10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 29, 2007

- OR - -

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to        

Commission file number 1-8207

THE HOME DEPOT, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-3261426
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)
2455 Paces Ferry Road, N.W.,  Atlanta, Georgia	30339
(Address of principal executive offices)	(Zip Code)

(770) 433-8211

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x        Accelerated filer o        Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

$0.05 par value 1,977,904,894 shares of common stock, as of August 30, 2007

THE HOME DEPOT, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

Part I.  Financial Information
Item 1.	Financial Statements
	CONSOLIDATED STATEMENTS OF EARNINGS—   Three and Six Months Ended July 29, 2007 and July 30, 2006
	CONSOLIDATED BALANCE SHEETS—   As of July 29, 2007 and January 28, 2007
	CONSOLIDATED STATEMENTS OF CASH FLOWS—   Six Months Ended July 29, 2007 and July 30, 2006
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME—   Three and Six Months Ended July 29, 2007 and July 30, 2006
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
Item 4.	Controls and Procedures
Part II. Other Information
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
Signatures
Index to Exhibits

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PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(Amounts In Millions, Except Per Share Data)

	Three Months Ended						Six Months Ended
	July 29, 2007			July 30, 2006			July 29, 2007			July 30, 2006
NET SALES	$	22,184		$	22,592		$	40,729		$	41,970
Cost of Sales	14,843			15,136			27,125			27,878
GROSS PROFIT	7,341			7,456			13,604			14,092
Operating Expenses:
Selling, General and Administrative	4,370			4,146			8,556			8,125
Depreciation and Amortization	414			395			819			780
Total Operating Expenses	4,784			4,541			9,375			8,905
OPERATING INCOME	2,557			2,915			4,229			5,187
Interest (Income) Expense:
Interest and Investment Income	(27		)	(6		)	(38		)	(17		)
Interest Expense	172			104			343			166
Interest, net	145			98			305			149
EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES	2,412			2,817			3,924			5,038
Provision for Income Taxes	891			1,116			1,456			1,946
EARNINGS FROM CONTINUING OPERATIONS	1,521			1,701			2,468			3,092
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX	66			161			165			254
NET EARNINGS	$	1,587		$	1,862		$	2,633		$	3,346
Weighted Average Common Shares	1,960			2,065			1,960			2,090
BASIC EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.78		$	0.82		$	1.26		$	1.48
BASIC EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS	$	0.03		$	0.08		$	0.08		$	0.12
BASIC EARNINGS PER SHARE	$	0.81		$	0.90		$	1.34		$	1.60
Diluted Weighted Average Common Shares	1,969			2,072			1,969			2,097
Diluted Earnings per Share from Continuing Operations	$	0.77		$	0.82		$	1.25		$	1.47
Diluted Earnings per Share from Discontinued Operations	$	0.03		$	0.08		$	0.08		$	0.12
Diluted Earnings Per Share	$	0.81		$	0.90		$	1.34		$	1.60
Dividends Declared Per Share	$	0.225		$	0.15		$	0.45		$	0.30

Note:  The sum of Diluted Earnings per Share from Continuing Operations and Diluted Earnings Per Share from Discontinued Operations may not total Diluted Earnings Per Share due to rounding.

See accompanying Notes to Consolidated Financial Statements.

3

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts In Millions, Except Per Share Data)

	July 29, 2007			January 28, 2007
ASSETS
Current Assets:
Cash and Cash Equivalents	$	987		$	600
Short-Term Investments	2,037			14
Receivables, net	1,554			3,223
Merchandise Inventories	12,287			12,822
Other Current Assets	1,226			1,341
Current Assets of Discontinued Operations	3,781			—
Total Current Assets	21,872			18,000
Property and Equipment, at cost	34,921			34,358
Less Accumulated Depreciation and Amortization	8,272			7,753
Net Property and Equipment	26,649			26,605
Notes Receivable	341			343
Goodwill	1,189			6,314
Other Assets	282			1,001
Noncurrent Assets of Discontinued Operations	6,531			—
Total Assets	$	56,864		$	52,263
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	7,686		$	7,356
Accrued Salaries and Related Expenses	1,077			1,307
Sales Taxes Payable	536			475
Deferred Revenue	1,691			1,634
Income Taxes Payable	403			217
Current Installments of Long-Term Debt	15			18
Other Accrued Expenses	2,065			1,924
Current Liabilities of Discontinued Operations	1,714			—
Total Current Liabilities	15,187			12,931
Long-Term Debt, excluding current installments	11,628			11,643
Other Long-Term Liabilities	1,688			1,243
Deferred Income Taxes	771			1,416
Noncurrent Liabilities of Discontinued Operations	415			—
Total Liabilities	29,689			27,233
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.05; authorized: 10,000 shares; issued 2,432 shares at July 29, 2007 and 2,421 shares at January 28, 2007; outstanding 1,978 shares at July 29, 2007 and 1,970 shares at January 28, 2007	122			121
Paid-In Capital	8,248			7,930
Retained Earnings	34,688			33,052
Accumulated Other Comprehensive Income	592			310
Treasury Stock, at cost, 454 shares at July 29, 2007 and 451 shares at January 28, 2007	(16,475		)	(16,383		)
Total Stockholders’ Equity	27,175			25,030
Total Liabilities and Stockholders’ Equity	$	56,864		$	52,263

See accompanying Notes to Consolidated Financial Statements.

4

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts In Millions)

	Six Months Ended
	July 29, 2007			July 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings	$	2,633		$	3,346
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization	963			932
Stock-Based Compensation Expense	111			146
Changes in Assets and Liabilities, net of the effects of acquisitions:
Increase in Receivables, net	(256		)	(320		)
Increase in Merchandise Inventories	(1,108		)	(1,441		)
Increase in Other Current Assets	(6		)	(41		)
Increase in Accounts Payable and Accrued Expenses	1,482			2,297
Increase in Deferred Revenue	64			114
Increase in Income Taxes Payable	466			124
Decrease in Deferred Income Taxes	(18		)	(82		)
Other	134			137
Net Cash Provided by Operating Activities	4,465			5,212
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures	(1,570		)	(1,503		)
Payments for Businesses Acquired, net	(30		)	(3,811		)
Proceeds from Sales of Property and Equipment	103			65
Purchases of Investments	(8,220		)	(4,588		)
Proceeds from Sales and Maturities of Investments	6,198			4,613
Net Cash Used in Investing Activities	(3,519		)	(5,224		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of Short-Term Borrowings, net	—			(800		)
Proceeds from Long-Term Borrowings, net of discount	—			3,984
Repayments of Long-Term Debt	(10		)	(503		)
Proceeds from Sale of Common Stock, net	198			236
Repurchase of Common Stock	(91		)	(2,795		)
Cash Dividends Paid to Stockholders	(886		)	(628		)
Other	235			347
Net Cash Used in Financing Activities	(554		)	(159		)
Increase (Decrease) in Cash and Cash Equivalents	392			(171		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	9			23
Cash and Cash Equivalents at Beginning of Period	600			793
Cash and Cash Equivalents at End of Period	1,001			645
Cash and Cash Equivalents of Discontinued Operations at End of Period	(14		)	—
Cash and Cash Equivalents of Continuing Operations at End of Period	$	987		$	645

See accompanying Notes to Consolidated Financial Statements.

