Home Depot 2009 Annual Report Download - page 46

recorded impairments on other closings and relocations in the ordinary course of business, which were not
material to the Consolidated Financial Statements in fiscal 2009, 2008 and 2007.
Goodwill and Other Intangible Assets
Goodwill represents the excess of purchase price over the fair value of net assets acquired. The Company does
not amortize goodwill, but does assess the recoverability of goodwill in the third quarter of each fiscal year, or
more often if indicators warrant, by determining whether the fair value of each reporting unit supports its
carrying value. The fair values of the Company’s identified reporting units were estimated using the present
value of expected future discounted cash flows.
The Company amortizes the cost of other intangible assets over their estimated useful lives, which range from 1
to 20 years, unless such lives are deemed indefinite. Intangible assets with indefinite lives are tested in the third
quarter of each fiscal year for impairment, or more often if indicators warrant. The Company recorded no
impairment charges for goodwill or other intangible assets for fiscal 2009, 2008 or 2007.
Stock-Based Compensation
The per share weighted average fair value of stock options granted during fiscal 2009, 2008 and 2007 was
$6.61, $6.46 and $9.45, respectively. The fair value of these options was determined at the date of grant using
the Black- Scholes option-pricing model with the following assumptions:
Fiscal Year Ended
January 31,
2010 February 1, 2009 February 3, 2008
Risk-free interest rate 2.3% 2.9% 4.4%
Assumed volatility 41.5% 33.8% 25.5%
Assumed dividend yield 3.9% 3.5% 2.4%
Assumed lives of option 6 years 6 years 6 years
Derivatives
The Company uses derivative financial instruments from time to time in the management of its interest rate
exposure on long-term debt and its exposure on foreign currency fluctuations. The Company accounts for its
derivative financial instruments in accordance with the Financial Accounting Standards Board Accounting
Standards Codification (“FASB ASC”) 815-10. The fair value of the Company’s derivative financial
instruments is discussed in Note 5.
Comprehensive Income
Comprehensive Income includes Net Earnings adjusted for certain revenues, expenses, gains and losses that are
excluded from Net Earnings under U.S. generally accepted accounting principles. Adjustments to Net Earnings
and Accumulated Other Comprehensive Income consist primarily of foreign currency translation adjustments.
Foreign Currency Translation
Assets and Liabilities denominated in a foreign currency are translated into U.S. dollars at the current rate of
exchange on the last day of the reporting period. Revenues and expenses are generally translated using average
exchange rates for the period and equity transactions are translated using the actual rate on the day of the
transaction.
Segment Information
The Company operates within a single reportable segment primarily within North America. Net Sales for the
Company outside of the U.S. were $7.0 billion for fiscal 2009 and were $7.4 billion for fiscal 2008 and 2007.
Long-lived assets outside of the U.S. totaled $3.0 billion and $2.8 billion as of January 31, 2010 and
February 1, 2009, respectively.
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