HD Supply 10-Q 7 Sep 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 31, 2016	Sep. 02, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	HD Supply Holdings, Inc.
Entity Central Index Key	1,573,097
Document Type	10-Q
Document Period End Date	Jul. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--01-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		201,025,941
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply Holdings, Inc.) - USD ($) shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	$ 2,016	$ 1,937	$ 3,797	$ 3,597
Cost of sales	1,336	1,289	2,508	2,390
Gross Profit	680	648	1,289	1,207
Operating expenses:
Selling, general and administrative	414	397	815	773
Depreciation and amortization	24	28	47	55
Restructuring	5		12
Total operating expenses	443	425	874	828
Operating Income	237	223	415	379
Interest expense	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Income (Loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	$ 96	$ 102	$ 86	$ 349
Weighted Average Common Shares Outstanding (thousands)
Basic (in shares)	199,250	196,893	199,029	196,120
Diluted (in shares)	201,978	201,809	201,615	201,221
Basic Earnings Per Share:
Income from Continuing Operations (in dollars per share)	$ 0.51	$ 0.53	$ 0.44	$ 1.72
Income (Loss) from Discontinued Operations (in dollars per share)	(0.02)	0.03	(0.02)	0.07
Net Income (in dollars per share)	0.49	0.55	0.42	1.79
Diluted Earnings Per Share:
Income from Continuing Operations (in dollars per share)	0.51	0.52	0.44	1.68
Income (Loss) from Discontinued Operations (in dollars per share)	(0.02)	0.02	(0.02)	0.06
Net Income (in dollars per share)	$ 0.49	$ 0.54	$ 0.42	$ 1.74

CONSOLIDATED BALANCE SHEETS (HD

CONSOLIDATED BALANCE SHEETS (HD Supply Holdings, Inc.) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Current assets:
Cash and cash equivalents	$ 313	$ 269
Receivables, less allowance for doubtful accounts of $13 and $13	1,101	872
Inventories	887	770
Current assets of discontinued operations		43
Other current assets	42	29
Total current assets	2,343	1,983
Property and equipment, net	306	310
Goodwill	2,869	2,869
Intangible assets, net	119	127
Deferred tax asset	633	685
Non-current assets of discontinued operations		20
Other assets	19	22
Total assets	6,289	6,016
Current liabilities:
Accounts payable	721	490
Accrued compensation and benefits	117	142
Current installments of long-term debt	9	9
Current liabilities of discontinued operations		30
Other current liabilities	200	200
Total current liabilities	1,047	871
Long-term debt, excluding current installments	4,299	4,302
Non-current liabilities of discontinued operations		1
Other liabilities	102	98
Total liabilities	5,448	5,272
Stockholders' equity:
Common stock, par value $0.01; 1 billion shares authorized; 200.9 million and 200.1 million shares issued and outstanding at July 31, 2016 and January 31, 2016, respectively	2	2
Paid-in capital	3,934	3,909
Accumulated deficit	(3,076)	(3,150)
Accumulated other comprehensive loss	(14)	(16)
Treasury stock, at cost, 0.13 million and 0.06 million shares at July 31, 2016 and January 31, 2016, respectively	(5)	(1)
Total stockholders' equity	841	744
Total liabilities and stockholder's equity	$ 6,289	$ 6,016

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) shares in Thousands, $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 13	$ 13
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000	1,000,000
Common stock, shares issued	200,900	200,100
Common stock, shares outstanding	200,900	200,100
Treasury stock
Treasury stock, shares	130	60

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply Holdings, Inc.) - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 84	$ 351
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	72
Provision for uncollectibles	3	4
Non-cash interest expense	9	14
Loss on extinguishment of debt	115
Stock-based compensation expense	11	10
Deferred income taxes	52	19
Loss on sales of businesses, net	3
Other		(1)
Changes in assets and liabilities:
(Increase) decrease in receivables	(232)	(252)
(Increase) decrease in inventories	(118)	(153)
(Increase) decrease in other current assets	(9)	(2)
Increase (decrease) in accounts payable and accrued liabilities	196	217
Increase (decrease) in other long-term liabilities	(1)	(181)
Net cash provided by (used in) operating activities	164	98
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(32)	(43)
Proceeds from sales of property and equipment	1	1
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	6	(42)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under employee benefit plans	14	41
Purchase of treasury shares	(14)	(31)
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver debt		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(2)	(1)
Net cash provided by (used in) financing activities	(127)	29
Effect of exchange rates on cash and cash equivalents	1	(1)
Increase (decrease) in cash and cash equivalents	44	84
Cash and cash equivalents at beginning of period	269	85
Cash and cash equivalents at end of period	$ 313	$ 169

CONSOLIDATED STATEMENTS OF OPE6

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply, Inc.) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	$ 2,016	$ 1,937	$ 3,797	$ 3,597
Cost of sales	1,336	1,289	2,508	2,390
Gross Profit	680	648	1,289	1,207
Operating expenses:
Selling, general and administrative	414	397	815	773
Depreciation and amortization	24	28	47	55
Restructuring	5		12
Total operating expenses	443	425	874	828
Operating Income	237	223	415	379
Interest expense	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Income (Loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	96	102	86	349
HD Supply, Inc. (Total HDS)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	2,016	1,937	3,797	3,597
Cost of sales	1,336	1,289	2,508	2,390
Gross Profit	680	648	1,289	1,207
Operating expenses:
Selling, general and administrative	414	397	815	773
Depreciation and amortization	24	28	47	55
Restructuring	5		12
Total operating expenses	443	425	874	828
Operating Income	237	223	415	379
Interest expense	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Income (Loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	$ 96	$ 102	$ 86	$ 349

CONSOLIDATED BALANCE SHEETS (H7

CONSOLIDATED BALANCE SHEETS (HD Supply, Inc.) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Current assets:
Cash and cash equivalents	$ 313	$ 269
Receivables, less allowance for doubtful accounts of $13 and $13	1,101	872
Inventories	887	770
Current assets of discontinued operations		43
Other current assets	42	29
Total current assets	2,343	1,983
Property and equipment, net	306	310
Goodwill	2,869	2,869
Intangible assets, net	119	127
Deferred tax asset	633	685
Non-current assets of discontinued operations		20
Other assets	19	22
Total assets	6,289	6,016
Current liabilities:
Accounts payable	721	490
Accrued compensation and benefits	117	142
Current installments of long-term debt	9	9
Current liabilities of discontinued operations		30
Other current liabilities	200	200
Total current liabilities	1,047	871
Long-term debt, excluding current installments	4,299	4,302
Non-current liabilities of discontinued operations		1
Other liabilities	102	98
Total liabilities	5,448	5,272
Stockholders' equity:
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at July 31, 2016 and January 31, 2016	2	2
Paid-in capital	3,934	3,909
Accumulated deficit	(3,076)	(3,150)
Accumulated other comprehensive loss	(14)	(16)
Total stockholders' equity	841	744
Total liabilities and stockholder's equity	6,289	6,016
HD Supply, Inc. (Total HDS)
Current assets:
Cash and cash equivalents	310	266
Receivables, less allowance for doubtful accounts of $13 and $13	1,101	872
Inventories	887	770
Current assets of discontinued operations		43
Other current assets	42	29
Total current assets	2,340	1,980
Property and equipment, net	306	310
Goodwill	2,869	2,869
Intangible assets, net	119	127
Deferred tax asset	633	685
Non-current assets of discontinued operations		20
Other assets	19	22
Total assets	6,286	6,013
Current liabilities:
Accounts payable	721	490
Accrued compensation and benefits	117	142
Current installments of long-term debt	9	9
Current liabilities of discontinued operations		30
Other current liabilities	200	199
Total current liabilities	1,047	870
Long-term debt, excluding current installments	4,299	4,302
Non-current liabilities of discontinued operations		1
Other liabilities	102	98
Total liabilities	5,448	5,271
Stockholders' equity:
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at July 31, 2016 and January 31, 2016
Paid-in capital	3,796	3,786
Accumulated deficit	(2,944)	(3,028)
Accumulated other comprehensive loss	(14)	(16)
Total stockholders' equity	838	742
Total liabilities and stockholder's equity	$ 6,286	$ 6,013

CONSOLIDATED BALANCE SHEETS (P8

CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 13	$ 13
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	200,900,000	200,100,000
Common stock, shares outstanding	200,900,000	200,100,000
HD Supply, Inc. (Total HDS)
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 13	$ 13
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	1,000	1,000
Common stock, shares outstanding	1,000	1,000

CONSOLIDATED STATEMENTS OF CAS9

CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply, Inc.) - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 84	$ 351
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	72
Provision for uncollectibles	3	4
Non-cash interest expense	9	14
Loss on extinguishment of debt	115
Stock-based compensation expense	11	10
Deferred income taxes	52	19
Loss on sales of businesses, net	3
Other		(1)
Changes in assets and liabilities:
(Increase) decrease in receivables	(232)	(252)
(Increase) decrease in inventories	(118)	(153)
(Increase) decrease in other current assets	(9)	(2)
Increase (decrease) in accounts payable and accrued liabilities	196	217
Increase (decrease) in other long-term liabilities	(1)	(181)
Net cash provided by (used in) operating activities	164	98
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(32)	(43)
Proceeds from sales of property and equipment	1	1
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	6	(42)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver debt		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(2)	(1)
Net cash provided by (used in) financing activities	(127)	29
Effect of exchange rates on cash and cash equivalents	1	(1)
Increase (decrease) in cash and cash equivalents	44	84
Cash and cash equivalents at beginning of period	269	85
Cash and cash equivalents at end of period	313	169
HD Supply, Inc. (Total HDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	84	351
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	72
Provision for uncollectibles	3	4
Non-cash interest expense	9	14
Loss on extinguishment of debt	115
Stock-based compensation expense	11	10
Deferred income taxes	52	19
Loss on sales of businesses, net	3
Other		(1)
Changes in assets and liabilities:
(Increase) decrease in receivables	(232)	(252)
(Increase) decrease in inventories	(118)	(153)
(Increase) decrease in other current assets	(9)	(2)
Increase (decrease) in accounts payable and accrued liabilities	196	217
Increase (decrease) in other long-term liabilities	(1)	(181)
Net cash provided by (used in) operating activities	164	98
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(32)	(43)
Proceeds from sales of property and equipment	1	1
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	6	(42)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver debt		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(2)	(1)
Net cash provided by (used in) financing activities	(127)	19
Effect of exchange rates on cash and cash equivalents	1	(1)
Increase (decrease) in cash and cash equivalents	44	74
Cash and cash equivalents at beginning of period	266	85
Cash and cash equivalents at end of period	$ 310	$ 159

