HD Supply 10-Q 5 Sep 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 29, 2018	Sep. 03, 2018
Document and Entity Information
Entity Registrant Name	HD Supply Holdings, Inc.
Entity Central Index Key	1,573,097
Document Type	10-Q
Document Period End Date	Jul. 29, 2018
Amendment Flag	false
Current Fiscal Year End Date	--01-27
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		183,776,667
Document Fiscal Year Focus	2,018
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. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Net Sales		$ 1,600	$ 1,352	$ 2,989	$ 2,568
Cost of sales		978	813	1,815	1,545
Gross Profit		622	539	1,174	1,023
Operating expenses:
Selling, general and administrative		384	338	756	672
Depreciation and amortization		25	21	47	42
Restructuring		2		9
Total operating expenses		411	359	812	714
Operating Income		211	180	362	309
Interest expense		35	49	69	98
Interest (income)				(1)
Loss on extinguishment of debt					3
Income from Continuing Operations Before Provision for Income Taxes		176	131	294	208
Provision for income taxes		46	50	75	69
Income from Continuing Operations		130	81	219	139
Income from discontinued operations, net of tax		1	361	1	388
Net Income		131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment		1	(3)	2	(2)
Total Comprehensive Income		$ 132	$ 439	$ 222	$ 525
Weighted Average Common Shares Outstanding (thousands)
Basic (in shares)		182,992	197,752	183,659	199,230
Diluted (in shares)		183,822	198,954	184,456	201,010
Basic Earnings Per Share:
Income from Continuing Operations (in dollars per share)	[1]	$ 0.71	$ 0.41	$ 1.19	$ 0.70
Income from Discontinued Operations (in dollars per share)	[1]	0.01	1.83	0.01	1.95
Net Income (in dollars per share)	[1]	0.72	2.24	1.20	2.65
Diluted Earnings Per Share:
Income from Continuing Operations (in dollars per share)	[1]	0.71	0.41	1.19	0.69
Income from Discontinued Operations (in dollars per share)	[1]	0.01	1.81	0.01	1.93
Net Income (in dollars per share)	[1]	$ 0.71	$ 2.22	$ 1.19	$ 2.62
[1]	May not foot due to rounding.

CONSOLIDATED BALANCE SHEETS (HD

CONSOLIDATED BALANCE SHEETS (HD Supply Holdings, Inc.) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Current assets:
Cash and cash equivalents	$ 228	$ 558
Receivables, less allowance for doubtful accounts of $17 and $12	843	612
Inventories	813	674
Other current assets	45	31
Total current assets	1,929	1,875
Property and equipment, net	345	325
Goodwill	1,992	1,807
Intangible assets, net	203	91
Deferred tax asset	119	205
Other assets	18	15
Total assets	4,606	4,318
Current liabilities:
Accounts payable	488	377
Accrued compensation and benefits	104	95
Current installments of long-term debt	11	11
Other current liabilities	247	138
Total current liabilities	850	621
Long-term debt, excluding current installments	2,087	2,090
Other liabilities	61	141
Total liabilities	2,998	2,852
Stockholders' equity:
Common stock, par value $0.01; 1 billion shares authorized; 183.8 million and 185.7 million shares issued and outstanding at July 29, 2018 and January 28, 2018, respectively	2	2
Paid-in capital	4,047	4,029
Accumulated deficit	(1,745)	(1,966)
Accumulated other comprehensive loss	(15)	(17)
Treasury stock, at cost, 20.8 and 18.2 million shares at July 29, 2018 and January 28, 2018, respectively	(681)	(582)
Total stockholders' equity	1,608	1,466
Total liabilities and stockholders' equity	$ 4,606	$ 4,318

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) shares in Millions, $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 17	$ 12
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	183.8	185.7
Common stock, shares outstanding	183.8	185.7
Treasury stock
Treasury stock, shares	20.8	18.2

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply Holdings, Inc.) - USD ($) $ in Millions	6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 220	$ 527
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	50
Provision for uncollectibles	6	4
Non-cash interest expense	11	6
Payment of discounts upon extinguishment of debt		(4)
Loss on extinguishment of debt		3
Stock-based compensation expense	12	12
Deferred income taxes	70	(223)
Other	(1)
Changes in assets and liabilities, net of the effects of acquisitions & dispositions:
(Increase) decrease in receivables	(183)	(258)
(Increase) decrease in inventories	(104)	(141)
(Increase) decrease in other current assets	(5)
Increase (decrease) in accounts payable and accrued liabilities	108	212
Increase (decrease) in other long-term liabilities	1	1
Net cash provided by (used in) operating activities	186	189
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(47)	(43)
Proceeds from sales of property and equipment		2
Payments for businesses acquired, net of cash acquired	(362)
Net cash provided by (used in) investing activities	(409)	(41)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under employee benefit plans	6	29
Purchase of treasury shares	(93)	(414)
Tax withholdings on stock-based awards	(6)
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt	10	599
Repayments on long-term revolver debt	(16)	(261)
Debt issuance costs		(6)
Other financing activities	(3)
Net cash provided by (used in) financing activities	(107)	(156)
Increase (decrease) in cash and cash equivalents	(330)	(8)
Cash and cash equivalents at beginning of period	558	75
Cash and cash equivalents at end of period	$ 228	$ 67

CONSOLIDATED STATEMENTS OF OPE6

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply, Inc.) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Net Sales	$ 1,600	$ 1,352	$ 2,989	$ 2,568
Cost of sales	978	813	1,815	1,545
Gross Profit	622	539	1,174	1,023
Operating expenses:
Selling, general and administrative	384	338	756	672
Depreciation and amortization	25	21	47	42
Restructuring	2		9
Total operating expenses	411	359	812	714
Operating Income	211	180	362	309
Interest expense	35	49	69	98
Interest (income)			(1)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	176	131	294	208
Provision for income taxes	46	50	75	69
Income from Continuing Operations	130	81	219	139
Income from discontinued operations, net of tax	1	361	1	388
Net Income	131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	132	439	222	525
HD Supply, Inc. (Total HDS)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Net Sales	1,600	1,352	2,989	2,568
Cost of sales	978	813	1,815	1,545
Gross Profit	622	539	1,174	1,023
Operating expenses:
Selling, general and administrative	384	338	756	672
Depreciation and amortization	25	21	47	42
Restructuring	2		9
Total operating expenses	411	359	812	714
Operating Income	211	180	362	309
Interest expense	35	49	69	98
Interest (income)			(1)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	176	131	294	208
Provision for income taxes	46	50	75	69
Income from Continuing Operations	130	81	219	139
Income from discontinued operations, net of tax	1	361	1	388
Net Income	131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	$ 132	$ 439	$ 222	$ 525

CONSOLIDATED BALANCE SHEETS (H7

CONSOLIDATED BALANCE SHEETS (HD Supply, Inc.) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Current assets:
Cash and cash equivalents	$ 228	$ 558
Receivables, less allowance for doubtful accounts of $17 and $12	843	612
Inventories	813	674
Other current assets	45	31
Total current assets	1,929	1,875
Property and equipment, net	345	325
Goodwill	1,992	1,807
Intangible assets, net	203	91
Deferred tax asset	119	205
Other assets	18	15
Total assets	4,606	4,318
Current liabilities:
Accounts payable	488	377
Accrued compensation and benefits	104	95
Current installments of long-term debt	11	11
Other current liabilities	247	138
Total current liabilities	850	621
Long-term debt, excluding current installments	2,087	2,090
Other liabilities	61	141
Total liabilities	2,998	2,852
Stockholders' equity:
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at July 29, 2018 and January 28, 2018	2	2
Paid-in capital	4,047	4,029
Accumulated deficit	(1,745)	(1,966)
Accumulated other comprehensive loss	(15)	(17)
Total stockholders' equity	1,608	1,466
Total liabilities and stockholders' equity	4,606	4,318
HD Supply, Inc. (Total HDS)
Current assets:
Cash and cash equivalents	227	558
Receivables, less allowance for doubtful accounts of $17 and $12	843	612
Inventories	813	674
Other current assets	45	31
Total current assets	1,928	1,875
Property and equipment, net	345	325
Goodwill	1,992	1,807
Intangible assets, net	203	91
Deferred tax asset	119	205
Other assets	18	15
Total assets	4,605	4,318
Current liabilities:
Accounts payable	488	377
Accrued compensation and benefits	104	95
Current installments of long-term debt	11	11
Other current liabilities	247	138
Total current liabilities	850	621
Long-term debt, excluding current installments	2,087	2,090
Other liabilities	61	141
Total liabilities	2,998	2,852
Stockholders' equity:
Paid-in capital	3,208	3,290
Accumulated deficit	(1,586)	(1,807)
Accumulated other comprehensive loss	(15)	(17)
Total stockholders' equity	1,607	1,466
Total liabilities and stockholders' equity	$ 4,605	$ 4,318

CONSOLIDATED BALANCE SHEETS (P8

CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 17	$ 12
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	183,800,000	185,700,000
Common stock, shares outstanding	183,800,000	185,700,000
HD Supply, Inc. (Total HDS)
Receivables
Receivables, allowance for doubtful accounts (in dollars)	$ 17	$ 12
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. 29, 2018	Jul. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 220	$ 527
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	50
Provision for uncollectibles	6	4
Non-cash interest expense	11	6
Payment of discounts upon extinguishment of debt		(4)
Loss on extinguishment of debt		3
Stock-based compensation expense	12	12
Deferred income taxes	70	(223)
Other	(1)
Changes in assets and liabilities, net of the effects of acquisitions & dispositions:
(Increase) decrease in receivables	(183)	(258)
(Increase) decrease in inventories	(104)	(141)
(Increase) decrease in other current assets	(5)
Increase (decrease) in accounts payable and accrued liabilities	108	212
Increase (decrease) in other long-term liabilities	1	1
Net cash provided by (used in) operating activities	186	189
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(47)	(43)
Proceeds from sales of property and equipment		2
Payments for businesses acquired, net of cash acquired	(362)
Net cash provided by (used in) investing activities	(409)	(41)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt	10	599
Repayments on long-term revolver debt	(16)	(261)
Debt issuance costs		(6)
Other financing activities	(3)
Net cash provided by (used in) financing activities	(107)	(156)
Increase (decrease) in cash and cash equivalents	(330)	(8)
Cash and cash equivalents at beginning of period	558	75
Cash and cash equivalents at end of period	228	67
HD Supply, Inc. (Total HDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	220	527
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51	50
Provision for uncollectibles	6	4
Non-cash interest expense	11	6
Payment of discounts upon extinguishment of debt		(4)
Loss on extinguishment of debt		3
Stock-based compensation expense	12	12
Deferred income taxes	70	(223)
Other	(1)
Changes in assets and liabilities, net of the effects of acquisitions & dispositions:
(Increase) decrease in receivables	(183)	(258)
(Increase) decrease in inventories	(104)	(141)
(Increase) decrease in other current assets	(5)
Increase (decrease) in accounts payable and accrued liabilities	108	212
Increase (decrease) in other long-term liabilities	1	1
Net cash provided by (used in) operating activities	186	189
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(47)	(43)
Proceeds from sales of property and equipment		2
Payments for businesses acquired, net of cash acquired	(362)
Net cash provided by (used in) investing activities	(409)	(41)
CASH FLOWS FROM FINANCING ACTIVITIES:
Equity distribution to Parent	(94)	(395)
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt	10	599
Repayments on long-term revolver debt	(16)	(261)
Debt issuance costs		(6)
Other financing activities	(3)
Net cash provided by (used in) financing activities	(108)	(166)
Increase (decrease) in cash and cash equivalents	(331)	(18)
Cash and cash equivalents at beginning of period	558	73
Cash and cash equivalents at end of period	$ 227	$ 55

NATURE OF BUSINESS AND BASIS OF

NATURE OF BUSINESS AND BASIS OF PRESENTATION	6 Months Ended
	Jul. 29, 2018
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 two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,000 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 includes approximately 650,000 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 construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments. The reportable segments are Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, 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 28, 2018, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). F iscal Year HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. The fiscal year ending February 3, 2019 ("fiscal 2018") includes 53 weeks and the fiscal year ending January 29, 2018 (“fiscal 2017”) includes 52 weeks. The three months ended July 29, 2018 (“second quarter 2018”) and July 30, 2017 ("second quarter 2017”) both include 13 weeks. The six months ended July 29, 2018 and July 30, 2017 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 HDS 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, workers’ compensation, and is self-insured for certain legal claims and medical claims, while maintaining per employee stop-loss coverage. 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 29, 2018 and January 28, 2018, self-insurance reserves totaled approximately $56 million and $51 million, respectively.

