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 May 1,July 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.

1,592,245,3491,564,291,782 shares of common stock, $0.05 par value, as of May 27,August 25, 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 STATEMENTS 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 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 May 1,July 31, 2011 and January 30, 2011, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material.

2. LONG-TERM DEBT

In 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 aggregate principal amount of $1.0 billion. The $6 million discount associated with the March 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, in the first quarter of fiscal 2011 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. The fair market value of the 21 million shares on the date of purchase was $780 million and was included in Treasury Stock in the accompanying Consolidated Balance Sheets asfirst quarter of May 1,fiscal 2011. The remaining $220 million was included in Paid-In Capital in the accompanying Consolidated Balance Sheets as of May 1, 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 at which time the $220 million initiallyrepurchased are included in Paid-In Capital was reclassified to Treasury Stock.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.

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 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 annualquarterly report on Form 10-K10-Q of HD Supply for the period ended January 30,May 1, 2011, the outstanding balance of this term loan as of January 30,May 1, 2011 was $938$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.

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:

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 May 1,July 31, 2011 and January 30, 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 threesix months ended May 1,July 31, 2011 and May 2,August 1, 2010 were as follows (amounts in millions):

Lease obligation costs were related to certain store closings and the exit of certain businesses in fiscal 2009 and 2008. These charges were measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 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 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 quartersix 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 $10.9$11.2 billion and $9.8 billion at May 1,July 31, 2011 and January 30, 2011, respectively, compared to a carrying value of $10.3 billion and $9.3 billion at May 1,July 31, 2011 and January 30, 2011, respectively.

6.  BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES

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

Stock plans consist of shares granted under the Company’s employee stock plans. Options to purchase 2130 million and 3842 million shares of common stock for the three months ended May 1,July 31, 2011 and May 2,August 1, 2010, respectively, and options to purchase 26 million and 40 million shares of common stock for the six months ended July 31, 2011 and August 1, 2010, 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 MayJuly 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, 2011,2010, and the related Consolidated Statements of Earnings, Cash Flows and Comprehensive Income for the three-monthsix-month periods ended May 1,July 31, 2011 and May 2,August 1, 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 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 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 30, 2011, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.

/s/    /s/ KPMG LLP

Atlanta, Georgia

June 1,    August 31, 2011

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 its completion, 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 30, 2011 as filed with the Securities and Exchange Commission (“SEC”) on March 24, 2011 (“Form 10-K”) and in Item 1A of Part II and elsewhere in this report. You should read such information in conjunction with our Consolidated Financial Statements and related notes 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 firstsecond quarter of fiscal 2011, we reported Net Earnings of $812 million$1.4 billion and Diluted Earnings per Share of $0.50$0.86 compared to Net Earnings of $725 million$1.2 billion and Diluted Earnings per Share of $0.43$0.72 for the firstsecond quarter of fiscal 2010. The results forFor the first quartersix months of fiscal 2010 included a $51 million pretax charge related to the extension of our guarantee of a senior secured loan of HD Supply, Inc. (“HD Supply Guarantee Extension”). Excluding this charge,2011, we reported Net Earnings were $758 millionof $2.2 billion and Diluted Earnings per Share were $0.45of $1.36 compared to Net Earnings of $1.9 billion and Diluted Earnings per Share of $1.14 for the first quartersix months of fiscal 2010.

Net Sales decreased 0.2%increased 4.2% to $16.8$20.2 billion for the firstsecond quarter of fiscal 2011 from $16.9$19.4 billion for the second quarter of fiscal 2010. For the first six months of fiscal 2011, Net Sales increased 2.2% to $37.1 billion from $36.3 billion for the first quartersix months of fiscal 2010. Our comparable store sales decreased 0.6%increased 4.3% in the firstsecond quarter of fiscal 2011, driven primarily by a 2.1% decrease3.3% increase in our comparable store customer transactions. Our comparable store average ticket was $53.34 for the first quarter of fiscal 2011, a 1.5% increase compared to the same period last year.ticket. Comparable store sales for our U.S. stores decreased 0.7%increased 3.5% in the firstsecond quarter of fiscal 2011.