NATURE OF BUSINESS AND BASIS OF

NATURE OF BUSINESS AND BASIS OF PRESENTATION	6 Months Ended
	Jul. 31, 2016
NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS AND BASIS OF PRESENTATION	NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business HD Supply Holdings, Inc. (‘‘Holdings’’) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS (“HD Supply” or the “Company”), is one of the largest industrial distribution companies in North America. The Company specializes in three distinct market sectors: Maintenance, Repair & Operations; Infrastructure; and Specialty Construction. Through approximately 500 locations across 48 U.S. states and six Canadian provinces, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 13,000 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services include more than 800,000 stock-keeping units (“SKUs”) of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from infrastructure and construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in three reportable segments. The reportable segments are Facilities Maintenance, Waterworks, and Construction & Industrial - White Cap. In addition, the consolidated financial statements include an operating segment, Home Improvement Solutions, and Corporate, which is comprised of enterprise-wide functional departments. Basis of Presentation In management’s opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair statement of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. For a more complete discussion of the Company’s significant accounting policies and other information, you should read this report in conjunction with the Company’s annual report on Form 10-K for the year ended January 31, 2016, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). Certain amounts in the prior-period financial statements have been reclassified to conform to the current period’s presentation. F iscal Year HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal years ending January 29, 2017 (“fiscal 2016”) and January 31, 2016 (“fiscal 2015”) both include 52 weeks. The three months ended July 31, 2016 (“second quarter 2016”) and August 2, 2015 (“second quarter 2015”) both include 13 weeks. The six months ended July 31, 2016 and August 2, 2015 both include 26 weeks. Principles of Consolidation The consolidated financial statements of Holdings present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HD Supply, Inc. present the results of operations, financial position and cash flows of HDS. and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented. Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with GAAP. Actual results could differ from these estimates. Self-Insurance HD Supply has a high deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability and workers’ compensation, and is self-insured for medical claims and certain legal claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At July 31, 2016 and January 31, 2016, self-insurance reserves totaled approximately $82 million and $84 million, respectively.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	6 Months Ended
	Jul. 31, 2016
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS	NOTE 2 — DISCONTINUED OPERATIONS In May 2016, the Company completed the sale of its Interior Solutions business, which is subject to a customary working capital adjustment. The Company received cash proceeds of approximately $34 million, net of $2 million of transaction costs. As a result of the sale, the Company recorded a $6 million pre-tax loss. In October 2015, the Company completed the sale of its Power Solutions business. During the second quarter of fiscal 2016, the Company received cash proceeds of $3 million in accordance with the final working capital settlement, and, as a result, recorded an additional $3 million pre-tax gain. Summary Financial Information In accordance with Accounting Standards Codification (“ASC”) 205-20, “Discontinued Operations” and Accounting Standards Update (“ASU”) 2014-08, “Reporting discontinued operations and disclosure of disposals of components of an entity,” the results of Interior Solutions and Power Solutions are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain/loss on the disposition of businesses, net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income. All Consolidated Statements of Operations and Comprehensive Income presented have been revised to reflect this presentation. The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Three Months Ended Six Months Ended July 31, 2016 August 2, July 31, August 2, Net sales $ $ $ $ Cost of sales Gross Profit Operating expenses: Selling, general and administrative Depreciation and amortization — Total operating expenses Operating Income (Loss) ) ) Loss on sales of discontinued operations — — Income (loss) before provision for income taxes ) ) Provision (benefit) for income taxes ) ) Income (loss) from discontinued operations, net of tax $ ) $ $ ) $ At July 31, 2016 and January 31, 2016, the carrying amounts of major classes of assets and liabilities of discontinued operations included in the Consolidated Balance Sheets were as follows (amounts in millions): July 31, January 31, Current assets: Receivables, less allowance for doubtful accounts of $0 and $1 $ — $ Inventories — Total current assets — Intangible assets, net — Other non-current assets — Total assets of discontinued operations $ — $ Current Liabilities: Accounts payable $ — $ Accrued compensation and benefits — Other current liabilities — Total current liabilities — Other non-current liabilities — Total liabilities of discontinued operations $ — $ The following table provides additional detail related to the net cash provided by (used in) operating and investing activities of the discontinued operations (amounts in millions): Six Months Ended July 31, August 2, Net cash flows provided by (used in) operating activities $ ) $ Cash flows from investing activities: Capital expenditures ) ) Proceeds from sales of businesses, net — Net cash flows provided by (used in) investing activities $ $ )

DEBT

DEBT	6 Months Ended
	Jul. 31, 2016
DEBT
DEBT	NOTE 3 — DEBT HDS’s long-term debt as of July 31, 2016 and January 31, 2016 consisted of the following (dollars in millions): July 31, 2016 January 31, 2016 Outstanding Interest Outstanding Interest Senior ABL Facility due 2018 $ — — $ — — Term Loans due 2021 December 2014 First Priority Notes due 2021 April 2016 Senior Unsecured Notes due 2024 — — October 2012 Senior Unsecured Notes due 2020 — — February 2013 Senior Unsecured Notes due 2020 Total gross long-term debt $ $ Less unamortized discount ) ) Less unamortized deferred financing costs ) ) Total net long-term debt $ $ Less current installments ) ) Total net long-term debt, excluding current installments $ $ (1) Represents the stated rate of interest, without including the effect of discounts or premiums. On April 11, 2016, HDS issued $1,000 million of 5.75% Senior Unsecured Notes due 2024 (the “April 2016 Senior Unsecured Notes”) at par. HDS received approximately $985 million, net of transaction fees. The transaction fees of $15 million are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the notes. On April 27, 2016, HDS used the net proceeds from the April 2016 Senior Unsecured Notes issuance, together with available cash, to redeem all of the outstanding $1,000 million aggregate principal of the 11.5% Senior Unsecured Notes due 2020 (the “October 2012 Senior Unsecured Notes”), and pay a $106 million make-whole premium calculated in accordance with the terms of the indenture governing such notes and pay $4 million of accrued but unpaid interest to the redemption date. As a result, the Company incurred a $115 million loss on extinguishment of the debt, which includes the $106 million make-whole premium and the write-off of $9 million of unamortized deferred financing costs, in accordance with ASC 470-50, “Debt — Modifications and Extinguishments.” Senior Credit Facilities Asset Based Lending Facility HDS’s Senior Asset Based Lending Facility due 2018 (“Senior ABL Facility”) provides for senior secured revolving loans and letters of credit of up to a maximum aggregate principal amount of $1,500 million (subject to availability under a borrowing base). Extensions of credit under the Senior ABL Facility are limited by a borrowing base calculated periodically based on specified percentages of the value of eligible inventory and eligible accounts receivable, subject to certain reserves and other adjustments. A portion of the Senior ABL Facility is available for letters of credit and swingline loans. As of July 31, 2016, HDS had $1,289 million of additional available borrowings under the Senior ABL Facility (after giving effect to the borrowing base limitations and approximately $34 million in letters of credit issued and including $89 million of borrowings available on qualifying cash balances). At HDS’s option, the interest rates applicable to the loans under the Senior ABL Facility are based (i) in the case of U.S. dollar-denominated loans, either at London Interbank Offered Rate (“LIBOR”) plus an applicable margin, or Prime Rate plus an applicable margin and (ii) in the case of Canadian dollar-denominated loans, either the banker’s acceptance (“BA”) rate plus an applicable margin, or the Canadian Prime Rate plus an applicable margin. The margins applicable for each elected interest rate are subject to a pricing grid, as defined in the agreement governing the Senior ABL Facility, based on average excess availability for the previous fiscal quarter. The Senior ABL Facility also contains a letter of credit fee computed at a rate per annum equal to the Applicable Margin (as defined in the Senior ABL Facility agreement) then in effect for LIBOR Loans (as defined in the Senior ABL Facility agreement) and an unused commitment fee subject to a pricing grid, included in the agreement governing the Senior ABL Facility, based on the Average Daily Used Percentage (as defined in the agreement). The Senior ABL Facility also permits HDS to add one or more incremental term loan facilities to be included in the Senior ABL Facility or one or more revolving credit facility commitments to be included in the Senior ABL Facility. The Senior ABL Facility will mature on June 28, 2018 (or the maturity date under HDS’s Term Loan Facility, if earlier). Senior Secured Term Loan Facility HDS’s Senior Term Facility consists of a senior secured term loan facility (the ‘‘Term Loan Facility,’’ and the term loans thereunder, the ‘‘Term Loans’’) providing for Term Loans in an original aggregate principal amount of $850 million. The Term Loan Facility will mature on August 13, 2021 (the ‘‘Term Loan Maturity Date’’). The Term Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Term Loan Facility beginning December 2015 with the balance payable on the Term Loan Maturity Date. The Term Loans bear interest at the applicable margin for borrowings of 2.75% for LIBOR borrowings and 1.75% for base rate borrowings, with the LIBOR floor at 1.00%. For additional information on our Senior ABL Facility or Term Loan Facility (collectively, the “Senior Credit Facilities”), including guarantees and security, please refer to the Notes to Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 31, 2016. Secured Notes 5.25% Senior Secured First Priority Notes due 2021 HDS’s 5.25% Senior Secured First Priority Notes due 2021 (the “December 2014 First Priority Notes”) bear interest at 5.25% per annum and will mature on December 15, 2021. Interest is paid semi-annually in arrears on June 15 th and December 15 th of each year. Redemption HDS may redeem the December 2014 First Priority Notes, in whole or in part, at any time (1) prior to December 15, 2017, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the indenture governing the December 2014 First Priority Notes and (2) on and after December 15, 2017, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on December 15 of the year set forth below. Year Percentage 2017 % 2018 % 2019 % 2020 and thereafter % In addition, at any time prior to December 15, 2017, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the December 2014 First Priority Notes with the proceeds of certain equity offerings at a redemption price of 105.25% of the principal amount of the December 2014 First Priority Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the December 2014 First Priority Notes are redeemed, an aggregate principal amount of December 2014 First Priority Notes equal to at least 50% of the original aggregate principal amount of December 2014 First Priority Notes must remain outstanding immediately after each such redemption of December 2014 First Priority Notes. Collateral The December 2014 First Priority Notes and the related guarantees are secured by a first-priority security interest in substantially all of the tangible and intangible assets of HDS and the Subsidiary Guarantors (other than the ABL Priority Collateral (both as defined in the indenture governing the December 2014 First Priority Notes), in which the December 2014 First Priority Notes and the related guarantees have a second-priority security interest), including pledges of all capital stock of HDS’s restricted subsidiaries directly owned by HDS and the Subsidiary Guarantors (but only up to 65% of each series of capital stock of each direct Foreign Subsidiary owned by HDS or any Subsidiary Guarantor), subject to certain thresholds, exceptions and permitted liens, and excluding any Excluded Assets and Excluded Subsidiary Securities (each as defined in the indenture governing the December 2014 First Priority Notes, and together, the “Cash Flow Priority Collateral”). The indenture governing the December 2014 First Priority Notes and the applicable collateral documents provide that any capital stock and other securities of any of HDS’s subsidiaries will be excluded from the collateral to the extent the pledge of such capital stock or other securities to secure the December 2014 First Priority Notes would cause such subsidiary to be required to file separate financial statements with the U.S. Securities and Exchange Commission (“SEC”) pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time). For additional information on the December 2014 First Priority Notes, including guarantees and security, please refer to the Notes to Consolidated Financial Statements of our Form 10-K, for the fiscal year ended January 31, 2016. Unsecured Notes 5.75% Senior Unsecured Notes due 2024 HDS issued $1,000 million aggregate principal amount of 5.75% Senior Notes (“April 2016 Senior Unsecured Notes”) under an Indenture, dated as of April 11, 2016 (“April 2016 Senior Unsecured Notes Indenture”) among HDS, certain subsidiaries of HDS as guarantors and the Trustee. The April 2016 Senior Unsecured Notes bear interest at a rate of 5.75% and will mature on April 15, 2024. Interest is paid semi-annually on April 15 th and October 15 th of each year with first interest payment scheduled October 15, 2016. The April 2016 Senior Unsecured Notes are unsecured senior indebtedness of HDS and rank equal in right of payment with all of HDS’s existing and future senior indebtedness, senior in right of payment to all of HDS’s existing and future subordinated indebtedness, and effectively subordinated to all of HDS’s existing and future indebtedness, including, without limitation, indebtedness under the Senior Credit Facilities and December 2014 First Priority Notes, to the extent of the value of the collateral securing each indebtedness. The April 2016 Senior Unsecured Notes are guaranteed, on a senior unsecured basis, by each of HDS’s direct and indirect domestic existing and future subsidiaries that is a wholly owned domestic subsidiary (other than certain excluded subsidiaries), and by each other domestic subsidiary that is a borrower under the Senior ABL Facility or that guarantees HDS’s obligations under any credit facility or capital markets securities. These guarantees are subject to release under customary circumstances as stipulated in the April 2016 Senior Unsecured Notes Indenture. Redemption HDS may redeem the April 2016 Senior Unsecured Notes, in whole or in part, at any time (1) prior to April 15, 2019, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the April 2016 Senior Unsecured Notes Indenture and (2) on and after April 15, 2019, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on April 15 of the year set forth below. Year Percentage 2019 % 2020 % 2021 % 2022 and thereafter % In addition, at any time prior to April 15, 2019, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the April 2016 Senior Unsecured Notes with the proceeds of certain equity offerings at a redemption price of 105.75% of the principal amount in respect of the April 2016 Senior Unsecured Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the April 2016 Senior Unsecured Notes are redeemed, an aggregate principal amount of April 2016 Senior Unsecured Notes equal to at least 50% of the original aggregate principal amount of April 2016 Senior Unsecured Notes must remain outstanding immediately after each such redemption of April 2016 Senior Unsecured Notes. 7.5% Senior Unsecured Notes due 2020 HDS’s 7.5% Senior Unsecured Notes due 2020 (the ‘‘February 2013 Senior Unsecured Notes’’) bear interest at 7.5% per annum and will mature on July 15, 2020. Interest is paid semi-annually in arrears on April 15 th and October 15 th of each year. Redemption HDS may redeem the February 2013 Senior Unsecured Notes, in whole or in part, at any time (1) prior to October 15, 2016, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the indenture governing the February 2013 Senior Unsecured Notes and (2) on and after October 15, 2016, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on October 15 of the year set forth below. Year Percentage 2016 % 2017 % 2018 and thereafter % 11.5% Senior Unsecured Notes due 2020 HDS’s 11.5% Senior Unsecured Notes due 2020 (the ‘‘October 2012 Senior Unsecured Notes’’) bore interest at 11.5% per annum with a maturity date of July 15, 2020. Interest was paid semi-annually in arrears on April 15 th and October 15 th of each year, prior to the April 27, 2016 redemption of all of the outstanding $1,000 million aggregate principal amount of the October 2012 Senior Unsecured Notes. Debt covenants HDS’s outstanding debt agreements contain various restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness and dividend payments and restrictions on the use of proceeds from asset dispositions. As of July 31, 2016, HDS was in compliance with all such covenants that were in effect on such date.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Jul. 31, 2016
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	NOTE 4 — FAIR VALUE MEASUREMENTS The fair value measurements and disclosure principles of GAAP (ASC 820, “Fair Value Measurements and Disclosures”) define fair value, establish a framework for measuring fair value and provide disclosure requirements about fair value measurements. These principles define a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly; Level 3 — Unobservable inputs in which little or no market activity exists. The Company’s financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of July 31, 2016 and January 31, 2016 (amounts in millions): As of July 31, 2016 As of January 31, 2016 Recorded Estimated Recorded Estimated Senior ABL Facility $ — $ — $ — $ — Term Loans and Notes Total $ $ $ $ (1) These amounts do not include accrued interest; accrued interest is classified as Other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts, premiums, or deferred financing costs. The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the long-term debt. Management’s fair value estimates were based on quoted prices for recent trades of HDS’s long-term debt, recent similar credit facilities initiated by companies with like credit quality in similar industries, quoted prices for similar instruments, and inquiries with certain investment communities.