ACQUISITION

ACQUISITION	6 Months Ended
	Jul. 29, 2018
ACQUISITION
ACQUISITION	NOTE 2—ACQUISITION HD Supply enters into strategic acquisitions to expand into new markets, new platforms, and new geographies in an effort to better service existing customers and attract new ones. In accordance with the acquisition method of accounting under Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”), the results of acquisitions completed by HD Supply are reflected in the Company’s consolidated financial statements from the date of acquisition forward. On March 5, 2018, the Company completed the acquisition of A.H. Harris Construction Supply (“A.H. Harris”) for a purchase price of approximately $362 million, net of cash acquired and subject to a final working capital adjustment. A.H. Harris is a leading specialty construction distributor serving the northeast and mid-Atlantic regions. This acquisition expands Construction & Industrial’s market presence in the northeastern United States. In accordance with ASC 805, the Company provisionally recorded the following assets and liabilities at fair value as of the date of the A.H. Harris acquisition: $185 million in goodwill, $123 million in definite-lived intangible assets, $13 million in property & equipment, $57 million in net working capital, and $17 million in deferred tax liabilities. The total amount of goodwill expected to be deductible for tax purposes is $19 million. The definite-lived intangible assets are comprised of $110 million in customer relationships and $13 million of trade names that will be amortized over a period of 12 years and 5 years, respectively. From March 5, 2018 to July 29, 2018, A.H. Harris generated approximately $164 million in Net sales. During second quarter 2018 and the first six months of fiscal 2018, the Company incurred approximately $1 million and $3 million of costs, respectively, related to the acquisition and integration of A.H. Harris. The Company expects to incur a total of $8 million to $10 million of acquisition and integration costs during fiscal 2018.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	6 Months Ended
	Jul. 29, 2018
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS	NOTE 3—DISCONTINUED OPERATIONS In August 2017, the Company completed the sale of its Waterworks business. In accordance with 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 Waterworks are classified as a discontinued operation. 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. In connection with presenting the Waterworks business unit as a discontinued operation in the second quarter of fiscal 2017, a net deferred tax asset of $323 million and corresponding income tax benefit for the difference in the Company’s stock basis versus its book carrying value of the Waterworks subsidiary was recorded in the second quarter of fiscal 2017. Upon recording the gain on the sale of Waterworks in the third quarter of fiscal 2017, the Company recognized a tax expense in discontinued operations, which included $323 million related to utilizing the deferred tax asset originally recorded in the second quarter of fiscal 2017. 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 29, July 30, July 29, July 30, Net sales $ — $ 746 $ — $ 1,403 Cost of sales — 582 — 1,092 Gross Profit — 164 — 311 Operating expenses: Selling, general and administrative — 100 — 197 Depreciation and amortization — 3 — 6 Total operating expenses — 103 — 203 Operating Income — 61 — 108 (Gain) Loss on sales of businesses, net (1) — (1) — Other (Income) expense, net — 1 — 3 Income before provision (benefit) for income taxes 1 60 1 105 Provision (benefit) for income taxes — (301) — (283) Income from discontinued operations, net of tax $ 1 $ 361 $ 1 $ 388 The following table provides additional detail related to the net cash provided by operating and investing activities of the discontinued operations (amounts in millions): Six Months Ended July 29, July 30, Net cash flows provided by operating activities $ — $ 17 Cash flows from investing activities: Capital expenditures — (5) Proceeds from sales of property and equipment, net — 2 Net cash flows provided by (used in) investing activities $ — $ (3)

DEBT

DEBT	6 Months Ended
	Jul. 29, 2018
DEBT
DEBT	NOTE 4—DEBT HDS’s long-term debt as of July 29, 2018 and January 28, 2018 consisted of the following (dollars in millions): July 29, 2018 January 28, 2018 Outstanding Interest Outstanding Interest Principal Rate % (1) Principal Rate % (1) Senior ABL Facility due 2022 $ 49 3.07 $ 58 2.86 Term B-3 Loans due 2021 531 4.33 534 3.94 Term B-4 Loans due 2023 542 4.58 544 4.19 April 2016 Senior Unsecured Notes due 2024 1,000 5.75 1,000 5.75 Total gross long-term debt $ 2,122 $ 2,136 Less unamortized discount (5) (6) Less unamortized deferred financing costs (19) (29) Total net long-term debt $ 2,098 $ 2,101 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 2,087 $ 2,090 (1) Represents the stated rate of interest, without including the effect of discounts or premiums. Senior Credit Facilities Senior ABL Facility HDS's Senior Asset Based Lending Facility due 2022 (the “Senior ABL Facility”) provides for senior secured revolving loans and letters of credit of up to a maximum aggregate principal amount of $1,000 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 29, 2018, HDS had $924 million of Excess Availability (as defined in the agreement) under the Senior ABL Facility (after giving effect to the borrowing base limitations and approximately $27 million in letters of credit issued and including $134 million of borrowings available on qualifying cash balances). As of July 29, 2018, all outstanding borrowings on the Senior ABL Facility are Canadian borrowings. 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 and an unused commitment fee subject to a pricing grid, included in the agreement governing the Senior ABL Facility, based on Excess Availability. 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. Per the Third Amendment to the credit agreement governing the existing Senior ABL Facility, the Senior ABL Facility will mature on April 5, 2022 (the stated "Maturity Date") or 60 days before the maturity date of any outstanding principal balance that is greater than or equal to $250 million ("Material Indebtedness") unless, before such date, the Material Indebtedness has been (a) refinanced to extend the maturity date at least 60 days after the stated Maturity Date, (b) adequately reserved for by the Administrative Agent, (c) cash collateralized pursuant to arrangements reasonably acceptable to the Administrative Agent, or (d) any combination of the above actions or items. Senior Term Loan Facility HDS’s Senior Term Facility ("the 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 $1,081 million. The tranche of term loans in an original aggregate principal amount of $535 million (the "Term B-3 Loans") will mature on August 13, 2021. The tranche of term loans in an original aggregate principal amount of $546 million (the "Term B-4 Loans") will mature on October 17, 2023. Both the Term B-3 Loans and the Term B-4 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Term Loans with the balances payable on their respective maturity dates. The Term B-3 Loans bear interest at the applicable margin for borrowings of 2.25% for LIBOR borrowings and 1.25% for base rate borrowings. The Term B-4 Loans bear interest at the applicable margin for borrowings of 2.50% for LIBOR borrowings and 1.50% for base rate borrowings. For additional information on our Senior ABL Facility or Senior Term Facility (collectively, the “Senior Credit Facilities”), including guarantees and security, please refer to the Notes to the Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 28, 2018. Unsecured Notes 5.75% Senior Unsecured Notes due 2024 HDS’s 5.75% Senior Unsecured Notes due 2024 (the “April 2016 Senior Unsecured Notes”) bear interest at a rate of 5.75% until April 15, 2019 and 7.00% per annum from April 15, 2019 until maturity on April 15, 2024. Interest is paid semi‑annually on April 15 th and October 15 th of each year. 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 104.313 % 2020 102.875 % 2021 101.438 % 2022 and thereafter 100.000 % 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. For additional information on the April 2016 Senior Unsecured Notes, including guarantees and security, please refer to the Notes to the Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 28, 2018. 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 29, 2018, 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. 29, 2018
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	NOTE 5—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 29, 2018 and January 28, 2018 (amounts in millions): As of July 29, 2018 As of January 28, 2018 Recorded Estimated Recorded Estimated Amount (1) Fair Value Amount (1) Fair Value Senior ABL Facility $ 49 $ 49 $ 58 $ 57 Term Loans and Notes 2,073 2,133 2,078 2,158 Total $ 2,122 $ 2,182 $ 2,136 $ 2,215 (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. 29, 2018
INCOME TAXES
INCOME TAXES	NOTE 6—INCOME TAXES For the six months ended July 29, 2018, the Company’s combined federal, state, and foreign effective tax rate for continuing operations was 25.5%. The effective rate for continuing operations for the six months ended July 30, 2017 was 33.2%. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. The Tax Act lowered the Company’s federal statutory rate from 35% to 21%. 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 July 29, 2018 and January 28, 2018, the Company’s unrecognized tax benefits in accordance with the income taxes principles of GAAP (ASC 740, “Income Taxes”) were $16 million. The Company’s ending net accrual for interest and penalties related to unrecognized tax benefits as of July 29, 2018 and January 28, 2018 was zero. As of July 29, 2018 and January 28, 2018, the Company’s valuation allowance on its U.S. deferred tax assets was approximately $7 million. Each reporting period, the Company assesses available positive and negative evidence and estimates if sufficient future taxable income will be generated to utilize the existing deferred tax assets. As of July 29, 2018, the Company has completed its evaluation of its indefinite reinvestment assertion as a result of the Tax Act and has asserted that its Canadian earnings are permanently reinvested until such time that the Canadian borrowings under the Senior ABL Facility, which was initially drawn on during fiscal 2016, are paid off. No provision for U.S. federal and state income taxes or foreign withholding taxes has been made in the Company’s current year consolidated financial statements for those non-U.S. subsidiaries whose earnings are considered to be permanently reinvested.

BASIC AND DILUTED WEIGHTED AVER

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES	6 Months Ended
	Jul. 29, 2018
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES	NOTE 7—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 three and six months ended July 29, 2018 and July 30, 2017 was as follows (in thousands): Three Months Ended Six Months Ended July 29, July 30, July 29, July 30, Weighted-average common shares 182,992 197,752 183,659 199,230 Effect of potentially dilutive stock plan securities 830 1,202 797 1,780 Diluted weighted-average common shares 183,822 198,954 184,456 201,010 Stock plan securities excluded from dilution (1) 1,536 2,383 2,133 1,652 (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, restricted stock units, and performance share units) granted under Holdings’ stock-based compensation plans.

SUPPLEMENTAL BALANCE SHEET AND

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION	6 Months Ended
	Jul. 29, 2018
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION	NOTE 8—SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION Receivables Receivables as of July 29, 2018 and January 28, 2018 consisted of the following (amounts in millions): July 29, January 28, Trade receivables, net of allowance for doubtful accounts $ 770 $ 540 Vendor rebate receivables 57 58 Other receivables 16 14 Total receivables, net $ 843 $ 612 Other Current Liabilities Other current liabilities as of July 29, 2018 and January 28, 2018 consisted of the following (amounts in millions): July 29, January 28, Corporate headquarters financing liability $ 87 $ — Accrued non-income taxes 36 27 Accrued interest 17 21 Refund liability (1) 15 — Other 92 90 Total other current liabilities $ 247 $ 138 (1) This amount represents the Company’s sales return estimate as of July 29, 2018 classified as a Current liability within the Consolidated Balance Sheet as required per ASC 606, Revenue from Contracts with Customers. The sales return estimate as of January 28, 2018 was approximately $12 million and was classified within Net receivables within the Consolidated Balance Sheet. Supplemental Cash Flow Information Cash paid for interest in the six months ended July 29, 2018 and July 30, 2017 was $61 million and $92 million, respectively. During the six months ended July 30, 2017, the Company paid $4 million of original issue discounts related to the extinguishment of debt. Cash paid for income taxes, net of refunds, in the six months ended July 29, 2018 and July 30, 2017 was approximately $5 million and $10 million, respectively. During the six months ended July 29, 2018, HDS executed a cash equity distribution of $94 million to Holdings, via HDS’s direct parent, HDS Holding Corporation. The equity distribution from HDS and return of capital recognized by Holdings were eliminated in consolidation of Holdings and its wholly-owned subsidiaries, including HDS. On August 25, 2017, Holdings’ Board of Directors authorized the Company to enter into a share repurchase program for the repurchase of up to an aggregate amount of $500 million of Holdings’ common stock. During the six months ended July 29, 2018, under this plan, Holdings repurchased 2,298,643 shares of its common stock for approximately $88 million. In combination with the 2014 authorized share repurchase plan (utilizing proceeds from employee stock option exercises), Holdings repurchased a total of 2,426,141 shares of its common stock during the six months ended July 29, 2018 for approximately $93 million. Significant Non-Cash Transactions Build-to-Suit Lease In February 2016, the Company entered into a build-to-suit arrangement for a leadership development and headquarters facility in Atlanta, Georgia, which began construction in 2016. In accordance with ASC 840, “Leases,” for build-to-suit arrangements where the Company is involved in the construction of structural improvements prior to the commencement of the lease or takes some level of construction risk, the Company is considered the owner of the assets and land during the construction period. Accordingly, during construction activities, the Company recorded a Construction in progress asset within Property and equipment and a corresponding financing liability on the Consolidated Balance Sheet for construction costs incurred by the landlord. The lease commenced in February 2018, with the leased asset and corresponding financing liability valued at $87 million each. In accordance with the sale and leaseback criteria of GAAP, the build-to-suit arrangement and subsequent lease failed to qualify as a sale. Therefore, the transaction is accounted for as a financing arrangement, whereby both the leased asset and the financing liability remain on the Company’s Consolidated Balance Sheet. The asset is depreciated as if the Company is the legal owner and rental payments are allocated between interest expense and principal repayment of the financing liability. In April 2018, the Company exercised its option to purchase the leased asset in February 2019 for $87 million. As a result, the financing liability is classified as a Current liability within the Consolidated Balance Sheet.