5

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Amounts In Millions)

	Three Months Ended					Six Months Ended
	July 29, 2007		July 30, 2006			July 29, 2007		July 30, 2006
Net Earnings	$	1,587	$	1,862		$	2,633	$	3,346
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	149		(54		)	282		5
Interest Rate Hedge (1)	—		1			—		(11		)
Unrealized Loss on Investments (1)	—		(1		)	—		—
Total Other Comprehensive Income (Loss)	149		(54		)	282		(6		)
Comprehensive Income	$	1,736	$	1,808		$	2,915	$	3,340

(1)  These components of comprehensive income are reported net of income taxes.

See accompanying Notes to Consolidated Financial Statements.

6

THE HOME DEPOT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 28, 2007, as filed with the Securities and Exchange Commission (File No. 1-8207).

Business

The Home Depot, Inc. and subsidiaries (the “Company”) operate The Home Depot stores, which are full-service, warehouse-style stores averaging approximately 105,000 square feet in size. The stores stock approximately 35,000 to 45,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers, home improvement contractors, tradespeople and building maintenance professionals.  In addition, the Company operates EXPO Design Center stores (“EXPO”) and The Home Depot Landscape Supply stores.  Information related to the Company’s discontinued HD Supply business is discussed in Note 2.

Valuation Reserves

As of July 29, 2007 and January 28, 2007, the valuation allowances for Merchandise Inventories and uncollectible Receivables were not material. 

Reclassifications

Certain amounts in the prior fiscal period have been reclassified to conform with the presentation adopted in the current fiscal period.

2.  DISCONTINUED OPERATIONS

In February 2007, the Company announced its decision to evaluate strategic alternatives for HD Supply in order to maximize shareholder value. On June 19, 2007, the Company entered into an agreement to sell HD Supply to a consortium of private equity firms. On August 27, 2007, the Company amended the purchase and sale agreement. On August 30, 2007, the Company closed the sale of HD Supply for a purchase price of $8.5 billion.  In connection with the sale, the Company purchased a 12.5% equity interest in HD Supply for $325 million and guaranteed a $1.0 billion senior secured loan of HD Supply. 

In accordance with S tatement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), the Company reclassified the results of HD Supply as discontinued operations in its Consolidated Statements of Earnings for all periods presented.

The following table presents Net Sales and Earnings Before Provision for Income Taxes of HD Supply which have been reclassified to discontinued operations in the Consolidated Statements of Earnings for the three and six months ended July 29, 2007 and July 30, 2006 (amounts in millions):

	Three Months Ended				Six Months Ended
	July 29, 2007		July 30, 2006		July 29,  2007		July 30,  2006
Net Sales	$	3,195	$	3,433	$	6,235	$	5,517
Earnings Before Provision for Income Taxes	$	192	$	263	$	354	$	413

7

In addition, the Company reclassified the assets and liabilities of HD Supply as discontinued operations in its Consolidated Balance Sheet as of July 29, 2007, the major classes of which are detailed in the following table (amounts in millions):

	July 29, 2007
Cash and Cash Equivalents	$	14
Receivables, net	1,930
Merchandise Inventories	1,738
Other Current Assets	99
Current Assets of Discontinued Operations	$	3,781
Net Property and Equipment	$	690
Goodwill	5,184
Other Assets	657
Noncurrent Assets of Discontinued Operations	$	6,531
Accounts Payable	$	1,280
Accrued Salaries and Related Expenses	182
Sales Tax Payable	41
Deferred Revenue	11
Income Taxes Payable	62
Current Installments of Long-Term Debt	5
Other Accrued Expenses	133
Current Liabilities of Discontinued Operations	$	1,714
Long-Term Debt, excluding current installments	$	11
Other Long-Term Liabilities	66
Deferred Income Taxes	338
Noncurrent Liabilities of Discontinued Operations	$	415

3.   BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES

The reconciliation of basic to diluted weighted average common shares is as follows (amounts in millions):

	Three Months Ended		Six Months Ended
	July 29, 2007	July 30, 2006	July 29,  2007	July 30,  2006
Weighted average common shares	1,960	2,065	1,960	2,090
Effect of potentially dilutive securities:
Stock Plans	9	7	9	7
Diluted weighted average common shares	1,969	2,072	1,969	2,097

Stock plans include shares granted under the Company’s employee stock purchase plans (“ESPP”) and stock incentive plans, as well as shares issued under deferred compensation stock plans.  Options to purchase 37.0 million and 55.1 million shares of common stock for the three months ended July 29, 2007 and July 30, 2006, respectively, and options to purchase 38.4 million and 43.7 million shares of common stock for the six months ended July 29, 2007 and July 30, 2006, respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive.

8

4.  INCOME TAXES

On January 29, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”). Among other things, FIN 48 requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change.  The January 29, 2007 adoption of FIN 48 reduced the Company’s Retained Earnings by $111 million.

During the second quarter and first six months of fiscal 2007, the Company increased its unrecognized tax benefits by approximately $16 million and $32 million, respectively, for tax positions taken during those periods.  During the second quarter and first six months of fiscal 2007, the Company increased its unrecognized tax benefits by approximately $24 million for positions taken related to prior periods. The Company also settled liabilities of $8 million and $20 million during the second quarter and first six months of fiscal 2007, respectively, which resulted in an insignificant income statement impact.  The gross amount of unrecognized tax benefits as of July 29, 2007 totaled $703 million, which includes $433 million of net unrecognized tax benefits that, if recognized, would affect the annual effective income tax rate.

During the second quarter and first six months of fiscal 2007, the Company accrued approximately $14 million and $28 million, respectively, in additional interest expense and paid less than $1 million and $5 million, respectively, of interest associated with uncertain tax positions for those same periods.  There have been no penalty accruals during the first six months of fiscal 2007.  Interest and penalties are not included as a component of Provision for Income Taxes, but are included in net interest expense and operating expenses, respectively.  Our classification of interest and penalties did not change as a result of the adoption of FIN 48.

The U.S. Internal Revenue Service (“IRS”) completed its audit of our consolidated income tax returns for 2003 and 2004, and continues its review of certain subsidiary pre-acquisition returns for the years 2003, 2004 and 2005.  In addition, certain other tax deficiency issues and refund claims for previous years remain unresolved.  The Canadian governments, including the provinces of Alberta, British Columbia, Ontario and Quebec, are currently auditing income tax returns for the years 2001 to 2004.  There are U.S. state and local audits covering tax years 1994 to 2005. The Company anticipates that few of these audits will be fully resolved during fiscal 2007.

