UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

                      EXCHANGE ACT OF 1934

For the quarterly period ended August 1, 2010July 31, 2011

- OR -

¨          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

                     EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 1-8207

THE HOME DEPOT, INC.

(Exact name of Registrant as specified in its charter)

(770) 433-8211

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

$0.05 par value 1,665,301,1801,564,291,782 shares of common stock, $0.05 par value, as of August 27, 201025, 2011

THE HOME DEPOT, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTSOFSTATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

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 January 31, 2010,30, 2011, as filed with the Securities and Exchange Commission.

Business

The Home Depot, Inc. and 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 and professional customers.

Valuation Reserves

As of August 1, 2010July 31, 2011 and January 31, 2010,30, 2011, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material.

Reclassifications2. LONG-TERM DEBT

Certain amountsIn March 2011, the Company issued $1.0 billion of 4.40% Senior Notes due April 1, 2021 at a discount of $2 million and $1.0 billion of 5.95% Senior Notes due April 1, 2041 at a discount of $4 million (together, the “March 2011 issuance”). Interest on these Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning October 1, 2011. The net proceeds of the March 2011 issuance were used to repurchase $1.0 billion of the Company’s common stock through an Accelerated Share Repurchase (“ASR”) agreement and the balance of the net proceeds were used to repay the Company’s 5.20% Senior Notes that matured March 1, 2011 in the prior fiscal period have been reclassified to conformaggregate principal amount of $1.0 billion. The $6 million discount associated with the presentation adoptedMarch 2011 issuance is being amortized over the term of the Senior Notes using the effective interest rate method. Issuance costs were approximately $15 million and are being amortized over the term of the Senior Notes.

The Senior Notes may be redeemed by the Company at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date. The redemption price is equal to the greater of (1) 100% of the principal amount of the Senior Notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest to maturity. Additionally, if a Change in Control Triggering Event occurs, as defined by the terms of the March 2011 issuance, holders of the March 2011 issuance have the right to require the Company to redeem those notes at 101% of the aggregate principal amount of the notes plus accrued interest up to the redemption date. The Company is generally not limited under the indenture governing the Senior Notes in its ability to incur additional indebtedness or required to maintain financial ratios or specified levels of net worth or liquidity. Further, while the indenture governing the Senior Notes contains various restrictive covenants, none is expected to impact the Company’s liquidity or capital resources.

In May 2010, the Company entered into a forward starting interest rate swap agreement with a notional amount of $500 million, which was accounted for as a cash flow hedge, to hedge interest rate fluctuations in anticipation of the March 2011 issuance. Upon the March 2011 issuance, the Company settled this forward starting interest rate swap agreement for an immaterial amount.

THE HOME DEPOT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3.  ACCELERATED SHARE REPURCHASE

In March 2011, the Company entered into an ASR agreement with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. Under the agreement, the Company paid $1.0 billion to the financial institution, using a portion of the proceeds from the March 2011 issuance, and received an initial delivery of approximately 21 million shares in the currentfirst quarter of fiscal period.2011. The transaction was completed in the second quarter of fiscal 2011, with the Company receiving an additional 6 million shares. The $1.0 billion of shares repurchased are included in Treasury Stock in the accompanying Consolidated Balance Sheets as of July 31, 2011. The final number of shares delivered upon settlement of the agreement was determined with reference to the average price of the Company’s common stock over the term of the ASR agreement.

2.4.  DEBT GUARANTEE EXTENSION

In connection with the sale of HD Supply, Inc. (“HD Supply”) on August 30, 2007, the Company guaranteed a $1.0 billion senior secured amortizing term loan (“guaranteed loan”) of HD Supply. The Company is responsible for up to $1.0 billion and any unpaid interest in the event of nonpayment by HD Supply. As reported in the quarterly report on Form 10-Q of HD Supply for the period ended May 1, 2011, the outstanding balance of this term loan as of May 1, 2011 was $935 million. The guaranteed loan is collateralized by certain assets of HD Supply. The original expiration date of the guarantee was August 30, 2012. On March 19, 2010, the Company amended the guarantee to extend the expiration date to April 1, 2014. The fair value of the guarantee at August 30, 2007 was $16 million and was recorded as a liability of the Company in Other Long-Term Liabilities. The extension of the guarantee increased the fair value of the guarantee to $67 million, resulting in a $51 million charge to Interest and Other, net, for the first quarter and first six months of fiscal 2010.