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jul. 31, 2016
INCOME TAXES
INCOME TAXES	NOTE 5 — INCOME TAXES For the six months ended July 31, 2016, the Company’s combined federal, state, and foreign effective tax rate is an expense of 39.7%. The effective rate for continuing operations for the six months ended August 2, 2015 was a benefit of 103.6%, mainly driven by a decrease of $189 million in the Company’s unrecognized U.S. federal and state tax benefits related to the Joint Committee on Taxation’s February 19, 2015 approval and finalization of a tentative settlement with the Internal Revenue Service’s Office of Appeals in conjunction with a Revenue Agent’s report issued in January 2013. For additional information, please refer to the Notes to Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 31, 2016. The Company’s effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where it operates, restructuring and other one-time charges, as well as discrete events, such as settlements of future audits. As of January 31, 2016, the Company’s unrecognized tax benefits in accordance with the income taxes principles of GAAP (ASC 740, “Income Taxes”) were $9 million. As of July 31, 2016, the Company’s unrecognized tax benefits remained unchanged. The Company’s ending net accrual for interest and penalties related to unrecognized tax benefits as of January 31, 2016 was zero and remained unchanged as of July 31, 2016. At July 31, 2016 and January 31, 2016, the Company’s valuation allowance on its U.S. deferred tax assets was approximately $5 million and $6 million, respectively. Each reporting period management assesses available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

BASIC AND DILUTED WEIGHTED AVER

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES	6 Months Ended
	Jul. 31, 2016
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES	NOTE 6—BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES The following basic and diluted weighted average common shares information is provided for Holdings. The reconciliation of basic to diluted weighted average common shares for the six months ended July 31, 2016 and August 2, 2015 was as follows (in thousands): Three Months Ended Six Months Ended July 31, August 2, July 31, August 2, Weighted-average common shares Effect of potentially dilutive stock plan securities Diluted weighted-average common shares Stock plan securities excluded from dilution (1) (1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock plan securities consist of securities (stock options, restricted stock and restricted stock units) granted under Holdings’ stock-based compensation plans.

SUPPLEMENTAL BALANCE SHEET AND

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION	6 Months Ended
	Jul. 31, 2016
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION	NOTE 7 — SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION Receivables Receivables consisted of the following (amounts in millions): July 31, January 31, Trade receivables, net of allowance for doubtful accounts $ $ Vendor rebate receivables Other receivables Total receivables, net $ $ Other Current Liabilities Other current liabilities consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. July 31, January 31, July 31, January 31, Accrued interest $ $ $ $ Accrued non-income taxes Other Total other current liabilities $ $ $ $ Supplemental Cash Flow Information Cash paid for interest in the six months ended July 31, 2016 and August 2, 2015 was $161 million and $201 million, respectively. Cash paid for income taxes, net of refunds, in the six months ended July 31, 2016 and August 2, 2015 was approximately $6 million and $9 million, respectively. Significant Non-Cash Transactions During the six months ended July 31, 2016, Holdings retired 319,093 shares of its common stock (“Retired Shares”) held as treasury shares by Holdings in the amount of $9 million. All of these shares were repurchased by Holdings pursuant to the publicly announced share repurchase program previously authorized by Holdings board of directors. Holdings reinstated the Retired Shares to the status of authorized but unissued shares of common stock, par value $0.01 per share, effective as of the date of retirement. In accordance with ASC 505-30, “Equity-Treasury Stock,” Holdings reversed the $0.01 par value of the Retired Shares and the excess of the cost of the Retired Shares over par value to Retained Earnings.

RESTRUCTURING ACTIVITIES

RESTRUCTURING ACTIVITIES	6 Months Ended
	Jul. 31, 2016
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES	NOTE 8—RESTRUCTURING ACTIVITIES During the fourth quarter of fiscal 2015 in conjunction with the sale of the Power Solutions business unit, management evaluated the Company’s talent alignment and functional support strategies. Consequently, during fiscal 2015, the Company initiated a restructuring plan to strategically align its leadership and functional support teams. Initially, the Company expected to incur approximately $10 million to $20 million of restructuring charges under the plan. During first quarter fiscal 2016, the Company accelerated and expanded the restructuring plan. As a result, the Company now expects to incur a total of approximately $25 million to $30 million of restructuring charges under the restructuring plan, which is expected to be complete in the second half of fiscal 2016 and deliver a payback of approximately two years via a reduction in costs. During the three and six months ended July 31, 2016, the Company’s activities under this restructuring plan resulted in restructuring charges of $5 million and $12 million, respectively, of which $3 million and $9 million, respectively, was incurred at the Facilities Maintenance business. During fiscal 2015, the Company incurred $9 million of restructuring charges under this plan. The Company expects to incur an additional $4 million to $9 million of restructuring charges over the next six months primarily for severance, relocation and related costs. The following table presents the activity for the liability balance, included in Other current liabilities in the Consolidated Balance Sheets (amounts in millions): Severance Relocation & Total Balance—January 31, 2016 $ $ $ Charges Cash payments ) ) ) Balance—July 31, 2016 $ $ $

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jul. 31, 2016
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 9 — COMMITMENTS AND CONTINGENCIES Legal Matters HD Supply is involved in various legal proceedings arising in the normal course of its business. The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that it determines to be both probable and reasonably estimable in accordance with ASC 450, “Contingencies.” In the opinion of management, based on current knowledge, all reasonably estimable and probable matters are believed to be adequately reserved for or covered by insurance and are not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. For all other matters, except as noted below, management believes the possibility of losses from such matters is not probable, the potential loss from such matters is not reasonably estimable, or such matters, if disposed of unfavorably to the Company, are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. For material matters that are reasonably possible and reasonably estimable, including matters that are probable and estimable but for which the amount that is reasonably possible is in excess of the amount that the Company has accrued for, management has estimated the aggregate range of potential loss as $0 to $15 million. If a material loss is probable or reasonably possible, and in either case estimable, the Company has considered it in the analysis and it is included in the discussion set forth above.