RESTRUCTURING ACTIVITIES

RESTRUCTURING ACTIVITIES	6 Months Ended
	Jul. 29, 2018
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES	NOTE 9—RESTRUCTURING ACTIVITIES Fiscal 2017 Plan As a result of the sale of the Waterworks business in fiscal 2017, management evaluated the Company’s alignment and functional support strategies. During fiscal 2017, the Company initiated a restructuring plan that included reducing workforce personnel, realigning talent, and closing a Construction & Industrial branch. In addition, the Company relocated its headquarters in first quarter 2018. During the three and six months ended July 29, 2018, the Company recognized $2 million and $9 million, respectively, of restructuring charges, primarily related to property lease obligations upon exiting the Company’s previous headquarters location, and, to a lesser extent, severance and other employee-related costs. During fiscal 2017, the Company recognized $6 million of restructuring charges under this plan. Activities under this plan were completed in the second quarter of fiscal 2018 and no further charges are expected under this plan. The Company expects a payback of the employee-related costs via a reduction in personnel costs over the next one to two years. The Company is actively pursuing buyout options and subleasing opportunities for the Company’s previous headquarters location prior to its lease expiration in October 2020. Payments for severance and employee-related costs incurred under this plan are expected to be substantially complete by the end of fiscal 2018. Payments related to the property lease obligations of the Company’s previous headquarters location will continue until the expiration of the lease in October 2020 or until a buyout option is negotiated. The following table presents the activity for the liability balances, included in Other current liabilities and Other liabilities in the Consolidated Balance Sheets (amounts in millions): Relocation & Occupancy Severance Other Costs Costs Total Balance—January 28, 2018 $ 2 $ 1 $ — $ 3 Charges 2 2 5 9 Cash payments (2) (3) (1) (6) Other — — 2 2 Balance—July 29, 2018 $ 2 $ — $ 6 $ 8

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jul. 29, 2018
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 10—COMMITMENTS AND CONTINGENCIES Legal Matters On July 10, 2017 and August 8, 2017, shareholders filed putative class action complaints in the U.S. District Court for the Northern District of Georgia, alleging that HD Supply and certain senior members of its management (collectively, the “defendants”) made certain false or misleading public statements in violation of the federal securities laws between November 9, 2016 and June 5, 2017, inclusive (the “original securities complaints”). Subsequently, the two securities cases were consolidated, and, on November 16, 2017, the lead plaintiffs appointed by the Court filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”) against the defendants on behalf of all persons other than defendants who purchased or otherwise acquired the Company’s common stock between November 9, 2016 and June 5, 2017, inclusive. The Amended Complaint alleges that defendants made certain false or misleading public statements, primarily relating to the Company’s progress in addressing certain supply chain disruption issues encountered in the Company’s Facilities Maintenance business unit. The Amended Complaint asserts claims against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks class certification under the Federal Rules of Civil Procedure, as well as unspecified monetary damages, pre-judgment and post-judgment interest, and attorneys’ fees and other costs. Defendants moved to dismiss the Consolidated Amended Complaint in December 2017. That motion is pending. On August 8, 2017, two shareholder derivative complaints were filed naming the Company as a “nominal defendant” and certain members of its senior management and board of directors (collectively, the “individual defendants”) as defendants. The complaints generally allege that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding operating leverage and supply chain corrective actions. The complaints assert claims against the individual defendants under Section 14(a) of the Securities Exchange Act of 1934, and allege breaches of fiduciary duties, unjust enrichment, corporate waste, and insider selling. The complaints assert a claim to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seek certain actions by the Company to modify its corporate governance and internal procedures, and seek to recover attorneys’ fees and other costs. In October 2017, the Court consolidated the two derivative actions and granted the parties’ joint scheduling order request. On December 5, 2017, the Court entered an order staying all activity in the case until a ruling is issued on the motion to dismiss filed in the consolidated securities litigation described above. On August 29, 2018, a shareholder derivative complaint was filed in Delaware Chancery Court naming the Company as a “nominal defendant” and certain members of its senior management and board of directors (collectively, the “individual defendants”) as defendants. The complaint generally alleges that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding supply chain corrective actions. The complaint asserts various common law breach of fiduciary duty claims against the individual defendants and claims of unjust enrichment and insider selling. The complaint seeks to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seeks certain actions by the Company to modify its corporate governance and internal procedures, and seeks to recover attorneys’ fees and other costs. The Company intends to defend these lawsuits vigorously. Given the stage of the complaints and the claims and issues presented in the above matters, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these unresolved lawsuits. 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 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 are of such kind or involve such amounts that would not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company if disposed of unfavorably. 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 $10 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. 29, 2018
SEGMENT INFORMATION
SEGMENT INFORMATION	NOTE 11—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 two reportable segments, each of which is presented below: · Facilities Maintenance— Facilities Maintenance distributes maintenance, repair and operations products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities. · Construction & Industrial- Construction & Industrial distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors. Construction & Industrial also 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. In addition to the reportable segments, the Company’s consolidated financial results include Corporate. Corporate incurs costs related to the Company’s centralized support functions, which are comprised of finance, information technology, human resources, legal, supply chain and other support services. All Corporate overhead costs are allocated to the reportable segments. Eliminations include the adjustments necessary to eliminate intercompany transactions. The following tables present Net sales, Adjusted EBITDA, and other measures for both of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Total Facilities Construction Continuing Maintenance & Industrial Eliminations Operations Three Months Ended July 29, 2018 Net sales $ 820 $ 781 $ (1) $ 1,600 Adjusted EBITDA 150 96 — 246 Depreciation (1) & Software Amortization 9 12 — 21 Other Intangible Amortization 2 4 — 6 Three Months Ended July 30, 2017 Net sales $ 769 $ 584 $ (1) $ 1,352 Adjusted EBITDA 145 63 — 208 Depreciation (1) & Software Amortization 8 11 — 19 Other Intangible Amortization 3 — — 3 Six Months Ended July 29, 2018 Net sales $ 1,543 $ 1,447 $ (1) $ 2,989 Adjusted EBITDA 273 163 — 436 Depreciation (1) & Software Amortization 18 22 — 40 Other Intangible Amortization 4 7 — 11 Six Months Ended July 30, 2017 Net sales $ 1,451 $ 1,120 $ (3) $ 2,568 Adjusted EBITDA 253 112 — 365 Depreciation (1) & Software Amortization 17 21 — 38 Other Intangible Amortization 5 1 — 6 (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 29, July 30, July 29, July 30, Total Adjusted EBITDA $ 246 $ 208 $ 436 $ 365 Depreciation and amortization (1) 27 22 51 44 Stock-based compensation 6 6 12 12 Restructuring 2 — 9 — Acquisition and integration costs (2) 1 — 3 — Other (1) — (1) — Operating income 211 180 362 309 Interest expense 35 49 69 98 Interest (income) — — (1) — Loss on extinguishment of debt (3) — — — 3 Income from Continuing Operations Before Provision for Income Taxes 176 131 294 208 Provision for income taxes 46 50 75 69 Income from continuing operations 130 81 219 139 Income from discontinued operations, net of tax 1 361 1 388 Net income $ 131 $ 442 $ 220 $ 527 (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of A.H. Harris Construction Supplies. (3) Represents the loss on extinguishment of debt including the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. On March 5, 2018, the Company completed the acquisition of A.H. Harris for a purchase price of approximately $362 million, net of cash acquired. The acquisition reduced total assets of the Corporate reportable segment by the purchase price and increased total assets of the Construction & Industrial reportable segment by approximately $414 million.