The Company believes that some individual adjustments from the completed IRS audit and other audits may be agreed upon within the next twelve months.  Accordingly, the Company has classified approximately $84 million of the reserve for unrecognized tax benefits as a short-term liability in the accompanying Consolidated Balance Sheets.  Final settlement of these audit issues may result in payments that are more or less than this amount, but the Company does not anticipate the resolution of these matters will result in a material change to its consolidated financial position or results of operations.

9

THE HOME DEPOT, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
The Home Depot, Inc.:

We have reviewed the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of July 29, 2007, and the related Consolidated Statements of Earnings and Comprehensive Income for the three-month and six-month periods ended July 29, 2007 and July 30, 2006, and the related Consolidated Statements of Cash Flows for the six-month periods ended July 29, 2007 and July 30, 2006.  These Consolidated Financial Statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the Consolidated Financial Statements referred to above for them to be in conformity with U.S. generally accepted accounting principles. 

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of January 28, 2007, and the related Consolidated Statements of Earnings, Stockholders’ Equity and Comprehensive Income, and Cash Flows for the year then ended (not presented herein); and in our report dated March 21, 2007, we expressed an unqualified opinion on those Consolidated Financial Statements.  In our opinion, the information set forth in the accompanying Consolidated Balance Sheet as of January 28, 2007, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.

	/s/ KPMG LLP
Atlanta, Georgia
August 31, 2007

10

THE HOME DEPOT, INC. AND SUBSIDIARIES

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Certain statements regarding our future performance made in this report are forward-looking statements. Forward-looking statements may relate to such matters as Net Sales growth, comparable store sales, impact of cannibalization, state of the residential construction and housing markets, state of the home improvement market, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, protection of intellectual property rights, Net Earnings performance, earnings per share, stock-based compensation expense, store openings and closures, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, strategic direction, including the sale of HD Supply, the planned recapitalization of the Company, the successful completion of the tender offer and the ability to issue debt securities on terms and at rates acceptable to us, and the demand for our products and services.

These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance. They are subject to future events, risks and uncertainties – many of which are beyond our control – as well as potentially inaccurate assumptions, that could cause actual results to differ materially from our expectations and projections. Some of the material risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for fiscal 2006 as filed with the Securities and Exchange Commission (“SEC”).  You should read that information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report and our Consolidated Financial Statements and related notes in Item 1 of Part I of this report. We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not perceive them to be material, that could cause results to differ materially from our expectations.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these forward-looking statements except as may be required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

To provide clarity about the operating performance of HD Supply, the Company supplemented the reporting of Earnings from Discontinued Operations with a non-GAAP measure, adjusted Earnings from Discontinued Operations. This supplemental information should not be considered in isolation or as a substitute for the GAAP measure of Earnings from Discontinued Operations. The Company believes that this non-GAAP measure provides management and investors with meaningful information that assists in clearly understanding and analyzing HD Supply’s earnings in the most recent fiscal quarter.

EXECUTIVE SUMMARY AND SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA

For the second quarter of fiscal 2007, we reported consolidated Net Earnings of $1.6 billion and Diluted Earnings per Share of $0.81 compared to Net Earnings of $1.9 billion and Diluted Earnings per Share of $0.90 for the second quarter of fiscal 2006. For the first six months of fiscal 2007, we reported Net Earnings of $2.6 billion and Diluted Earnings per Share of $1.34 compared to Net Earnings of $3.3 billion and Diluted Earnings per Share of $1.60 for the first six months of fiscal 2006.

In February 2007, we announced our decision to evaluate strategic alternatives for HD Supply in order to maximize shareholder value. We considered whether to fully integrate HD Supply into our retail business or to sell, spin-off or undertake an initial public offering of the business.  After a thorough review of these alternatives, our Board of Directors approved the sale of HD Supply as part of our plan to enhance shareholder value.  On June 19, 2007, we entered into an agreement to sell our HD Supply business to a consortium of private equity firms.  HD Supply is being reported as a discontinued operation in our Consolidated Financial Statements beginning the second quarter of fiscal 2007.  On August 27, 2007, we amended the purchase and sale agreement.  On August 30, 2007, we closed the sale of HD Supply for a purchase price of $8.5 billion.  In connection w ith the sale, we purchased a 12.5% equity interest in HD Supply for $325 million and guaranteed a $1.0 billion senior secured loan of HD Supply.

11

For the second quarter of fiscal 2007, we reported Net Earnings from Continuing Operations of $1.5 billion and Diluted Earnings per Share from Continuing Operations of $0.77 compared to Net Earnings from Continuing Operations of $1.7 billion and Diluted Earnings per Share from Continuing Operations of $0.82 for the second quarter of fiscal 2006. For the first six months of fiscal 2007, we reported Net Earnings from Continuing Operations of $2.5 billion and Diluted Earnings per Share from Continuing Operations of $1.25 compared to Net Earnings from Continuing Operations of $3.1 billion and Diluted Earnings per Share from Continuing Operations of $1.47 for the first six months of fiscal 2006.  Net Sales decreased 1.8% to $22.2 billion for the second quarter of fiscal 2007 from $22.6 billion for the second quarter of fiscal 2006. For the first six months of fiscal 2007, Net Sales decreased 3.0% to $40.7 billion from $42.0 billion for the first six months of fiscal 2006. Our gross profit margin was 33.1% and our operating margin was 11.5% for the second quarter of fiscal 2007. For the first six months of fiscal 2007, our gross profit margin was 33.4% and our operating margin was 10.4%.

The slowdown in the residential construction and home improvement markets negatively affected our Net Sales for the second quarter and first six months of fiscal 2007. Our comparable store sales declined 5.2% in the second quarter of fiscal 2007 driven by a 2.2% decline in comparable store customer transactions, as well as a 2.8% decline in our average ticket to $58.30.

We believe the residential construction and home improvement market will remain soft throughout 2007 and into 2008.  We expect our Diluted Earnings per Share from Continuing Operations to decline by 12% to 15% for fiscal 2007 and consolidated Earnings per Share to decline by 15% to 18%.

We remain committed to the long-term health of our business through our strategy of investing in our retail business and through the following five key priorities:

Associate Engagement – We have taken a number of actions to improve associate engagement by changing the way our associates are compensated, recognized and rewarded, including restructuring our success sharing program, an incentive program for our hourly associates driven by individual store performance. For the first half of fiscal 2007, 74% of our stores will receive a success sharing payout compared to 33% of stores for the same period last year. During the first half of fiscal 2007, we launched a program to hire master trade specialists to bring experience and know-how to the store and to transfer knowledge to other associates. We now have over 700 licensed electricians and plumbers in our stores.

Product Excitement – During the first six months of fiscal 2007, we accelerated clearance markdowns to sell through existing product in order to make room for new merchandise as we launched our enhanced product line review process and in support of merchandising reset activities. For example, we gained market share in both soft and hard flooring in the second quarter of fiscal 2007 through the addition of new styles and color choices and by enhancing our product displays.