SEGMENT INFORMATION

SEGMENT INFORMATION	6 Months Ended
	Jul. 31, 2016
SEGMENT INFORMATION
SEGMENT INFORMATION	NOTE 10 — SEGMENT INFORMATION HD Supply’s operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for Corporate, which provides general corporate overhead support. The Company determines its reportable segments in accordance with the principles of segment reporting within ASC 280, “Segment Reporting.” For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supply’s ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA and certain other measures for each of the operating segments. HD Supply has three reportable segments, each of which is presented below: · Facilities Maintenance —Facilities Maintenance distributes maintenance, repair and operations (‘‘MRO’’) products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities. · Waterworks —Waterworks distributes complete lines of water and wastewater transmission products, serving contractors and municipalities in the water and wastewater industries for non-residential and residential uses. · Construction & Industrial - White Cap —Construction & Industrial - White Cap distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors. In addition to the reportable segments, the Company’s consolidated financial results include ‘‘Corporate & Other.’’ Corporate & Other includes the operating segment Home Improvement Solutions, which offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. Corporate & Other also includes costs related to our centralized support functions, which are comprised of finance, information technology, human resources, legal, supply chain and other support services, and removes inter-segment transactions. The following tables present Net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Facilities Waterworks Construction & Corporate & Total Three Months Ended July 31, 2016 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — — Three Months Ended August 2, 2015 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — — Six Months Ended July 31, 2016 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — Facilities Waterworks Construction & Corporate & Total Six Months Ended August 2, 2015 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. Reconciliation to Consolidated Financial Statements Three Months Ended Six Months Ended July 31, August 2, July 31, August 2, Total Adjusted EBITDA $ $ $ $ Depreciation and amortization(1) Stock-based compensation Restructuring — — Other — — — Operating income Interest expense, net Loss on extinguishment of debt(2) — — — Other (income) expense, net(3) — — Income from Continuing Operations Before Provision (Benefit) for Income Taxes Provision (benefit) for income taxes ) Income from continuing operations Less: Income (loss) from discontinued operations, net of tax ) ) Net income (loss) $ $ $ $ (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the loss on extinguishment of debt including the premium paid to redeem the debt as well as the write-off of unamortized deferred financing costs and other assets or liabilities associated with such debt. (3) Represents the costs expensed in connection with secondary offerings of Holdings’ common stock by certain of Holdings’ stockholders.

SUBSIDIARY GUARANTORS

SUBSIDIARY GUARANTORS	6 Months Ended
	Jul. 31, 2016
SUBSIDIARY GUARANTORS
SUBSIDIARY GUARANTORS	NOTE 11—SUBSIDIARY GUARANTORS HDS (the “Debt Issuer”) has outstanding December 2014 First Priority Notes, February 2013 Senior Unsecured Notes, and April 2016 Senior Unsecured Notes (collectively the “Notes”), which are guaranteed by certain of its subsidiaries (the “Subsidiary Guarantors”). The Subsidiary Guarantors are direct or indirect wholly-owned domestic subsidiaries of HDS. The subsidiaries of HDS that do not guarantee the Notes (“Non-guarantor Subsidiaries”) are direct or indirect wholly-owned subsidiaries of HDS and primarily include HDS’s operations in Canada. The Debt Issuer’s payment obligations under the Notes are jointly and severally guaranteed by the guarantors and all guarantees are full and unconditional. These guarantees are subject to release under the circumstances as described below: (i) concurrently with any direct or indirect sale or disposition (by merger or otherwise) of any Subsidiary Guarantor or any interest therein in accordance with the terms of the applicable indebtedness by HDS or a restricted subsidiary, following which such Subsidiary Guarantor is no longer a restricted subsidiary of HDS; (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under all of its guarantees of payment of any indebtedness of HDS or any Subsidiary Guarantor under all other indebtedness and is not a borrower under the Senior ABL Facility; (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into HDS or another Subsidiary Guarantor that is the surviving entity in such merger or consolidation, or upon the liquidation of such Subsidiary Guarantor following the transfer of all of its assets to HDS or another Subsidiary Guarantor; (iv) concurrently with any Subsidiary Guarantor becoming an unrestricted subsidiary; (v) during the period when the rating on the notes is changed to investment grade and certain covenants cease to apply while such investment grade rating is maintained, upon the merger or consolidation of any Subsidiary Guarantor with and into another subsidiary that is not a Subsidiary Guarantor with such other subsidiary being the surviving entity in such merger or consolidation, or upon liquidation of such Subsidiary Guarantor following the transfer of all of its assets to a subsidiary that is not a Subsidiary Guarantor; (vi) upon legal or covenant defeasance of HDS’s obligations under the applicable indebtedness, or satisfaction and discharge of the indenture governing the applicable indebtedness; or (vii) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all applicable indebtedness then outstanding and all other obligations guaranteed by a Subsidiary Guarantor then due and owing. In addition, HDS has the right, upon 30 days’ notice to the applicable trustee, to cause any Subsidiary Guarantor that has not guaranteed payment of any indebtedness of HDS or any Subsidiary Guarantor under all other indebtedness and is not a borrower under the Senior ABL Facility to be unconditionally released from all obligations under its Subsidiary Guarantee, and such Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect. In connection with the issuance of the Notes, HDS determined the need for compliance with Rule 3-10 of SEC Regulation S-X. In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, HDS has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(f) of SEC Regulation S-X. The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed statements of cash flows for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions). CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — ) Gross Profit — — Operating expenses: Selling, general and administrative — Depreciation and amortization — Restructuring — — Total operating expenses — Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — Income (Loss) from Continuing Operations ) Income (loss) from discontinued operations, net of tax ) ) — — ) Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ ) $ ) $ Three Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — — Gross Profit — ) Operating expenses: Selling, general and administrative ) Depreciation and amortization — Total operating expenses ) Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Other (income) expense, net — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — — Income (Loss) from Continuing Operations ) Income (loss) from discontinued operations, net of tax ) — Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss)—foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ ) $ ) $ Six Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — ) Gross Profit — — Operating expenses: Selling, general and administrative — Depreciation and amortization — Restructuring — — Total operating expenses — Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Loss on extinguishment of debt — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — Income (Loss) from Continuing Operations ) (Loss) from discontinued operations, net of tax ) ) — — ) Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment — ) Total Comprehensive Income (Loss) $ $ $ $ ) $ Six Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — — Gross Profit — ) Operating expenses: Selling, general and administrative ) Depreciation and amortization — Total operating expenses ) Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Other (income) expense, net — — — Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes ) Provision (benefit) for income taxes ) — — ) Income (Loss) from Continuing Operations ) Income from discontinued operations, net of tax — — Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ $ ) $ CONDENSED CONSOLIDATING BALANCE SHEETS As of July 31, 2016 Debt Subsidiary Non-Guarantor Eliminations Total ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Receivables, net — Inventories — — Intercompany receivables — — ) — Other current assets — Total current assets ) Property and equipment, net — Goodwill — — — Intangible assets, net — — Deferred tax asset — ) Investment in subsidiaries — — ) — Intercompany notes receivable — ) — Other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued compensation and benefits — Current installments of long-term debt — — — Intercompany payables — — ) — Other current liabilities — Total current liabilities ) Long-term debt, excluding current installments — — — Deferred tax liabilities — — ) — Intercompany notes payable — ) — Other liabilities — Total liabilities ) Stockholder’s equity ) Total liabilities and stockholder’s equity $ $ $ $ ) $ As of January 31, 2016 Debt Subsidiary Non-Guarantor Eliminations Total ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Receivables, net — Inventories — — Current assets of discontinued operations — — — Other current assets — Total current assets — Property and equipment, net — Goodwill — — — Intangible assets, net — — Deferred tax asset — ) Non-current assets of discontinued operations — — — Investment in subsidiaries — — ) — Intercompany notes receivable — ) — Other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued compensation and benefits — Current installments of long-term debt — — — Current liabilities of discontinued operations — — — Other current liabilities — Total current liabilities — Long-term debt, excluding current installments — — — Deferred tax liabilities — — ) — Non-current liabilities of discontinued operations — — — Intercompany notes payable — ) — Other liabilities — Total liabilities ) Stockholder’s equity ) Total liabilities and stockholder’s equity $ $ $ $ ) $ CONDENSED CONSOLIDATING CASH FLOW STATEMENTS Six Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net cash flows from operating activities $ $ ) $ $ — $ Cash flows from investing activities Capital expenditures ) ) — — ) Proceeds from sale of property and equipment — — — Proceeds from sale of a business — — — Proceeds from (payments of) intercompany notes — — ) — Net cash flows from investing activities $ $ $ — $ ) $ Cash flows from financing activities Borrowings of (repayments of) intercompany notes ) — — — Borrowings of long-term debt — — — Repayments of long-term debt ) — — — ) Debt issuance costs ) — — — ) Other financing activities ) ) — — ) Net cash flows from financing activities ) ) — ) Effect of exchange rates on cash — — — Net increase (decrease) in cash & cash equivalents $ $ ) $ $ — $ Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ Six Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net cash flows from operating activities $ $ ) $ $ — $ Cash flows from investing activities Capital expenditures ) ) ) — ) Proceeds from sale of property and equipment — — — Proceeds from (payments of) intercompany notes — — ) — Net cash flows from investing activities $ ) $ $ ) $ ) $ ) Cash flows from financing activities Borrowings of (repayments of) intercompany notes ) — — — Repayments of long-term debt ) — — — ) Borrowings on long-term revolver — — — Repayments on long-term revolver ) — — — ) Other financing activities ) — — — ) Net cash flows from financing activities ) — — Effect of exchange rates on cash — — ) — ) Net increase (decrease) in cash & cash equivalents $ $ ) $ $ — $ Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	6 Months Ended
	Jul. 31, 2016
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS Stock Compensation — In March 2016, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation —Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The new guidance identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2016-09. Leases — In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new guidance requires companies to recognize all leases as assets and liabilities for the rights and obligations created by leased assets on the consolidated balance sheet. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact of adopting ASU 2016-02. Inventory — In July 2015, the FASB issued ASU No. 2015-11, “Inventory, Simplifying the Measurement of Inventory” (“ASU 2015-11”). The amended guidance requires that inventory be measured at the lower of cost and net realizable value. The amended guidance is limited to inventory measured using the first-in, first-out (“FIFO”) or average cost methods and excludes inventory measured using last-in, first-out (“LIFO”) or retail inventory methods. ASU 2015-11 is effective for fiscal years, and interim periods, beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU 2015-11 is not expected to have a material impact on the Company’s financial position or results of operations. Revenue recognition — In May 2014, the FASB issued ASU No. 2014-09, “Revenue from contracts with customers” (“ASU 2014-09”). The amended guidance outlines a single comprehensive revenue model for entities to use in accounting for revenue arising from contracts with customers. The guidance supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” Entities have the option of using either a full retrospective or modified approach to adopt the guidance. In July 2015, the FASB provided a one-year delay in the effective date of ASU 2014-09, to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, early adoption is permitted for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

NATURE OF BUSINESS AND BASIS 22

NATURE OF BUSINESS AND BASIS OF PRESENTATION	6 Months Ended
	Jul. 31, 2016
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business	Nature of Business HD Supply Holdings, Inc. (‘‘Holdings’’) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS (“HD Supply” or the “Company”), is one of the largest industrial distribution companies in North America. The Company specializes in three distinct market sectors: Maintenance, Repair & Operations; Infrastructure; and Specialty Construction. Through approximately 500 locations across 48 U.S. states and six Canadian provinces, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 13,000 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services include more than 800,000 stock-keeping units (“SKUs”) of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from infrastructure and construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in three reportable segments. The reportable segments are Facilities Maintenance, Waterworks, and Construction & Industrial - White Cap. In addition, the consolidated financial statements include an operating segment, Home Improvement Solutions, and Corporate, which is comprised of enterprise-wide functional departments.
Basis of Presentation	Basis of Presentation In management’s opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair statement of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. For a more complete discussion of the Company’s significant accounting policies and other information, you should read this report in conjunction with the Company’s annual report on Form 10-K for the year ended January 31, 2016, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). Certain amounts in the prior-period financial statements have been reclassified to conform to the current period’s presentation.
Fiscal Year	F iscal Year HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal years ending January 29, 2017 (“fiscal 2016”) and January 31, 2016 (“fiscal 2015”) both include 52 weeks. The three months ended July 31, 2016 (“second quarter 2016”) and August 2, 2015 (“second quarter 2015”) both include 13 weeks. The six months ended July 31, 2016 and August 2, 2015 both include 26 weeks.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements of Holdings present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HD Supply, Inc. present the results of operations, financial position and cash flows of HDS. and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented.
Estimates	Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with GAAP. Actual results could differ from these estimates.
Self-Insurance	Self-Insurance HD Supply has a high deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability and workers’ compensation, and is self-insured for medical claims and certain legal claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At July 31, 2016 and January 31, 2016, self-insurance reserves totaled approximately $82 million and $84 million, respectively.