In the first quartersix months of fiscal 2011, we continued to focus on the 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 simplifying the business. The roll out of our Customers FIRST training to all store associates and support staff has brought simplification and focus across the business and is part of our ongoing commitment to improve customer service levels in our stores. In the firstsecond quarter of fiscal 2011, we expandedpiloted 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 our Customers FIRST program and beganscheduling activity, we can increase the rolltime allocated to customer facing activity. We plan to have this rolled out throughout the U.S. by the end of our FIRST-for-Pro program, which is designed to drive increased customer satisfaction with our professional customers.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 were about 20%expect to complete as ofthis process in the end of the firstthird 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. In fiscal 2010, we completedSince the completion of the roll out of our Rapid Deployment Centers (“RDCs”), in fiscal 2010, we continue to improve delivery and asservice to U.S. stores and at the same time leverage the cost of moving goods. During the end of the firstsecond quarter of fiscal 2011, we had increased product flow through the RDC network by 80% compared to the same period last year. We also began implementation of a new forecasting and replenishment system forsettled our Distribution Centers (“DCs”), so that our store and DC systems will be integrated. During the first quarter of fiscal 2011, we entered into a $1.0 billion Accelerated Share Repurchase (“ASR”) agreement. We received a total of 27 million shares of our common stock under the ASR agreement in the first six months of fiscal 2011, including 6 million shares upon completionsettlement of the ASR agreement in the second quarter of fiscal 2011. Also during the first quartersix months of fiscal 2011, we repurchased an additional 836 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 greatly expand our assortment of merchandise, and we are making the investment to build these capabilities, including the roll out of “buy on-line, pick-upBuy On-Line, Pick-up in store.” Our goal is to deliver a best-in-class interconnected retail experience for our customers, and we plan to have this roll out completed byStore. We had over 100 stores with Buy On-Line, Pick-up in Store as of the end of the year.second quarter of fiscal 2011, and the roll out to our U.S. stores should be complete in the third quarter of fiscal 2011.

We opened twoone new storesstore in Mexico and closed five storesone store destroyed by a tornado during the firstsecond quarter of fiscal 2011, for a total store count of 2,245 at the end of the firstsecond quarter of fiscal 2011. As of the end of the firstsecond quarter of fiscal 2011, a total of 272273 of these stores, or 12.1%12.2%, were located in Canada, Mexico and China compared to 268 stores, or 11.9%, as of the end of the firstsecond quarter of fiscal 2010.

We generated $2.1$4.5 billion of cash flow from operations in the first quartersix months of fiscal 2011. We used a portion of this cash flow to pay $403 million of dividends, fund $301 million$1.3 billion of share repurchases in addition to shares purchased through ourunder the ASR program,agreement, pay $798 million of dividends, and fund $199$469 million in capital expenditures.

At the end of the firstsecond quarter of fiscal 2011, our long-term debt-to-equity ratio was 58.9% compared to 39.6%39.7% at the end of the firstsecond quarter of fiscal 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 13.0%13.5% for the firstsecond quarter of fiscal 2011 compared to 11.5% for the firstsecond quarter of fiscal 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/A – Not Applicable

RESULTS OF OPERATIONS

Net Sales for the firstsecond quarter of fiscal 2011 decreased 0.2%increased 4.2% to $16.8$20.2 billion from $16.9$19.4 billion for the firstsecond quarter of fiscal 2010. For the first six months of fiscal 2011, Net Sales increased 2.2% to $37.1 billion from $36.3 billion for the comparable period in fiscal 2010. The decreaseincrease in Net Sales for the second quarter and first quartersix months of fiscal 2011 reflects the impact of negativepositive comparable store sales. Total comparable store sales decreased 0.6%increased 4.3% for the firstsecond quarter of fiscal 2011 compared to an increase of 4.8%1.7% for the second quarter of fiscal 2010. For the first quartersix months of fiscal 2011, total comparable store sales increased 2.0% compared to an increase of 3.2% for the same period of fiscal 2010.

The decrease inpositive comparable store sales for the second quarter and first six months of fiscal 2011 reflects a number of factors. Our performance in the second quarter of fiscal 2011 was driven by weak performanceour seasonal business and outdoor projects, repair business from the harsh winter and spring storms, and strength in our Indoorcore departments. The majority of our departments posted positive comparable store sales for the second quarter and Outdoor Garden categories, as we experienced unseasonably cold weather conditions, particularly in our Northern division. Comparable store customer transactions decreased 2.1% in the first quartersix months of fiscal 2011, whileand comparable store average ticket increased 1.5% to $53.343.3% and 2.5% for the second quarter and first quartersix months of fiscal 2011. We saw strength across many of2011, respectively. Comparable store sales for our otherBuilding Materials, Electrical, Kitchen/Bath, Indoor Garden, Outdoor Garden and Tools product categories as Electrical, Kitchen/Bath, Tools, Plumbing, Paintwere above the Company average, and Flooring posted positive comparable store sales during the first quarter of fiscal 2011.for Hardware posted negative comparable store sales but outperformedwas at the Company average for the firstsecond quarter of fiscal 2011. Comparable store sales for our Paint, Plumbing and Flooring product categories were positive but less than the Company average for the second quarter of fiscal 2011. Comparable store sales in Lighting were flat while Lumber and Millwork were negative for the second quarter of 2011.

