Home Depot 2008 Annual Report Download - page 27

We use capital and operating leases to finance a portion of our real estate, including our stores, distribution centers and
store support centers. The net present value of capital lease obligations is reflected in our Consolidated Balance Sheets in
Long-Term Debt and Current Maturities of Long-Term Debt. In accordance with generally accepted accounting principles,
the operating leases are not reflected in our Consolidated Balance Sheets. As of the end of fiscal 2008, our long-term
debt-to-equity ratio was 54.4% compared to 64.3% at the end of fiscal 2007.
As of February 1, 2009, we had $525 million in Cash and Short-Term Investments. We believe that our current cash
position, access to the debt capital markets and cash flow generated from operations should be sufficient to enable us to
complete our capital expenditure programs and required long-term debt payments through the next several fiscal years. In
addition, we have funds available from our commercial paper programs and the ability to obtain alternative sources of
financing for other requirements. We intend to use cash flow generated by operations to repay $1.8 billion in debt coming
due in fiscal 2009.
During fiscal 2008 and 2007, we entered into interest rate swaps, accounted for as fair value hedges, with notional
amounts of $3.0 billion, that swapped fixed rate interest on our $3.0 billion 5.40% Senior Notes for variable rate interest
equal to LIBOR plus 60 to 149 basis points. In fiscal 2008, we received $56 million to settle these swaps, which will be
amortized to reduce Interest Expense over the remaining term of the debt.
At February 1, 2009, we had outstanding an interest rate swap, accounted for as a cash flow hedge, with a notional
amount of $750 million that swaps variable rate interest on our $750 million Floating Rate Senior Notes for fixed rate
interest at 4.36% that expires on December 16, 2009. At February 1, 2009, the approximate fair value of this agreement
was a liability of $21 million, which is the estimated amount we would have paid to settle this interest rate swap
agreement.
Off-Balance Sheet Arrangements
In accordance with generally accepted accounting principles, operating leases for a portion of our real estate and other
assets are not reflected in our Consolidated Balance Sheets.
Contractual Obligations
The following table summarizes our significant contractual obligations as of February 1, 2009 (amounts in millions):
Contractual Obligations Total 2009 2010-2011 2012-2013 Thereafter
Payments Due by Fiscal Year
Total Debt
(1)
$17,850 $2,327 $2,943 $2,068 $10,512
Capital Lease Obligations
(2)
1,366 88 178 178 922
Operating Leases 8,738 804 1,366 1,094 5,474
Purchase Obligations
(3)
6,123 1,687 1,791 1,712 933
FIN 48 Unrecognized Tax Benefits
(4)
18 18 — — —
Total $34,095 $4,924 $6,278 $5,052 $17,841
(1) Excludes present value of capital lease obligations of $417 million. Includes $6.8 billion of interest payments and
$2 million, net, of unamortized non-cash items.
(2) Includes $949 million of imputed interest.
(3) Purchase obligations include all legally binding contracts such as firm commitments for inventory purchases,
utility purchases, capital expenditures, software acquisition and license commitments and legally binding service
contracts. Purchase orders that are not binding agreements are excluded from the table above.
(4) Excludes $677 million of noncurrent unrecognized tax benefits due to uncertainty regarding the timing of future
cash payments related to the FIN 48 liabilities.
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