~$1.7 billion of cash flow from operations in the first ~~nine months~~quarter of fiscal ~~2008.~~2009. We used ~~this~~ cash flow to ~~repay $2.0 billion~~pay $381 million of ~~short-term debt~~dividends and ~~other debt obligations,~~ fund ~~$1.4 billion~~$172 million in capital ~~expenditures and pay $1.1 billion of dividends.~~

expenditures.

At the end of the ~~third~~first quarter of fiscal ~~2008,~~ 2009, our long-term debt-to-equity ratio was ~~56.3%~~53.7% compared to ~~65.0%~~64.0% at the end of the ~~third~~first quarter of fiscal ~~2007.~~2008. Our return on invested capital ~~for continuing operations~~ (computed on the average of beginning and ending long-term debt and equity for the trailing twelve months) was ~~11.6%~~10.0% for the ~~third~~first quarter of fiscal ~~2008~~2009 compared to ~~15.0%~~12.0% for the ~~third~~first quarter of fiscal ~~2007.~~2008. This decrease reflects the decline in our operating profit, ~~and~~which includes the ~~store~~

~~Table~~impact of ~~Contents~~

~~rationalization charge.~~the Rationalization Charges. Excluding ~~the store rationalization charge,~~Rationalization Charges, our return on invested capital was 11.1% for ~~continuing operations was 12.7%.~~the first quarter of fiscal 2009 compared to 13.0% for the first quarter of fiscal 2008.

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. We believe the information presented in our Management’s Discussion and Analysis of Financial Condition and Results of Operations provides an understanding of our business, our operations and our financial condition.

% of Net Sales

% Increase (Decrease)

Three Months Ended

Nine Months Ended

in Dollar Amounts

November 2,
2008

October 28,
2007

November 2,
2008

October 28,
2007

Three
Months

Nine
Months

NET SALES

100.0
%
100.0
%
100.0
%
100.0
%
(6.2
)%
(5.0
)%

GROSS PROFIT

33.7

33.4

33.6

33.4

(5.4
)
(4.6
)

Operating Expenses:

Selling, General and Administrative

23.8

21.9

24.0

21.3

2.0

7.0

Depreciation and Amortization

2.5

2.3

2.4

2.1

3.5

7.4

Total Operating Expenses

26.3

24.1

26.4

23.4

2.1

7.1

OPERATING INCOME

7.4

9.3

7.2

10.0

(25.0
)
(31.7
)

Interest (Income) Expense:

Interest and Investment Income

—

(0.2
)
—

(0.1
)
(79.3
)
(80.6
)
Interest Expense

0.9

0.8

0.9

0.8

1.9

(2.4
)
Interest, net

0.8

0.7

0.8

0.7

20.8

9.8

EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES

6.6

8.6

6.4

9.3

(28.5
)
(34.9
)
Provision for Income Taxes

2.3

3.0

2.3

3.4

(26.8
)
(35.4
)
EARNINGS FROM CONTINUING OPERATIONS

4.3
%
5.7
%
4.1
%
5.9
%
(29.4
)%
(34.6
)%

Note: Certain percentages may not sum to totals due to rounding.

SELECTED SALES DATA

Number of Customer Transactions (in millions)

315

326

989

1,021

(3.4
)%
(3.1
)%
Average Ticket

$
55.86

$
57.48

$
56.97

$
58.26

(2.8
)%
(2.2
)%
Weighted Average Weekly Sales Per Operating Store (in thousands)

$
597

$
651

$
640

$
696

(8.3
)%
(8.0
)%
Weighted Average Sales per Square Foot

$
295.95

$
323.36

$
317.26

$
345.72

(8.5
)%
(8.2
)%
Comparable Store Sales Decrease (%)⁽¹⁾

(8.3
)%
(6.2
)%
(7.5
)%
(6.3
)%
N/A

N/A


	% of Net Sales
							% Increase
							(Decrease)
							in Dollar
	Three Months Ended						Amounts

	May 3,			May 4,			2009
	2009			2008			vs. 2008
NET SALES		100.0	%		100.0	%		(9.7	)%

GROSS PROFIT		33.7			33.9			(10.2	)

Operating Expenses:
Selling, General and Administrative		25.0			27.4			(17.5	)
Depreciation and Amortization		2.6			2.5			(3.6	)

Total Operating Expenses		27.6			29.8			(16.4	)


OPERATING INCOME		6.1			4.1			34.6

Interest (Income) Expense:
Interest and Investment Income		—			—			66.7
Interest Expense		1.1			0.9			7.8

Interest, net		1.1			0.9			6.7


EARNINGS BEFORE PROVISION FOR INCOME TAXES		5.0			3.2			42.7
Provision for Income Taxes		1.8			1.2			39.9

NET EARNINGS		3.2	%		2.0	%		44.4	%


Note: Certain percentages may not sum to totals due to rounding.

SELECTED SALES DATA
Number of Customer Transactions (in millions)		310			314			(1.3	)%
Average Ticket	$	52.67		$	57.36			(8.2	)
Weighted Average Weekly Sales Per Operating Store (in thousands)	$	552		$	616			(10.4	)
Weighted Average Sales per Square Foot	$	273		$	305			(10.5	)%
Comparable Store Sales Decrease (%)⁽¹⁾		(10.2	)%		(6.5	)%		N/A

~~(1)~~
(1)		Includes Net Sales at locations open greater than 12 months, including relocated and remodeled stores. Retail stores become comparable on the Monday following their 365^thday 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.