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	6 Months Ended
	Jul. 31, 2016
DISCONTINUED OPERATIONS
Result of Operations of Discontinued Operations	The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Three Months Ended Six Months Ended July 31, 2016 August 2, July 31, August 2, Net sales $ $ $ $ Cost of sales Gross Profit Operating expenses: Selling, general and administrative Depreciation and amortization — Total operating expenses Operating Income (Loss) ) ) Loss on sales of discontinued operations — — Income (loss) before provision for income taxes ) ) Provision (benefit) for income taxes ) ) Income (loss) from discontinued operations, net of tax $ ) $ $ ) $ At July 31, 2016 and January 31, 2016, the carrying amounts of major classes of assets and liabilities of discontinued operations included in the Consolidated Balance Sheets were as follows (amounts in millions): July 31, January 31, Current assets: Receivables, less allowance for doubtful accounts of $0 and $1 $ — $ Inventories — Total current assets — Intangible assets, net — Other non-current assets — Total assets of discontinued operations $ — $ Current Liabilities: Accounts payable $ — $ Accrued compensation and benefits — Other current liabilities — Total current liabilities — Other non-current liabilities — Total liabilities of discontinued operations $ — $ The following table provides additional detail related to the net cash provided by (used in) operating and investing activities of the discontinued operations (amounts in millions): Six Months Ended July 31, August 2, Net cash flows provided by (used in) operating activities $ ) $ Cash flows from investing activities: Capital expenditures ) ) Proceeds from sales of businesses, net — Net cash flows provided by (used in) investing activities $ $ )

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Jul. 31, 2016
DEBT
Schedule of Long-term Debt	HDS’s long-term debt as of July 31, 2016 and January 31, 2016 consisted of the following (dollars in millions): July 31, 2016 January 31, 2016 Outstanding Interest Outstanding Interest Senior ABL Facility due 2018 $ — — $ — — Term Loans due 2021 December 2014 First Priority Notes due 2021 April 2016 Senior Unsecured Notes due 2024 — — October 2012 Senior Unsecured Notes due 2020 — — February 2013 Senior Unsecured Notes due 2020 Total gross long-term debt $ $ Less unamortized discount ) ) Less unamortized deferred financing costs ) ) Total net long-term debt $ $ Less current installments ) ) Total net long-term debt, excluding current installments $ $ (1) Represents the stated rate of interest, without including the effect of discounts or premiums.
5.25% December 2014 Senior Secured First Priority Notes due 2021
DEBT
Notes Redemption	Year Percentage 2017 % 2018 % 2019 % 2020 and thereafter %
5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Notes Redemption	Year Percentage 2019 % 2020 % 2021 % 2022 and thereafter %
7.5% February 2013 Senior Unsecured Notes due 2020
DEBT
Notes Redemption	Year Percentage 2016 % 2017 % 2018 and thereafter %

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Jul. 31, 2016
FAIR VALUE MEASUREMENTS
Schedule of financial instruments that are not reflected at fair value on the Consolidated Balance Sheets	The Company’s financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of July 31, 2016 and January 31, 2016 (amounts in millions): As of July 31, 2016 As of January 31, 2016 Recorded Estimated Recorded Estimated Senior ABL Facility $ — $ — $ — $ — Term Loans and Notes Total $ $ $ $ (1) These amounts do not include accrued interest; accrued interest is classified as Other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts, premiums, or deferred financing costs.

BASIC AND DILUTED WEIGHTED AV26

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES (Tables)	6 Months Ended
	Jul. 31, 2016
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
Schedule of reconciliation of basic to diluted weighted average common shares	The reconciliation of basic to diluted weighted average common shares for the six months ended July 31, 2016 and August 2, 2015 was as follows (in thousands): Three Months Ended Six Months Ended July 31, August 2, July 31, August 2, Weighted-average common shares Effect of potentially dilutive stock plan securities Diluted weighted-average common shares Stock plan securities excluded from dilution (1) (1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.

SUPPLEMENTAL BALANCE SHEET AN27

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables)	6 Months Ended
	Jul. 31, 2016
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
Schedule of Receivables	Receivables consisted of the following (amounts in millions): July 31, January 31, Trade receivables, net of allowance for doubtful accounts $ $ Vendor rebate receivables Other receivables Total receivables, net $ $
Schedule of Other current liabilities	Other current liabilities consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. July 31, January 31, July 31, January 31, Accrued interest $ $ $ $ Accrued non-income taxes Other Total other current liabilities $ $ $ $

RESTRUCTURING ACTIVITIES (Table

RESTRUCTURING ACTIVITIES (Tables)	6 Months Ended
	Jul. 31, 2016
RESTRUCTURING ACTIVITIES
Restructuring Activity Liability Balances	The following table presents the activity for the liability balance, included in Other current liabilities in the Consolidated Balance Sheets (amounts in millions): Severance Relocation & Total Balance—January 31, 2016 $ $ $ Charges Cash payments ) ) ) Balance—July 31, 2016 $ $ $

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	6 Months Ended
	Jul. 31, 2016
SEGMENT INFORMATION
Net Sales Adjusted Earning Before Interest, Taxes, Depreciation and Amortization and Other Measures for Reportable Segments and Total Continuing Operations	The following tables present Net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Facilities Waterworks Construction & Corporate & Total Three Months Ended July 31, 2016 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — — Three Months Ended August 2, 2015 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — — Six Months Ended July 31, 2016 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — Facilities Waterworks Construction & Corporate & Total Six Months Ended August 2, 2015 Net sales $ $ $ $ $ Adjusted EBITDA ) Depreciation(1) & Software Amortization Other Intangible Amortization — (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.
Reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations	Three Months Ended Six Months Ended July 31, August 2, July 31, August 2, Total Adjusted EBITDA $ $ $ $ Depreciation and amortization(1) Stock-based compensation Restructuring — — Other — — — Operating income Interest expense, net Loss on extinguishment of debt(2) — — — Other (income) expense, net(3) — — Income from Continuing Operations Before Provision (Benefit) for Income Taxes Provision (benefit) for income taxes ) Income from continuing operations Less: Income (loss) from discontinued operations, net of tax ) ) Net income (loss) $ $ $ $ (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the loss on extinguishment of debt including the premium paid to redeem the debt as well as the write-off of unamortized deferred financing costs and other assets or liabilities associated with such debt. (3) Represents the costs expensed in connection with secondary offerings of Holdings’ common stock by certain of Holdings’ stockholders.

SUBSIDIARY GUARANTORS (Tables)

SUBSIDIARY GUARANTORS (Tables)	6 Months Ended
	Jul. 31, 2016
SUBSIDIARY GUARANTORS
Condensed Consolidating Statements of Operations and Comprehensive Income	The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed statements of cash flows for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions). CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — ) Gross Profit — — Operating expenses: Selling, general and administrative — Depreciation and amortization — Restructuring — — Total operating expenses — Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — Income (Loss) from Continuing Operations ) Income (loss) from discontinued operations, net of tax ) ) — — ) Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ ) $ ) $ Three Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — — Gross Profit — ) Operating expenses: Selling, general and administrative ) Depreciation and amortization — Total operating expenses ) Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Other (income) expense, net — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — — Income (Loss) from Continuing Operations ) Income (loss) from discontinued operations, net of tax ) — Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss)—foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ ) $ ) $ Six Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — ) Gross Profit — — Operating expenses: Selling, general and administrative — Depreciation and amortization — Restructuring — — Total operating expenses — Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Loss on extinguishment of debt — — — Income (Loss) from Continuing Operations Before Provision for Income Taxes ) Provision for income taxes — Income (Loss) from Continuing Operations ) (Loss) from discontinued operations, net of tax ) ) — — ) Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment — ) Total Comprehensive Income (Loss) $ $ $ $ ) $ Six Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net Sales $ — $ $ $ ) $ Cost of sales — — Gross Profit — ) Operating expenses: Selling, general and administrative ) Depreciation and amortization — Total operating expenses ) Operating Income (Loss) ) — Interest expense — ) Interest (income) ) ) — — Net (earnings) loss of equity affiliates ) — — — Other (income) expense, net — — — Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes ) Provision (benefit) for income taxes ) — — ) Income (Loss) from Continuing Operations ) Income from discontinued operations, net of tax — — Net Income (Loss) $ $ $ $ ) $ Other comprehensive income (loss) —foreign currency translation adjustment ) — ) ) Total Comprehensive Income (Loss) $ $ $ $ ) $
Condensed Consolidating Balance Sheets	The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed statements of cash flows for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions). As of July 31, 2016 Debt Subsidiary Non-Guarantor Eliminations Total ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Receivables, net — Inventories — — Intercompany receivables — — ) — Other current assets — Total current assets ) Property and equipment, net — Goodwill — — — Intangible assets, net — — Deferred tax asset — ) Investment in subsidiaries — — ) — Intercompany notes receivable — ) — Other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued compensation and benefits — Current installments of long-term debt — — — Intercompany payables — — ) — Other current liabilities — Total current liabilities ) Long-term debt, excluding current installments — — — Deferred tax liabilities — — ) — Intercompany notes payable — ) — Other liabilities — Total liabilities ) Stockholder’s equity ) Total liabilities and stockholder’s equity $ $ $ $ ) $ As of January 31, 2016 Debt Subsidiary Non-Guarantor Eliminations Total ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Receivables, net — Inventories — — Current assets of discontinued operations — — — Other current assets — Total current assets — Property and equipment, net — Goodwill — — — Intangible assets, net — — Deferred tax asset — ) Non-current assets of discontinued operations — — — Investment in subsidiaries — — ) — Intercompany notes receivable — ) — Other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued compensation and benefits — Current installments of long-term debt — — — Current liabilities of discontinued operations — — — Other current liabilities — Total current liabilities — Long-term debt, excluding current installments — — — Deferred tax liabilities — — ) — Non-current liabilities of discontinued operations — — — Intercompany notes payable — ) — Other liabilities — Total liabilities ) Stockholder’s equity ) Total liabilities and stockholder’s equity $ $ $ $ ) $
Condensed Consolidating Cash Flow Statements	The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed statements of cash flows for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions). Six Months Ended July 31, 2016 Debt Subsidiary Non- Eliminations Total Net cash flows from operating activities $ $ ) $ $ — $ Cash flows from investing activities Capital expenditures ) ) — — ) Proceeds from sale of property and equipment — — — Proceeds from sale of a business — — — Proceeds from (payments of) intercompany notes — — ) — Net cash flows from investing activities $ $ $ — $ ) $ Cash flows from financing activities Borrowings of (repayments of) intercompany notes ) — — — Borrowings of long-term debt — — — Repayments of long-term debt ) — — — ) Debt issuance costs ) — — — ) Other financing activities ) ) — — ) Net cash flows from financing activities ) ) — ) Effect of exchange rates on cash — — — Net increase (decrease) in cash & cash equivalents $ $ ) $ $ — $ Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ Six Months Ended August 2, 2015 Debt Subsidiary Non- Eliminations Total Net cash flows from operating activities $ $ ) $ $ — $ Cash flows from investing activities Capital expenditures ) ) ) — ) Proceeds from sale of property and equipment — — — Proceeds from (payments of) intercompany notes — — ) — Net cash flows from investing activities $ ) $ $ ) $ ) $ ) Cash flows from financing activities Borrowings of (repayments of) intercompany notes ) — — — Repayments of long-term debt ) — — — ) Borrowings on long-term revolver — — — Repayments on long-term revolver ) — — — ) Other financing activities ) — — — ) Net cash flows from financing activities ) — — Effect of exchange rates on cash — — ) — ) Net increase (decrease) in cash & cash equivalents $ $ ) $ $ — $ Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $

NATURE OF BUSINESS AND BASIS 31

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Nature of Business (Details)	6 Months Ended
	Jul. 31, 2016segmentproductlocationcustomeremployeeitem
Nature of Business
Number of distinct market sectors in which entity specializes | item	3
Number of operating locations	500
Number of associates | employee	13,000
Number of customer | customer	500,000
Number of reportable segments | segment	3
Minimum
Nature of Business
Number of SKUs offered | product	800,000
U.S.
Nature of Business
Number of states or provinces	48
Canada
Nature of Business
Number of states or provinces	6

NATURE OF BUSINESS AND BASIS 32

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Fiscal Year (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015	Jan. 29, 2017	Jan. 31, 2016
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Length of some fiscal years, minimum (in days)			364 days
Length of some fiscal years, maximum (in days)			371 days
Length of fiscal year (in days)					364 days	364 days
Length of fiscal quarter (in days)	91 days	91 days	182 days	182 days

NATURE OF BUSINESS AND BASIS 33

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Self-Insurance (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Self-insurance reserves	$ 82	$ 84

DISCONTINUED OPERATIONS - Gener

DISCONTINUED OPERATIONS - General Information (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	May 31, 2016	Jul. 31, 2016	Jul. 31, 2016
DISCONTINUED OPERATIONS
Cash received from sale of business			$ 37
Interior Solutions | Discontinued Operations, Disposed of by Sale
DISCONTINUED OPERATIONS
Cash received from sale of business	$ 34
Sale of issued and outstanding equity interests, transaction cost	2
Gain (loss) on disposal of discontinued operations	$ 6
Power Solutions | Discontinued Operations, Disposed of by Sale
DISCONTINUED OPERATIONS
Cash received from sale of business		$ 3
Gain (loss) on disposal of discontinued operations		$ 3

DISCONTINUED OPERATIONS - Resul

DISCONTINUED OPERATIONS - Results of Operations (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
Operating expenses:
Income (loss) from discontinued operations, net of tax	$ (4)	$ 5	$ (4)	$ 13
Discontinued Operations, Held-for-sale
Results of operations of the discontinued operations
Net Sales	22	594	85	1,155
Cost of sales	18	499	65	970
Gross Profit	4	95	20	185
Operating expenses:
Selling, general and administrative	7	77	23	148
Depreciation and amortization		7	1	15
Total operating expenses	7	84	24	163
Operating Income (Loss)	(3)	11	(4)	22
Loss on sales of discontinued operations	3		3
Income (loss) before provision for income taxes	(6)	11	(7)	22
Provision (benefit) for income taxes	(2)	6	(3)	9
Income (loss) from discontinued operations, net of tax	$ (4)	$ 5	$ (4)	$ 13

DISCONTINUED OPERATIONS - Carry

DISCONTINUED OPERATIONS - Carrying Amounts of Major Classes of Assets and Liabilities (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Current assets:
Total current assets		$ 43
Current Liabilities:
Total current liabilities		30
Discontinued Operations, Held-for-sale
Current assets:
Receivables, less allowance for doubtful accounts of $0 and $1		31
Allowance for doubtful accounts	$ 0	1
Inventories		12
Total current assets		43
Intangible assets, net		3
Other non-current assets		17
Total assets of discontinued Operations		63
Current Liabilities:
Accounts payable		19
Accrued compensation and benefits		2
Other current liabilities		9
Total current liabilities		30
Other non-current liabilities		1
Total liabilities of discontinued operations		$ 31

DISCONTINUED OPERATIONS - Net C

DISCONTINUED OPERATIONS - Net Cash Provided by (Used in) Operating Activities and Investing Activities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016
Net cash provided by (used in) operating activities and used in investing activities of the discontinued operations
Proceeds from sales of businesses, net			$ 37
Discontinued Operations, Held-for-sale
Net cash provided by (used in) operating activities and used in investing activities of the discontinued operations
Net cash flows provided by (used in) operating activities	$ (3)	$ 10
Capital expenditures	(1)	(3)
Proceeds from sales of businesses, net	37
Net cash flows provided by (used in) investing activities	$ 36	$ (3)

DEBT - Gross Long-term Debt - T

DEBT - Gross Long-term Debt - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 31, 2016	Apr. 27, 2016	Apr. 11, 2016	Jan. 31, 2016
DEBT
Total gross long-term debt	$ 4,369			$ 4,373
Secured debt | HDS (Debt Issuer) | 5.25% December 2014 Senior Secured First Priority Notes due 2021
DEBT
Total gross long-term debt	$ 1,250			$ 1,250
Interest rate, stated rate (as a percent)	5.25%			5.25%
Secured debt | HDS (Debt Issuer) | Credit facility | Term Loan Facility due 2021
DEBT
Total gross long-term debt	$ 844			$ 848
Interest rate, stated rate (as a percent)	3.75%			3.75%
Unsecured debt | HDS (Debt Issuer) | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Total gross long-term debt	$ 1,000
Interest rate, stated rate (as a percent)	5.75%		5.75%
Unsecured debt | HDS (Debt Issuer) | 11.5% October 2012 Senior Unsecured Notes due 2020
DEBT
Total gross long-term debt				$ 1,000
Interest rate, stated rate (as a percent)		11.50%		11.50%
Unsecured debt | HDS (Debt Issuer) | 7.5% February 2013 Senior Unsecured Notes due 2020
DEBT
Total gross long-term debt	$ 1,275			$ 1,275
Interest rate, stated rate (as a percent)	7.50%			7.50%

DEBT - Total Net Long-term Debt

DEBT - Total Net Long-term Debt - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
DEBT
Total gross long-term debt	$ 4,369	$ 4,373
Less unamortized discount	(10)	(11)
Less unamortized deferred debt costs	(51)	(51)
Total net long-term debt	$ 4,308	$ 4,311

DEBT - Total Long-term Debt, Ex

DEBT - Total Long-term Debt, Excluding Current Installments - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
DEBT
Total net long-term debt	$ 4,308	$ 4,311
Less current installments	(9)	(9)
Total net long-term debt, excluding current installments	$ 4,299	$ 4,302

DEBT - 5.75% Senior Unsecured N

DEBT - 5.75% Senior Unsecured Notes due 2024 (Details) - Unsecured debt - HDS (Debt Issuer) - 5.75% April 2016 Senior Unsecured Notes due 2024 - USD ($) $ in Millions	Apr. 11, 2016	Jul. 31, 2016
DEBT
Note issued, amount	$ 1,000
Note issued, interest rate	5.75%	5.75%
Net proceeds	$ 985
Unamortized transaction fees	$ 15

DEBT - Debt Redemption (Details

DEBT - Debt Redemption (Details) - USD ($) $ in Millions	Apr. 27, 2016	Jul. 31, 2016	Jan. 31, 2016
DEBT
Loss on extinguishment & modification of debt		$ 115
HDS (Debt Issuer)
DEBT
Loss on extinguishment & modification of debt		$ 115
Unsecured debt | HDS (Debt Issuer) | 11.5% October 2012 Senior Unsecured Notes due 2020
DEBT
Debt redeemed	$ 1,000
Note issued, interest rate	11.50%		11.50%
Make-whole premium payment to redeem notes	$ 106
Accrued but unpaid interest	4
Loss on extinguishment & modification of debt	115
Make-whole premium	106
Write-off of unamortized deferred debt cost	$ 9

DEBT - Asset Based Lending Faci

DEBT - Asset Based Lending Facility (Details) - Secured debt - HDS (Debt Issuer) - Credit facility - Senior ABL Facility due 2018 $ in Millions	6 Months Ended
	Jul. 31, 2016USD ($)item
DEBT
Aggregate principal amount	$ 1,500
Line of credit facility, available for borrowing	1,289
Letter of credit facility outstanding	34
Line of credit facility, available for borrowing on qualifying cash balances	$ 89
The minimum number of incremental term loan facilities permitted to be included in the Senior ABL Facility | item	1
The minimum number of revolving credit facility commitments permitted to be included in the Senior ABL Facility | item	1

DEBT - Senior Secured Term Loan

DEBT - Senior Secured Term Loan Facility (Details) - Secured debt - HDS (Debt Issuer) - Credit facility - Term Loan Facility due 2021 $ in Millions	6 Months Ended
	Jul. 31, 2016USD ($)
DEBT
Aggregate principal amount	$ 850
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent)	1.00%
LIBOR
DEBT
Percentage added to reference rate (as a percent)	2.75%
Interest rate floor (as a percent)	1.00%
Base
DEBT
Percentage added to reference rate (as a percent)	1.75%

DEBT - 5.25% Senior Secured Fir

DEBT - 5.25% Senior Secured First Priority Notes due 2021 (Details) - Secured debt - HDS (Debt Issuer) - 5.25% December 2014 Senior Secured First Priority Notes due 2021	6 Months Ended
	Jul. 31, 2016	Jan. 31, 2016
DEBT
Note issued, interest rate	5.25%	5.25%
Collateral pledged, percentage outstanding capital of any foreign subsidiary	65.00%
Prior to December 15, 2017
DEBT
Optional prepayment price percentage	100.00%
Percentage limit on amount that can be redeemed	40.00%
Prepayment percentage price as a percent of the principal, with proceeds from certain equity offerings	105.25%
Threshold percentage for debt that must remain after each redemption	50.00%
2,017
DEBT
Optional prepayment price percentage	103.938%
2,018
DEBT
Optional prepayment price percentage	102.625%
2,019
DEBT
Optional prepayment price percentage	101.313%
2020 and thereafter
DEBT
Optional prepayment price percentage	100.00%