3.   RATIONALIZATION CHARGES

In fiscal 2008, the Company reduced its 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 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 over varying periods. The Company also closed 15 underperforming U.S. stores 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 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.

THE HOME DEPOT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The Company recognized total pretax charges of $146 million for fiscal 2009, including $137 million in the first six months of fiscal 2009, related to these actions (collectively, the “Rationalization Charges”). The Company did not incur any material charges related to these actions in the first six months of fiscal 2010 and does not expect any further charges related to these actions.

Activities related to Rationalization Charges for the first six months of fiscal 2010 were as follows (amounts in millions):

Costs related to asset impairments and lease obligations 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 obligation costs represent the present value of contractually obligated rental payments offset by estimated sublet income, 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.

4.5.  FAIR VALUE MEASUREMENTS

The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

              assumptions

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The assets and liabilities of the Company that are measured at fair value on a recurring basis as of August 1, 2010July 31, 2011 and January 31, 201030, 2011 were as follows (amounts in millions):

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

THE HOME DEPOT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The assets and liabilities of the Company that were measured at fair value on a nonrecurring basis during the six months ended July 31, 2011 and August 1, 2010 were as follows (amounts in millions):

Lease obligation costs includedwere related to certain store closings and the exit of certain businesses in the Company’s Rationalization Chargesfiscal 2009 and 2008. These charges were measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3), as further discussed in Note 3..

The guarantee of the HD Supply loan was measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3), as further discussed in Note 2.4.

Long-lived assets were analyzed for impairment on a nonrecurring basis using fair value measurements with unobservable inputs (level 3). Impairment charges related to long-lived assets in the first six months of fiscal 2011 and 2010 were not material.

The Company completed an assessment on the recoverability of Goodwill for one of its reporting units in the first six months of fiscal 2011. The fair value of the Company’s reporting unit was based on the potential selling price of the reporting unit. The impairment charge related to this Goodwill assessment was not material.

The aggregate fair value of the Company’s Senior Notes, based on quoted market prices, (level 1), was $11.2 billion and $9.8 billion and $9.5 billion at August 1, 2010July 31, 2011 and January 31, 2010,30, 2011, respectively, compared to a carrying value of $10.3 billion and $9.3 billion at both August 1, 2010July 31, 2011 and January 31, 2010.30, 2011, respectively.

5.6.  BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES

The reconciliation of basic to diluted weighted average common shares for the three and six months ended July 31, 2011 and August 1, 2010 and August 2, 2009 was as follows (amounts in millions):

Stock plans consist of shares granted under the Company'sCompany’s employee stock plans. Options to purchase 4230 million and 5042 million shares of common stock for the three months ended July 31, 2011 and August 1, 2010, and August 2, 2009, respectively, and options to purchase 4026 million and 5240 million shares of common stock for the six months ended July 31, 2011 and August 1, 2010, and August 2, 2009, respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

The Home Depot, Inc.:

We have reviewed the Consolidated Balance SheetSheets of The Home Depot, Inc. and subsidiaries as of August 1, 2010, andJuly 31, 2011, the related Consolidated Statements of Earnings and Comprehensive Income for the three-month and six-month periods ended July 31, 2011 and August 1, 2010, and August 2, 2009, and the related Consolidated Statements of Cash Flows for the six-month periods ended July 31, 2011 and August 1, 2010 and August 2, 2009.2010. 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 January 31, 2010,30, 2011, 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 25, 2010,24, 2011, 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 January 31, 2010,30, 2011, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.

    /s/ KPMG LLP

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

FORWARD-LOOKING STATEMENTS

Certain statements regarding our future performance constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain 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 accounting charges, the planned recapitalization of the Company and the timing of theits completion, of the recapitalization, the ability to issue debt securities on terms and at rates acceptable to us, store openings and closures, expense leverage and financial outlook.