Gross Profit was $5.8increased 4.5% to $6.9 billion for both the firstsecond quarter of fiscal 2011 andfrom $6.6 billion for the second quarter of fiscal 2010. Gross Profit increased 2.7% to $12.7 billion for the first quartersix 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 288 basis points to 34.6%34.0% for the firstsecond quarter of fiscal 2011 compared to 34.4%33.9% for the firstsecond quarter of fiscal 2010. Our U.S. stores experienced 24For 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 ofpoints. The increase in gross profit margin expansion in the second quarter and first quartersix months of fiscal 2011 due to lower penetration of lower margin seasonal categories, fewer deferred financing programs andwas driven by benefits arising from our merchandising portfolio approach and our supply chain transformation.transformation in the U.S.

Selling, General and Administrative Expense (“SG&A”) decreased 1.7%increased 1.4% to $4.0$4.2 billion for the firstsecond quarter of fiscal 2011 from $4.1 billion for the firstsecond quarter of fiscal 2010, and was $8.2 billion for the first six months of both fiscal 2011 and 2010. As a percent of Net Sales, SG&A was 23.8%20.7% for the firstsecond quarter of fiscal 2011 compared to 24.2%21.3% for the firstsecond quarter of fiscal 2010. For the first six months of fiscal 2011, SG&A as a percent of Net Sales was 22.1% compared to 22.6% for the same period last year. The decrease in SG&A as a percent of Net Sales for the second quarter and first quartersix months of fiscal 2011 was driven by lower payroll and management bonus, reflectingreflects expense leverage in the lowerpositive comparable store sales environment inpartially offset by a $32 million impairment charge for a non-core carpet cleaning and cabinet refinishing business that the first quarter of fiscal 2011, as well as lower advertising expenses, reflecting our decisionCompany intends to shift more advertising spend into the second quarter of 2011 to align our advertising spending with our top selling months.sell.

Depreciation and Amortization decreased 3.4%2.5% to $397$396 million for the firstsecond quarter of fiscal 2011 from $411$406 million for the second quarter of fiscal 2010. For the first quartersix months of fiscal 2011, Depreciation and Amortization decreased 2.9% to $793 million from $817 million for the same period of fiscal 2010. Depreciation and Amortization as a percent of Net Sales was 2.4%2.0% for both the firstsecond quarter of fiscal 2011 compared to 2.1% for the second quarter of fiscal 2010, and was 2.1% for the first quartersix months of fiscal 2011 compared to 2.3% for the same period in fiscal 2010. The decrease in Depreciation and Amortization was a function of an increased number of fully depreciated assets.

Operating Income increased 9.0%12.0% to $1.4$2.3 billion for the firstsecond quarter of fiscal 2011 from $1.3$2.0 billion for the firstsecond quarter of fiscal 2010. Operating Income as a percent of Net Sales was 8.5%increased 10.8% to $3.7 billion for the first quartersix months of fiscal 2011 compared to 7.7%from $3.4 billion for the first quartersix months of fiscal 2010.

In the firstsecond quarter of fiscal 2011, we recognized $139$146 million of Interest and Other, net, compared to $189$148 million in the second quarter of fiscal 2010. We recognized $285 million of Interest and Other, net, in the first six months of fiscal 2011 compared to $337 million for the firstsame period last year. Interest and Other, net, as a percent of Net Sales was 0.7% for the second quarter of fiscal 2011 compared to 0.8% for the second quarter of fiscal 2010. For the first six months of fiscal 2011, Interest and Other, net, as a percent of Net Sales was 0.8% compared to 0.9% for the first quarter of fiscal 2011 compared to 1.1% for the first quarter of fiscal 2010.same period last year. Interest and Other, net, for the first six months of fiscal 2010 reflects a $51 million pretax charge taken in the first quarter of fiscal 2010 related to the extension of our guarantee of a senior secured loan of HD Supply, Guarantee Extension. Excluding this charge, Interest and Other, net, as a percent of Net Sales was 0.8% for the first quarter of fiscal 2010, flat compared to the first quarter of fiscal 2011.Inc.