Shopping Environment – In an effort to improve the shopping environment, we continued our store reinvestment program with half of our planned maintenance projects for fiscal 2007, such as restroom remodels, floor polishing, re-lamping and lot striping, in progress or complete.

Product Availability – We are in the early stages of our supply chain transformation to improve product availability. We have improved management of our in-stock position, implemented enhancements to our replenishment systems, began a rollout of a new warehouse management system and begun to pilot our new centralized distribution concept.

Own the Pro – We have made significant improvements in the services we provide our pro customers, particularly through our bid room. The pro bid room, which is available in all of our stores, allows us to leverage the buying power of The Home Depot for the benefit of our pro customers. Our direct ship program allows us to have large orders delivered from our vendors to the customer’s job site directly, reducing handling, lead-time and cost, building loyalty with the pro customer.

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We opened 33 new stores during the second quarter of fiscal 2007, including 3 relocations, bringing our total store count to 2,200. As of the end of the second quarter of fiscal 2007, 232, or approximately 11%, of our stores were located in Canada, Mexico or China compared to 200, or approximately 10%, as of the end of the second quarter of fiscal 2006.

We generated $4.5 billion of cash flow from operations in the first six months of fiscal 2007. We used this cash flow to fund $1.6 billion in capital expenditures and $977 million of share repurchases and dividends.

At the end of the second quarter of fiscal 2007, our long-term debt-to-equity ratio was 42.8% compared to 24.5% at the end of the second quarter of fiscal 2006. Our consolidated return on invested capital (computed on the average of beginning and ending long-term debt and equity for the trailing four quarters) was 15.0% for the second quarter of fiscal 2007 compared to 20.7% for the second quarter of fiscal 2006.

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We believe the selected sales data, the percentage relationship between Net Sales and major categories in the Consolidated Statements of Earnings and the percentage change in the dollar amounts of each of the items presented below is important in evaluating the performance of our business operations.  We believe the information presented in our Management’s Discussion and Analysis of Financial Condition and Results of Operations provides an understanding of our business, our operations and our financial condition.

	% of Net Sales								% Increase (Decrease)
	Three Months Ended				Six Months Ended				in Dollar Amounts
	July 29, 2007		July 30,  2006		July 29, 2007		July 30, 2006		Three Months		Six  Months
NET SALES	100.0	%	100.0	%	100.0	%	100.0	%	(1.8	)%	(3.0	)%
GROSS PROFIT	33.1		33.0		33.4		33.6		(1.5	)	(3.5	)
Operating Expenses:
Selling, General and Administrative	19.7		18.4		21.0		19.4		5.4		5.3
Depreciation and Amortization	1.9		1.8		2.0		1.9		4.8		5.0
Total Operating Expenses	21.6		20.1		23.0		21.2		5.4		5.3
OPERATING INCOME	11.5		12.9		10.4		12.4		(12.3	)	(18.5	)
Interest (Income) Expense:
Interest and Investment Income	(0.1	)	—		(0.1	)	—		350.0		123.5
Interest Expense	0.8		0.4		0.8		0.4		65.4		106.6
Interest, net	0.7		0.4		0.7		0.4		48.0		104.7
EARNINGS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES	10.9		12.5		9.6		12.0		(14.4	)	(22.1	)
Provision for Income Taxes	4.0		4.9		3.6		4.6		(20.2	)	(25.2	)
EARNINGS FROM CONTINUING OPERATIONS	6.9	%	7.5	%	6.1	%	7.4	%	(10.6	)%	(20.2	)%

Note: Certain percentages may not sum to totals due to rounding.

SELECTED SALES DATA
Number of Customer Transactions (in millions)	377			373			695			695			1.1	%	—
Average Ticket	$	58.30		$	59.98		$	58.63		$	60.34		(2.8	)	(2.8	)
Weighted Average Weekly Sales Per Operating Store (in thousands)	$	772		$	833		$	719		$	785		(7.3	)	(8.4	)
Weighted Average Sales per Square Foot	$	383.22		$	411.50		$	356.91		$	387.79		(6.9	)	(8.0	)
Comparable Store Sales Decrease (%)(1)	(5.2		)%	(0.2		)%	(6.3		)%	0.0		%	N/A		N/A

(1)Includes Net Sales at locations open greater than 12 months, including relocated and remodeled stores.  Retail stores become comparable on the Monday following their 365th day of operation. Comparable store sales is intended only as supplemental information and is not a substitute for Net Sales or Net Earnings presented in accordance with generally accepted accounting principles.

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RESULTS OF OPERATIONS

Net Sales for the second quarter of fiscal 2007 decreased 1.8%, or $408 million, to $22.2 billion from $22.6 billion for the second quarter of fiscal 2006. For the first six months of fiscal 2007, Net Sales decreased 3.0%, or $1.3 billion, to $40.7 billion from $42.0 billion for the comparable period in fiscal 2006.

The decrease in Net Sales for the second quarter and first six months of fiscal 2007 reflects the impact of negative comparable store sales, partially offset by Net Sales of $1.6 billion for the first six months of fiscal 2007 from new stores and stores open less than one year.Comparable store sales decreased 5.2% for the second quarter of fiscal 2007 compared to a decrease of 0.2% for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, comparable store sales decreased 6.3% and were flat for the same period of fiscal 2006. Our average ticket decreased 2.8% to $58.30 for the second quarter of fiscal 2007 and decreased 2.8% to $58.63 for the first six months of fiscal 2007.

There were a number of factors that contributed to our comparable store sales decline. The residential construction and home improvement markets continued to be soft, especially in some of our traditionally strong markets such as Florida and California. We saw relative strength in Flooring, Plumbing, Garden and Paint as comparable store sales in these areas were above the Company average for the second quarter and first six months of fiscal 2007.  Comparable store sales for Hardware, Lumber, Kitchen/Bath, Lighting, Building Materials and Millwork were below the Company average for the second quarter and first six months of fiscal 2007.

Our Mexican stores posted a double digit comparable store sales increase in both the second quarter and first six months of fiscal 2007 and Canada’s comparable store sales were also positive for those periods. The integration of our new China locations is progressing in accordance with our plan.

In order to meet our customer service objectives, we strategically open stores near market areas served by existing stores (“cannibalize”) to enhance service levels, gain incremental sales and increase market penetration. Our new stores cannibalized approximately 10% of our existing stores as of the second quarter of fiscal 2007, which had a negative impact to comparable store sales of approximately 1%.