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. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 31, 201030, 2011 as filed with the Securities and Exchange Commission (“SEC”) on March 25, 201024, 2011 (“Form 10-K”) and in Item 1A of Part II and elsewhere in this report. The risks and uncertainties described in the Form 10-K and in this report include the risks associated with the current economic environment and the possible adverse effects on the Company’s results of operations and financial condition. You should read such information in conjunction with our Consolidated Financial Statements and related notes in Item 1 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I 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 these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

EXECUTIVE SUMMARY AND SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA

For the second quarter of fiscal 2010,2011, we reported Net Earnings of $1.4 billion and Diluted Earnings per Share of $0.86 compared to Net Earnings of $1.2 billion and Diluted Earnings per Share of $0.72 compared tofor the second quarter of fiscal 2010. For the first six months of fiscal 2011, we reported Net Earnings of $1.1$2.2 billion and Diluted Earnings per Share of $0.66 for the second quarter of fiscal 2009. For the first six months of fiscal 2010, we reported$1.36 compared to Net Earnings of $1.9 billion and Diluted Earnings per Share of $1.14 compared to Net Earnings of $1.6 billion and Diluted Earnings per Share of $0.96 for the first six months of fiscal 2009.2010.

The resultsNet Sales increased 4.2% to $20.2 billion for the first six months of fiscal 2010 include a $51 million pretax charge related to the extension of our guarantee of a senior secured loan of HD Supply, Inc. (“guarantee extension”). The results for the second quarter and first six months of fiscal 2009 reflect the impact of several strategic actions initiated in fiscal 2008. These strategic actions resulted in store rationalization charges related to the closing of 15 underperforming U.S. stores and the removal of approximately 50 U.S. stores from our new store pipeline, business rationalization charges related to the exit of our 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 $137 million for the first six months of fiscal 2009, including $20 million in the second quarter of fiscal 2009. Excluding the charges noted above, Diluted Earnings per Share were $0.72 and $1.16 for the second quarter and first six months of fiscal 2010, respectively, compared to $0.67 and $1.01 for the second quarter and first six months of fiscal 2009, respectively.

The results for the second quarter and first six months of fiscal 2009 also reflect a tax benefit of approximately $50 million to Net Earnings arising2011 from a favorable foreign tax settlement. This tax benefit positively impacted Diluted Earnings per Share by approximately $0.03 for the second quarter and first six months of fiscal 2009.

Net Sales increased 1.8% to $19.4 billion for the second quarter of fiscal 2010 from $19.1 billion for the second quarter of fiscal 2009.2010. For the first six months of fiscal 2010,2011, Net Sales increased 2.9%2.2% to $36.3$37.1 billion from $35.2$36.3 billion for the first six months of fiscal 2009.2010. Our comparable store sales increased 1.7%4.3% in the second quarter of fiscal 2010,2011, driven primarily by a 1.7%3.3% increase in comparable store customer transactions. Ourour comparable store average ticket was $52.30 for the second quarter of fiscal 2010, flat compared to the same period last year.ticket. Comparable store sales for our U.S. stores increased 1.0%3.5% in the second quarter of fiscal 2010.2011.

In the first six months of fiscal 2010,2011, we continued to focus on our core retail business, investing inthe following four key initiatives:

Customer Service– Our focus on customer service is anchored on the principles of taking care of our associates, putting customers first and stores and improving our customer service.simplifying the business. The roll-outroll out of our Customers FIRST training to all store associates and support staff in fiscal 2009 has brought simplification and focus across the business and we repeated and refreshed the Customers FIRST training during the first six months of fiscal 2010. In the second quarter of fiscal 2010, we launched a version of Customers FIRST for our professional customers, as well as a version focused on our checkout process. The Customers FIRST program is part of our ongoing commitment to improve customer service levels in our stores. In the second quarter of fiscal 2011, we piloted a new scheduling system for our associates that will eliminate approximately 30 hours per store per week of manual scheduling activity. With the time saved on scheduling activity, we can increase the time allocated to customer facing activity. We plan to have this rolled out throughout the U.S. by the end of fiscal 2011.

Product Authority – Our focus on product authority is facilitated by our merchandising transformation and portfolio strategy, including innovation, assortment and value. In an effort to improve our special order performance, we are digitizing our vendor catalogs and expect to complete this process in the third quarter of fiscal 2011. This will make the special order process both simpler and more accurate for our associates and will provide the foundation for a new special order sales dashboard that will give our merchants greater visibility into special order pricing and performance.