SUBSIDIARY GUARANTORS

SUBSIDIARY GUARANTORS	6 Months Ended
	Jul. 29, 2018
SUBSIDIARY GUARANTORS
SUBSIDIARY GUARANTORS	NOTE 12—SUBSIDIARY GUARANTORS HDS (the "Debt Issuer") has outstanding April 2016 Senior Unsecured 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 April 2016 Senior Unsecured Notes (the "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 April 2016 Senior Unsecured Notes are jointly and severally guaranteed by the Subsidiary 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 April 2016 Senior Unsecured 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 April 2016 Senior Unsecured 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 (loss), the condensed balance sheets and the condensed cash flow statements 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 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 1,560 $ 41 $ (1) $ 1,600 Cost of sales — 956 23 (1) 978 Gross Profit — 604 18 — 622 Operating expenses: Selling, general and administrative 17 353 14 — 384 Depreciation and amortization 5 20 — — 25 Restructuring 1 1 — — 2 Total operating expenses 23 374 14 — 411 Operating Income (Loss) (23) 230 4 — 211 Interest expense 34 — 1 — 35 Interest (income) — — — — — Net (earnings) of equity affiliates (229) — — 229 — Income from Continuing Operations Before Provision for Income Taxes 172 230 3 (229) 176 Provision for income taxes 42 4 — — 46 Income from Continuing Operations 130 226 3 (229) 130 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 131 $ 226 $ 3 $ (229) $ 131 Other comprehensive income—foreign currency translation adjustment 1 — 1 (1) 1 Total Comprehensive Income $ 132 $ 226 $ 4 $ (230) $ 132 Three Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 1,316 $ 36 $ — $ 1,352 Cost of sales — 793 20 — 813 Gross Profit — 523 16 — 539 Operating expenses: Selling, general and administrative 21 304 13 — 338 Depreciation and amortization 3 17 1 — 21 Total operating expenses 24 321 14 — 359 Operating Income (Loss) (24) 202 2 — 180 Interest expense 56 31 1 (39) 49 Interest (income) (32) (7) — 39 — Net (earnings) of equity affiliates (239) — — 239 — Income from Continuing Operations Before Provision for Income Taxes 191 178 1 (239) 131 Provision for income taxes 48 1 1 — 50 Income from Continuing Operations 143 177 — (239) 81 Income from discontinued operations, net of tax 299 61 1 — 361 Net Income $ 442 $ 238 $ 1 $ (239) $ 442 Other comprehensive income (loss)-foreign currency translation adjustment (3) — (3) 3 (3) Total Comprehensive Income $ 439 $ 238 $ (2) $ (236) $ 439 Six Months Ended July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 2,912 $ 78 $ (1) $ 2,989 Cost of sales — 1,774 42 (1) 1,815 Gross Profit — 1,138 36 — 1,174 Operating expenses: Selling, general and administrative 38 690 28 — 756 Depreciation and amortization 9 38 — — 47 Restructuring 6 3 — — 9 Total operating expenses 53 731 28 — 812 Operating Income (Loss) (53) 407 8 — 362 Interest expense 71 22 1 (25) 69 Interest (income) (22) (4) — 25 (1) Net (earnings) of equity affiliates (390) — — 390 — Income from Continuing Operations Before Provision for Income Taxes 288 389 7 (390) 294 Provision for income taxes 69 5 1 — 75 Income from Continuing Operations 219 384 6 (390) 219 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 220 $ 384 $ 6 $ (390) $ 220 Other comprehensive income-foreign currency translation adjustment 2 — 2 (2) 2 Total Comprehensive Income $ 222 $ 384 $ 8 $ (392) $ 222 Six Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 2,501 $ 68 $ (1) $ 2,568 Cost of sales — 1,509 37 (1) 1,545 Gross Profit — 992 31 — 1,023 Operating expenses: Selling, general and administrative 42 605 25 — 672 Depreciation and amortization 7 34 1 — 42 Total operating expenses 49 639 26 — 714 Operating Income (Loss) (49) 353 5 — 309 Interest expense 112 66 1 (81) 98 Interest (income) (66) (15) — 81 — Net (earnings) of equity affiliates (394) — — 394 — Loss on extinguishment of debt 3 — — — 3 Income from Continuing Operations Before Provision for Income Taxes 296 302 4 (394) 208 Provision for income taxes 66 2 1 — 69 Income from Continuing Operations 230 300 3 (394) 139 Income from discontinued operations, net of tax 297 91 — — 388 Net Income $ 527 $ 391 $ 3 $ (394) $ 527 Other comprehensive income (loss)-foreign currency translation adjustment (2) — (2) 2 (2) Total Comprehensive Income $ 525 $ 391 $ 1 $ (392) $ 525 CONDENSED CONSOLIDATING BALANCE SHEETS As of July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS ASSETS Current assets: Cash and cash equivalents $ 204 $ 20 $ 3 $ — $ 227 Receivables, net 4 815 24 — 843 Inventories — 793 20 — 813 Intercompany receivables — 1 — (1) — Other current assets 13 31 1 — 45 Total current assets 221 1,660 48 (1) 1,928 Property and equipment, net 156 186 3 — 345 Goodwill — 1,992 — — 1,992 Intangible assets, net — 202 1 — 203 Deferred tax asset 198 — 2 (81) 119 Investment in subsidiaries 4,268 — — (4,268) — Intercompany notes receivable 189 1,181 — (1,370) — Other assets 13 5 — — 18 Total assets $ 5,045 $ 5,226 $ 54 $ (5,720) $ 4,605 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 8 $ 464 $ 16 $ — $ 488 Accrued compensation and benefits 32 69 3 — 104 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 1 (1) — Other current liabilities 124 117 6 — 247 Total current liabilities 175 650 26 (1) 850 Long-term debt, excluding current installments 2,038 — 49 — 2,087 Deferred tax liabilities — 81 — (81) — Intercompany notes payable (1) 1,181 189 — (1,370) — Other liabilities 44 16 1 — 61 Total liabilities 3,438 936 76 (1,452) 2,998 Stockholder’s equity (deficit) 1,607 4,290 (22) (4,268) 1,607 Total liabilities and stockholder’s equity (deficit) $ 5,045 $ 5,226 $ 54 $ (5,720) $ 4,605 (1) During the six months ended July 29, 2018, the Parent completed a non-cash debt contribution to the Guarantor Subsidiaries of approximately $958 million. As of January 28, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS ASSETS Current assets: Cash and cash equivalents $ 539 $ 15 $ 4 $ — $ 558 Receivables, net 7 584 21 — 612 Inventories — 654 20 — 674 Intercompany receivables — 2 — (2) — Other current assets 15 15 1 — 31 Total current assets 561 1,270 46 (2) 1,875 Property and equipment, net 152 170 3 — 325 Goodwill — 1,807 — — 1,807 Intangible assets, net — 90 1 — 91 Deferred tax asset 264 — 2 (61) 205 Investment in subsidiaries 2,811 — — (2,811) — Intercompany notes receivable 1,005 1,083 — (2,088) — Other assets 12 3 — — 15 Total assets $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11 $ 353 $ 13 $ — $ 377 Accrued compensation and benefits 34 57 4 — 95 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 2 (2) — Other current liabilities 43 88 7 — 138 Total current liabilities 99 498 26 (2) 621 Long-term debt, excluding current installments 2,032 — 58 — 2,090 Deferred tax liabilities — 61 — (61) — Intercompany notes payable 1,083 1,005 — (2,088) — Other liabilities 125 16 — — 141 Total liabilities 3,339 1,580 84 (2,151) 2,852 Stockholder's equity (deficit) 1,466 2,843 (32) (2,811) 1,466 Total liabilities and stockholder’s equity (deficit) $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 CONDENSED CONSOLIDATING CASH FLOW STATEMENTS Six Months Ended July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net cash flows from operating activities $ 208 $ (27) $ 5 $ — $ 186 Cash flows from investing activities Capital expenditures (17) (29) (1) — (47) Payments for businesses acquired, net — — (362) — (362) Proceeds from sales of property and equipment — — — — — Investments in equity affiliates (1) (365) — (3) 368 — Proceeds from (payments of) intercompany notes — 58 — (58) — Net cash flows from investing activities $ (382) $ 29 $ (366) $ 310 $ (409) Cash flows from financing activities Equity contribution (distribution) (1) (94) 3 365 (368) (94) Borrowings of (repayments of) intercompany notes (58) — — 58 — Repayments of long-term debt (5) — — — (5) Borrowings on long-term revolver debt — — 10 — 10 Repayments on long-term revolver debt — — (16) — (16) Other financing activities (4) — 1 — (3) Net cash flows from financing activities (161) 3 360 (310) (108) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (335) $ 5 $ (1) $ — $ (331) Cash and cash equivalents at beginning of period 539 15 4 — 558 Cash and cash equivalents at end of period $ 204 $ 20 $ 3 $ — $ 227 (1) During the six months ended July 29, 2018, the Parent completed a cash contribution of approximately $365 million to a Non-Guarantor Subsidiary to execute the purchase of A.H. Harris. Subsequent to the acquisition, the A.H. Harris entities became Guarantor Subsidiaries. Six Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net cash flows from operating activities $ 227 $ (41) $ 3 $ — $ 189 Cash flows from investing activities Capital expenditures (9) (34) — — (43) Proceeds from sale of property and equipment — 2 — — 2 Proceeds from (payments of) intercompany notes — 73 — (73) — Net cash flows from investing activities $ (9) $ 41 $ — $ (73) $ (41) Cash flows from financing activities Equity contribution (395) — — — (395) Borrowings of (repayments of) intercompany notes (73) — — 73 — Repayments of long-term debt (103) — — — (103) Borrowings on long-term revolver debt 596 — 3 — 599 Repayments on long-term revolver debt (256) — (5) — (261) Debt issuance costs (6) — — — (6) Net cash flows from financing activities (237) — (2) 73 (166) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (19) $ — $ 1 $ — $ (18) Cash and cash equivalents at beginning of period 51 17 5 — 73 Cash and cash equivalents at end of period $ 32 $ 17 $ 6 $ — $ 55

REVENUE

REVENUE	6 Months Ended
	Jul. 29, 2018
REVENUE
REVENUE	NOTE 13—REVENUE The Company’s revenues are earned from contracts with customers. Contracts include written agreements, as well as arrangements that are implied by customary practices or law. The Company adopted the provisions of ASC 606, Revenue from Contracts with Customers, and related amendments (“ASC 606”) using the modified retrospective method on January 29, 2018 (the first day of fiscal 2018). The Company concluded that most of its contracts with customers consist of a single performance obligation to transfer promised goods or services and therefore are not impacted by the adoption of ASC 606. The adoption of ASC 606 impacted the Company’s method of recognizing certain installation income, which was generally recognized when the customer order was fully installed. ASC 606 requires installation income to be recognized as each performance obligation within a contract is completed. The Company’s installation contracts are typically completed in less than 90 days. Due to the seasonal nature of the Company’s installation business, recognized revenue could shift between quarters within the year. The adoption of ASC 606 did not have a material impact on the Company’s financial position, results of operations or cash flows. As such, the Company did not make any adjustments to its financial position upon adoption. Nature of Products and Services Both Facilities Maintenance and Construction & Industrial serve unique end markets. Facilities Maintenance offers products that serve the maintenance, repair and operations (“MRO”) end market as well as value-added services. Construction & Industrial offers products used broadly across both the residential and non-residential construction end markets as well as light remodeling supplies for small remodeling contractors and trade professionals. For additional information regarding the nature of products and services offered by the Company’s reportable segments, see “Description of segments” within Item 2 of this report on Form 10-Q. Revenue Recognition The Company recognizes revenue, net of allowances for returns and discounts and any taxes collected from the customer, when an identified performance obligation is satisfied by the transfer of control of promised products or services to the customer. The Company ships products to customers by internal fleet and third-party carriers. Transfer of control to the customer for products generally occurs at the point of destination (i.e., upon transfer of title and risk of loss of product). Transfer of control to the customer for services occurs when the customer has the right to direct the use of and obtain substantially all the remaining benefits of the asset that is created or enhanced from the service. The Company accounts for shipping and handling costs associated with outbound freight as a fulfillment cost. Such costs are included in Selling, general and administrative expenses. Disaggregation of Revenue The Company elected to disaggregate the revenue of Facilities Maintenance by its demand types: MRO and Property Improvement, and Construction & Industrial by its end markets: Non-Residential Construction, Residential Construction, and Other. The Company believes this disaggregation appropriately meets the objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Three Months Ended Six Months Ended July 29, 2018 July 30, 2017 July 29, 2018 July 30, 2017 Facilities Maintenance Maintenance, Repair, and Operations $ 722 $ 680 $ 1,358 $ 1,286 Property Improvement 98 89 185 165 Total Facilities Maintenance Net Sales 820 769 1,543 1,451 Construction & Industrial Non-Residential Construction 549 378 998 726 Residential Construction 188 167 364 320 Other 44 39 85 74 Total Construction & Industrial Net Sales 781 584 1,447 1,120 Inter-segment Eliminations (1) (1) (1) (3) Total HD Supply Net Sales $ 1,600 $ 1,352 $ 2,989 $ 2,568 Contract Balances The timing of satisfaction of identified performance obligations may differ from the timing of invoicing to customers for certain installation contracts, which may result in the recognition of a contract asset or liability. The Company records a contract asset when it recognizes revenue prior to invoicing, or a contract liability when revenue is recognized subsequent to invoicing. Contract assets are reclassified as accounts receivable upon invoicing and contract liabilities are relieved upon recognition of revenue. As of July 29, 2018, the Company’s contract assets and contract liabilities, which are included in Other Current Assets and Other Current Liabilities, respectively, within the Consolidated Balance Sheets, are not material. Payment terms and conditions vary by contract type, although terms generally include a requirement for payment within 45 days. As such, in instances where the timing of revenue recognition differs from the timing of invoicing, the Company has concluded that its contracts with customers do not include a significant financing component because customer payments for goods and services are received in less than one year. All remaining performance obligations as of July 29, 2018 are not material.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	6 Months Ended
	Jul. 29, 2018
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	NOTE 14—RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements Stock Compensation – In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017‑09”). This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied prospectively to awards modified on or after the adoption date. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no impact to the Company's financial position, results of operations or cash flows. Business Combinations -- In January 2017, the FASB issued ASC No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). This update clarifies the definition of a business with the objective of adding guidance to assist companies to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied prospectively with no required disclosure at the transition date. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no material impact to the Company’s financial position, results of operations or cash flows. Statement of Cash Flows – In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). The new guidance is intended to reduce diversity in practice by adding or clarifying guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied retrospectively to all periods presented. The Company adopted this guidance retrospectively on January 29, 2018 (the first day of fiscal 2018) with no material impact on the Company’s financial position, results of operations or cash flows. On a prospective basis, ASU 2016-18 will only impact the Company’s financial position and cash flows to the extent it has restricted cash. Income Taxes –In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-entity Transfers of Assets Other than Inventory” (“ASU 2016-16”). The new guidance is intended to improve the accounting for intra-entity transfers of assets other than inventory by requiring recognition of income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update were required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no adjustment to retained earnings. Statement of Cash Flows – In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new guidance is intended to reduce diversity in practice related to certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update were required to be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application was permitted. The Company adopted this guidance retrospectively on January 29, 2018 (the first day of fiscal 2018) with no revision to prior periods. Revenue recognition – In May 2014, the FASB issued ASU No. 2014-09, “Revenue from contracts with customers” (“ASU 2014-09”), amended by ASU 2016-10, “Revenue from contracts with customers (Topic 606): Identifying Performance Obligations and Licensing,” ASU 2016-12, “Revenue from contracts with customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” and ASU 2017-14, “Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606).” 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.” The update requires significant additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. 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, and a permission to early adopt for annual and interim periods beginning after December 15, 2016. The Company adopted ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard on January 29, 2018 (the first day of fiscal 2018) using the modified retrospective method. See “Note 13, Revenue” for the Company’s revenue accounting policies and disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted Goodwill – In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The amendments in this update should be applied on a prospective basis. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows. Financial Instruments -- In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments -- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The amended guidance modifies the measurement of expected credit losses of certain financial instruments, including trade receivables. The amended guidance also prescribes additional disclosure requirements for certain financial instruments. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact of adopting ASU 2016-13. Leases – In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), amended by ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” ASU 2018-01, “Leases (Topic 842)-Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11, “Leases (Topic 842) – Targeted Improvements.” The amended 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. Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company is currently evaluating the impact of adopting ASU 2016-02.

NATURE OF BUSINESS AND BASIS 24

NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies)	6 Months Ended
	Jul. 29, 2018
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 two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,000 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 includes approximately 650,000 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 construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments. The reportable segments are Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, 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 28, 2018, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”).
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. The fiscal year ending February 3, 2019 ("fiscal 2018") includes 53 weeks and the fiscal year ending January 29, 2018 (“fiscal 2017”) includes 52 weeks. The three months ended July 29, 2018 (“second quarter 2018”) and July 30, 2017 ("second quarter 2017”) both include 13 weeks. The six months ended July 29, 2018 and July 30, 2017 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 HDS 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, workers’ compensation, and is self-insured for certain legal claims and medical claims, while maintaining per employee stop-loss coverage. 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 29, 2018 and January 28, 2018, self-insurance reserves totaled approximately $56 million and $51 million, respectively.