Gross Profit decreased 1.5% to $7.3 billion for the second quarter of fiscal 2007 from $7.5 billion for the second quarter of fiscal 2006.  Gross Profit decreased 3.5% to $13.6 billion for the first six months of fiscal 2007 from $14.1 billion for the first six months of fiscal 2006.Gross Profit as a percent of Net Sales increased 9 basis points to 33.1% for the second quarter of fiscal 2007 compared to 33.0% for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, Gross Profit as a percent of Net Sales was 33.4% compared with 33.6% for the comparable period of fiscal 2006, a decrease of 18 basis points. In the second quarter of fiscal 2007, Gross Profit as a percent of Net Sales was negatively impacted by approximately 16 basis points as a result of a change in mix of products sold and markdowns taken to allow us to transition into new products. In addition, increased shrink levels negatively impacted our gross profit margin by 13 basis points in the second quarter of fiscal 2007. These decreases were offset by a benefit of 38 basis points of gross profit margin expansion arising from lower financing costs associated with our private label credit card financing programs. Through our private label credit card we offer no interest/no payment programs and the cost of these programs has been reduced beginning in fiscal 2007. For the second quarter and first six months of fiscal 2007, the penetration of our private label credit sales was 29% for both periods, as compared to 27% for the same periods of fiscal 2006.

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Operating Expenses increased 5.4% to $4.8 billion for the second quarter of fiscal 2007 from $4.5 billion for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, Operating Expenses increased 5.3% to $9.4 billion from $8.9 billion for the comparable period of fiscal 2006.  Operating Expenses as a percent of Net Sales were 21.6% for the second quarter of fiscal 2007 compared to 20.1% for the second quarter of fiscal 2006, an increase of 147 basis points.  Operating Expenses as a percent of Net Sales were 23.0% for the first six months of fiscal 2007 compared to 21.2% for the first six months of fiscal 2006.

Selling, General and Administrative Expense (“SG&A”) increased 5.4% to $4.4 billion for the second quarter of fiscal 2007 from $4.1 billion for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, SG&A increased 5.3% to $8.6 billion from $8.1 billion for the first six months of fiscal 2006. As a percent of Net Sales, SG&A was 19.7% for the second quarter of fiscal 2007 compared to 18.4% for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, SG&A as a percent of Net Sales was 21.0% compared to 19.4% for the same period last year.  Our deleverage in SG&A reflects the impact of negative comparable store sales, where for every one percentage point of negative comparable store sales, we expect to deleverage expenses by about 20 basis points. SG&A also reflects investments we are making in support of our five key priorities. As a percentage of Net Sales, total payroll increased by 79 basis points for the second quarter of fiscal 2007 over the same period last year. This reflects investment in store labor, as well as the impact of our success sharing bonus plans.

Depreciation and Amortization increased 4.8% to $414 million for the second quarter of fiscal 2007 from $395 million for the second quarter of fiscal 2006.  For the first six months of fiscal 2007, Depreciation and Amortization increased 5.0% to $819 million from $780 million for the same period of fiscal 2006.  Depreciation and Amortization as a percent of Net Sales was 1.9% for the second quarter of fiscal 2007 compared to 1.8% for the second quarter of fiscal 2006, and was 2.0% for the first six months of fiscal 2007 compared to 1.9% for the same period in fiscal 2006.  The increase as a percentage of Net Sales in both periods was primarily due to the depreciation of our investments in store modernization and technology.

Operating Income decreased 12.3% to $2.6 billion for the second quarter of fiscal 2007 from $2.9 billion for the second quarter of fiscal 2006. Operating Income decreased 18.5% to $4.2 billion for the first six months of fiscal 2007 from $5.2 billion for the first six months of fiscal 2006. Operating Income as a percent of Net Sales was 11.5% for the second quarter of fiscal 2007 compared to 12.9% for the second quarter of fiscal 2006, and was 10.4% for the first six months of fiscal 2007 compared to 12.4% for the first six months of fiscal 2006.

In the second quarter of fiscal 2007, we recognized $145 million of net Interest Expense compared to $98 million in the second quarter of fiscal 2006.  Net Interest Expense as a percentage of Net Sales was 0.7% for the second quarter of fiscal 2007 and 0.4% for the second quarter of 2006. This increase was primarily due to additional interest incurred related to the December 2006 issuance of $750 million of floating rate Senior Notes, $1.25 billion of 5.25% Senior Notes and $3.0 billion of 5.875% Senior Notes.

Our combined federal and state effective income tax rate for continuing operations decreased to 37.1% for the first six months of fiscal 2007 from 38.6% for the comparable period of fiscal 2006.  The decrease in our effective income tax rate reflects the impact of a one-time tax assessment received from the province of Quebec in the second quarter of fiscal 2006.

Diluted Earnings per Share from Continuing Operations were $0.77 and $1.25 for the second quarter and first six months of fiscal 2007 compared to $0.82 and $1.47 for the second quarter and first six months of fiscal 2006, respectively.

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Discontinued operations consist of the results of operations of HD Supply. Net Sales from discontinued operations were $3.2 billion and $6.2 billion for the second quarter and first six months of fiscal 2007, respectively, compared to $3.4 billion and $5.5 billion for the second quarter and first six months of fiscal 2006, respectively.  Earnings from Discontinued Operations were $66 million and $165 million for the second quarter and first six months of fiscal 2007, respectively, compared to $161 million and $254 million for the same periods of last year.  A discrete tax item of approximately $60 million arising from the timing of the sale of HD Supply is included in Earnings from Discontinued Operations for the second quarter of fiscal 2007.  Excluding this discrete item, adjusted Earnings from Discontinued Operations would have been $126 million and $225 million for the second quarter and first six months of fiscal 2007, respectively.

As we began reporting the results of HD Supply as discontinued operations in the second quarter of fiscal 2007, we are providing Net Sales and Earnings Before Provision for Income Taxes from Continuing Operations for the third and fourth quarters of fiscal 2006 and the first quarter of fiscal 2007 for informational purposes along with the results of the second quarter of fiscal 2007 (amounts in millions):

	Three Months Ended
	October 29, 2006		January 28, 2007		April 29, 2007		July 29, 2007
Net Sales	$	19,648	$	17,404	$	18,545	$	22,184
Earnings Before Provision for Income Taxes	$	2,130	$	1,334	$	1,512	$	2,412

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides us with a significant source of liquidity.  During the first six months of fiscal 2007, Net Cash Provided by Operating Activities was $4.5 billion compared to $5.2 billion for the same period of fiscal 2006.  This change was primarily a result of decreased Net Earnings.

Net Cash Used in Investing Activities for the first six months of fiscal 2007 was $3.5 billion compared to $5.2 billion for the same period of fiscal 2006.  The decrease in Net Cash Used in Investing Activities was primarily the result of a decrease in Payments for Businesses Acquired of $3.8 billion as a result of our purchase of Hughes Supply, Inc. in fiscal 2006, partially offset by an increase of $2.0 billion in net purchases of investments.

During the first six months of fiscal 2007, Net Cash Used in Financing Activities was $554 million compared with $159 million for the same period of fiscal 2006.  The increase in Net Cash Used in Financing Activities was primarily due to the March 2006 issuance of $1.0 billion of 5.20% Senior Notes and $3.0 billion of 5.40% Senior Notes, partially offset by a $2.7 billion decrease in the repurchase of shares of our common stock and the repayment of $800 million of Short-Term Debt outstanding under our commercial paper program in the first half of fiscal 2006.