Productivity and Efficiency – Our approach to driving productivity and efficiency starts with disciplined capital allocation focused on building best-in-class competitive advantages in information technology and supply chain, as well as building shareholder value through higher returns on invested capital and total value returned to shareholders in the form of dividends and share repurchases. Since the completion of the roll out of our Rapid Deployment Centers (“RDCs”) in fiscal 2010, we continue to improve delivery and service to U.S. stores and at the same time leverage the cost of moving goods. During the second quarter of fiscal 2011, we continued to seesettled our $1.0 billion Accelerated Share Repurchase (“ASR”) agreement. We received a total of 27 million shares under the benefit of this trainingASR agreement in improved customer service ratings for the first six months of fiscal 2010 compared to fiscal 2009.

We also continued to make significant progress on our merchandising tools2011, including 6 million shares upon settlement of the ASR agreement in the U.S. that helped us manage markdown and clearance activity and better control inventory. For the third consecutive quarter we improved our year-over-year inventory turnover ratio, which was 4.4 times for the second quarter of fiscal 2010, compared2011. Also during the first six months of fiscal 2011, we repurchased an additional 36 million shares of our common stock through the open market.

Interconnected Retail – Our focus on interconnected retail is based on the view that providing a seamless shopping experience across multiple channels will be a critical enabler for future success. Our multiple channel focus is allowing us to 4.3 times forgreatly expand our assortment of merchandise, and we are making the investment to build these capabilities, including the roll out of Buy On-Line, Pick-up in Store. We had over 100 stores with Buy On-Line, Pick-up in Store as of the end of the second quarter of fiscal 2009. As of August 17, 2010, we had 16 Rapid Deployment Centers (“RDCs”) that serve over 80% of our U.S. stores. We remain committed2011, and the roll out to our overall RDC roll-out strategy, supporting our goal of increasing our central distribution penetration, and are on track to serve 100% of our U.S. stores through RDCs byshould be complete in the endthird quarter of fiscal 2010.2011.

We opened twoone new storesstore in Mexico and closed one store destroyed by a tornado during the second quarter of fiscal 2010, including one relocation, and closed one store,2011, for a total store count of 2,2442,245 at the end of the second quarter of fiscal 2010.2011. As of the end of the second quarter of fiscal 2010,2011, a total of 268273 of these stores, or approximately 12%12.2%, were located in Canada, Mexico and China compared to 266,268 stores, or approximately 12%11.9%, as of the end of the second quarter of fiscal 2009.2010.

We generated $3.4$4.5 billion of cash flow from operations in the first six months of fiscal 2010.2011. We used a portion of this cash flow to fund $1.2$1.3 billion of share repurchases in addition to shares purchased under the ASR agreement, pay $793$798 million of dividends, and fund $407$469 million in capital expenditures.

At the end of the second quarter of fiscal 2010,2011, our long-term debt-to-equity ratio was 39.7%58.9% compared to 50.4%39.7% at the end of the second quarter of fiscal 2009.2010. Our return on invested capital (computed on net operating profit after tax for the trailing twelve months and the average of beginning and ending long-term debt and equity) was 13.5% for the second quarter of fiscal 2011 compared to 11.5% for the second quarter of fiscal 2010 compared to 9.3% for the second quarter of fiscal 2009. This increase reflects the increase in our operating profit, which includes the impact of the Rationalization Charges in the results of the second quarter of fiscal 2009. Excluding the Rationalization Charges, our return on invested capital was 10.3% for the second quarter of fiscal 2009.2010.

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.

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

N/M – Not Meaningful

N/A – Not Applicable

RESULTS OF OPERATIONS

Net Sales for the second quarter of fiscal 20102011 increased 1.8%4.2% to $19.4$20.2 billion from $19.1$19.4 billion for the second quarter of fiscal 2009.2010. For the first six months of fiscal 2010,2011, Net Sales increased 2.9%2.2% to $36.3$37.1 billion from $35.2$36.3 billion for the comparable period in fiscal 2009.2010. The increase in Net Sales for the second quarter and first six months of fiscal 20102011 reflects the impact of positive comparable store sales. Total comparable store sales increased 4.3% for the second quarter of fiscal 2011 compared to an increase of 1.7% for the second quarter of fiscal 2010 compared to a decrease of 8.5% for the second quarter of fiscal 2009.2010. For the first six months of fiscal 2010,2011, total comparable store sales increased 3.2%2.0% compared to a decreasean increase of 9.3%3.2% for the same period of fiscal 2009. Our Net Sales and comparable store sales for the second quarter of fiscal 2010 reflect the pull-forward of some sales into the first quarter of fiscal 2010 due to more favorable weather conditions in the earlier period as well as softer economic conditions in the second quarter of fiscal 2010.

