Home Depot 2015 Annual Report Download - page 57

Table of Contents
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12. BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
The reconciliation of basic to diluted weighted average common shares for fiscal 2015, 2014 and 2013 was as follows
(amounts in millions):
Fiscal Year Ended
January 31,
2016 February 1, 2015 February 2, 2014
Weighted average common shares 1,277 1,338 1,425
Effect of potentially dilutive securities:
Stock plans 68 9
Diluted weighted average common shares 1,283 1,346 1,434
Stock plans consist of shares granted under the Company’s employee stock plans as described in Note 9. Options to purchase
1 million, 1 million and 1 million shares of common stock at January 31, 2016, February 1, 2015 and February 2, 2014,
respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-
dilutive.
13. COMMITMENTS AND CONTINGENCIES
At January 31, 2016, the Company was contingently liable for approximately $422 million under outstanding letters of credit
and open accounts issued for certain business transactions, including insurance programs, trade contracts and construction
contracts. The Company’s letters of credit are primarily performance-based and are not based on changes in variable
components, a liability or an equity security of the other party.
In addition to the Data Breach described below, the Company is involved in litigation arising from the normal course of
business. In management’s opinion, this litigation is not expected to have a material adverse effect on the Company’s
consolidated financial condition, results of operations or cash flows.
Data Breach
As previously reported, in the third quarter of fiscal 2014, the Company confirmed that its payment data systems were
breached, which potentially impacted customers who used payment cards at self-checkout systems in the Company’s U.S.
and Canadian stores (the "Data Breach").
Litigation, Claims and Government Investigations
In the second quarter of fiscal 2015, the payment card networks made claims against the Company for costs that they assert
they or their issuing banks incurred in connection with the Data Breach, including incremental counterfeit fraud losses and
non-ordinary course operating expenses (such as card reissuance costs), and the Company recorded an accrual for estimated
probable losses it expected to incur in connection with those claims. In the third and fourth quarters of fiscal 2015, the
Company entered into settlement agreements with American Express, Discover, MasterCard and Visa with respect to their
claims.
In addition, at least 57 putative class actions have been filed in courts in the U.S. and Canada allegedly arising from the Data
Breach. The U.S. class actions have been consolidated for pre-trial proceedings in the United States District Court for the
Northern District of Georgia (the "District Court"). That court ordered that the individual class actions be administratively
closed in favor of the filing of consolidated class action complaints on behalf of customers and financial institutions allegedly
harmed by the Data Breach. In the third quarter of fiscal 2015, the Company recorded an accrual for estimated probable
losses that it expects to incur in connection with the U.S. customer class actions. In the fourth quarter of fiscal 2015, the
Company agreed in principle to settlement terms that, upon approval of the District Court, will resolve and dismiss the claims
asserted in the U.S. customer class actions.
The accruals for estimated probable losses in connection with the payment card networks’ claims and the U.S. customer class
actions are based on currently available information associated with those matters. These estimates may change as new
information becomes available or circumstances change.
Other claims have been and may be asserted against the Company on behalf of customers, payment card issuing banks,
shareholders or others seeking damages or other related relief allegedly arising from the Data Breach. In the third quarter of
fiscal 2015, two purported shareholder derivative actions were filed in the District Court against certain present and former