~~Table of Contents~~

RESULTS OF OPERATIONS

Net Sales for the ~~third~~first quarter of fiscal ~~2008~~2009 decreased ~~6.2%~~9.7%, or ~~$1.2~~$1.7 billion, to ~~$17.8~~$16.2 billion from ~~$19.0~~$17.9 billion for the ~~third~~first quarter of fiscal ~~2007. For the first nine months of fiscal 2008, Net Sales decreased 5.0%, or $3.0 billion, to $56.7 billion from $59.7 billion for the comparable period in fiscal 2007.~~

2008. The decrease in Net Sales for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2008~~2009 reflects the impact of negative comparable store sales, partially offset by Net Sales of $220 million from new ~~stores in~~stores. Total comparable store sales decreased 10.2% for the first ~~nine months of fiscal 2008 of $1.5 billion, including $439 million in the third~~ quarter of fiscal ~~2008.~~ ~~Comparable store sales decreased 8.3% for the third quarter of fiscal 2008~~2009 compared to a decrease of ~~6.2%~~6.5% for the ~~third~~first quarter of fiscal ~~2007. For the first nine months of fiscal 2008, comparable store sales decreased 7.5% compared to a decrease of 6.3% for the same period of fiscal 2007.~~2008. Due to the 53^rd week in fiscal 2007, the ~~third~~first quarter of fiscal 2008 ~~was negatively impacted by~~benefited from a seasonal timing change that ~~reduced Net Sales by approximately $225 million and comparable store sales by approximately 120 basis points. For the first nine months of fiscal 2008, this seasonal timing change~~ added approximately ~~$151~~$536 million to Net Sales and approximately 30270 basis points to our comparable store ~~sales.~~

sales in the first quarter of fiscal 2008.

There were a number of factors that contributed to our comparable store sales decline. In the first quarter of fiscal 2009, we saw significant strengthening of the U.S. dollar against all currencies. Fluctuating exchange rates negatively impacted our total Company comparable store sales by approximately 190 basis points compared to last year, partially offset by a 30 basis point benefit arising from comparable store sales growth outside of the U.S. The U.S. residential construction and home improvement markets continued to be soft, and consumers were challenged due to higher unemployment and an ~~across the board~~across-the-board tightening of consumer credit availability. We saw relative strength in Building Materials, ~~Hardware,~~Flooring, Paint, Plumbing ~~Garden~~ and ~~Paint~~Garden/Seasonal as comparable store sales in these areas were above ~~or at~~ the Company average for the ~~third~~first quarter of fiscal ~~2008.~~2009. Comparable store sales for Lumber, ~~Flooring,~~Hardware, Electrical, Kitchen/Bath ~~Electrical~~ and Millwork were below the Company average for the ~~third~~first quarter of fiscal ~~2008. The softness~~2009. Softness in ~~our big ticket~~construction and discretionary categories as well as the stronger U.S. dollar negatively impacted average ticket, which decreased ~~2.8%~~8.2% to ~~$55.86~~$52.67 for the ~~third~~first quarter of fiscal ~~2008 and decreased 2.2% to $56.97 for the first nine months of fiscal 2008.~~

Our international businesses began to feel some of the economic pressure that we have experienced in the U.S. in the third quarter of fiscal 2008. Our comparable store sales for Canada and China were at the Company average for the third quarter of fiscal 2008. For the first nine months of fiscal 2008, comparable store sales for Canada were above the Company average and were positive for China. Our stores in Mexico posted double digit comparable store sales in both the third quarter and first nine months of fiscal 2008.

In order to meet our customer service objectives, we strategically open stores near market areas served by existing stores (“cannibalize”) to enhance service levels, gain incremental sales and increase market penetration. Our new stores cannibalized approximately 7% of our existing stores as of the third quarter of fiscal 2008, which had a negative impact to comparable store sales of approximately 1%.

2009.

Gross Profit decreased ~~5.4%~~10.2% to ~~$6.0 billion for the third quarter of fiscal 2008 from $6.3 billion for the third quarter of fiscal 2007. Gross Profit decreased 5.0% to $19.0~~$5.5 billion for the first ~~nine months~~quarter of fiscal ~~2008~~2009 from ~~$19.9~~$6.1 billion for the first ~~nine months~~quarter of fiscal ~~2007.~~2008. Gross Profit as a percent of Net Sales ~~increased 27~~decreased 22 basis points to 33.7% for the ~~third~~first quarter of fiscal ~~2008~~2009 compared to ~~33.4%~~33.9% for the ~~third~~first quarter of fiscal ~~2007. For~~2008. Our U.S. stores reported 29 basis points of gross margin expansion in the first ~~nine months~~quarter of fiscal ~~2008,~~2009 driven by gross margin improvements in certain commodity classes, some shift in sales penetration and improved shrink performance. Through our focused bay portfolio approach, our U.S. merchants continued to introduce new lower prices while growing overall gross margin. The U.S. gross profit margin expansion was offset by markdowns taken in connection with closing our Exited Businesses, which negatively impacted Gross Profit as a percent of Net Sales ~~was 33.6% compared with 33.4% for the comparable period of fiscal 2007, an increase of 16~~by 24 basis points. The increase in Gross Profit as a percent of Net Sales for the third quarter of fiscal 2008 reflects a 23 basis point benefit from lower markdowns coupled with a smarter approach to promotions that covered the cost of our new lower price program and a 14 basis point benefit resulting from a decline in the penetration in our kitchen and appliance category. These increases were partially offset by a contraction of 10Additionally, we realized 27 basis points ~~associated with clearance activities in connection with the one-time conversion~~ of gross margin contraction arising from our ~~Canadian stores to their new enterprise resource planning system.~~

non-U.S. businesses, principally Canada.