The increase inpositive comparable store sales for the second quarter and first six months of fiscal 20102011 reflects a number of factors. Our performance in the second quarter of fiscal 2011 was driven by our seasonal business and outdoor projects, repair business from the harsh winter and spring storms, and strength in our core departments. The majority of our departments posted positive comparable store sales for the second quarter and first six months of fiscal 2010,2011, and comparable store customer transactionsaverage ticket increased 1.7%3.3% and 3.0% in2.5% for the second quarter and first six months of fiscal 2010,2011, respectively. Comparable store sales for our Lumber, PlumbingBuilding Materials, Electrical, Kitchen/Bath, Indoor Garden, Outdoor Garden and ElectricalTools product categories were above the Company average, and comparable store sales for our Flooring and Kitchen/Bath product categories wereHardware was at the Company average for the second quarter of fiscal 2010.2011. Comparable store sales for our Paint, Plumbing and HardwareFlooring product categories were positive while comparablebut less than the Company average for the second quarter of fiscal 2011. Comparable store sales for our Building Materials, Garden/Seasonalin Lighting were flat while Lumber and Millwork product categories were slightly negative for the second quarter of 2011.

Gross Profit increased 4.5% to $6.9 billion for the second quarter of fiscal 2011 from $6.6 billion for the second quarter of fiscal 2010. Also,Gross Profit increased 2.7% to $12.7 billion for the first six months of fiscal 2011 from $12.4 billion for the first six months of fiscal 2010. Gross Profit as a percent of Net Sales increased 8 basis points to 34.0% for the second quarter of fiscal 2011 compared to 33.9% for the second quarter of fiscal 2010. For the first six months of fiscal 2011, Gross Profit as a percent of Net Sales was 34.3% compared with 34.1% for the comparable period of fiscal 2010, an increase of 16 basis points. The increase in gross profit margin in the second quarter and first six months of fiscal 2010, lumber and copper price inflation positively impacted our comparable store sales by approximately 100 basis points.

Gross Profit increased 3.0% to $6.6 billion for the second quarter of fiscal 2010 from $6.4 billion for the second quarter of fiscal 2009. Gross Profit increased 4.5% to $12.4 billion for the first six months of fiscal 2010 from $11.8 billion for the first six months of fiscal 2009. Gross Profit as a percent of Net Sales increased 41 basis points to 33.9% for the second quarter of fiscal 2010 compared to 33.5% for the second quarter of fiscal 2009. For the first six months of fiscal 2010, Gross Profit as a percent of Net Sales2011 was 34.1% compared with 33.6% for the comparable period of fiscal 2009, an increase of 53 basis points. Our U.S. stores experienced gross profit margin expansion in the second quarter and first six months of fiscal 2010 driven by higher volume rebates from vendors, lower markdowns taken compared to the same periods last year, as we saw benefits from better product assortment management in seasonal categories, and fewer promotions. Additionally, we realized gross profit margin expansion arising from our non-U.S. businesses primarily due to higher volume rebates from vendorsmerchandising portfolio approach and improved shrink performance.our supply chain transformation in the U.S.

