Home Depot 2013 Annual Report Download - page 28

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purposes, including repayment of our $1.25 billion 5.25% senior notes that matured December 16, 2013 and repurchases of
shares of our common stock.
In April 2013, we issued $1.0 billion of 2.70% senior notes due April 1, 2023 at a discount of $2 million and $1.0 billion of
4.20% senior notes due April 1, 2043 at a discount of $4 million (together, the "April 2013 issuance"). Interest on these senior
notes is due semi-annually on April 1 and October 1 of each year, beginning October 1, 2013. The net proceeds of the April
2013 issuance were used for general corporate purposes, including repurchases of shares of our common stock.
In November 2013, we entered into an interest rate swap that expires on September 10, 2018, with a notional amount of $500
million, accounted for as a fair value hedge, that swaps fixed rate interest on the 2018 notes for variable interest equal to
LIBOR plus 88 basis points. At February 2, 2014, the approximate fair value of this agreement was a liability of $1 million,
which is the estimated amount we would have paid to settle the agreement.
Also in November 2013, we entered into an interest rate swap that expires on September 15, 2020, with a notional amount of
$500 million, accounted for as a fair value hedge, that swaps fixed rate interest on our 3.95% senior notes due September 15,
2020 for variable interest equal to LIBOR plus 183 basis points. At February 2, 2014, the approximate fair value of this
agreement was an asset of $2 million, which is the estimated amount we would have received to settle the agreement.
At February 2, 2014, we had an outstanding 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 2, 2014, the approximate fair value of this agreement was
an asset of $28 million, which is the estimated amount we would have received to settle the agreement.
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. The credit facility expires in July 2017
and contains various restrictive covenants. At February 2, 2014, we were in compliance with all of the covenants, and they
are not expected to impact our liquidity or capital resources. As of February 2, 2014, there were no borrowings outstanding
under the commercial paper programs or the related credit facility. See Note 3 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 2, 2014, we had $1.9 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 not only for our operating
requirements but also 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 2014, we entered into an ASR agreement with a third-party financial institution to repurchase $950 million of our
common stock. Under the agreement, we paid $950 million to the financial institution and received an initial delivery of
approximately 10 million shares in the first quarter of fiscal 2014. 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.