Home Depot 2008 Annual Report Download - page 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business, Consolidation and Presentation
The Home Depot, Inc. and its subsidiaries (the “Company”) operate The Home Depot stores, which are full-service,
warehouse-style stores averaging approximately 105,000 square feet in size. The stores stock approximately 30,000 to
40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to
do-it-yourself customers, do-it-for-me customers, home improvement contractors, tradespeople and building maintenance
professionals. At the end of fiscal 2008, the Company was operating 2,274 stores, which included 1,971 The Home Depot
stores, 34 EXPO stores, five Yardbirds stores and two THD Design Center stores in the United States, including the
Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam (“U.S.”), 176 The Home Depot
stores in Canada, 74 The Home Depot stores in Mexico and 12 The Home Depot stores in China. On January 26, 2009,
the Company announced plans to close the EXPO, THD Design Center and Yardbirds stores as part of the Company’s
focus on its core business. The Consolidated Financial Statements include the accounts of the Company and its wholly-
owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal year ended
February 1, 2009 (“fiscal 2008”) includes 52 weeks, fiscal year ended February 3, 2008 (“fiscal 2007”) includes 53 weeks
and fiscal year ended January 28, 2007 (“fiscal 2006”) includes 52 weeks.
Use of Estimates
Management of the Company 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 financial statements in conformity with accounting principles generally accepted in the U.S. Actual results could
differ from these estimates.
Fair Value of Financial Instruments
The carrying amounts of Cash and Cash Equivalents, Receivables, Short-Term Debt and Accounts Payable approximate
fair value due to the short-term maturities of these financial instruments. The fair value of the Company’s investments is
discussed under the caption “Short-Term Investments” in this Note 1. The fair value of the Company’s Long-Term Debt is
discussed in Note 6.
Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash
equivalents. The Company’s Cash Equivalents are carried at fair market value and consist primarily of high-grade
commercial paper, money market funds and U.S. government agency securities.
Short-Term Investments
Short-Term Investments are recorded at fair value based on current market rates and are classified as available-for-sale.
Accounts Receivable
The Company has an agreement with a third-party service provider who directly extends credit to customers, manages the
Company’s private label credit card program and owns the related receivables. We evaluated the third-party entities
holding the receivables under the program and concluded that they should not be consolidated by the Company in
accordance with the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R),
“Consolidation of Variable Interest Entities.” The agreement with the third-party service provider expires in 2018, with the
Company having the option, but no obligation, to purchase the receivables at the end of the agreement. The deferred
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