Selling, General and Administrative Expense (“SG&A”) ~~increased 2.0%~~decreased 17.5% to ~~$4.2 billion for the third quarter of fiscal 2008 from $4.1 billion for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, SG&A increased 7.0% to $13.6 billion from $12.7~~$4.0 billion for the first ~~nine months~~quarter of fiscal ~~2007.~~2009 from $4.9 billion for the first quarter of fiscal 2008. As a percent of Net Sales, SG&A was ~~23.8%~~25.0% for the ~~third~~first quarter of fiscal ~~2008~~2009 compared to ~~21.9%~~27.4% for the ~~third~~first quarter of fiscal ~~2007. For~~2008. Excluding the ~~first nine months of fiscal 2008,~~Rationalization Charges, SG&A as a percent of Net Sales was ~~24.0% compared to 21.3% for the same period last year. Excluding the store rationalization charge, SG&A as a percent of Net Sales for the first nine months of fiscal 2008 was 23.0%~~24.4%, an increase of ~~173~~five basis points over the adjusted prior ~~year. For~~year period. This increase reflects expense deleverage in the ~~third quarter of fiscal 2008,~~ ~~the increase in SG&A as a percent of Net Sales reflects the impact of~~ negative comparable store sales ~~as well as an increase of approximately 70 basis points due to higher~~environment, offset by a lower cost of credit associated with the private label credit card ~~program. For the third quarter~~program and ~~first nine months of fiscal 2008, the penetration~~

solid expense control.

~~Table of Contents~~

~~of the private label credit card sales was 28% for both periods, as compared to 30% and 29% for the third quarter and first nine months of fiscal 2007, respectively.~~

Depreciation and Amortization ~~increased 3.5%~~decreased 3.6% to ~~$446~~$428 million for the ~~third~~first quarter of fiscal ~~2008~~2009 from ~~$431~~$444 million for the ~~third~~first quarter of fiscal ~~2007. Depreciation and Amortization was $1.3 billion for the third quarter of both fiscal 2008 and fiscal 2007.~~2008. Depreciation and Amortization as a percent of Net Sales was 2.6% for the first quarter of fiscal 2009 and 2.5% for the ~~third~~first quarter of fiscal ~~2008 compared to 2.3% for~~2008. Excluding the ~~third quarter of fiscal 2007,~~Rationalization Charges, Depreciation and ~~was 2.4% for the first nine months of fiscal 2008 compared to 2.1% for the same period in fiscal 2007. The increase~~Amortization as a ~~percentage~~percent of Net Sales ~~in both periods was~~increased by 18 basis points from last year, primarily due to sales ~~deleverage and the depreciation of our investments in shorter lived assets like store resets and technology.~~

deleverage.

Operating Income ~~decreased 25.0%~~increased 34.6% to ~~$1.3 billion~~$980 million for the ~~third~~first quarter of fiscal ~~2008~~2009 from ~~$1.8 billion~~$728 million for the ~~third~~first quarter of fiscal ~~2007. Operating Income decreased 31.7% to $4.1 billion for the first nine months of fiscal 2008 from $6.0 billion for the first nine months of fiscal 2007.~~2008. Operating Income as a percent of Net Sales was ~~7.4%~~6.1% for the ~~third~~first quarter of fiscal ~~2008~~2009 compared to ~~9.3%~~4.1% for the ~~third~~first quarter of fiscal ~~2007, and was 7.2% for the first nine months of fiscal 2008 compared to 10.0% for the first nine months of fiscal 2007.~~2008. Excluding the ~~store rationalization charge,~~Rationalization Charges, our Operating Income as a percent of Net Sales was ~~8.2%~~6.9% for the first ~~nine months of fiscal 2008.~~

~~In the third~~ quarter of fiscal ~~2008,~~2009 compared to 7.1% for the first quarter of fiscal 2008.

In the first quarter of fiscal 2009, we recognized ~~$151~~$175 million of net Interest Expense compared to ~~$125~~$164 million in the ~~third~~first quarter of fiscal ~~2007.~~2008. Net Interest Expense as a ~~percentage~~percent of Net Sales was ~~0.8%~~1.1% for the ~~third~~first quarter of fiscal ~~2008 compared to 0.7%~~2009 and 0.9% for the ~~third~~first quarter of fiscal ~~2007.~~2008. The increase in Net Interest Expense ~~included less interest income~~ as a ~~result~~percent of ~~lower investable cash balances offset by lower interest expense~~Net Sales was primarily ~~arising from a favorable tax settlement.~~

due to sales deleverage.

Our combined effective income tax rate ~~for continuing operations~~ decreased to 36.1% for the first ~~nine months~~quarter of fiscal ~~2008~~2009 from ~~36.4%~~36.9% for the comparable period of fiscal ~~2007. The decrease in our effective income tax rate reflects a favorable income tax settlement as well as~~2008, reflecting lower ~~state and~~ foreign effective tax rates.

Diluted Earnings per Share ~~from Continuing Operations~~ were ~~$0.45 and $1.37~~$0.30 for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2008, respectively,~~2009 compared to ~~$0.59 and $1.85 for the third quarter and first nine months of fiscal 2007, respectively.~~ ~~Excluding the store rationalization charge,~~ Diluted Earnings per Share ~~from Continuing Operations~~of $0.21 for the first ~~nine months~~quarter of fiscal ~~2008~~2008. Excluding the Rationalization Charges, Diluted Earnings per Share for the first quarter of fiscal 2009 were ~~$1.58,~~$0.35, a decrease of 14.6% from the first nine months of fiscal 2007. Diluted Earnings per Share were favorably impacted by the repurchase of shares of our common stock related to our tender offer completed in September of fiscal 2007, as well as the repurchase of 2.4 million shares of our common stock for $70 million in the third quarter of fiscal 2008.