Our combined effective income tax rate was 36.7%36.6% for the first quartersix months of fiscal 2011 compared to 35.0%36.5% for the comparable period of fiscal 2010. The first quarter of fiscal 2010 included benefits arising from favorable settlements with various state taxing authorities.

Diluted Earnings per Share were $0.50$0.86 and $1.36 for the second quarter and first quartersix months of fiscal 2011, respectively, compared to $0.43$0.72 and $1.14 for the second quarter and first quartersix months of fiscal 2010, an increase of 16.3%. Excluding the $51 million HD Supply Guarantee Extension charge from the first quarter of fiscal 2010 results,respectively. Diluted Earnings per Share increased 11.1% for the second quarter and first quarter of fiscal 2011.

To provide clarity, internally and externally, about our operating performance, we supplement our reporting with non-GAAP financial measures. 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 that impact the comparability of underlying business results from period to period. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.

There were no adjustments for the first quartersix months of fiscal 2011 for eventsreflect $0.04 and $0.06, respectively, of unusual nature or frequency. The results forbenefit from repurchases of our common stock in the first quarter of fiscal 2010 reflect the $51 million pretax charge related to the HD Supply Guarantee Extension as described more fully in Note 4 to the Consolidated Financial Statements. The following reconciles the non-GAAP financial measures excluding this charge to the corresponding GAAP measures for the first quarter of fiscal 2010 (amounts in millions, except per share data):last 12 months.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides us with a significant source of liquidity. During the first quartersix months of fiscal 2011, Net Cash Provided by Operating Activities was $2.1$4.5 billion compared to $2.0$3.4 billion for the same period of fiscal 2010. This increase was primarily a result of an increase in Net Earnings.Earnings, changes in inventory levels and other net working capital items.

Net Cash Used in Investing Activities for the first quartersix months of fiscal 2011 was $184$442 million compared to $140$363 million for the same period of fiscal 2010. This change was primarily due to increased Capital Expenditures.

Net Cash Used in Financing Activities for the first quartersix months of both fiscal 2011 and 2010 was $664 million compared with $893 million for the same period of fiscal 2010. This change was primarily the result of $1.0 billion in net proceeds from long-term borrowings, partially offset by $793 million more in repurchases of common stock in the first quarter of fiscal 2011 compared to the same period of fiscal 2010.

$2.0 billion. In March 2011, we 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 our common stock, and the balance 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 2011 we paid $1.0 billion to the financial institution and received an initial delivery of approximately 21 million shares. The transaction was completed in the second quarter of fiscal 2011, at which time we received an additional 6 million shares. The final numberAlso during the first six months of fiscal 2011, we repurchased an additional 36 million shares delivered upon settlement of the agreement was determined with reference to the average price of our common stock overfor $1.3 billion through the term of the ASR agreement.open market. As of the end of the firstsecond quarter of fiscal 2011, $8.6$7.6 billion remained under our share repurchase authorization.

In May 2010, we 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, we settled this forward starting interest rate swap agreement for an immaterial amount.

In March 2011, we entered into an interest rate swap that expires on March 1, 2016, with a notional amount of $500 million, accounted for as a fair value hedge, that swaps fixed rate interest on our 5.40% Senior Notes due March 1, 2016 for variable interest equal to LIBOR plus 300 basis points. At May 1, 2011, the approximate fair value of this agreement was an asset of $8 million, which is the estimated amount we would have received to settle the agreement.

We have commercial paper programs that allow for borrowings up to $2.0 billion. In connection with the programs, we have a back-up credit facility with a consortium of banks for borrowings up to $2.0 billion. As of May 1,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 May 1,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 May 1,July 31, 2011, we had $1.8$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, 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.

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 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 May 1,July 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 Company was contacted by district attorneys in three counties in California within the South Coast Air Quality Management District (the “SCAQMD”) and the City of Los 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 sold products with higher-than-permitted VOC levels. This action seeks $30 million in civil penalties and injunctive relief. The second action was brought by the Los Angeles City Attorney and the district attorneys of each of Orange, Riverside and San Bernadino counties and alleges that the Company engaged in 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 outcomes of these matters, it does not expect either to have a material adverse effect on its consolidated financial condition or results of operations.

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 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; levels of consumer confidence; 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 Sales of Equity Securities and Use of Proceeds

During the firstsecond quarter of fiscal 2011, the Company credited 43,2791,309 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 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.

INDEX TO EXHIBITS

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