Home Depot 2007 Annual Report Download - page 66

rate fluctuations in anticipation of the issuance of the 5.875% Senior Notes due December 16, 2036. Upon issuance of the hedged debt in
December 2006, the Company settled its forward starting interest rate swap agreements and recorded an $11 million decrease, net of income
taxes, to Accumulated Other Comprehensive Income, which will be amortized to interest expense over the life of the related debt.
In March 2006, the Company issued $1.0 billion of 5.20% Senior Notes due March 1, 2011 at a discount of $1 million and $3.0 billion of 5.40%
Senior Notes due March 1, 2016 at a discount of $15 million, together the "March 2006 Issuance." The net proceeds of the March 2006 Issuance
were used to pay for the acquisition price of Hughes Supply, Inc. and for the repayment of the Company's 5.375% Senior Notes due April 2006
in the aggregate principal amount of $500 million. The $16 million discount and $19 million of issuance costs associated with the March 2006
Issuance are being amortized to interest expense over the term of the related Senior Notes.
Additionally in March 2006, the Company entered into a forward starting interest rate swap agreement with a notional amount of $2.0 billion,
accounted for as a cash flow hedge, to hedge interest rate fluctuations in anticipation of the issuance of the 5.40% Senior Notes due March 1,
2016. Upon issuance of the hedged debt, the Company settled its forward starting interest rate swap agreements and recorded a $12 million
decrease, net of income taxes, to Accumulated Other Comprehensive Income, which will be amortized to interest expense over the life of the
related debt.
In August 2005, the Company issued $1.0 billion of 4.625% Notes due August 15, 2010 ("August 2005 Issuance") at a discount of $5 million.
The net proceeds of $995 million were used to pay for a portion of the acquisition price of National Waterworks, Inc. The $5 million discount
and $7 million of issuance costs associated with the August 2005 Issuance are being amortized to interest expense over the term of the related
Senior Notes.
The Company also had $1.0 billion of 3.75% Senior Notes due September 15, 2009 outstanding as of February 3, 2008, collectively referred to
with the December 2006 Issuance, March 2006 Issuance and August 2005 Issuance as "Senior Notes." The Senior Notes may be redeemed by
the Company at any time, in whole or in part, at a redemption price plus accrued interest up to the redemption date. The redemption price is
equal to the greater of (1) 100% of the principal amount of the Senior Notes to be redeemed, or (2) the sum of the present values of the
remaining scheduled payments of principal and interest to maturity. Additionally, if a Change in Control Triggering Event occurs, as defined by
the terms of the December 2006 Issuance, holders of the December 2006 Issuance have the right to require the Company to redeem those notes
at 101% of the aggregate principal amount of the notes plus accrued interest up to the redemption date.
The Company is generally not limited under the indenture governing the Senior Notes in its ability to incur additional indebtedness or required to
maintain financial ratios or specified levels of net worth or liquidity. However, the indenture governing the Senior Notes contains various
restrictive covenants, none of which is expected to impact the Company's liquidity or capital resources.
Interest Expense in the accompanying Consolidated Statements of Earnings is net of interest capitalized of $46 million, $47 million and
$51 million in fiscal 2007, 2006 and 2005, respectively. Maturities of Long-Term Debt are $300 million for fiscal 2008, $1.8 billion for fiscal
2009, $1.0 billion for fiscal 2010, $1.0 billion for fiscal 2011, $23 million for fiscal 2012 and $7.5 billion thereafter.
As of February 3, 2008, the market value of the Senior Notes was approximately $10.5 billion. The estimated fair value of all other long-term
borrowings, excluding capital lease obligations, was approximately $307 million compared to the carrying value of $302 million. These fair
values were estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar liabilities.
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