As of the end of the second quarter of fiscal 2007, our long-term debt-to-equity ratio was 42.8% reflecting the December 2006 issuance of $750 million of floating rate Senior Notes, $1.25 billion of 5.25% Senior Notes and $3.0 billion of 5.875% Senior Notes.

In the second quarter of fiscal 2007, we increased the maximum capacity for borrowing under our commercial paper program to $3.0 billion from $2.5 billion, as well as increased the related back-up credit facility with a consortium of banks to $3.0 billion from $2.0 billion. As of July 29, 2007, there were no borrowings outstanding under the program or the related back-up credit facility.  The credit facility, which expires in December 2010, contains various restrictive covenants, none of which is expected to impact our liquidity or capital resources.

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As of July 29, 2007, we had $3.0 billion in Cash and Short-Term Investments.  We believe that our current cash position and cash flow generated from operations should be sufficient to enable us to complete our capital expenditure programs and any required long-term debt payments through the next several fiscal years.  In addition, we have funds available from the $3.0 billion commercial paper program and the ability to obtain alternative sources of financing for other requirements.

On June 18, 2007, the Board of Directors authorized an additional $22.5 billion in common stock repurchases for a total authorization of $40.0 billion. In connection with this authorization, on July 10, 2007, our Board of Directors authorized a tender offer for the purchase of up to 250 million shares of our common stock at a price between $39 and $44 per share, which was subsequently revised to between $37 and $42 per share on August 10, 2007.  Under terms of the tender offer, shareholders are given an opportunity to specify prices, within the stated price range, at which they are willing to tender shares. Upon receipt of the tenders, we will select a final price that enables us to purchase up to the stated amount of shares from those shareholders who agreed to sell at or below the Company-selected price. There is no guarantee that shares tendered will be purchased. We may purchase up to an additional 39.6 million shares in the tender offer without extending the tender offer. The purchase price for the shares in the tender is expected to be funded with proceeds from the sale of HD Supply, cash on hand or up to $2.0 billion of borrowings available under a tender offer financing facility that was entered into in August 2007.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risks results primarily from fluctuations in interest rates.  There have been no material changes to our exposure to market risks from those disclosed in our Annual Report on Form 10-K for the year ended January 28, 2007.

Item 4.  Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the fiscal quarter ended July 29, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Reference is made to page 13 of the Company’s 2006 Form 10-K which describes six class actions filed against the Company and certain of its current and former officers and directors in the U.S. District Court for the Northern District of Georgia in Atlanta, alleging certain misrepresentations in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with the Company’s return-to-vendor practices. On July 18, 2007, the Court granted the defendants’ motions to dismiss without leave to amend and entered a judgment in favor of the defendants.  On August 17, 2007, the plaintiffs appealed the dismissal.

Reference is made to page 14 of the Company’s 2006 Form 10-K which describes the investigation being conducted by California state and local government authorities concerning the Company’s handling, storage and disposal of hazardous materials.  On August 14, 2007, the Company entered into a negotiated civil settlement of this matter with such authorities pursuant to which the Company agreed to make certain payments to the state and local authorities, as well as contribute to environmental training programs and other environmental initiatives benefiting the citizens of California.  The Company also agreed to be subject to a consent decree providing for an injunction pursuant to which it agreed to maintain and enhance compliance programs for managing hazardous materials at its stores.  This proposed settlement is subject to court approval. The Company also entered into a related settlement with Riverside County to resolve issues related to a previously entered injunction. The Company agreed to make a contribution towards the construction of a hazardous waste disposal facility, and Riverside County agreed to dissolve the prior injunction.

Item 1A. Risk Factors

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed under “Risk Factors” in our Form 10-K for fiscal 2006 as filed with the SEC.  These risks could materially and adversely affect our business, financial condition and results of operations.  The risks described in our Form 10-K are not the only risks we face.  Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(a)During the second quarter of fiscal 2007, the Company issued 13,897 deferred stock units under The Home Depot, Inc. NonEmployee Directors’ Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. The deferred stock units were credited to the accounts of such nonemployee directors who elected to receive board and committee fees in the form of deferred stock units instead of receiving such fees in cash as payment for board and committee meetings held during the second quarter of fiscal 2007. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in this plan.

During the second quarter of fiscal 2007, the Company credited 1,179 deferred stock units to participant accounts under The Home Depot FutureBuilder Restoration Plan pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, for involuntary, non-contributory plans. The deferred stock units convert to shares of common stock on a one-for-one basis following the termination of services as described in this plan.

(c)Since fiscal 2002, the Company has repurchased shares of its common stock having a value of approximately $16.5 billion. The number and average price of shares purchased in each fiscal month of the second quarter of fiscal 2007 are set forth in the table below:

Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Program(2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(2)
April 30, 2007 – May 27, 2007	44,038	$	38.79	—	$	1,025,170,744
May 28, 2007 – June 24, 2007	11,663	$	39.98	—	$	23,525,170,744
June 25, 2007 – July 29, 2007	19,675	$	39.45	—	$	23,525,170,744

(1)These amounts include repurchases pursuant to the Company’s 1997 and 2005 Omnibus Stock Incentive Plans (the “Plans”). Under the Plans, participants may exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Participants in the Plans may also surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs. For the quarter ended July 29, 2007, the following shares of The Home Depot common stock were surrendered by participants in the Plans and included in the total number of shares purchased: Apr. 30, 2007 – May 27, 2007 – 44,038 shares at an average price per share of $38.79; May 28, 2007 – June 24, 2007 – 11,663 shares at an average price per share of $39.98; June 25, 2007 – July 29, 2007 – 19,675 shares at an average price per share of $39.45.

(2)The Company’s common stock repurchase program was initially announced on July 15, 2002. As of the beginning of the second quarter of fiscal 2007, the Board had approved purchases up to $17.5 billion. On June 18, 2007, the Board authorized an additional $22.5 billion in common stock repurchases for a total authorization of $40.0 billion at the end of the second quarter of 2007.  The program does not have a prescribed expiration date.

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Item 6.  Exhibits

2.1	Purchase and Sale Agreement, dated as of June 19, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation. [Form 8-K filed on June 20, 2007, Exhibit 2.1]
2.2	Letter agreement, dated August 14, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation. [Form 8-K filed on August 15, 2007, Exhibit 2.1]
2.3	Amendment, dated August 27, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation.
3.1	By-Laws, as amended and restated. [Form 8-K filed on May 29, 2007, Exhibit 3.1]
10.1	Tender Offer Financing Facility Commitment Letter between The Home Depot, Inc., Lehman Commercial Paper Inc., Merrill Lynch Capital Corporation and certain of their affiliates, dated July 9, 2007.
10.2	Amendment No.1 to Tender Offer Financing Facility Commitment Letter between The Home Depot, Inc., Lehman Commercial Paper Inc., Merrill Lynch Capital Corporation and certain of their affiliates, dated August 10, 2007.
10.3	Letter Agreement between The Home Depot, Inc. and Joseph J. DeAngelo, dated May 24, 2007.
10.4	The Home Depot Deferred Compensation Plan for Officers. [Form 8-K filed on August 20, 2007, Exhibit 10.1]
10.5	The Home Depot FutureBuilder Restoration Plan. [Form 8-K filed on August 20, 2007, Exhibit 10.2]
10.6	The Home Depot, Inc. Non-Employees Directors’ Deferred Stock Compensation Plan. [Form 8-K filed on August 20, 2007, Exhibit 10.3]
12.1	Statement of Computation of Ratio of Earnings to Fixed Charges.
15.1	Letter of KPMG LLP, Acknowledgement of Independent Registered Public Accounting Firm, dated August 31, 2007.
31.1	Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chairman and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer and Executive Vice President – Corporate Services, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE HOME DEPOT, INC.
		(Registrant)
	By:	/s/ FRANCIS S. BLAKE
		Francis S. Blake
		Chairman &
		Chief Executive Officer
		/s/ CAROL B. TOMÉ
		Carol B. Tomé
		Chief Financial Officer &
		Executive Vice President –
August 29, 2007		Corporate Services
(Date)