Selling, General and Administrative Expense (“SG&A”) wasincreased 1.4% to $4.2 billion for the second quarter of fiscal 2011 from $4.1 billion for the second quarter of both fiscal 2010, and 2009, and was $8.2 billion for the first six months of both fiscal 20102011 and 2009.2010. As a percent of Net Sales, SG&A was 20.7% for the second quarter of fiscal 2011 compared to 21.3% for the second quarter of fiscal 2010 compared to 21.6% for the second quarter of fiscal 2009.2010. For the first six months of fiscal 2010,2011, SG&A as a percent of Net Sales was 22.6%22.1% compared to 23.2%22.6% for the same period last year. Excluding the Rationalization Charges, SG&A as a percent of Net Sales was 21.5% and 22.8% for the second quarter and first six months of fiscal 2009, respectively. The decrease in SG&A as a percent of Net Sales for the second quarter and first six months of fiscal 20102011 reflects expense leverage in the positive comparable store sales environment and lower payroll and incentive compensation expenses, partially offset by a higher cost of credit due$32 million impairment charge for a non-core carpet cleaning and cabinet refinishing business that the Company intends to a higher penetration of bank cards.sell.

Depreciation and Amortization decreased 6.5%2.5% to $396 million for the second quarter of fiscal 2011 from $406 million for the second quarter of fiscal 2010 from $434 million for the second quarter of fiscal 2009.2010. For the first six months of fiscal 2010,2011, Depreciation and Amortization decreased 5.2%2.9% to $817$793 million from $862$817 million for the same period of fiscal 2009.2010. Depreciation and Amortization as a percent of Net Sales was 2.0% for the second quarter of fiscal 2011 compared to 2.1% for the second quarter of fiscal 2010, compared to 2.3% for the second quarter of fiscal 2009, and was 2.3%2.1% for the first six months of fiscal 20102011 compared to 2.4%2.3% for the same period in fiscal 2009.2010. The decrease in Depreciation and Amortization aswas a percentfunction of Net Sales for both periods was primarily due to a smaller fixed asset base compared to the same periods last year.an increased number of fully depreciated assets.

Operating Income increased 11.8%12.0% to $2.3 billion for the second quarter of fiscal 2011 from $2.0 billion for the second quarter of fiscal 2010 from $1.82010. Operating Income increased 10.8% to $3.7 billion for the second quarterfirst six months of fiscal 2009. Operating Income increased 19.2% to2011 from $3.4 billion for the first six months of fiscal 2010 from $2.8 billion for the second quarter of 2009. Excluding the Rationalization Charges from the results of the second quarter and first

six months of fiscal 2009, Operating Income increased 10.6% and 13.7% for the second quarter and first six months of fiscal 2010, respectively.2010.

In the second quarter of fiscal 2010,2011, we recognized $148$146 million of Interest and Other, net, compared to $161$148 million in the second quarter of fiscal 2009.2010. We recognized $337$285 million of Interest and Other, net, in the first six months of fiscal 20102011 compared to $336$337 million for the same period last year. Interest and Other, net, as a percent of Net Sales was 0.8%0.7% for both the second quarter of fiscal 2010 and 2009.2011 compared to 0.8% for the second quarter of fiscal 2010. For the first six months of fiscal 2010, Interest and Other, net, as a percent of Net Sales was 0.9% compared to 1.0% for the same period last year. Interest and Other, net, reflects a $51 million charge in the first six months of fiscal 2010 related to the guarantee extension. Excluding this charge,2011, Interest and Other, net, as a percent of Net Sales was 0.8% compared to 0.9% for the same period last year. Interest and Other, net, for the first six months of fiscal 2010 reflects a decrease of 17 basis points from the same period last year. The decrease in Interest and Other, net, excluding the $51 million pretax charge was due primarilytaken in the first quarter of fiscal 2010 related to the extension of our guarantee of a lower debt balance.senior secured loan of HD Supply, Inc.

Our combined effective income tax rate was 36.5%36.6% for the first six months of fiscal 20102011 compared to 34.2%36.5% for the comparable period of fiscal 2009, reflecting a favorable foreign tax settlement in2010.

Diluted Earnings per Share were $0.86 and $1.36 for the second quarter and first six months of fiscal 2009. This settlement reduced tax expense by approximately $50 million and provided an approximately $0.03 benefit2011, respectively, compared to Diluted Earnings per Share in the first six months of fiscal 2009.

Diluted Earnings per Share were $0.72 and $1.14 for the second quarter and first six months of fiscal 2010, compared to $0.66 and $0.96respectively. Diluted Earnings per Share for the second quarter and first six months of fiscal 2009, respectively. Excluding the $51 million debt guarantee extension charge2011 reflect $0.04 and the Rationalization Charges, Diluted Earnings per Share for the first six months of fiscal 2010 were $1.16 compared to $1.01 for the first six months of fiscal 2009, an increase of 14.9%. Diluted Earnings per Share for the second quarter of fiscal 2010 reflect $0.02$0.06, respectively, of benefit from repurchases of our common stock.

