Home Depot 2009 Annual Report Download - page 50

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In November 2009, the Company entered into a forward starting interest rate swap agreement with a notional
amount of $500 million, accounted for as a cash flow hedge, to hedge interest rate fluctuations in anticipation of
issuing long-term debt to refinance debt maturing in fiscal 2010. At January 31, 2010, the approximate fair
value of this agreement was an asset of $3 million, which is the estimated amount the Company would have
received to settle the agreement.
During fiscal 2008 and 2007, the Company entered into interest rate swaps, accounted for as fair value hedges,
with notional amounts of $3.0 billion, that swapped fixed rate interest on the Company’s $3.0 billion
5.40% Senior Notes for variable rate interest equal to LIBOR plus 60 to 149 basis points. In fiscal 2008, the
Company received $56 million to settle these swaps, which is being amortized to reduce net Interest Expense
over the remaining term of the debt.
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 5.25% Senior
Notes and the 5.875% Senior Notes issuance (together 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.
At January 31, 2010, the Company had outstanding cross currency swap agreements with a notional amount of
$900 million, accounted for as cash flow hedges, to hedge foreign currency fluctuations on certain
intercompany debt. At January 31, 2010, the approximate fair value of these agreements was a liability of $4
million, which is the estimated amount the Company would have paid to settle the agreements.
Interest Expense in the accompanying Consolidated Statements of Earnings is net of interest capitalized of
$4 million, $20 million and $46 million in fiscal 2009, 2008 and 2007, respectively. Maturities of Long-Term
Debt are $1.0 billion for fiscal 2010, $1.0 billion for fiscal 2011, $30 million for fiscal 2012, $1.3 billion for
fiscal 2013, $33 million for fiscal 2014 and $6.3 billion thereafter.
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