~~On August 30, 2007, the Company closed the sale of HD Supply.~~ Discontinued operations for the third quarter and first nine months of fiscal 2007 consist of the results of operations of HD Supply. Net Sales from discontinued operations were $1.2 billion and Earnings from Discontinued Operations, net of tax, were $20 million for the third quarter of fiscal 2007. Net Sales from discontinued operations were $7.4 billion and Earnings from Discontinued Operations, net of tax, were $185 million for the first nine months of fiscal 2007.

To provide clarity, internally and externally, about our operating performance ~~for~~in the first ~~nine months~~quarters of fiscal 2009 and 2008, we supplemented our reporting with non-GAAP measurements to reflect adjustments for the ~~store rationalization charge~~Rationalization Charges as described more fully in Note 32 to the Consolidated Financial ~~Statements.~~Statements, as well as the Net Sales from Exited Businesses during the period from closing announcement to actual closing. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measurements. We believe these non-GAAP measurements provide management and investors with meaningful information to understand and analyze our performance. The following reconciles the non-GAAP measurements ~~reflecting the store rationalization charge~~ to the reported GAAP information for the first ~~nine months~~quarters of fiscal 2009 and 2008:


	Three Months Ended May 3, 2009
*amounts in millions, except per share data*	As					Non-GAAP		% of
	Reported		Adjustments			Measurements		Net Sales
Net Sales	$	16,175	$	221		$	15,954		100.0	%
Cost of Sales		10,725		192			10,533		66.0

Gross Profit		5,450		29			5,421		34.0
Operating Expenses:
Selling, General and Administrative		4,042		143			3,899		24.4
Depreciation and Amortization		428		3			425		2.7

Total Operating Expenses		4,470		146			4,324		27.1

Operating Income		980		(117	)		1,097		6.9
Interest, net		175		-			175		1.1

Earnings Before Provision for Income Taxes		805		(117	)		922		5.8
Provision for Income Taxes		291		(44	)		335		2.1

Net Earnings	$	514	$	(73	)	$	587		3.7	%

Diluted Earnings per Share	$	0.30	$	(0.04	)	$	0.35		N/A


	Three Months Ended May 4, 2008
	As					Non-GAAP		% of
	Reported		Adjustments			Measurements		Net Sales
Net Sales	$	17,907	$	-		$	17,907		100.0	%
Cost of Sales		11,835		10			11,825		66.0

Gross Profit		6,072		(10	)		6,082		34.0
Operating Expenses:
Selling, General and Administrative		4,900		533			4,367		24.4
Depreciation and Amortization		444		-			444		2.5

Total Operating Expenses		5,344		533			4,811		26.9

Operating Income		728		(543	)		1,271		7.1
Interest, net		164		-			164		0.9

Earnings Before Provision for Income Taxes		564		(543	)		1,107		6.2
Provision for Income Taxes		208		(202	)		410		2.3

Net Earnings	$	356	$	(341	)	$	697		3.9	%

Diluted Earnings per Share	$	0.21	$	(0.20	)	$	0.41		N/A

~~Table of Contents~~

~~(Amounts In Millions, Except Per Share Data)~~

As Reported

Store
Rationalization
Charge

Non-GAAP
Measurement

Net Sales

$
56,681

$
—

$
56,681

Cost of Sales

37,651

10

37,641

Gross Profit

19,030

(10
)
19,040

Operating Expenses:

Selling, General and Administrative

13,595

552

13,043

Depreciation and Amortization

1,342

2

1,340

Total Operating Expenses

14,937

554

14,383

Operating Income

4,093

(564
)
4,657

Interest, net

472

—

472

Earnings From Continuing Operations Before Provision for Income Taxes

3,621

(564
)
4,185

Provision for Income Taxes

1,307

(209
)
1,516

Earnings from Continuing Operations

$
2,314

$
(355
)
$
2,669

Diluted Earnings per Share from Continuing Operations

$
1.37

$
(0.21
)
$
1.58

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides ~~us with~~ a significant source of liquidity. During the first ~~nine months~~quarter of fiscal ~~2008,~~2009, Net Cash Provided by Operating Activities was ~~$4.8~~$1.7 billion compared to ~~$5.2~~$2.1 billion for the same period of fiscal ~~2007.~~2008. This change was primarily a result of ~~decreased Net Earnings and improved inventory management.~~

changes in net working capital.

Net Cash Used in Investing Activities for the first ~~nine months~~quarter of fiscal ~~2008~~2009 was ~~$1.4 billion~~$83 million compared to ~~$5.6 billion provided by investing activities~~$438 million for the same period of fiscal ~~2007.~~2008. The ~~change in Net Cash Used in/Provided by Investing Activities~~decrease was primarily the result of ~~$8.3 billion of net proceeds from the sale of HD Supply in the third quarter of fiscal 2007 and $1.1 billion~~$277 million less in capital expenditures ~~than~~in the first quarter of fiscal 2009 compared to the same period ~~in fiscal 2007.~~

~~During~~last year.

Net Cash Provided by Financing Activities for the first ~~nine months~~quarter of fiscal ~~2008,~~2009 was $43 million compared to Net Cash Used in Financing Activities ~~was $3.0 billion compared with $10.8~~of $1.4 billion for the same period of fiscal ~~2007. The decrease in Net Cash Used in Financing Activities~~2008. This change was ~~primarily due to~~ the ~~repurchase~~result of ~~289 million shares of our common stock for $10.7~~$1.2 billion in ~~connection with our tender offer related to the sale~~Repayments of ~~HD Supply~~Short-Term Borrowings in the ~~third~~first quarter of fiscal ~~2007 partially offset by~~ repayments in the first nine months of fiscal 2008 for $1.7 billion of Short-Term Debt outstanding under our commercial paper program and $282 million in debt created under a structured financing arrangement.

