Home Depot 2012 Annual Report Download - page 29

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In March 2011, we issued $1.0 billion of 4.40% Senior Notes due April 1, 2021 at a discount of $2 million and $1.0 billion of
5.95% Senior Notes due April 1, 2041 at a discount of $4 million (together, the "March 2011 issuance"). Interest on these
Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning October 1, 2011. The net proceeds of the
March 2011 issuance were used to repurchase $1.0 billion of our common stock, and the balance of the net proceeds was
used to repay our 5.20% Senior Notes that matured March 1, 2011 in the aggregate principal amount of $1.0 billion.
In connection with the March 2011 issuance, we entered into an ASR agreement with a third-party financial institution to
repurchase $1.0 billion of our common stock. Under the agreement, we paid $1.0 billion to the financial institution and
received a total of 27 million shares in fiscal 2011.
In March 2011, we entered into an interest rate swap that expires on March 1, 2016, with a notional amount of $500 million,
accounted for as a fair value hedge, that swaps fixed rate interest on our 5.40% Senior Notes due March 1, 2016 for variable
interest equal to LIBOR plus 300 basis points. At February 3, 2013, the approximate fair value of this agreement was an asset
of $36 million, which is the estimated amount we would have received to settle the agreement.
Also at February 3, 2013, we had outstanding interest rate swaps, accounted for as fair value hedges, that expire on
December 16, 2013 with a notional amount of $1.25 billion that swap fixed rate interest on our $1.25 billion 5.25% Senior
Notes due December 16, 2013 for variable interest equal to LIBOR plus 259 basis points. At February 3, 2013, the
approximate fair value of these agreements was an asset of $28 million, which is the estimated amount we would have
received to settle the agreements.
We have commercial paper programs that allow for borrowings up to $2.0 billion. In connection with the programs, we have
a back-up credit facility with a consortium of banks for borrowings up to $2.0 billion. As of February 3, 2013, there were no
borrowings outstanding under the commercial paper programs or the related credit facility. The credit facility expires in July
2017 and contains various restrictive covenants. As of February 3, 2013, we were in compliance with all of the covenants,
and they are not expected to impact our liquidity or capital resources. See Note 5 to our Consolidated Financial Statements
for further discussion of our commercial paper programs and related credit facility.
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 Installments of Long-Term Debt. In accordance with generally accepted accounting principles, the
operating leases are not reflected in our Consolidated Balance Sheets.
In connection with the sale of HD Supply on August 30, 2007, we guaranteed a $1.0 billion senior secured amortizing term
loan of HD Supply. The original expiration date of the guarantee was August 30, 2012. In March 2010, we amended the
guarantee to extend the expiration date to April 1, 2014. The fair value of the guarantee at August 30, 2007 was $16 million
and was recorded as a liability in Other Long-Term Liabilities. The extension of the guarantee increased the fair value of the
guarantee to $67 million, resulting in a $51 million charge to Interest and Other, net, for fiscal 2010. In April 2012, the term
loan guarantee was terminated. As a result, we reversed the $67 million liability related to the guarantee, resulting in a $67
million pretax benefit to Interest and Other, net, for fiscal 2012.
As of February 3, 2013, we had $2.5 billion in Cash and Cash Equivalents. 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 fund dividend payments, share repurchases and any 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.
In March 2013, we entered into an ASR agreement with a third-party financial institution to repurchase $1.5 billion of our
common stock. Under the agreement, we will pay $1.5 billion to the financial institution, using cash on hand, and receive an
initial delivery of approximately 18 million shares in the first quarter of fiscal 2013. The final number of shares delivered
upon settlement of the agreement will be determined with reference to the average price of our common stock over the term
of the ASR 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.