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	6 Months Ended
	Jul. 29, 2018
DISCONTINUED OPERATIONS
Schedule of results 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 29, July 30, July 29, July 30, Net sales $ — $ 746 $ — $ 1,403 Cost of sales — 582 — 1,092 Gross Profit — 164 — 311 Operating expenses: Selling, general and administrative — 100 — 197 Depreciation and amortization — 3 — 6 Total operating expenses — 103 — 203 Operating Income — 61 — 108 (Gain) Loss on sales of businesses, net (1) — (1) — Other (Income) expense, net — 1 — 3 Income before provision (benefit) for income taxes 1 60 1 105 Provision (benefit) for income taxes — (301) — (283) Income from discontinued operations, net of tax $ 1 $ 361 $ 1 $ 388 The following table provides additional detail related to the net cash provided by operating and investing activities of the discontinued operations (amounts in millions): Six Months Ended July 29, July 30, Net cash flows provided by operating activities $ — $ 17 Cash flows from investing activities: Capital expenditures — (5) Proceeds from sales of property and equipment, net — 2 Net cash flows provided by (used in) investing activities $ — $ (3)

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Jul. 29, 2018
DEBT
Schedule of long-term debt	HDS’s long-term debt as of July 29, 2018 and January 28, 2018 consisted of the following (dollars in millions): July 29, 2018 January 28, 2018 Outstanding Interest Outstanding Interest Principal Rate % (1) Principal Rate % (1) Senior ABL Facility due 2022 $ 49 3.07 $ 58 2.86 Term B-3 Loans due 2021 531 4.33 534 3.94 Term B-4 Loans due 2023 542 4.58 544 4.19 April 2016 Senior Unsecured Notes due 2024 1,000 5.75 1,000 5.75 Total gross long-term debt $ 2,122 $ 2,136 Less unamortized discount (5) (6) Less unamortized deferred financing costs (19) (29) Total net long-term debt $ 2,098 $ 2,101 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 2,087 $ 2,090 (1) Represents the stated rate of interest, without including the effect of discounts or premiums.
5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Schedule of notes redemption	Year Percentage 2019 104.313 % 2020 102.875 % 2021 101.438 % 2022 and thereafter 100.000 %

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Jul. 29, 2018
FAIR VALUE MEASUREMENTS
Schedule of financial instruments that are not reflected at fair value on the balance sheet	The Company’s financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of July 29, 2018 and January 28, 2018 (amounts in millions): As of July 29, 2018 As of January 28, 2018 Recorded Estimated Recorded Estimated Amount (1) Fair Value Amount (1) Fair Value Senior ABL Facility $ 49 $ 49 $ 58 $ 57 Term Loans and Notes 2,073 2,133 2,078 2,158 Total $ 2,122 $ 2,182 $ 2,136 $ 2,215 (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 AV28

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES (Tables)	6 Months Ended
	Jul. 29, 2018
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 three and six months ended July 29, 2018 and July 30, 2017 was as follows (in thousands): Three Months Ended Six Months Ended July 29, July 30, July 29, July 30, Weighted-average common shares 182,992 197,752 183,659 199,230 Effect of potentially dilutive stock plan securities 830 1,202 797 1,780 Diluted weighted-average common shares 183,822 198,954 184,456 201,010 Stock plan securities excluded from dilution (1) 1,536 2,383 2,133 1,652 (1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.

SUPPLEMENTAL BALANCE SHEET AN29

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables)	6 Months Ended
	Jul. 29, 2018
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
Schedule of receivables	Receivables as of July 29, 2018 and January 28, 2018 consisted of the following (amounts in millions): July 29, January 28, Trade receivables, net of allowance for doubtful accounts $ 770 $ 540 Vendor rebate receivables 57 58 Other receivables 16 14 Total receivables, net $ 843 $ 612
Schedule of other current liabilities	Other current liabilities as of July 29, 2018 and January 28, 2018 consisted of the following (amounts in millions): July 29, January 28, Corporate headquarters financing liability $ 87 $ — Accrued non-income taxes 36 27 Accrued interest 17 21 Refund liability (1) 15 — Other 92 90 Total other current liabilities $ 247 $ 138 (1) This amount represents the Company’s sales return estimate as of July 29, 2018 classified as a Current liability within the Consolidated Balance Sheet as required per ASC 606, Revenue from Contracts with Customers. The sales return estimate as of January 28, 2018 was approximately $12 million and was classified within Net receivables within the Consolidated Balance Sheet.

RESTRUCTURING ACTIVITIES (Table

RESTRUCTURING ACTIVITIES (Tables)	6 Months Ended
	Jul. 29, 2018
RESTRUCTURING ACTIVITIES
Schedule of restructuring activity for the liability balances	The following table presents the activity for the liability balances, included in Other current liabilities and Other liabilities in the Consolidated Balance Sheets (amounts in millions): Relocation & Occupancy Severance Other Costs Costs Total Balance—January 28, 2018 $ 2 $ 1 $ — $ 3 Charges 2 2 5 9 Cash payments (2) (3) (1) (6) Other — — 2 2 Balance—July 29, 2018 $ 2 $ — $ 6 $ 8

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	6 Months Ended
	Jul. 29, 2018
SEGMENT INFORMATION
Schedule of net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations	The following tables present Net sales, Adjusted EBITDA, and other measures for both of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Total Facilities Construction Continuing Maintenance & Industrial Eliminations Operations Three Months Ended July 29, 2018 Net sales $ 820 $ 781 $ (1) $ 1,600 Adjusted EBITDA 150 96 — 246 Depreciation (1) & Software Amortization 9 12 — 21 Other Intangible Amortization 2 4 — 6 Three Months Ended July 30, 2017 Net sales $ 769 $ 584 $ (1) $ 1,352 Adjusted EBITDA 145 63 — 208 Depreciation (1) & Software Amortization 8 11 — 19 Other Intangible Amortization 3 — — 3 Six Months Ended July 29, 2018 Net sales $ 1,543 $ 1,447 $ (1) $ 2,989 Adjusted EBITDA 273 163 — 436 Depreciation (1) & Software Amortization 18 22 — 40 Other Intangible Amortization 4 7 — 11 Six Months Ended July 30, 2017 Net sales $ 1,451 $ 1,120 $ (3) $ 2,568 Adjusted EBITDA 253 112 — 365 Depreciation (1) & Software Amortization 17 21 — 38 Other Intangible Amortization 5 1 — 6 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.
Schedule of reconciliation of adjusted EBITDA to income (loss) from continuing operations	Three Months Ended Six Months Ended July 29, July 30, July 29, July 30, Total Adjusted EBITDA $ 246 $ 208 $ 436 $ 365 Depreciation and amortization (1) 27 22 51 44 Stock-based compensation 6 6 12 12 Restructuring 2 — 9 — Acquisition and integration costs (2) 1 — 3 — Other (1) — (1) — Operating income 211 180 362 309 Interest expense 35 49 69 98 Interest (income) — — (1) — Loss on extinguishment of debt (3) — — — 3 Income from Continuing Operations Before Provision for Income Taxes 176 131 294 208 Provision for income taxes 46 50 75 69 Income from continuing operations 130 81 219 139 Income from discontinued operations, net of tax 1 361 1 388 Net income $ 131 $ 442 $ 220 $ 527 (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of A.H. Harris Construction Supplies. (3) Represents the loss on extinguishment of debt including the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt.

SUBSIDIARY GUARANTORS (Tables)

SUBSIDIARY GUARANTORS (Tables)	6 Months Ended
	Jul. 29, 2018
SUBSIDIARY GUARANTORS
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME	CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three Months Ended July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 1,560 $ 41 $ (1) $ 1,600 Cost of sales — 956 23 (1) 978 Gross Profit — 604 18 — 622 Operating expenses: Selling, general and administrative 17 353 14 — 384 Depreciation and amortization 5 20 — — 25 Restructuring 1 1 — — 2 Total operating expenses 23 374 14 — 411 Operating Income (Loss) (23) 230 4 — 211 Interest expense 34 — 1 — 35 Interest (income) — — — — — Net (earnings) of equity affiliates (229) — — 229 — Income from Continuing Operations Before Provision for Income Taxes 172 230 3 (229) 176 Provision for income taxes 42 4 — — 46 Income from Continuing Operations 130 226 3 (229) 130 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 131 $ 226 $ 3 $ (229) $ 131 Other comprehensive income—foreign currency translation adjustment 1 — 1 (1) 1 Total Comprehensive Income $ 132 $ 226 $ 4 $ (230) $ 132 Three Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 1,316 $ 36 $ — $ 1,352 Cost of sales — 793 20 — 813 Gross Profit — 523 16 — 539 Operating expenses: Selling, general and administrative 21 304 13 — 338 Depreciation and amortization 3 17 1 — 21 Total operating expenses 24 321 14 — 359 Operating Income (Loss) (24) 202 2 — 180 Interest expense 56 31 1 (39) 49 Interest (income) (32) (7) — 39 — Net (earnings) of equity affiliates (239) — — 239 — Income from Continuing Operations Before Provision for Income Taxes 191 178 1 (239) 131 Provision for income taxes 48 1 1 — 50 Income from Continuing Operations 143 177 — (239) 81 Income from discontinued operations, net of tax 299 61 1 — 361 Net Income $ 442 $ 238 $ 1 $ (239) $ 442 Other comprehensive income (loss)-foreign currency translation adjustment (3) — (3) 3 (3) Total Comprehensive Income $ 439 $ 238 $ (2) $ (236) $ 439 Six Months Ended July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 2,912 $ 78 $ (1) $ 2,989 Cost of sales — 1,774 42 (1) 1,815 Gross Profit — 1,138 36 — 1,174 Operating expenses: Selling, general and administrative 38 690 28 — 756 Depreciation and amortization 9 38 — — 47 Restructuring 6 3 — — 9 Total operating expenses 53 731 28 — 812 Operating Income (Loss) (53) 407 8 — 362 Interest expense 71 22 1 (25) 69 Interest (income) (22) (4) — 25 (1) Net (earnings) of equity affiliates (390) — — 390 — Income from Continuing Operations Before Provision for Income Taxes 288 389 7 (390) 294 Provision for income taxes 69 5 1 — 75 Income from Continuing Operations 219 384 6 (390) 219 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 220 $ 384 $ 6 $ (390) $ 220 Other comprehensive income-foreign currency translation adjustment 2 — 2 (2) 2 Total Comprehensive Income $ 222 $ 384 $ 8 $ (392) $ 222 Six Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net Sales $ — $ 2,501 $ 68 $ (1) $ 2,568 Cost of sales — 1,509 37 (1) 1,545 Gross Profit — 992 31 — 1,023 Operating expenses: Selling, general and administrative 42 605 25 — 672 Depreciation and amortization 7 34 1 — 42 Total operating expenses 49 639 26 — 714 Operating Income (Loss) (49) 353 5 — 309 Interest expense 112 66 1 (81) 98 Interest (income) (66) (15) — 81 — Net (earnings) of equity affiliates (394) — — 394 — Loss on extinguishment of debt 3 — — — 3 Income from Continuing Operations Before Provision for Income Taxes 296 302 4 (394) 208 Provision for income taxes 66 2 1 — 69 Income from Continuing Operations 230 300 3 (394) 139 Income from discontinued operations, net of tax 297 91 — — 388 Net Income $ 527 $ 391 $ 3 $ (394) $ 527 Other comprehensive income (loss)-foreign currency translation adjustment (2) — (2) 2 (2) Total Comprehensive Income $ 525 $ 391 $ 1 $ (392) $ 525
CONDENSED CONSOLIDATING BALANCE SHEETS	CONDENSED CONSOLIDATING BALANCE SHEETS As of July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS ASSETS Current assets: Cash and cash equivalents $ 204 $ 20 $ 3 $ — $ 227 Receivables, net 4 815 24 — 843 Inventories — 793 20 — 813 Intercompany receivables — 1 — (1) — Other current assets 13 31 1 — 45 Total current assets 221 1,660 48 (1) 1,928 Property and equipment, net 156 186 3 — 345 Goodwill — 1,992 — — 1,992 Intangible assets, net — 202 1 — 203 Deferred tax asset 198 — 2 (81) 119 Investment in subsidiaries 4,268 — — (4,268) — Intercompany notes receivable 189 1,181 — (1,370) — Other assets 13 5 — — 18 Total assets $ 5,045 $ 5,226 $ 54 $ (5,720) $ 4,605 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 8 $ 464 $ 16 $ — $ 488 Accrued compensation and benefits 32 69 3 — 104 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 1 (1) — Other current liabilities 124 117 6 — 247 Total current liabilities 175 650 26 (1) 850 Long-term debt, excluding current installments 2,038 — 49 — 2,087 Deferred tax liabilities — 81 — (81) — Intercompany notes payable (1) 1,181 189 — (1,370) — Other liabilities 44 16 1 — 61 Total liabilities 3,438 936 76 (1,452) 2,998 Stockholder’s equity (deficit) 1,607 4,290 (22) (4,268) 1,607 Total liabilities and stockholder’s equity (deficit) $ 5,045 $ 5,226 $ 54 $ (5,720) $ 4,605 (1) During the six months ended July 29, 2018, the Parent completed a non-cash debt contribution to the Guarantor Subsidiaries of approximately $958 million. As of January 28, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS ASSETS Current assets: Cash and cash equivalents $ 539 $ 15 $ 4 $ — $ 558 Receivables, net 7 584 21 — 612 Inventories — 654 20 — 674 Intercompany receivables — 2 — (2) — Other current assets 15 15 1 — 31 Total current assets 561 1,270 46 (2) 1,875 Property and equipment, net 152 170 3 — 325 Goodwill — 1,807 — — 1,807 Intangible assets, net — 90 1 — 91 Deferred tax asset 264 — 2 (61) 205 Investment in subsidiaries 2,811 — — (2,811) — Intercompany notes receivable 1,005 1,083 — (2,088) — Other assets 12 3 — — 15 Total assets $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11 $ 353 $ 13 $ — $ 377 Accrued compensation and benefits 34 57 4 — 95 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 2 (2) — Other current liabilities 43 88 7 — 138 Total current liabilities 99 498 26 (2) 621 Long-term debt, excluding current installments 2,032 — 58 — 2,090 Deferred tax liabilities — 61 — (61) — Intercompany notes payable 1,083 1,005 — (2,088) — Other liabilities 125 16 — — 141 Total liabilities 3,339 1,580 84 (2,151) 2,852 Stockholder's equity (deficit) 1,466 2,843 (32) (2,811) 1,466 Total liabilities and stockholder’s equity (deficit) $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318
CONDENSED CONSOLIDATING CASH FLOW STATEMENTS	CONDENSED CONSOLIDATING CASH FLOW STATEMENTS Six Months Ended July 29, 2018 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net cash flows from operating activities $ 208 $ (27) $ 5 $ — $ 186 Cash flows from investing activities Capital expenditures (17) (29) (1) — (47) Payments for businesses acquired, net — — (362) — (362) Proceeds from sales of property and equipment — — — — — Investments in equity affiliates (1) (365) — (3) 368 — Proceeds from (payments of) intercompany notes — 58 — (58) — Net cash flows from investing activities $ (382) $ 29 $ (366) $ 310 $ (409) Cash flows from financing activities Equity contribution (distribution) (1) (94) 3 365 (368) (94) Borrowings of (repayments of) intercompany notes (58) — — 58 — Repayments of long-term debt (5) — — — (5) Borrowings on long-term revolver debt — — 10 — 10 Repayments on long-term revolver debt — — (16) — (16) Other financing activities (4) — 1 — (3) Net cash flows from financing activities (161) 3 360 (310) (108) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (335) $ 5 $ (1) $ — $ (331) Cash and cash equivalents at beginning of period 539 15 4 — 558 Cash and cash equivalents at end of period $ 204 $ 20 $ 3 $ — $ 227 (1) During the six months ended July 29, 2018, the Parent completed a cash contribution of approximately $365 million to a Non-Guarantor Subsidiary to execute the purchase of A.H. Harris. Subsequent to the acquisition, the A.H. Harris entities became Guarantor Subsidiaries. Six Months Ended July 30, 2017 Non- Debt Subsidiary Guarantor Total Issuer Guarantors Subsidiaries Eliminations HDS Net cash flows from operating activities $ 227 $ (41) $ 3 $ — $ 189 Cash flows from investing activities Capital expenditures (9) (34) — — (43) Proceeds from sale of property and equipment — 2 — — 2 Proceeds from (payments of) intercompany notes — 73 — (73) — Net cash flows from investing activities $ (9) $ 41 $ — $ (73) $ (41) Cash flows from financing activities Equity contribution (395) — — — (395) Borrowings of (repayments of) intercompany notes (73) — — 73 — Repayments of long-term debt (103) — — — (103) Borrowings on long-term revolver debt 596 — 3 — 599 Repayments on long-term revolver debt (256) — (5) — (261) Debt issuance costs (6) — — — (6) Net cash flows from financing activities (237) — (2) 73 (166) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (19) $ — $ 1 $ — $ (18) Cash and cash equivalents at beginning of period 51 17 5 — 73 Cash and cash equivalents at end of period $ 32 $ 17 $ 6 $ — $ 55