2008.

We have commercial paper programs that allow for borrowings up to $3.25 billion. In connection with the programs, we have a back-up credit facility with a consortium of banks for borrowings up to $3.25 billion. As of ~~November 2, 2008,~~May 3, 2009, there were no borrowings outstanding under the commercial paper programs or the related credit facility. The credit facility, which expires in December 2010, contains various restrictive covenants, with all of which we are in compliance. None of the covenants are expected to impact our liquidity or capital resources.

As of ~~November 2, 2008,~~May 3, 2009, we had ~~$874 million~~$2.2 billion in Cash and Short-Term Investments. We believe that our current cash position, access to the debt capital markets and cash flow generated from operations should be sufficient to enable us to complete our capital expenditure programs 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 for other requirements. We intend to use cash flow generated by operations to repay the $1.8 billion in debt coming due in fiscal 2009.

During the third quarter of fiscal 2008, we settled our fair value hedge interest rate swaps with notional amounts of $2.4 billion that previously swapped fixed rate interest on our $3.0 billion 5.40% Senior Notes for variable rate interest. We received $43 million for the settlements which will be amortized to reduce net Interest Expense over the remaining term of the debt.

~~Table of Contents~~

~~RECENT ACCOUNTING PRONOUNCEMENTS~~

In June 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) Emerging Issues Task Force No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP-EITF 03-6-1”). FSP-EITF 03-6-1 clarifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method. FSP-EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. The Company is in the process of evaluating the impact of the adoption of FSP-EITF 03-6-1, but it is not expected to have a material impact on our consolidated financial statements.

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 ~~Annual Report on~~ Form ~~10-K for the year ended February 3, 2008.~~

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) 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 ~~the Securities and Exchange Commission’s~~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 ~~November 2, 2008~~May 3, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The following ~~actions have been filed against~~information updates, and should be read in conjunction with, Item 3, “Legal Proceedings,” of the Company’s Form 10-K. Except as set forth below, there are no other material changes during the first quarter of fiscal 2009 to our disclosure in Item 3 of the Form 10-K.

As discussed on page 11 of the Form 10-K, the Company ~~and,~~established a reserve in ~~some cases, against certain~~the fourth quarter of ~~its~~fiscal 2008 for a tentative settlement, subject to court approval, with the plaintiffs in five current ~~and former officers and directors as described below. Although~~lawsuits in the Superior Court of the County of Los Angeles in California, containing multiple class-action allegations that the Company ~~cannot predict their outcome, it does~~failed to provide meal breaks. Such reserve did not ~~expect these actions, individually or together, will~~ have a material adverse effect on ~~its~~the Company’s consolidated financial condition or results of operations.

Reference is made to pages 12 and 13 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2008 which describes six purported class actions filed against the Company and certain of its current and former officers and directors alleging claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with the Company’s return-to-vendor practices. As previously reported, on July 18, 2007, the trial court granted the defendants’ motions to dismiss without allowing the plaintiffs leave to amend and entered a judgment in favor of the defendants. Thereafter, the plaintiffs appealed. On October 8, 2008, the U.S. Court of Appeals for the Eleventh Circuit issued an order affirming the trial court’s decision.

In compliance with SEC disclosure requirements, the environmental proceeding set forth below involves potential monetary sanctions of $100,000 or more. Although the Company cannot predict the outcome of this proceeding, it does not expect any such outcome to have a material adverse effect on its consolidated financial condition or results of operations.

On September 26, 2008, the Company received an Administrative Order and Notice of Civil Administrative Penalty Assessment from the State of New Jersey Department of Environmental Protection (“DEP”). The Order and Notice seeks a civil penalty for alleged violations of recordkeeping requirements pertaining to the use of generators as determined by the DEP. The Company has requested a hearing to address these issues and has also indicated its willingness to enter into settlement discussions with the DEP.

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 ~~Annual Report on~~ Form ~~10-K for the fiscal year ended February 3, 2008 as filed with the SEC.~~10-K. These risks and uncertainties could materially and adversely affect our business, financial condition and results of operations. The risks and uncertainties described in the Form 10-K include the considerable risks and uncertainties associated with the current economic environment, such as the declining number of new housing starts and home renovations; the state of the credit markets, including the limited availability of mortgages, home equity loans, consumer credit for our retail customers, commercial credit for our professional customers and our suppliers, and the availability and costs of commercial credit generally; reduced consumer spending; lower levels of consumer confidence; increased levels of consumer and commercial delinquencies; and supply interruptions and adverse business circumstances experienced by certain of our suppliers. Some of these risks and uncertainties and certain adverse effects which we experienced during the ~~third~~ fiscal quarter covered by this report (and continue to experience) are described in greater detail in this Form 10-Q in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The risks described in our Form 10-K and set forth above are not the only risks we face. 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.

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

	(a)		During the first quarter of fiscal 2009, the Company issued 381 deferred stock units under The Home Depot, Inc. NonEmployee Directors’ Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. The deferred stock units were credited to the accounts of such nonemployee directors who elected to receive board retainers in the form of deferred stock units instead of cash during the first quarter of fiscal 2009. 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.

			During the first quarter of fiscal 2009, the Company credited 1,411 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 of 1933, as amended, 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 services as described in this plan.

