DISCONTINUED OPERATIONS

9 Months Ended

Oct. 30, 2011

DISCONTINUED OPERATIONS

NOTE 2 – DISCONTINUED OPERATIONS

On September 9, 2011, the Company sold all of the issued and outstanding equity interests in its Plumbing/HVAC business to Hajoca Corporation for proceeds of approximately $104 million, subject to a customary working capital adjustment. Upon closing, the Company received cash proceeds of approximately $92 million, net of $8 million remaining in escrow and $4 million of transaction costs. Prior to the sale, in an effort to minimize business interruption for the Plumbing/HVAC vendors, the Company accelerated $6 million of trade accounts payable payments, which will be recovered in the final working capital adjustment. These accelerated payments are reflected as a reduction in the cash received from the sale of businesses in the Consolidated Statements of Cash Flows. As a result of the sale, the Company recorded a preliminary $7 million pre-tax gain in the third quarter of fiscal 2011, which is subject to a customary working capital adjustment that is expected to be finalized during the fourth quarter of fiscal 2011.

On February 28, 2011, HD Supply Canada sold substantially all of the assets of SESCO/QUESCO, an electrical products division of HD Supply Canada, to Sonepar Canada, and received proceeds of approximately $11 million, less $1 million remaining in escrow. As a result of the sale, the Company recorded a $2 million pre-tax gain in the first quarter of fiscal 2011.

In accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations, the results of the Plumbing/HVAC and SESCO/QUESCO operations and the gain on sale of the businesses are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain on the sale of businesses, net of tax, as one line item on the Consolidated Statements of Operations. All prior period Consolidated Statements of Operations presented have been restated to reflect this presentation. The following tables provide additional detail related to the results of operations of the discontinued operations (amounts in millions):

	Three Months Ended
	October 30, 2011								October 31, 2010
	SESCO		Plumbing			Total			SESCO		Plumbing			Total
Net sales	$	—	$	48		$	48		$	15	$	104		$	119
Gain on sale of discontinued operations		—		7			7			—		—			—
Income (loss) before provision for income taxes		—		1			1			—		(9	)		(9	)
Provision for income taxes		—		—			—			—		—			—
Income (loss) from discontinued operations, net of tax	$	—	$	1		$	1		$	—	$	(9	)	$	(9	)
	Nine Months Ended
	October 30, 2011								October 31, 2010
	SESCO		Plumbing			Total			SESCO		Plumbing			Total
Net sales	$	3	$	270		$	273		$	38	$	315		$	353
Gain on sale of discontinued operations		2		7			9			—		—			—
Income (loss) before provision for income taxes		2		(11	)		(9	)		—		(24	)		(24	)
Provision for income taxes		1		—			1			—		—			—
Income (loss) from discontinued operations, net of tax	$	1	$	(11	)	$	(10	)	$	—	$	(24	)	$	(24	)