To provide clarity, internally and externally, about our operating performance forstock in the second quarter and first six months of fiscal 2010 and 2009, we supplement our reporting with non-GAAP financial measures to reflect adjustments for the $51 million pretax charge related to the guarantee extension as described more fully in Note 2 to the Consolidated Financial Statements, the Rationalization Charges as described more fully in Note 3, and the Net Sales from Exited Businesses during the period from closing announcement to actual closing. We believe these non-GAAP financial measures better enable management and investors to understand and analyze our performance by providing them with meaningful information relevant to events of unusual nature or frequency. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.last 12 months.

The following reconciles the non-GAAP financial measures to the corresponding GAAP measures for the second quarter and first six months of fiscal 2010 and 2009 (amounts in millions, except per share data):

		Three Months Ended August 2, 2009								Six Months Ended August 2, 2009
		As Reported		Adjustments		Non-GAAP Measures		% of Net Sales		As Reported		Adjustments		Non-GAAP Measures		% of Net Sales
Net Sales		$19,071		$       -		$19,071		100.0%		$35,246		$   221		$35,025		100.0%
Cost of Sales		12,683		1		12,682		66.5		23,408		193		23,215		66.3
Gross Profit		6,388		(1)		6,389		33.5		11,838		28		11,810		33.7
Operating Expenses:
Selling, General and Administrative		4,121		18		4,103		21.5		8,163		161		8,002		22.8
Depreciation and Amortization		434		1		433		2.3		862		4		858		2.4
Total Operating Expenses		4,555		19		4,536		23.8		9,025		165		8,860		25.3
Operating Income		1,833		(20)		1,853		9.7		2,813		(137)		2,950		8.4
Interest and Other, net		161		-		161		0.8		336		-		336		1.0
Earnings Before Provision for Income Taxes		1,672		(20)		1,692		8.9		2,477		(137)		2,614		7.5
Provision for Income Taxes		556		(9)		565		3.0		847		(53)		900		2.6
Net Earnings		$ 1,116		$   (11)		$ 1,127		5.9%		$ 1,630		$   (84)		$  1,714		4.9%
Diluted Earnings per Share		$   0.66		$(0.01)		$   0.67		N/A		$   0.96		$(0.05)		$    1.01		N/A

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides us with a significant source of liquidity. During the first six months of fiscal 2010,2011, Net Cash Provided by Operating Activities was $3.4$4.5 billion compared to $3.3$3.4 billion for the same period of fiscal 2009.2010. This changeincrease was primarily a result of increasedan increase in Net Earnings, changes in the first six months of fiscal 2010.inventory levels and other net working capital items.

Net Cash Used in Investing Activities for the first six months of fiscal 20102011 was $363$442 million compared to $214$363 million for the same period of fiscal 2009.2010. This change was primarily due to increased Capital Expenditures.

Net Cash Used in Financing Activities for the first six months of both fiscal 2011 and 2010 was $2.0 billion. In March 2011, we issued $1.0 billion comparedof 4.40% Senior Notes due April 1, 2021 at a discount of $2 million and $1.0 billion of 5.95% Senior Notes due April 1, 2041 at a discount of $4 million (together, the “March 2011 issuance”). Interest on these Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning October 1, 2011. The net proceeds of the March 2011 issuance were used to $529 million forrepurchase $1.0 billion of our common stock, and the same periodbalance of the net proceeds were used to repay our 5.20% Senior Notes that matured March 1, 2011 in the aggregate principal amount of $1.0 billion.

In connection with the March 2011 issuance, we entered into an ASR agreement with a third-party financial institution to repurchase $1.0 billion of our common stock. Under the agreement, in the first quarter of fiscal 2009. This change2011 we paid $1.0 billion to the financial institution and received an initial delivery of approximately 21 million shares. The transaction was primarilycompleted in the resultsecond quarter of $1.2 billion in Repurchases of Common Stock infiscal 2011, at which time we received an additional 6 million shares. Also during the first six months of fiscal 2010. Since the inception of our share repurchase program in 2002,2011, we have repurchased 790.6an additional 36 million shares of our common stock for a total of $28.7 billion.$1.3 billion through the open market. As of August 1, 2010, $11.3the end of the second quarter of fiscal 2011, $7.6 billion remained under our share repurchase authorization.