	(c)		Since fiscal 2002, the Company has repurchased shares of its common stock having a value of approximately $27.3 billion pursuant to its share repurchase program. The number and average price of shares purchased in each fiscal month of the first quarter of fiscal 2009 are set forth in the table below:


							Approximate Dollar
	Total				Total Number of		Value of Shares
	Number of		Average		Shares Purchased as		that May Yet Be
	Shares		Price Paid		Part of Publicly		Purchased Under
Period	Purchased⁽¹⁾		Per Share⁽¹⁾		Announced Program⁽²⁾		the Program⁽²⁾
February 2, 2009 - March 1, 2009		3,175	$	20.77		-	$	12,731,893,819
March 2, 2009 - March 29, 2009		100,863	$	21.84		-	$	12,731,893,819
March 30, 2009 - May 3, 2009		1,476	$	25.73		-	$	12,731,893,819

	(1)		These amounts are repurchases pursuant to the Company’s 1997 and 2005 Omnibus Stock Incentive Plans (the “Plans”). Under the Plans, participants may exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Participants in the Plans may also surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. 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.

	(2)		The Company’s common stock repurchase program was initially announced on July 15, 2002. As of the beginning of the first quarter of fiscal 2009, the Board had approved purchases up to $40.0 billion. The program does not have a prescribed expiration date. Given current market conditions, we have suspended the repurchase program until our business and credit markets stabilize.

~~(a)During~~

Item 4. Submission of Matters to a Vote of Security Holders

At the ~~third quarter~~Company’s Annual Meeting of ~~fiscal 2008,~~Shareholders held on May 28, 2009, shareholders of the Company ~~issued 461 deferred stock units under The Home Depot, Inc. NonEmployee Directors’ Deferred Stock Compensation Plan pursuant~~elected the following nominees to the ~~exemption from registration provided by Section 4(2)~~Board of Directors to serve a one-year term. Votes cast were as follows:


F. Duane Ackerman		Albert P. Carey

For: 1,430,536,492		For: 1,430,964,521
Against: 20,255,823		Against: 19,830,250
Abstain: 5,359,370		Abstain: 5,356,914

David H. Batchelder		Armando Codina

For: 1,428,052,091		For: 1,386,043,364
Against: 22,665,040		Against: 64,626,358
Abstain: 5,434,554		Abstain: 5,481,963

Francis S. Blake		Bonnie G. Hill

For: 1,418,753,529		For: 1,412,805,801
Against: 32,770,706		Against: 38,145,209
Abstain: 4,627,450		Abstain: 5,200,674

Ari Bousbib		Karen L. Katen

For: 1,397,265,132		For: 1,416,594,846
Against: 53,291,408		Against: 34,321,935
Abstain: 5,595,145		Abstain: 5,234,903

Gregory D. Brenneman

For: 1,390,131,025
Against: 60,628,618
Abstain: 5,392,041

Shareholders ratified the appointment of KPMG LLP as the Company’s independent registered public accounting firm for fiscal 2009. Votes cast were as follows:

For: 1,433,137,454
Against: 19,026,878
Abstain: 3,987,352

Shareholders approved the amendment of the ~~Securities Act~~Company’s Certificate of ~~1933,~~Incorporation. Votes cast were as ~~amended. The deferred stock units~~follows:

For: 1,139,124,046
Against: 309,800,208
Abstain: 7,227,431

Shareholders rejected a shareholder proposal regarding cumulative voting. Votes cast were credited to the accounts of such nonemployee directors who elected to receive board retainers in the form of deferred stock units instead of cash during the third quarter of fiscal 2008. The deferred stock units convert to shares of common stock onas follows:

For: 375,363,938
Against: 782,953,776
Abstain: 5,116,154
Non-votes: 292,717,817

Shareholders rejected a ~~one-for-one basis following~~shareholder proposal regarding special shareholder meetings. Votes cast were as follows:

For: 525,448,572
Against: 630,761,064
Abstain: 7,224,631
Non-votes: 292,717,417

Shareholders rejected a ~~termination of service~~shareholder proposal regarding employment diversity report disclosure. Votes cast were as ~~described in this plan.~~follows:

For: 221,281,709
Against: 771,438,220
Abstain: 170,714,338
Non-votes: 292,717,417

Shareholders rejected a shareholder proposal regarding executive officer compensation. Votes cast were as follows:

For: 497,022,394
Against: 626,756,498
Abstain: 39,656,075
Non-votes: 292,716,717

Shareholders rejected a shareholder proposal regarding energy usage. Votes cast were as follows:

For: 227,814,358
Against: 734,212,731
Abstain: 201,407,178
Non-votes: 292,717,417

During the third quarter of fiscal 2008, the Company credited 900 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 of 1933, as amended, for involuntary, non-contributory plans. 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.

~~(c)~~Since fiscal 2002, the Company has repurchased shares of its common stock having a value of approximately $27.3 billion. The number and average price of shares purchased in each fiscal month of the third quarter of fiscal 2008 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)

Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under
the Program(2)

August 4, 2008 – August 31, 2008

949,111

$
27.50

851,500

$
12,778,189,392

September 1, 2008 – September 28, 2008

1,674,969

$
28.90

1,595,987

$
12,731,893,819

September 29, 2008 – November 2, 2008

25,115

$
18.58

—

$
12,731,893,819

~~(1)~~These amounts include repurchases pursuant to the Company’s 1997 and 2005 Omnibus Stock Incentive Plans (the “Plans”). Under the Plans, participants may exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Participants in the Plans may also surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. 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.