DEBT - 5.75% Senior Unsecured46

DEBT - 5.75% Senior Unsecured Notes due 2024 (Details) - Unsecured debt - HDS (Debt Issuer) - 5.75% April 2016 Senior Unsecured Notes due 2024 - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2016	Apr. 11, 2016
DEBT
Note issued, amount		$ 1,000
Note issued, interest rate	5.75%	5.75%
Prior to April 15, 2019
DEBT
Optional prepayment price percentage	100.00%
Percentage limit on amount that can be redeemed	40.00%
Prepayment percentage price as a percent of the principal, with proceeds from certain equity offerings	105.75%
Threshold percentage for debt that must remain after each redemption	50.00%
2,019
DEBT
Optional prepayment price percentage	104.313%
2,020
DEBT
Optional prepayment price percentage	102.875%
2,021
DEBT
Optional prepayment price percentage	101.438%
2022 and thereafter
DEBT
Optional prepayment price percentage	100.00%

DEBT - 7.5% Senior Unsecured No

DEBT - 7.5% Senior Unsecured Notes due 2020 (Details) - Unsecured debt - HDS (Debt Issuer) - 7.5% February 2013 Senior Unsecured Notes due 2020	6 Months Ended
	Jul. 31, 2016	Jan. 31, 2016
DEBT
Note issued, interest rate	7.50%	7.50%
Prior to October 15, 2016
DEBT
Optional prepayment price percentage	100.00%
2,016
DEBT
Optional prepayment price percentage	103.75%
2,017
DEBT
Optional prepayment price percentage	101.875%
2018 and thereafter
DEBT
Optional prepayment price percentage	100.00%

DEBT - 11.5% Senior Unsecured N

DEBT - 11.5% Senior Unsecured Notes due 2020 (Details) - Unsecured debt - HDS (Debt Issuer) - 11.5% October 2012 Senior Unsecured Notes due 2020 - USD ($) $ in Millions	Apr. 27, 2016	Jan. 31, 2016
DEBT
Note issued, interest rate	11.50%	11.50%
Debt redeemed	$ 1,000

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Recorded Amount
Financial instruments not reflected at fair value on the balance sheet
Term Loans and Notes	$ 4,369	$ 4,373
Total	4,369	4,373
Estimated Fair Value | Level 2
Financial instruments not reflected at fair value on the balance sheet
Term Loans and Notes	4,571	4,560
Total	$ 4,571	$ 4,560

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Millions	Feb. 19, 2015	Jul. 31, 2016	Aug. 02, 2015	Jan. 31, 2016
INCOME TAXES
Combined federal, state and foreign effective tax rate for continuing operations (benefit)		39.70%	(103.60%)
Unrecognized tax benefits, decrease resulting from U.S. federal and state audit settlements	$ 189
Unrecognized tax benefits		$ 9
Net accrual for interest and penalties related to unrecognized tax benefits		0		$ 0
Deferred tax assets, valuation allowance		$ 5		$ 6

BASIC AND DILUTED WEIGHTED AV51

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES - Reconciliation of Basic to Diluted Weighted Average Common Shares (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
Reconciliation of basic to diluted weighted average common shares
Weighted-average common shares	199,250	196,893	199,029	196,120
Effect of potentially dilutive securities:
Effect of potentially dilutive stock plan securities	2,728	4,916	2,586	5,101
Diluted weighted-average common shares	201,978	201,809	201,615	201,221

BASIC AND DILUTED WEIGHTED AV52

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
Anti-dilutive securities
Stock plan securities excluded from dilution	1,452	107	2,240	1,645

SUPPLEMENTAL BALANCE SHEET AN53

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Receivables (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Receivables
Trade receivables, net of allowance for doubtful accounts	$ 1,020	$ 784
Vendor rebate receivables	70	76
Other receivables	11	12
Total receivables, net	$ 1,101	$ 872

SUPPLEMENTAL BALANCE SHEET AN54

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Other Current Liabilities (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016
Other Current Liabilities
Accrued interest	$ 57	$ 73
Accrued non-income taxes	41	30
Other	102	97
Total other current liabilities	200	200
HD Supply, Inc. (Total HDS)
Other Current Liabilities
Accrued interest	57	73
Accrued non-income taxes	41	30
Other	102	96
Total other current liabilities	$ 200	$ 199

SUPPLEMENTAL BALANCE SHEET AN55

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015
Supplemental Cash Flow Information
Cash paid for interest	$ 161	$ 201
Cash paid for income taxes, net of refunds	$ 6	$ 9

SUPPLEMENTAL BALANCE SHEET AN56

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Significant Non-Cash Transactions (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jul. 31, 2016	Jan. 31, 2016
Significant Non-Cash Transactions
Retired common stock (in shares)	319,093
Retired common stock	$ 9
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01

RESTRUCTURING ACTIVITIES - Gene

RESTRUCTURING ACTIVITIES - General Information (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 31, 2016	Jul. 31, 2016	Jan. 31, 2016
RESTRUCTURING ACTIVITIES
Restructuring Charges	$ 5	$ 12
Restructuring activities resulting from the sale of a business unit in October 2015
RESTRUCTURING ACTIVITIES
Payback period (in years)		2 years
Expected costs, period (in months)		6 months
Restructuring Charges	5	$ 12	$ 9
Restructuring activities resulting from the sale of a business unit in October 2015 | Minimum
RESTRUCTURING ACTIVITIES
Expected costs	25	25	10
Remaining expected costs	4	4
Restructuring activities resulting from the sale of a business unit in October 2015 | Maximum
RESTRUCTURING ACTIVITIES
Expected costs	30	30	$ 20
Remaining expected costs	9	9
Restructuring activities resulting from the sale of a business unit in October 2015 | Facilities Maintenance | Reportable segment
RESTRUCTURING ACTIVITIES
Restructuring Charges	$ 3	$ 9

RESTRUCTURING ACTIVITIES - Rest

RESTRUCTURING ACTIVITIES - Restructuring Liability Activity (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 31, 2016	Jul. 31, 2016	Jan. 31, 2016
Activity for the liability balances for restructuring
Restructuring Charges	$ 5	$ 12
Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring
Balance - January 31, 2016		7
Restructuring Charges	5	12	$ 9
Cash payments		(13)
Balance - May 31, 2016	6	6	7
Severance | Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring
Balance - January 31, 2016		6
Restructuring Charges		4
Cash payments		(5)
Balance - May 31, 2016	5	5	6
Relocation & Other Costs | Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring
Balance - January 31, 2016		1
Restructuring Charges		8
Cash payments		(8)
Balance - May 31, 2016	$ 1	$ 1	$ 1

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	Jul. 31, 2016USD ($)
Legal Matters
Estimated aggregate potential loss, minimum	$ 0
Estimated aggregate potential loss, maximum	$ 15

SEGMENT INFORMATION - General I

SEGMENT INFORMATION - General Information (Details)	6 Months Ended
	Jul. 31, 2016segment
SEGMENT INFORMATION
Number of reportable segments	3

SEGMENT INFORMATION - Net Sales

SEGMENT INFORMATION - Net Sales for Each Reportable Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
SEGMENT INFORMATION
Net Sales	$ 2,016	$ 1,937	$ 3,797	$ 3,597
Corporate & Other
SEGMENT INFORMATION
Net Sales	53	47	105	95
Facilities Maintenance | Reportable segment
SEGMENT INFORMATION
Net Sales	741	733	1,418	1,368
Waterworks | Reportable segment
SEGMENT INFORMATION
Net Sales	733	702	1,338	1,272
Construction & Industrial - White Cap | Reportable segment
SEGMENT INFORMATION
Net Sales	$ 489	$ 455	$ 936	$ 862

SEGMENT INFORMATION - Adjusted

SEGMENT INFORMATION - Adjusted EBITDA, Depreciation & Software Amortization, Other Intangible Amortization for Each Reportable Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
SEGMENT INFORMATION
Adjusted EBITDA	$ 273	$ 257	$ 488	$ 446
Depreciation & Software Amortization	22	26	43	50
Other Intangible Amortization	3	3	7	7
Corporate & Other
SEGMENT INFORMATION
Adjusted EBITDA	(8)	(10)	(18)	(22)
Depreciation & Software Amortization	5	5	9	9
Other Intangible Amortization	1	1	3	3
Facilities Maintenance | Reportable segment
SEGMENT INFORMATION
Adjusted EBITDA	151	156	285	278
Depreciation & Software Amortization	7	11	15	23
Other Intangible Amortization	2	2	3	3
Waterworks | Reportable segment
SEGMENT INFORMATION
Adjusted EBITDA	70	66	118	111
Depreciation & Software Amortization	3	3	5	5
Other Intangible Amortization			1	1
Construction & Industrial - White Cap | Reportable segment
SEGMENT INFORMATION
Adjusted EBITDA	60	45	103	79
Depreciation & Software Amortization	$ 7	$ 7	$ 14	$ 13

SEGMENT INFORMATION - Reconcili

SEGMENT INFORMATION - Reconciliation to Consolidated Financial Statements (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
SEGMENT INFORMATION
Total Adjusted EBITDA	$ 273	$ 257	$ 488	$ 446
Depreciation and amortization	25	29	50	57
Stock-based compensation	5	5	11	10
Restructuring	5		12
Other	1
Operating Income	237	223	415	379
Interest expense, net	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Less : Income (loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	$ 98	$ 109	$ 84	$ 351

SUBSIDIARY GUARANTORS - General

SUBSIDIARY GUARANTORS - General Information (Details)	6 Months Ended
	Jul. 31, 2016
HDS (Debt Issuer)
SUBSIDIARY GUARANTORS
Period of notice to the applicable trustee to cause subsidiary guarantor to be released from subsidiary guarantee	30 days