In the second quarter of fiscalMay 2010, we replaced our $3.25 billion commercial paper programsentered into a forward starting interest rate swap agreement with newa notional amount of $500 million, which was accounted for as a cash flow hedge, to hedge interest rate fluctuations in anticipation of the March 2011 issuance. Upon the March 2011 issuance, we settled this forward starting interest rate swap agreement for an immaterial amount.

We have commercial paper programs that allow for borrowings up to $2.0 billion. In connection with the programs, we also replaced ourhave a back-up credit facility with a new credit facility with a consortium of banks to allow for borrowings up to $2.0 billion. As of August 1, 2010,July 31, 2011, there were no borrowings outstanding under the commercial paper programs or the related credit facility. The credit facility expires in July 2013 and contains various restrictive covenants. As of August 1, 2010,July 31, 2011, we were in compliance with all of the covenants, and they are not expected to impact our liquidity or capital resources.

As of August 1, 2010,July 31, 2011, we had $2.4$2.6 billion in Cash and Cash Equivalents. We believe that our current cash position, access to the debt capital markets and cash flow generated from operations should be sufficient to enable us to complete our capital expenditure programs and fund dividend payments, any share repurchases and any required long-term debt payments through the next several fiscal years. In addition, we have funds available from our commercial paper programs and the ability to obtain alternative sources of financing. Subsequent to the end of the second quarter of fiscal 2010, we repaid $1.0 billion of 4.625% Senior Notes that were due August 15, 2010. We plan to refinance this debt in the third quarter of fiscal 2010.

Item 3.  Quantitative and Qualitative Disclosures Aboutabout 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 Form 10-K.

Item 4.  Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended August 1, 2010July 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The following 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 second quarter of fiscal 2011 to our disclosure in Item 3 of our Form 10-K.

As reported on page 12 of our Form 10-K, in September 2010, the secondCompany was contacted by district attorneys in three counties in California within the South Coast Air Quality Management District (the “SCAQMD”) and third quartersthe City of fiscal 2006, three purported, but uncertified, class actionsLos Angeles regarding allegations that the Company sold products in those counties with VOC (volatile organic compound) levels in excess of amounts permitted by SCAQMD rules. In June 2011, two related complaints were filed in the Superior Court of California – County of Los Angeles against the Company. The first action was brought by the SCAQMD and alleges that the Company The Home Depot FutureBuilder Administrative Committee and certain of the Company’s current and former directors and employees alleging breach of fiduciary dutysold products with higher-than-permitted VOC levels. This action seeks $30 million in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with the Company’s return-to-vendor and stock option practices. These actions were joined into one case in 2007, and the joint amended complaint seeks certification as a class action, unspecified damages, costs, attorney’s fees and equitablecivil penalties and injunctive relief. On June 7, 2010,The second action was brought by the U.S. District Court forLos Angeles City Attorney and the Northern Districtdistrict attorneys of Georgiaeach of Orange, Riverside and San Bernadino counties and alleges that the Company engaged in Atlanta granted with prejudice Home Depot’s motion to dismiss plaintiffs’ third amended complaint. On June 28, 2010, plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Eleventh Circuit.unfair business practices and false advertising when selling these products. This action seeks unspecified civil penalties and injunctive relief. Although the Company cannot predict the outcomeoutcomes of this matter,these matters, it does not expect the outcomeeither to have a material adverse effect on its consolidated financial condition or results of operations.

Item 1A. RiskFactorsRisk 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 Form 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 risks and uncertainties associated with the current economic environment, such as the state of the residential construction, housing and home improvement markets; the state of the credit markets, including the limited availability of mortgages, home equity loans, consumer credit for our retail customers and commercial credit for our professional customers and our suppliers, as well as 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 related effects that we experienced during the 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. There have been no material changes in the risk factors discussed in our Form 10-K.

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

During the second quarter of fiscal 2010,2011, the Company credited 1,1241,309 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.

Item 6. Exhibits

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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.