~~(2)~~The Company’s common stock repurchase program was initially announced on July 15, 2002. As of the beginning of the third quarter of fiscal 2008, the Board had approved purchases up to $40.0 billion. The program does not have a prescribed expiration date.


o
		~~For the quarterly period ended November 2, 2008~~

		~~- OR -~~

o		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~~


Delaware		95-3261426
(State or other jurisdiction of ~~incorporation or organization)~~		~~95-3261426~~ (I.R.S. Employer Identification Number)
incorporation or organization)

2455 Paces Ferry Road N.W., Atlanta, Georgia (Address of principal executive offices)		30339 (Zip Code)


Large accelerated filerx	Accelerated filero	Non-accelerated filero	Smaller ~~Reporting Company~~ reporting companyo
		(Do not check if a smaller reporting company)

* 3.1
	*3.1		Amended and Restated Certificate of Incorporation of The Home Depot, Inc.[Form 10-Q for the fiscal quarter ended August 4, 2002, Exhibit 3.1]

* 3.2	3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation of The Home Depot, Inc.

	*3.3		By-Laws of The Home Depot, Inc. ~~(As Amended~~(Amended and Restated Effective November 20, 2008)[Form 8-K filed on November 21, 2008, Exhibit 3.1]

~~12.1~~	*10.1	†	Form of U.S. Restricted Stock Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.1]

	*10.2	†	Form of Executive Officer Nonqualified Stock Option Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.4]

	*10.3	†	Form of Non-Employee Director Nonqualified Stock Option Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.5]

	*10.4	†	Form of Canada Deferred Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.2]

	*10.5	†	Form of Mexico Deferred Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.3]

	*10.6	†	Form of Performance Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.6]

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

~~15.1~~	15.1		Letter of KPMG LLP, Acknowledgement of Independent Registered Public Accounting Firm, dated ~~December~~June 3, ~~2008.~~ 2009.

~~18.1~~	31.1	~~Preferability Letter from Independent Registered Public Accounting Firm.~~

~~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~~	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~~	32.1		Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~	32.2		Certification of Chief Financial Officer and Executive Vice President – Corporate Services pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


		THE HOME DEPOT, INC. (Registrant)
~~(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

~~(Mark One)~~
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Three Months Ended						Nine Months Ended
	November 2, 2008			October 28, 2007			November 2, 2008			October 28, 2007
NET SALES	$	17,784		$	18,961		$	56,681		$	59,690
Cost of Sales	11,790			12,622			37,651			39,747
GROSS PROFIT	5,994			6,339			19,030			19,943

Operating Expenses:
Selling, General and Administrative	4,225			4,144			13,595			12,700
Depreciation and Amortization	446			431			1,342			1,250
Total Operating Expenses	4,671			4,575			14,937			13,950

OPERATING INCOME	1,323			1,764			4,093			5,993

Interest (Income) Expense:
Interest and Investment Income	(6		)	(29		)	(13		)	(67		)
Interest Expense	157			154			485			497
Interest, net	151			125			472			430

EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES	1,172			1,639			3,621			5,563
Provision for Income Taxes	416			568			1,307			2,024
EARNINGS FROM CONTINUING OPERATIONS	756			1,071			2,314			3,539
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX	—			20			—			185
NET EARNINGS	$	756		$	1,091		$	2,314		$	3,724

Weighted Average Common Shares	1,681			1,810			1,681			1,910
BASIC EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.45		$	0.59		$	1.38		$	1.85
BASIC EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS	$	—		$	0.01		$	—		$	0.10
BASIC EARNINGS PER SHARE	$	0.45		$	0.60		$	1.38		$	1.95

Diluted Weighted Average Common Shares	1,687			1,815			1,686			1,918
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.45		$	0.59		$	1.37		$	1.85
DILUTED EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS	$	—		$	0.01		$	—		$	0.10
DILUTED EARNINGS PER SHARE	$	0.45		$	0.60		$	1.37		$	1.94

Dividends Declared Per Share	$	0.225		$	0.225		$	0.675		$	0.675

	November 2, 2008			February 3, 2008
ASSETS
Current Assets:
Cash and Cash Equivalents	$	864		$	445
Short-Term Investments	10			12
Receivables, net	1,490			1,259
Merchandise Inventories	11,869			11,731
Other Current Assets	1,374			1,227
Total Current Assets	15,607			14,674
Property and Equipment, at cost	36,804			36,412
Less Accumulated Depreciation and Amortization	10,022			8,936
Net Property and Equipment	26,782			27,476
Notes Receivable	37			342
Goodwill	1,175			1,209
Other Assets	561			623
Total Assets	$	44,162		$	44,324
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-Term Debt	$	—		$	1,747
Accounts Payable	6,773			5,732
Accrued Salaries and Related Expenses	1,044			1,094
Sales Taxes Payable	431			445
Deferred Revenue	1,263			1,474
Income Taxes Payable	365			60
Current Installments of Long-Term Debt	1,016			300
Other Accrued Expenses	1,989			1,854
Total Current Liabilities	12,881			12,706
Long-Term Debt, excluding current installments	10,353			11,383
Other Long-Term Liabilities	1,978			1,833
Deferred Income Taxes	554			688
Total Liabilities	25,766			26,610
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.05; Authorized: 10 billion shares; Issued: 1.706 billion shares at November 2, 2008 and 1.698 billion shares at February 3, 2008; Outstanding: 1.695 billion shares at November 2, 2008 and 1.690 billion shares at February 3, 2008	85			85
Paid-In Capital	5,988			5,800
Retained Earnings	12,518			11,388
Accumulated Other Comprehensive Income	177			755
Treasury Stock, at cost, 11 million shares at November 2, 2008 and 8 million shares at February 3, 2008	(372		)	(314		)
Total Stockholders’ Equity	18,396			17,714
Total Liabilities and Stockholders’ Equity	$	44,162		$	44,324