REVENUE (Tables)

REVENUE (Tables)	6 Months Ended
	Jul. 29, 2018
REVENUE
Schedule of Facilities Maintenance and Construction & Industrial with Inter-segment eliminations	The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Three Months Ended Six Months Ended July 29, 2018 July 30, 2017 July 29, 2018 July 30, 2017 Facilities Maintenance Maintenance, Repair, and Operations $ 722 $ 680 $ 1,358 $ 1,286 Property Improvement 98 89 185 165 Total Facilities Maintenance Net Sales 820 769 1,543 1,451 Construction & Industrial Non-Residential Construction 549 378 998 726 Residential Construction 188 167 364 320 Other 44 39 85 74 Total Construction & Industrial Net Sales 781 584 1,447 1,120 Inter-segment Eliminations (1) (1) (1) (3) Total HD Supply Net Sales $ 1,600 $ 1,352 $ 2,989 $ 2,568

NATURE OF BUSINESS AND BASIS 34

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Nature of Business (Details)	6 Months Ended
	Jul. 29, 2018segmentproductcategorycustomeritememployee
Nature of Business
Number of distinct market sectors in which entity specializes | category	2
Number of associates | employee	11,000
Number of customers | customer	500,000
Number of SKUs offered | product	650,000
Number of reportable segments | segment	2
U.S. and Canada
Nature of Business
Number of branches	270
Number of distribution centers	44

NATURE OF BUSINESS AND BASIS 35

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Fiscal Year (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017	Feb. 03, 2019	Jan. 28, 2018
Length of fiscal year (in days)					371 days	364 days
Length of fiscal quarter (in days)	91 days	91 days	182 days	182 days
Minimum
Length of fiscal year (in days)			364 days
Maximum
Length of fiscal year (in days)			371 days

NATURE OF BUSINESS AND BASIS 36

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Self-Insurance (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Self-insurance reserves	$ 56	$ 51

ACQUISITION (Details)

ACQUISITION (Details) - USD ($) $ in Millions	Mar. 05, 2018	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 29, 2018	Jul. 30, 2017	Feb. 03, 2019	Jan. 28, 2018
ACQUISITION
Goodwill		$ 1,992		$ 1,992	$ 1,992			$ 1,807
Net sales		1,600	$ 1,352		2,989	$ 2,568
A.H. Harris
ACQUISITION
Purchase price, net of cash acquired	$ 362
Goodwill	185
Definite-lived intangible assets	123
Property & equipment	13
Net working capital	57
Deferred tax liabilities	17
Goodwill expected to be deductible for tax purposes	19
Costs related to acquisition and integration		$ 1			$ 3
A.H. Harris | Forecast | Minimum
ACQUISITION
Costs related to acquisition and integration							$ 8
A.H. Harris | Forecast | Maximum
ACQUISITION
Costs related to acquisition and integration							$ 10
A.H. Harris | Customer relationships
ACQUISITION
Definite-lived intangible assets	$ 110
Estimated amortization periods	12 years
A.H. Harris | Trade names
ACQUISITION
Definite-lived intangible assets	$ 13
Estimated amortization periods	5 years
A.H. Harris
ACQUISITION
Net sales				$ 164

DISCONTINUED OPERATIONS - Resul

DISCONTINUED OPERATIONS - Results of Operations (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jul. 29, 2018	Oct. 29, 2017	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
DISCONTINUED OPERATIONS
Income tax expense (benefit)	$ 46		$ 50	$ 75	$ 69
Operating expenses:
Income from discontinued operations, net of tax	1		361	1	388
Discontinued operations
Results of operations of the discontinued operations
Net sales			746		1,403
Cost of sales			582		1,092
Gross Profit			164		311
Operating expenses:
Selling, general and administrative			100		197
Depreciation and amortization			3		6
Total operating expenses			103		203
Operating Income			61		108
(Gain) Loss on sales of businesses, net	(1)			(1)
Other (Income) expense, net			1		3
Income before provision (benefit) for income taxes	1		60	1	105
Provision (benefit) for income taxes			(301)		(283)
Income from discontinued operations, net of tax	$ 1		361	$ 1	388
Discontinued operations | Waterworks business
DISCONTINUED OPERATIONS
Net deferred tax asset			323		$ 323
Income tax expense (benefit)		$ 323	$ (323)

DISCONTINUED OPERATIONS - Net C

DISCONTINUED OPERATIONS - Net Cash Provided by Operating Activities and Investing Activities (Details) $ in Millions	6 Months Ended
	Jul. 30, 2017USD ($)
Cash flows from investing activities
Proceeds from sales of property and equipment, net	$ 2
Discontinued operations
Net cash provided by operating and investing activities of the discontinued operations
Net cash flows provided by operating activities	17
Cash flows from investing activities
Capital expenditures	(5)
Proceeds from sales of property and equipment, net	2
Net cash flows provided by (used in) investing activities	$ (3)

DEBT - Gross Long-term Debt - O

DEBT - Gross Long-term Debt - Outstanding Principal - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
DEBT
Total gross long-term debt	$ 2,122	$ 2,136
HDS (Debt Issuer) | Secured debt | Credit facility | Senior ABL Facility due 2022
DEBT
Total gross long-term debt	49	58
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-3 Loans due 2021
DEBT
Total gross long-term debt	531	534
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-4 Loans due 2023
DEBT
Total gross long-term debt	542	544
HDS (Debt Issuer) | Unsecured debt | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Total gross long-term debt	$ 1,000	$ 1,000

DEBT - Gross Long-term Debt - I

DEBT - Gross Long-term Debt - Interest Rate - Tabular Disclosure (Details) - HDS (Debt Issuer)	Jul. 29, 2018	Jan. 28, 2018
Secured debt | Credit facility | Senior ABL Facility due 2022
DEBT
Interest rate, rate at end of period (as a percent)	3.07%	2.86%
Secured debt | Credit facility | Term B-3 Loans due 2021
DEBT
Interest rate, rate at end of period (as a percent)	4.33%	3.94%
Secured debt | Credit facility | Term B-4 Loans due 2023
DEBT
Interest rate, rate at end of period (as a percent)	4.58%	4.19%
Unsecured debt | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Interest rate, stated rate (as a percent)	5.75%	5.75%

DEBT - Total Net Long-term Debt

DEBT - Total Net Long-term Debt - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
DEBT
Total gross long-term debt	$ 2,122	$ 2,136
Less unamortized discount	(5)	(6)
Less unamortized deferred financing costs	(19)	(29)
Total net long-term debt	$ 2,098	$ 2,101

DEBT - Total Long-term Debt, Ex

DEBT - Total Long-term Debt, Excluding Current Installments - Tabular Disclosure (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
DEBT
Total net long-term debt	$ 2,098	$ 2,101
Less current installments	(11)	(11)
Total net long-term debt, excluding current installments	$ 2,087	$ 2,090

DEBT - Senior ABL Facility (Det

DEBT - Senior ABL Facility (Details) - Secured debt - HDS (Debt Issuer) - Credit facility - Senior ABL Facility $ in Millions	6 Months Ended
	Jul. 29, 2018USD ($)facility
DEBT
Aggregate principal amount	$ 1,000
Line of credit facility, Excess Availability for borrowing	924
Letter of credit facility outstanding	27
Line of credit facility, available for borrowing on qualifying cash balances	$ 134
The minimum number of incremental term loan facilities permitted to be included in the Senior ABL Facility | facility	1
The minimum number of revolving credit facility commitments permitted to be included in the Senior ABL Facility | facility	1
Minimum
DEBT
Extension period after the stated Maturity Date	60 days
Maximum
DEBT
Aggregate principal amount	$ 250
Maturity Date	60 days

DEBT - Senior Term Loan Facilit

DEBT - Senior Term Loan Facility (Details) - HDS (Debt Issuer) - Secured debt - Credit facility $ in Millions	6 Months Ended
	Jul. 29, 2018USD ($)
Term Loan Facility
DEBT
Remaining aggregate principal amount	$ 1,081
Term B-3 Loans due 2021
DEBT
Remaining aggregate principal amount	$ 535
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent)	1.00%
Term B-4 Loans due 2023
DEBT
Remaining aggregate principal amount	$ 546
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent)	1.00%
LIBOR | Term B-3 Loans due 2021
DEBT
Percentage added to reference rate (as a percent)	2.25%
LIBOR | Term B-4 Loans due 2023
DEBT
Percentage added to reference rate (as a percent)	2.50%
Base | Term B-3 Loans due 2021
DEBT
Percentage added to reference rate (as a percent)	1.25%
Base | Term B-4 Loans due 2023
DEBT
Percentage added to reference rate (as a percent)	1.50%