SUBSIDIARY GUARANTORS - CONDENS

SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015	Jul. 31, 2016	Aug. 02, 2015
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	$ 2,016	$ 1,937	$ 3,797	$ 3,597
Cost of sales	1,336	1,289	2,508	2,390
Gross Profit	680	648	1,289	1,207
Operating expenses:
Selling, general and administrative	414	397	815	773
Depreciation and amortization	24	28	47	55
Restructuring	5		12
Total operating expenses	443	425	874	828
Operating Income (Loss)	237	223	415	379
Interest expense	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Income (Loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	96	102	86	349
HDS (Debt Issuer)
Operating expenses:
Selling, general and administrative	20	21	40	42
Depreciation and amortization	3	4	6	7
Restructuring	1		2
Total operating expenses	24	25	48	49
Operating Income (Loss)	(24)	(25)	(48)	(49)
Interest expense	73	108	162	215
Interest (income)	(60)	(61)	(121)	(121)
Net (earnings) loss of equity affiliates	(200)	(188)	(345)	(321)
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	163	115	141	177
Provision (benefit) for income taxes	63	9	55	(174)
Income (Loss) from Continuing Operations	100	106	86	351
Income (Loss) from discontinued operations, net of tax	(2)	3	(2)
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	96	102	86	349
Subsidiary Guarantors
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	1,984	1,904	3,736	3,535
Cost of sales	1,319	1,271	2,475	2,357
Gross Profit	665	633	1,261	1,178
Operating expenses:
Selling, general and administrative	383	364	753	708
Depreciation and amortization	20	23	40	47
Restructuring	4		10
Total operating expenses	407	387	803	755
Operating Income (Loss)	258	246	458	423
Interest expense	60	61	121	121
Interest (income)	(4)	(2)	(8)	(3)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	202	187	345	305
Provision (benefit) for income taxes	1	3	1	2
Income (Loss) from Continuing Operations	201	184	344	303
Income (Loss) from discontinued operations, net of tax	(2)	(2)	(2)	5
Net Income (Loss)	199	182	342	308
Total Comprehensive Income (Loss)	199	182	342	308
Non-Guarantor Subsidiaries
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	33	34	62	63
Cost of sales	18	18	34	33
Gross Profit	15	16	28	30
Operating expenses:
Selling, general and administrative	11	13	22	24
Depreciation and amortization	1	1	1	1
Total operating expenses	12	14	23	25
Operating Income (Loss)	3	2	5	5
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	3	2	5	5
Provision (benefit) for income taxes	2		2
Income (Loss) from Continuing Operations	1	2	3	5
Income (Loss) from discontinued operations, net of tax		4		8
Net Income (Loss)	1	6	3	13
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	(1)	(1)	5	11
HD Supply, Inc. (Total HDS)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	2,016	1,937	3,797	3,597
Cost of sales	1,336	1,289	2,508	2,390
Gross Profit	680	648	1,289	1,207
Operating expenses:
Selling, general and administrative	414	397	815	773
Depreciation and amortization	24	28	47	55
Restructuring	5		12
Total operating expenses	443	425	874	828
Operating Income (Loss)	237	223	415	379
Interest expense	69	106	154	212
Loss on extinguishment of debt			115
Other (income) expense, net		1		1
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	168	116	146	166
Provision (benefit) for income taxes	66	12	58	(172)
Income (Loss) from Continuing Operations	102	104	88	338
Income (Loss) from discontinued operations, net of tax	(4)	5	(4)	13
Net Income (Loss)	98	109	84	351
Other comprehensive income (loss) - foreign currency translation adjustment	(2)	(7)	2	(2)
Total Comprehensive Income (Loss)	96	102	86	349
Eliminations
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	(1)	(1)	(1)	(1)
Cost of sales	(1)		(1)
Gross Profit		(1)		(1)
Operating expenses:
Selling, general and administrative		(1)		(1)
Total operating expenses		(1)		(1)
Interest expense	(64)	(63)	(129)	(124)
Interest (income)	64	63	129	124
Net (earnings) loss of equity affiliates	200	188	345	321
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	(200)	(188)	(345)	(321)
Income (Loss) from Continuing Operations	(200)	(188)	(345)	(321)
Net Income (Loss)	(200)	(188)	(345)	(321)
Other comprehensive income (loss) - foreign currency translation adjustment	2	7	(2)	2
Total Comprehensive Income (Loss)	$ (198)	$ (181)	$ (347)	$ (319)

SUBSIDIARY GUARANTORS - CONDE66

SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING BALANCE SHEETS (Details) - USD ($) $ in Millions	Jul. 31, 2016	Jan. 31, 2016	Aug. 02, 2015	Feb. 01, 2015
Current assets:
Cash and cash equivalents	$ 313	$ 269	$ 169	$ 85
Receivables, net	1,101	872
Inventories	887	770
Current assets of discontinued operations		43
Other current assets	42	29
Total current assets	2,343	1,983
Property and equipment, net	306	310
Goodwill	2,869	2,869
Intangible assets, net	119	127
Deferred tax asset	633	685
Non-current assets of discontinued operations		20
Other assets	19	22
Total assets	6,289	6,016
Current liabilities:
Accounts payable	721	490
Accrued compensation and benefits	117	142
Current installments of long-term debt	9	9
Current liabilities of discontinued operations		30
Other current liabilities	200	200
Total current liabilities	1,047	871
Long-term debt, excluding current installments	4,299	4,302
Non-current liabilities of discontinued operations		1
Other liabilities	102	98
Total liabilities	5,448	5,272
Stockholder's equity	841	744
Total liabilities and stockholder's equity	6,289	6,016
Eliminations
Current assets:
Intercompany receivables	(1)
Total current assets	(1)
Deferred tax asset	(75)	(76)
Investment in subsidiaries	(2,637)	(2,623)
Intercompany notes receivable	(2,740)	(2,819)
Total assets	(5,453)	(5,518)
Current liabilities:
Intercompany payable	(1)
Total current liabilities	(1)
Deferred tax liabilities	(75)	(76)
Intercompany notes payable	(2,740)	(2,819)
Total liabilities	(2,816)	(2,895)
Stockholder's equity	(2,637)	(2,623)
Total liabilities and stockholder's equity	(5,453)	(5,518)
HDS (Debt Issuer)
Current assets:
Cash and cash equivalents	274	233	101	28
Receivables, net	2	5
Other current assets	9	9
Total current assets	285	247
Property and equipment, net	61	55
Deferred tax asset	705	759
Investment in subsidiaries	2,637	2,623
Intercompany notes receivable	2,193	2,192
Other assets	15	20
Total assets	5,896	5,896
Current liabilities:
Accounts payable	10	12
Accrued compensation and benefits	30	38
Current installments of long-term debt	9	9
Other current liabilities	82	93
Total current liabilities	131	152
Long-term debt, excluding current installments	4,299	4,302
Intercompany notes payable	547	627
Other liabilities	81	73
Total liabilities	5,058	5,154
Stockholder's equity	838	742
Total liabilities and stockholder's equity	5,896	5,896
Subsidiary Guarantors
Current assets:
Cash and cash equivalents	17	18	121	25
Receivables, net	1,081	852
Inventories	868	753
Intercompany receivables	1
Current assets of discontinued operations		43
Other current assets	32	19
Total current assets	1,999	1,685
Property and equipment, net	243	253
Goodwill	2,869	2,869
Intangible assets, net	118	125
Non-current assets of discontinued operations		20
Intercompany notes receivable	547	627
Other assets	4	2
Total assets	5,780	5,581
Current liabilities:
Accounts payable	699	469
Accrued compensation and benefits	85	101
Current liabilities of discontinued operations		30
Other current liabilities	110	99
Total current liabilities	894	699
Deferred tax liabilities	75	76
Non-current liabilities of discontinued operations		1
Intercompany notes payable	2,193	2,192
Other liabilities	19	22
Total liabilities	3,181	2,990
Stockholder's equity	2,599	2,591
Total liabilities and stockholder's equity	5,780	5,581
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	19	15	37	32
Receivables, net	18	15
Inventories	19	17
Other current assets	1	1
Total current assets	57	48
Property and equipment, net	2	2
Intangible assets, net	1	2
Deferred tax asset	3	2
Total assets	63	54
Current liabilities:
Accounts payable	12	9
Accrued compensation and benefits	2	3
Intercompany payable	1
Other current liabilities	8	7
Total current liabilities	23	19
Other liabilities	2	3
Total liabilities	25	22
Stockholder's equity	38	32
Total liabilities and stockholder's equity	63	54
HD Supply, Inc. (Total HDS)
Current assets:
Cash and cash equivalents	310	266	$ 159	$ 85
Receivables, net	1,101	872
Inventories	887	770
Current assets of discontinued operations		43
Other current assets	42	29
Total current assets	2,340	1,980
Property and equipment, net	306	310
Goodwill	2,869	2,869
Intangible assets, net	119	127
Deferred tax asset	633	685
Non-current assets of discontinued operations		20
Other assets	19	22
Total assets	6,286	6,013
Current liabilities:
Accounts payable	721	490
Accrued compensation and benefits	117	142
Current installments of long-term debt	9	9
Current liabilities of discontinued operations		30
Other current liabilities	200	199
Total current liabilities	1,047	870
Long-term debt, excluding current installments	4,299	4,302
Non-current liabilities of discontinued operations		1
Other liabilities	102	98
Total liabilities	5,448	5,271
Stockholder's equity	838	742
Total liabilities and stockholder's equity	$ 6,286	$ 6,013

SUBSIDIARY GUARANTORS - CONDE67

SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2016	Aug. 02, 2015
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net cash flows from operating activities	$ 164	$ 98
Cash flows from investing activities
Capital expenditures	(32)	(43)
Proceeds from sales of property and equipment	1	1
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	6	(42)
Cash flows from financing activities
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(2)	(1)
Net cash provided by (used in) financing activities	(127)	29
Effect of exchange rates on cash	1	(1)
Increase (decrease) in cash and cash equivalents	44	84
Cash and cash equivalents at beginning of period	269	85
Cash and cash equivalents at end of period	313	169
Eliminations
Cash flows from investing activities
Proceeds from (payments of) intercompany notes	(105)	(51)
Net cash provided by (used in) investing activities	(105)	(51)
Cash flows from financing activities
Borrowings of (repayments of) intercompany notes	105	51
Net cash provided by (used in) financing activities	105	51
HDS (Debt Issuer)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net cash flows from operating activities	242	112
Cash flows from investing activities
Capital expenditures	(7)	(7)
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	30	(7)
Cash flows from financing activities
Borrowings of (repayments of) intercompany notes	(105)	(51)
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(1)	(1)
Net cash provided by (used in) financing activities	(231)	(32)
Increase (decrease) in cash and cash equivalents	41	73
Cash and cash equivalents at beginning of period	233	28
Cash and cash equivalents at end of period	274	101
Subsidiary Guarantors
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net cash flows from operating activities	(81)	(21)
Cash flows from investing activities
Capital expenditures	(25)	(35)
Proceeds from sales of property and equipment	1	1
Proceeds from (payments of) intercompany notes	105	51
Net cash provided by (used in) investing activities	81	17
Cash flows from financing activities
Other financing activities	(1)
Net cash provided by (used in) financing activities	(1)
Increase (decrease) in cash and cash equivalents	(1)	(4)
Cash and cash equivalents at beginning of period	18	25
Cash and cash equivalents at end of period	17	121
Non-Guarantor Subsidiaries
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net cash flows from operating activities	3	7
Cash flows from investing activities
Capital expenditures		(1)
Net cash provided by (used in) investing activities		(1)
Cash flows from financing activities
Effect of exchange rates on cash	1	(1)
Increase (decrease) in cash and cash equivalents	4	5
Cash and cash equivalents at beginning of period	15	32
Cash and cash equivalents at end of period	19	37
HD Supply, Inc. (Total HDS)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net cash flows from operating activities	164	98
Cash flows from investing activities
Capital expenditures	(32)	(43)
Proceeds from sales of property and equipment	1	1
Proceeds from sales of businesses	37
Net cash provided by (used in) investing activities	6	(42)
Cash flows from financing activities
Borrowings of long-term debt	1,000
Repayments of long-term debt	(1,110)	(16)
Borrowings on long-term revolver		562
Repayments on long-term revolver debt		(526)
Debt issuance and modification fees	(15)
Other financing activities	(2)	(1)
Net cash provided by (used in) financing activities	(127)	19
Effect of exchange rates on cash	1	(1)
Increase (decrease) in cash and cash equivalents	44	74
Cash and cash equivalents at beginning of period	266	85
Cash and cash equivalents at end of period	$ 310	$ 159