	Total Expected Charges		Fiscal 2008 Charges		Total Remaining
Asset impairments	$	313	$	313	$	—
Lease obligation costs, net	226		226		—
Inventory markdowns	10		10		—
Severance	5		5		—
Other	32		10		22
Total	$	586	$	564	$	22

	Fiscal 2008 Charges		Cash Payments		Non-cash Uses		Balance, November 2, 2008
Asset impairments	$	313	$	—	$	276	$	37
Lease obligation costs, net	226		38		—		188
Inventory markdowns	10		10		—		—
Severance	5		5		—		—
Other	10		8		2		—
Total	$	564	$	61	$	278	$	225

	% of Net Sales												% Increase (Decrease)
	Three Months Ended						Nine Months Ended						in Dollar Amounts
	November 2, 2008			October 28, 2007			November 2, 2008			October 28, 2007			Three Months		Nine Months
NET SALES	100.0		%	100.0		%	100.0		%	100.0		%	(6.2	)%	(5.0	)%

GROSS PROFIT	33.7			33.4			33.6			33.4			(5.4	)	(4.6	)

Operating Expenses:
Selling, General and Administrative	23.8			21.9			24.0			21.3			2.0		7.0
Depreciation and Amortization	2.5			2.3			2.4			2.1			3.5		7.4
Total Operating Expenses	26.3			24.1			26.4			23.4			2.1		7.1

OPERATING INCOME	7.4			9.3			7.2			10.0			(25.0	)	(31.7	)

Interest (Income) Expense:
Interest and Investment Income	—			(0.2		)	—			(0.1		)	(79.3	)	(80.6	)
Interest Expense	0.9			0.8			0.9			0.8			1.9		(2.4	)
Interest, net	0.8			0.7			0.8			0.7			20.8		9.8

EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES	6.6			8.6			6.4			9.3			(28.5	)	(34.9	)
Provision for Income Taxes	2.3			3.0			2.3			3.4			(26.8	)	(35.4	)
EARNINGS FROM CONTINUING OPERATIONS	4.3		%	5.7		%	4.1		%	5.9		%	(29.4	)%	(34.6	)%

Note: Certain percentages may not sum to totals due to rounding.

SELECTED SALES DATA
Number of Customer Transactions (in millions)	315			326			989			1,021			(3.4	)%	(3.1	)%
Average Ticket	$	55.86		$	57.48		$	56.97		$	58.26		(2.8	)%	(2.2	)%
Weighted Average Weekly Sales Per Operating Store (in thousands)	$	597		$	651		$	640		$	696		(8.3	)%	(8.0	)%
Weighted Average Sales per Square Foot	$	295.95		$	323.36		$	317.26		$	345.72		(8.5	)%	(8.2	)%
Comparable Store Sales Decrease (%)⁽¹⁾	(8.3		)%	(6.2		)%	(7.5		)%	(6.3		)%	N/A		N/A

	As Reported		Store Rationalization Charge			Non-GAAP Measurement
Net Sales	$	56,681	$	—		$	56,681
Cost of Sales	37,651		10			37,641
Gross Profit	19,030		(10		)	19,040
Operating Expenses:
Selling, General and Administrative	13,595		552			13,043
Depreciation and Amortization	1,342		2			1,340
Total Operating Expenses	14,937		554			14,383
Operating Income	4,093		(564		)	4,657
Interest, net	472		—			472
Earnings From Continuing Operations Before Provision for Income Taxes	3,621		(564		)	4,185
Provision for Income Taxes	1,307		(209		)	1,516
Earnings from Continuing Operations	$	2,314	$	(355	)	$	2,669

Diluted Earnings per Share from Continuing Operations	$	1.37	$	(0.21	)	$	1.58

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)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(2)
August 4, 2008 – August 31, 2008	949,111	$	27.50	851,500	$	12,778,189,392
September 1, 2008 – September 28, 2008	1,674,969	$	28.90	1,595,987	$	12,731,893,819
September 29, 2008 – November 2, 2008	25,115	$	18.58	—	$	12,731,893,819


†		Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 6 of this report.

* 3.1
Exhibit			Description

Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the Securities and Exchange Commission, 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 for the fiscal quarter ended August 4, 2002, Exhibit 3.1]

* 3.2	3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation of The Home Depot, Inc.

	*3.3		By-Laws of The Home Depot, Inc. ~~(As Amended~~(Amended and Restated Effective November 20, 2008)[Form 8-K filed on November 21, 2008, Exhibit 3.1]

~~12.1~~	*10.1	†	Form of U.S. Restricted Stock Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.1]

	*10.2	†	Form of Executive Officer Nonqualified Stock Option Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.4]

	*10.3	†	Form of Non-Employee Director Nonqualified Stock Option Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.5]

	*10.4	†	Form of Canada Deferred Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.2]

	*10.5	†	Form of Mexico Deferred Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.3]

	*10.6	†	Form of Performance Share Award Pursuant to The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan.[Form 8-K filed on March 13, 2009, Exhibit 10.6]

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

~~15.1~~	15.1		Letter of KPMG LLP, Acknowledgement of Independent Registered Public Accounting Firm, dated ~~December~~June 3, ~~2008.~~ 2009.

~~18.1~~	31.1	~~Preferability Letter from Independent Registered Public Accounting Firm.~~

~~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~~	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~~	32.1		Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~	32.2		Certification of Chief Financial Officer and Executive Vice President – Corporate Services pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.