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INDEX TO EXHIBITS

2.1	Purchase and Sale Agreement, dated as of June 19, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation. [Form 8-K filed on June 20, 2007, Exhibit 2.1]
2.2	Letter agreement, dated August 14, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation. [Form 8-K filed on August 15, 2007, Exhibit 2.1]
2.3	Amendment, dated August 27, 2007, by and between The Home Depot, Inc., THD Holdings, LLC, Home Depot International, Inc., Homer TLC, Inc. and Pro Acquisition Corporation.
3.1	By-Laws, as amended and restated. [Form 8-K filed on May 29, 2007, Exhibit 3.1]
10.1	Tender Offer Financing Facility Commitment Letter between The Home Depot, Inc., Lehman Commercial Paper Inc., Merrill Lynch Capital Corporation and certain of their affiliates, dated July 9, 2007.
10.2	Amendment No.1 to Tender Offer Financing Facility Commitment Letter between The Home Depot, Inc., Lehman Commercial Paper Inc., Merrill Lynch Capital Corporation and certain of their affiliates, dated August 10, 2007.
10.3	Letter Agreement between The Home Depot, Inc. and Joseph J. DeAngelo, dated May 24, 2007.
10.4	The Home Depot Deferred Compensation Plan for Officers. [Form 8-K filed on August 20, 2007, Exhibit 10.1]
10.5	The Home Depot FutureBuilder Restoration Plan. [Form 8-K filed on August 20, 2007, Exhibit 10.2]
10.6	The Home Depot, Inc. Non-Employees Directors’ Deferred Stock Compensation Plan. [Form 8-K filed on August 20, 2007, Exhibit 10.3]
12.1	Statement of Computation of Ratio of Earnings to Fixed Charges.
15.1	Letter of KPMG LLP, Acknowledgement of Independent Registered Public Accounting Firm, dated August 31, 2007.
31.1	Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chairman and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer and Executive Vice President – Corporate Services, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

24

EX-2.3

Exhibit 2.3

AMENDMENT NO. 3 TO PURCHASE AND SALE AGREEMENT

This AMENDMENT NO. 3, dated as of August 27, 2007 (this “Amendment”), to the Purchase and Sale Agreement, dated as of June 19, 2007, as amended by Amendment No. 1 dated August 14, 2007 and Amendment No. 2 dated August 23, 2007 (“Amendment No. 2”) (as further amended by this Amendment, the “Purchase Agreement”), is made and entered into by and among The Home Depot, Inc., a Delaware corporation (“Parent”), THD Holdings, LLC, a Delaware limited liability company wholly owned by Parent, Home Depot International, Inc., a Delaware corporation wholly owned by Parent (THD Holdings, LLC and Home Depot International, Inc., collectively, the “Sellers”), Homer TLC, Inc., a Delaware corporation wholly owned by Parent (the “IP Seller”), HDS Investment Holding, Inc. a Delaware corporation formerly known as Pro Acquisition Corporation (“Purchaser”) and HDS Acquisition Subsidiary, Inc., a Delaware corporation (“HDS Acquisition”).

RECITALS

WHEREAS, on August 14, 2007, the parties hereto amended the Purchase Agreement to change the Closing Date to August 23, 2007;

WHEREAS, on August 23, 2007, the parties hereto further amended the Purchase Agreement;

WHEREAS, the parties hereto hereby agree to further amend the Purchase Agreement to provide for various matters set forth herein, including to amend and restate Amendment No. 2 in its entirety;

WHEREAS, Purchaser has offered Parent the opportunity to receive a portion of the purchase price in shares of common stock of Purchaser, and Parent has elected to accept this offer;

WHEREAS, (i) Purchaser owns all of the outstanding capital stock of HDS Holding Corporation, a Delaware corporation (“HDS Holding”), (ii) HDS Holding owns all of the outstanding capital stock of HDS Acquisition, and (iii) HDS Acquisition owns all of the outstanding capital stock of Pro Canadian Holdings I, ULC, a Nova Scotia Unlimited Company (“Pro NSULC”), a disregarded entity for U.S. federal income tax purposes;

WHEREAS, HDS Acquisition intends to merge with and into HD Supply, Inc. (“HDS”) immediately after the Closing, with HDS continuing as the surviving corporation; and

WHEREAS, the parties hereto hereby agree that as of the date hereof the conditions to each of their respective obligations to consummate the transactions contemplated by the Purchase Agreement have been and remain fulfilled, subject to the payment of the Purchase Price, the delivery of the Shares, the assignment of exclusive ownership of the Transferred IP and the entry into the Ancillary Agreements;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:

AGREEMENT

SECTION 1.  Amendment to Section 2.1, Section 2.2 and Section 2.3 of the Purchase Agreement.  Section 2.1, Section 2.2 and Section 2.3(a) of the Agreement shall be replaced in their entirety with the following:

“Section 2.1           Purchase.  Upon the terms and subject to the conditions set forth in this Agreement, at the closing of the transactions contemplated by this Agreement (the “Closing”):

(a)           the Sellers shall (and Parent shall cause the Sellers to) sell, transfer, convey, assign and deliver to HDS Acquisition, and Purchaser shall cause HDS Acquisition to acquire from the Sellers, all of the capital stock of HDS;

(b)           immediately after the transactions described in 2.1(a), the Sellers shall (and Parent shall cause the Sellers to) sell, transfer, convey, assign and deliver to Pro NSULC, and Purchaser shall cause Pro NSULC to acquire from the Sellers, all of the capital stock of CND Holdings, Inc.; and

(c)           immediately after the transactions described in 2.1(b), the Sellers, IP Seller and their applicable Subsidiaries shall (and Parent shall cause the Sellers, IP Seller and their applicable Subsidiaries to) transfer, convey, assign and deliver to HDS IP Holding, LLC, a subsidiary of HDS (“IP Acquirer”), and Purchaser shall cause IP Acquirer to acquire, all of the Sellers’, IP Seller’s and their applicable Subsidiaries’ right, title and interest in and to the Transferred IP (the “Sale”).