DEBT - 5.75% Senior Unsecured N

DEBT - 5.75% Senior Unsecured Notes due 2024 (Details) - Unsecured debt - HDS (Debt Issuer)	6 Months Ended
	Jul. 29, 2018	Jan. 28, 2018
5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Note issued, interest rate	5.75%	5.75%
7.00% April 2019 Senior Unsecured Notes due 2024
DEBT
Note issued, interest rate	7.00%
Prior to April 15, 2019 | 5.75% April 2016 Senior Unsecured Notes due 2024
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%
2019 | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Optional prepayment price percentage	104.313%
2020 | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Optional prepayment price percentage	102.875%
2021 | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Optional prepayment price percentage	101.438%
2022 and thereafter | 5.75% April 2016 Senior Unsecured Notes due 2024
DEBT
Optional prepayment price percentage	100.00%

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Recorded Amount
Financial instruments not reflected at fair value on the balance sheet
Senior ABL Facility	$ 49	$ 58
Term Loans and Notes	2,073	2,078
Total	2,122	2,136
Estimated Fair Value | Level 2
Financial instruments not reflected at fair value on the balance sheet
Senior ABL Facility	49	57
Term Loans and Notes	2,133	2,158
Total	$ 2,182	$ 2,215

INCOME TAXES - Tax items (Detai

INCOME TAXES - Tax items (Details) - USD ($) $ in Millions	6 Months Ended		7 Months Ended	11 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Dec. 22, 2017	Jan. 28, 2018
Combined federal, state and foreign effective tax rate for continuing operations (benefit)	25.50%	33.20%
Federal statutory rate			21.00%	35.00%
Unrecognized tax benefits	$ 16		$ 16		$ 16
Net accrual for interest and penalties related to unrecognized tax benefits	0		0		0
Deferred tax assets, valuation allowance	7		$ 7		$ 7
U.S Federal
Provision for income tax	0
State
Provision for income tax	0
Foreign
Provision for income tax	$ 0

BASIC AND DILUTED WEIGHTED AV49

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. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
Reconciliation of basic to diluted weighted-average common shares
Weighted-average common shares	182,992	197,752	183,659	199,230
Effect of potentially dilutive stock plan securities	830	1,202	797	1,780
Diluted weighted-average common shares	183,822	198,954	184,456	201,010

BASIC AND DILUTED WEIGHTED AV50

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
Anti-dilutive securities
Stock plan securities excluded from dilution	1,536	2,383	2,133	1,652

SUPPLEMENTAL BALANCE SHEET AN51

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Receivables (Details) - USD ($) $ in Millions	Jul. 29, 2018	Jan. 28, 2018
Receivables
Trade receivables, net of allowance for doubtful accounts	$ 770	$ 540
Vendor rebate receivables	57	58
Other receivables	16	14
Total receivables, net	$ 843	$ 612

SUPPLEMENTAL BALANCE SHEET AN52

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Other Current Liabilities (Details) - USD ($) $ in Millions	Jul. 29, 2018	Feb. 28, 2018	Jan. 28, 2018
Other Current Liabilities
Corporate headquarters financing liability	$ 87	$ 87
Accrued non-income taxes	36		$ 27
Accrued interest	17		21
Refund liability	15
Other	92		90
Total other current liabilities	$ 247		138
Estimated sales return			$ 12

SUPPLEMENTAL BALANCE SHEET AN53

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017
Supplemental Cash Flow Information
Cash paid for interest	$ 61	$ 92
Payment of debt issuance cost		6
Cash paid for income taxes, net of refunds	$ 5	10
HDS (Debt Issuer) | Credit facility | Term B-1 Loans due 2021 | Secured debt
Supplemental Cash Flow Information
Payment of debt issuance cost		$ 4

SUPPLEMENTAL BALANCE SHEET AN54

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Stock Repurchase Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 29, 2018	Aug. 25, 2017
HD Supply, Inc. (Total HDS)
Supplemental Cash Flow Information
Cash equity distribution	$ 94
Share Repurchase Program of June 2017 | Common Stock | Maximum
Supplemental Cash Flow Information
Authorized share repurchase amount		$ 500
Share Repurchase Program of August 2017 | Common Stock
Supplemental Cash Flow Information
Repurchase of common stock (in shares)	2,298,643
Repurchase of common stock	$ 88
Share Repurchase Program of 2017 and 2014 | Common Stock
Supplemental Cash Flow Information
Repurchase of common stock (in shares)	2,426,141
Repurchase of common stock	$ 93

SUPPLEMENTAL BALANCE SHEET AN55

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Build-to-Suit Lease (Details) - USD ($) $ in Millions	Jul. 29, 2018	Feb. 28, 2018
Build-to-Suit Lease
Financing liability, current	$ 87	$ 87

RESTRUCTURING ACTIVITIES - Fisc

RESTRUCTURING ACTIVITIES - Fiscal 2017 Plan (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 29, 2018	Jul. 29, 2018	Jan. 28, 2018
Restructuring activities
Restructuring charges	$ 2	$ 9
Sale of business | Fiscal 2017 Restructuring Plan | Waterworks
Restructuring activities
Restructuring charges	2	9	$ 6
Expected further restructuring charges	$ 0	$ 0
Sale of business | Fiscal 2017 Restructuring Plan | Waterworks | Minimum
Restructuring activities
Payback period of the employee-related costs via a permanent reduction in personnel costs		1 year
Sale of business | Fiscal 2017 Restructuring Plan | Waterworks | Maximum
Restructuring activities
Payback period of the employee-related costs via a permanent reduction in personnel costs		2 years

RESTRUCTURING ACTIVITIES - Rest

RESTRUCTURING ACTIVITIES - Restructuring Liability Activity (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jul. 29, 2018	Jul. 29, 2018
Activity for the liability balances for restructuring included in Other current liabilities and Other liabilities
Restructuring Charges	$ 2	$ 9
Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring included in Other current liabilities and Other liabilities
Balance-January 28, 2018		3
Restructuring Charges		9
Cash payments		(6)
Other		2
Balance-April 29, 2018	8	8
Severance | Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring included in Other current liabilities and Other liabilities
Balance-January 28, 2018		2
Restructuring Charges		2
Cash payments		(2)
Balance-April 29, 2018	2	2
Relocation & Other Costs | Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring included in Other current liabilities and Other liabilities
Balance-January 28, 2018		1
Restructuring Charges		2
Cash payments		(3)
Balance-April 29, 2018
Occupancy Costs | Restructuring activities resulting from the sale of a business unit in October 2015
Activity for the liability balances for restructuring included in Other current liabilities and Other liabilities
Restructuring Charges		5
Cash payments		(1)
Other		2
Balance-April 29, 2018	$ 6	$ 6

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - Legal Matters (Details) $ in Millions	Jul. 29, 2018USD ($)	Aug. 08, 2017complaint
Legal Matters
Number of shareholder derivative complaints | complaint		2
Minimum
Legal Matters
Estimated aggregate potential loss	$ 0
Maximum
Legal Matters
Estimated aggregate potential loss	$ 10

SEGMENT INFORMATION - General I

SEGMENT INFORMATION - General Information (Details)	6 Months Ended
	Jul. 29, 2018segment
SEGMENT INFORMATION
Number of reportable segments	2

SEGMENT INFORMATION - Net Sales

SEGMENT INFORMATION - Net Sales for Each Reportable Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
SEGMENT INFORMATION
Net sales	$ 1,600	$ 1,352	$ 2,989	$ 2,568
Eliminations
SEGMENT INFORMATION
Net sales	(1)	(1)	(1)	(3)
Facilities Maintenance | Reportable segment
SEGMENT INFORMATION
Net sales	820	769	1,543	1,451
Construction & Industrial | Reportable segment
SEGMENT INFORMATION
Net sales	$ 781	$ 584	$ 1,447	$ 1,120

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. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
SEGMENT INFORMATION
Adjusted EBITDA	$ 246	$ 208	$ 436	$ 365
Depreciation & Software Amortization	21	19	40	38
Other Intangible Amortization	6	3	11	6
Facilities Maintenance | Reportable segment
SEGMENT INFORMATION
Adjusted EBITDA	150	145	273	253
Depreciation & Software Amortization	9	8	18	17
Other Intangible Amortization	2	3	4	5
Construction & Industrial | Reportable segment
SEGMENT INFORMATION
Adjusted EBITDA	96	63	163	112
Depreciation & Software Amortization	12	$ 11	22	21
Other Intangible Amortization	$ 4		$ 7	$ 1

SEGMENT INFORMATION - Reconcili

SEGMENT INFORMATION - Reconciliation to Consolidated Financial Statements (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
SEGMENT INFORMATION
Total Adjusted EBITDA	$ 246	$ 208	$ 436	$ 365
Depreciation and amortization	27	22	51	44
Stock-based compensation	6	6	12	12
Restructuring	2		9
Acquisition and integration costs	1		3
Other	(1)		(1)
Operating Income	211	180	362	309
Interest expense	35	49	69	98
Interest (income)			(1)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	176	131	294	208
Provision for income taxes	46	50	75	69
Income from Continuing Operations	130	81	219	139
Income from discontinued operations, net of tax	1	361	1	388
Net Income	$ 131	$ 442	$ 220	$ 527

SEGMENT INFORMATION - Acquisiti

SEGMENT INFORMATION - Acquisition of A.H. Harris (Details) - A.H. Harris $ in Millions	Mar. 05, 2018USD ($)
SEGMENT INFORMATION
Purchase price, net of cash acquired	$ 362
Reportable segment | Construction & Industrial
SEGMENT INFORMATION
Purchase price, net of cash acquired	362
Increased (Decreased) in total assets by acquisition	414
Corporate reportable segment
SEGMENT INFORMATION
Increased (Decreased) in total assets by acquisition	$ 414

SUBSIDIARY GUARANTORS - General

SUBSIDIARY GUARANTORS - General Information (Details)	6 Months Ended
	Jul. 29, 2018
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. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	$ 1,600	$ 1,352	$ 2,989	$ 2,568
Cost of sales	978	813	1,815	1,545
Gross Profit	622	539	1,174	1,023
Operating expenses:
Selling, general and administrative	384	338	756	672
Depreciation and amortization	25	21	47	42
Restructuring	2		9
Total operating expenses	411	359	812	714
Operating Income (Loss)	211	180	362	309
Interest expense	35	49	69	98
Interest (income)			(1)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	176	131	294	208
Provision for income taxes	46	50	75	69
Income from Continuing Operations	130	81	219	139
Income from discontinued operations, net of tax	1	361	1	388
Net Income	131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	132	439	222	525
Eliminations
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	(1)		(1)	(1)
Cost of sales	(1)		(1)	(1)
Operating expenses:
Interest expense		(39)	(25)	(81)
Interest (income)		39	25	81
Net (earnings) of equity affiliates	229	239	390	394
Income from Continuing Operations Before Provision for Income Taxes	(229)	(239)	(390)	(394)
Income from Continuing Operations	(229)	(239)	(390)	(394)
Net Income	(229)	(239)	(390)	(394)
Other comprehensive income (loss) - foreign currency translation adjustment	(1)	3	(2)	2
Total Comprehensive Income	(230)	(236)	(392)	(392)
HDS (Debt Issuer) | Reportable Legal Entities
Operating expenses:
Selling, general and administrative	17	21	38	42
Depreciation and amortization	5	3	9	7
Restructuring	1		6
Total operating expenses	23	24	53	49
Operating Income (Loss)	(23)	(24)	(53)	(49)
Interest expense	34	56	71	112
Interest (income)		(32)	(22)	(66)
Net (earnings) of equity affiliates	(229)	(239)	(390)	(394)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	172	191	288	296
Provision for income taxes	42	48	69	66
Income from Continuing Operations	130	143	219	230
Income from discontinued operations, net of tax	1	299	1	297
Net Income	131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	132	439	222	525
Subsidiary Guarantors | Reportable Legal Entities
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	1,560	1,316	2,912	2,501
Cost of sales	956	793	1,774	1,509
Gross Profit	604	523	1,138	992
Operating expenses:
Selling, general and administrative	353	304	690	605
Depreciation and amortization	20	17	38	34
Restructuring	1		3
Total operating expenses	374	321	731	639
Operating Income (Loss)	230	202	407	353
Interest expense		31	22	66
Interest (income)		(7)	(4)	(15)
Income from Continuing Operations Before Provision for Income Taxes	230	178	389	302
Provision for income taxes	4	1	5	2
Income from Continuing Operations	226	177	384	300
Income from discontinued operations, net of tax		61		91
Net Income	226	238	384	391
Total Comprehensive Income	226	238	384	391
Non-Guarantor Subsidiaries | Reportable Legal Entities
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	41	36	78	68
Cost of sales	23	20	42	37
Gross Profit	18	16	36	31
Operating expenses:
Selling, general and administrative	14	13	28	25
Depreciation and amortization		1		1
Total operating expenses	14	14	28	26
Operating Income (Loss)	4	2	8	5
Interest expense	1	1	1	1
Income from Continuing Operations Before Provision for Income Taxes	3	1	7	4
Provision for income taxes		1	1	1
Income from Continuing Operations	3		6	3
Income from discontinued operations, net of tax		1
Net Income	3	1	6	3
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	4	(2)	8	1
HD Supply, Inc. (Total HDS)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales	1,600	1,352	2,989	2,568
Cost of sales	978	813	1,815	1,545
Gross Profit	622	539	1,174	1,023
Operating expenses:
Selling, general and administrative	384	338	756	672
Depreciation and amortization	25	21	47	42
Restructuring	2		9
Total operating expenses	411	359	812	714
Operating Income (Loss)	211	180	362	309
Interest expense	35	49	69	98
Interest (income)			(1)
Loss on extinguishment of debt				3
Income from Continuing Operations Before Provision for Income Taxes	176	131	294	208
Provision for income taxes	46	50	75	69
Income from Continuing Operations	130	81	219	139
Income from discontinued operations, net of tax	1	361	1	388
Net Income	131	442	220	527
Other comprehensive income (loss) - foreign currency translation adjustment	1	(3)	2	(2)
Total Comprehensive Income	$ 132	$ 439	$ 222	$ 525

