Home Depot 2010 Annual Report Download - page 26

Interest and Other, net
In fiscal 2010, we recognized $566 million of Interest and Other, net, compared to $821 million for fiscal 2009.
Interest and Other, net, as a percent of Net Sales was 0.8% for fiscal 2010 compared to 1.2% for fiscal 2009.
Interest and Other, net, reflects a $51 million charge in fiscal 2010 related to the HD Supply Guarantee Extension
and a $163 million charge in fiscal 2009 to write-down our investment in HD Supply. Excluding these charges,
Interest and Other, net, as a percent of Net Sales was 0.8% for fiscal 2010 compared to 1.0% for fiscal 2009. This
decrease was primarily due to a $44 million benefit arising from favorable IRS guidance resulting in the reversal
of an interest accrual during fiscal 2010, a lower cost of outstanding indebtedness than last year and an interest
benefit arising from certain state income tax settlements.
Provision for Income Taxes
Our combined effective income tax rate for continuing operations increased to 36.7% for fiscal 2010 from 34.2%
for fiscal 2009. Fiscal 2009 included benefits arising from a favorable foreign tax settlement and a realignment of
our foreign corporate structure.
Diluted Earnings per Share from Continuing Operations
Diluted Earnings per Share from Continuing Operations were $2.01 for fiscal 2010 and $1.55 for fiscal 2009.
Excluding the HD Supply Guarantee Extension charge from our fiscal 2010 results, and the Rationalization
Charges and the write-down of our investment in HD Supply from our fiscal 2009 results, Diluted Earnings per
Share from Continuing Operations for fiscal 2010 were $2.03 compared to $1.66 for fiscal 2009, an increase of
22.3%. Diluted Earnings per Share from Continuing Operations for fiscal 2010 reflect $0.04 of benefit from
repurchases of our common stock.
Discontinued Operations
On August 30, 2007, the Company closed the sale of HD Supply. Discontinued operations for fiscal 2009 consist
of earnings of $41 million, net of tax, or $0.02 per diluted share, for the settlement of working capital matters
arising from the sale of HD Supply.
Non-GAAP Measures
To provide clarity, internally and externally, about our operating performance for fiscal 2010, 2009 and 2008, we
supplement our reporting with non-GAAP financial measures to reflect adjustments for the $51 million pretax
charge related to the HD Supply Guarantee Extension as described more fully in Note 4 to the Consolidated
Financial Statements, the Rationalization Charges as described more fully in Note 2 to the Consolidated
Financial Statements, as well as the Net Sales from Exited Businesses during the period from closing
announcement to actual closing, and the charges to write-down our investment in HD Supply of $163 million in
each of fiscal 2009 and 2008 as described more fully in Note 4 to the Consolidated Financial Statements. We
believe these non-GAAP financial measures better enable management and investors to understand and analyze
our performance by providing them with meaningful information relevant to events of unusual nature or
frequency that impact the comparability of underlying business results from period to period. However, this
supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.
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