SUBSIDIARY GUARANTORS - CONDE66

SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING BALANCE SHEETS (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 29, 2018	Jan. 28, 2018
Current assets:
Cash and cash equivalents	$ 228	$ 558
Receivables, net	843	612
Inventories	813	674
Other current assets	45	31
Total current assets	1,929	1,875
Property and equipment, net	345	325
Goodwill	1,992	1,807
Intangible assets, net	203	91
Deferred tax asset	119	205
Other assets	18	15
Total assets	4,606	4,318
Current liabilities:
Accounts payable	488	377
Accrued compensation and benefits	104	95
Current installments of long-term debt	11	11
Other current liabilities	247	138
Total current liabilities	850	621
Long-term debt, excluding current installments	2,087	2,090
Other liabilities	61	141
Total liabilities	2,998	2,852
Stockholders' equity (deficit)	1,608	1,466
Total liabilities and stockholders' equity	4,606	4,318
HD Supply, Inc. (Total HDS)
Current assets:
Cash and cash equivalents	227	558
Receivables, net	843	612
Inventories	813	674
Other current assets	45	31
Total current assets	1,928	1,875
Property and equipment, net	345	325
Goodwill	1,992	1,807
Intangible assets, net	203	91
Deferred tax asset	119	205
Other assets	18	15
Total assets	4,605	4,318
Current liabilities:
Accounts payable	488	377
Accrued compensation and benefits	104	95
Current installments of long-term debt	11	11
Other current liabilities	247	138
Total current liabilities	850	621
Long-term debt, excluding current installments	2,087	2,090
Other liabilities	61	141
Total liabilities	2,998	2,852
Stockholders' equity (deficit)	1,607	1,466
Total liabilities and stockholders' equity	4,605	4,318
Reportable Legal Entities | HDS (Debt Issuer)
Current assets:
Cash and cash equivalents	204	539
Receivables, net	4	7
Other current assets	13	15
Total current assets	221	561
Property and equipment, net	156	152
Deferred tax asset	198	264
Investment in subsidiaries	4,268	2,811
Intercompany notes receivable	189	1,005
Other assets	13	12
Total assets	5,045	4,805
Current liabilities:
Accounts payable	8	11
Accrued compensation and benefits	32	34
Current installments of long-term debt	11	11
Other current liabilities	124	43
Total current liabilities	175	99
Long-term debt, excluding current installments	2,038	2,032
Intercompany notes payable	1,181	1,083
Other liabilities	44	125
Total liabilities	3,438	3,339
Stockholders' equity (deficit)	1,607	1,466
Total liabilities and stockholders' equity	5,045	4,805
Reportable Legal Entities | Subsidiary Guarantors
Current assets:
Cash and cash equivalents	20	15
Receivables, net	815	584
Inventories	793	654
Intercompany receivables	1	2
Other current assets	31	15
Total current assets	1,660	1,270
Property and equipment, net	186	170
Goodwill	1,992	1,807
Intangible assets, net	202	90
Intercompany notes receivable	1,181	1,083
Other assets	5	3
Total assets	5,226	4,423
Current liabilities:
Accounts payable	464	353
Accrued compensation and benefits	69	57
Other current liabilities	117	88
Total current liabilities	650	498
Deferred tax liabilities	81	61
Intercompany notes payable	189	1,005
Other liabilities	16	16
Total liabilities	936	1,580
Stockholders' equity (deficit)	4,290	2,843
Total liabilities and stockholders' equity	5,226	4,423
Non-cash debt contribution	958
Reportable Legal Entities | Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	3	4
Receivables, net	24	21
Inventories	20	20
Other current assets	1	1
Total current assets	48	46
Property and equipment, net	3	3
Intangible assets, net	1	1
Deferred tax asset	2	2
Total assets	54	52
Current liabilities:
Accounts payable	16	13
Accrued compensation and benefits	3	4
Intercompany payables	1	2
Other current liabilities	6	7
Total current liabilities	26	26
Long-term debt, excluding current installments	49	58
Other liabilities	1
Total liabilities	76	84
Stockholders' equity (deficit)	(22)	(32)
Total liabilities and stockholders' equity	54	52
Eliminations
Current assets:
Intercompany receivables	(1)	(2)
Total current assets	(1)	(2)
Deferred tax asset	(81)	(61)
Investment in subsidiaries	(4,268)	(2,811)
Intercompany notes receivable	(1,370)	(2,088)
Total assets	(5,720)	(4,962)
Current liabilities:
Intercompany payables	(1)	(2)
Total current liabilities	(1)	(2)
Deferred tax liabilities	(81)	(61)
Intercompany notes payable	(1,370)	(2,088)
Total liabilities	(1,452)	(2,151)
Stockholders' equity (deficit)	(4,268)	(2,811)
Total liabilities and stockholders' equity	$ (5,720)	$ (4,962)

SUBSIDIARY GUARANTORS - CONDE67

SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING CASH FLOW STATEMENTS (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash flows from operating activities	$ 186	$ 189
Cash flows from investing activities
Capital expenditures	(47)	(43)
Payments for businesses acquired, net	(362)
Proceeds from sales of property and equipment		2
Net cash provided by (used in) investing activities	(409)	(41)
Cash flows from financing activities
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt	10	599
Repayments on long-term revolver debt	(16)	(261)
Debt issuance costs		(6)
Other financing activities	(3)
Net cash provided by (used in) financing activities	(107)	(156)
Increase (decrease) in cash and cash equivalents	(330)	(8)
Cash and cash equivalents at beginning of period	558	75
Cash and cash equivalents at end of period	228	67
HD Supply, Inc. (Total HDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash flows from operating activities	186	189
Cash flows from investing activities
Capital expenditures	(47)	(43)
Payments for businesses acquired, net	(362)
Proceeds from sales of property and equipment		2
Net cash provided by (used in) investing activities	(409)	(41)
Cash flows from financing activities
Equity contribution (distribution)	(94)	(395)
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt	10	599
Repayments on long-term revolver debt	(16)	(261)
Debt issuance costs		(6)
Other financing activities	(3)
Net cash provided by (used in) financing activities	(108)	(166)
Increase (decrease) in cash and cash equivalents	(331)	(18)
Cash and cash equivalents at beginning of period	558	73
Cash and cash equivalents at end of period	227	55
Reportable Legal Entities | HDS (Debt Issuer)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash flows from operating activities	208	227
Cash flows from investing activities
Capital expenditures	(17)	(9)
Investments in equity affiliates	(365)
Net cash provided by (used in) investing activities	(382)	(9)
Cash flows from financing activities
Equity contribution (distribution)	(94)	(395)
Borrowings of (repayments of) intercompany notes	(58)	(73)
Repayments of long-term debt	(5)	(103)
Borrowings on long-term revolver debt		596
Repayments on long-term revolver debt		(256)
Debt issuance costs		(6)
Other financing activities	(4)
Net cash provided by (used in) financing activities	(161)	(237)
Increase (decrease) in cash and cash equivalents	(335)	(19)
Cash and cash equivalents at beginning of period	539	51
Cash and cash equivalents at end of period	204	32
Reportable Legal Entities | Subsidiary Guarantors
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash flows from operating activities	(27)	(41)
Cash flows from investing activities
Capital expenditures	(29)	(34)
Proceeds from sales of property and equipment		2
Proceeds from (payments of) intercompany notes	58	73
Net cash provided by (used in) investing activities	29	41
Cash flows from financing activities
Equity contribution (distribution)	3
Net cash provided by (used in) financing activities	3
Increase (decrease) in cash and cash equivalents	5
Cash and cash equivalents at beginning of period	15	17
Cash and cash equivalents at end of period	20	17
Reportable Legal Entities | Non-Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash flows from operating activities	5	3
Cash flows from investing activities
Capital expenditures	(1)
Payments for businesses acquired, net	(362)
Investments in equity affiliates	(3)
Net cash provided by (used in) investing activities	(366)
Cash flows from financing activities
Equity contribution (distribution)	365
Borrowings on long-term revolver debt	10	3
Repayments on long-term revolver debt	(16)	(5)
Other financing activities	1
Net cash provided by (used in) financing activities	360	(2)
Increase (decrease) in cash and cash equivalents	(1)	1
Cash and cash equivalents at beginning of period	4	5
Cash and cash equivalents at end of period	3	6
Cash contribution	365
Eliminations
Cash flows from investing activities
Investments in equity affiliates	368
Proceeds from (payments of) intercompany notes	(58)	(73)
Net cash provided by (used in) investing activities	310	(73)
Cash flows from financing activities
Equity contribution (distribution)	(368)
Borrowings of (repayments of) intercompany notes	58	73
Net cash provided by (used in) financing activities	$ (310)	$ 73

REVENUE (Details)

REVENUE (Details)	6 Months Ended
	Jul. 29, 2018
Minimum
Disaggregation of Revenue
Payment terms and conditions	45 days
ASU No. 2014-09 | Maximum
Disaggregation of Revenue
Duration of installation contract	90 days

REVENUE - Disaggregation of Rev

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2018	Jul. 30, 2017	Jul. 29, 2018	Jul. 30, 2017
Disaggregation of Revenue [Line Items]
Net Sales	$ 1,600		$ 2,989	$ 2,568
Inter-segment Eliminations
Disaggregation of Revenue [Line Items]
Net Sales	(1)		(1)	(3)
Facilities Maintenance
Disaggregation of Revenue [Line Items]
Net Sales	820		1,543	1,451
Facilities Maintenance | Maintenance, Repair, and Operations
Disaggregation of Revenue [Line Items]
Net Sales	722		1,358	1,286
Facilities Maintenance | Property Improvement
Disaggregation of Revenue [Line Items]
Net Sales	98		185	165
Construction & Industrial
Disaggregation of Revenue [Line Items]
Net Sales	781		1,447	1,120
Construction & Industrial | Non-Residential Construction
Disaggregation of Revenue [Line Items]
Net Sales	549		998	726
Construction & Industrial | Residential Construction
Disaggregation of Revenue [Line Items]
Net Sales	188		364	320
Construction & Industrial | Other
Disaggregation of Revenue [Line Items]
Net Sales	$ 44		$ 85	$ 74
Calculated under Revenue Guidance in Effect before Topic 606
Disaggregation of Revenue [Line Items]
Net Sales		$ 1,352
Calculated under Revenue Guidance in Effect before Topic 606 | Inter-segment Eliminations
Disaggregation of Revenue [Line Items]
Net Sales		(1)
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance
Disaggregation of Revenue [Line Items]
Net Sales		769
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Maintenance, Repair, and Operations
Disaggregation of Revenue [Line Items]
Net Sales		680
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Property Improvement
Disaggregation of Revenue [Line Items]
Net Sales		89
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial
Disaggregation of Revenue [Line Items]
Net Sales		584
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Non-Residential Construction
Disaggregation of Revenue [Line Items]
Net Sales		378
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Residential Construction
Disaggregation of Revenue [Line Items]
Net Sales		167
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Other
Disaggregation of Revenue [Line Items]
Net Sales		$ 39

REVENUE - Practical Expedient (

REVENUE - Practical Expedient (Details)	6 Months Ended
	Jul. 29, 2018
REVENUE
Practical expedient of significant financing component	true

RECENT ACCOUNTING PRONOUNCEME71

RECENT ACCOUNTING PRONOUNCEMENTS (Details) $ in Millions	Jan. 29, 2018USD ($)
ASU No. 2016-16
Recently Adopted Accounting Pronouncements
Cumulative-effect adjustment to retained earnings	$ 0