“Section 2.2           Consideration.

(a)           At the Closing, Purchaser shall contribute the Equity Interests to HDS Holding, which shall contribute the Equity Interests to HDS Acquisition.

(b)           Immediately after the transactions described in Section 2.2(a), in consideration for the Shares and the Transferred IP, at the Closing, Purchaser shall cause HDS Acquisition to pay to Parent, who shall receive such amount on behalf of the Sellers and the IP Seller, respectively, an aggregate of $8,500,000,000.00 (consisting of the Equity Interests and $8,175,000,000.00 in cash) (the “Purchase Price”), subject to adjustment as provided in Section 2.4(b) and Section 2.5(f).

Section 2.3             Closing.  (a) The Closing shall take place at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, at 10:00 a.m., New York time, on August 30, 2007 (the “Closing Date”) or such earlier date and time as the parties mutually agree.”

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SECTION 2.  Amendment to Section 7.16 of the Purchase Agreement.  Section 7.16 of the Agreement shall be amended by inserting the following sentence immediately after the first sentence thereof:

“For purposes of the foregoing, the “purchase price” shall include the Equity Interests.  The Equity Interests shall be deemed to have a value of $325 million.”

SECTION 3.  Investment.  For purposes of the Purchase Agreement, “Equity Interests” shall mean common stock of Purchaser, par value $0.01 per share (the “Purchaser Common Stock”), representing that number of shares of Purchaser Common Stock with a value in accordance with Section 2 of $325 million at the same purchase price per share of Purchaser Common Stock as is paid at the Closing by the Equity Investors.  At the Closing, Parent (or a subsidiary thereof), Purchaser, the Equity Investors and certain other investors in the Purchaser Common Stock shall enter into a Subscription Agreement, a Stockholders Agreement and a Registration Rights Agreement, in the forms attached as Exhibits A, B and C, respectively.  Neither Parent nor any of its subsidiaries party to the Subscription Agreement, Stockholders Agreement or Registration Rights Agreement shall be treated as an Equity Investor for any purpose under the Purchase Agreement.

SECTION 4.  References to the Purchase Agreement.  After giving effect to this Amendment, each reference in the Purchase Agreement to “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby” or words of like import referring to the Purchase Agreement shall refer to the Purchase Agreement, as amended by this Amendment, and each reference in the Parent Disclosure Schedule, Purchaser Disclosure Schedule, and Ancillary Agreements to “the Agreement” and “the Purchase Agreement” shall refer to the Purchase Agreement as amended by this Amendment.

SECTION 5.  Financing.  Purchaser represents and warrants to Parent and each of the Sellers and the IP Seller as follows:

(a)           Purchaser has received and accepted executed, amended and restated equity commitment letters, dated August 27, 2007 (collectively, the “Amended Equity Commitment Letters”), from the Equity Investors relating to the commitment of the Equity Investors to provide cash equity in the aggregate amount set forth therein (the “Cash Equity”) (the Cash Equity, together with the Debt Financing is collectively referred to as the “Financing”).  References in the Purchase Agreement to the Equity Commitment Letters shall be deemed to mean and refer to the Amended Equity Commitment Letters.  Complete and correct copies of the executed Amended Equity Commitment Letters have been provided to Parent.  The parties acknowledge and agree that the Equity Commitment Letters, dated June 19, 2007 and the Equity Commitment Letter dated August 23, 2007 by Carlyle Partners V, L.P., are hereby terminated and of no further force or effect.

(b)           The parties acknowledge and agree that Carlyle Partners V, L.P. has executed and delivered to Purchaser the limited guarantee of Carlyle Partners V, L.P. in substitution for the Guarantee, dated June 19, 2007, of Carlyle Partners IV, L.P. (the “Prior Carlyle Guarantee”).  The parties further acknowledge and agree that the Prior Carlyle Guarantee is terminated and of no further force or effect.

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(c)  Purchaser has received and accepted an executed amended and restated debt commitment letter, dated August 27, 2007 (the “New Debt Commitment Letter”), amending and restating the debt commitment letter, dated June 19, 2007, from the Lenders relating to the commitment of the Lenders to provide financing in the aggregate amount set forth therein.  References in the Purchase Agreement to the Debt Commitment Letter and the Debt Financing shall be deemed to mean and refer to the New Debt Commitment Letter and the financing contemplated thereby, respectively.

SECTION 6.  Parent Guarantee.  At the Closing, Parent shall execute and deliver (i) a guarantee in a form mutually acceptable to Parent, Purchaser and the Lenders, and having the terms set forth in the attached Exhibit D, and (ii) opinions of counsel in the form attached as Exhibit E.

SECTION 7.  Fees.  The parties agree that the fees payable to the Lenders and the financial advisers of Purchaser and the fees payable to Purchaser’s affiliates in connection with the transactions contemplated by the Purchase Agreement will not exceed $195,000,000 in the aggregate, (i) $95,000,000 of which will be funded by drawdowns on the Debt Financing and (ii) $100,000,000 of which will be fees payable to the Lenders by Parent (or one or more of Parent’s Subsidiaries designated by Parent (other than the Transferred Companies or their Subsidiaries)) at the Closing on behalf of HDS Acquisition by payment of immediately available funds at the instruction of Purchaser to such accounts as shall be designated by Purchaser.  The Lenders shall be third party beneficiaries of the foregoing clause (ii) of this Section 7.

SECTION 8.  Amendment No. 2.  Amendment No. 2 is hereby amended and restated in its entirety by this Amendment and Amendment No. 2 is of no further force and effect.

SECTION 9.  Construction.  Except as expressly provided in this Amendment, all references in the Purchase Agreement and Parent Disclosure Schedule, Purchaser Disclosure Schedule, and Ancillary Agreements to “the date hereof” and “the date of this Agreement” shall refer to June 19, 2007.

SECTION 10.  Defined Terms; References.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

SECTION 11.  Other Miscellaneous Terms.  The provisions of Article XI (General Provisions) of the Purchase Agreement shall apply mutatis mutandis to this Amendment, and to the Purchase Agreement as modified by this Amendment, taken together as a single agreement, reflecting the terms therein as modified hereby.

SECTION 12.  No Further Amendment.  Except as amended hereby, the Purchase Agreement shall remain in full force and effect.

[Signature page to follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above by their respective authorized officers thereunto dully authorized.

THE HOME DEPOT, INC.
By:	/s/ Carol B. Tomé
		Name: Carol B. Tomé
		Title:   Executive Vice President

THD HOLDINGS, LLC
By:	/s/ Steven Levy
		Name: Steven Levy
		Title:   President

HOME DEPOT INTERNATIONAL, INC.
By:	/s/ Carol B. Tomé
		Name: Carol B. Tomé
		Title:   Vice President

HOMER TLC, INC.
By:	/s/ Steven Levy
		Name: Steven Levy
		Title:   President

HDS INVESTMENT HOLDING, INC.
By:	/s/ David Novak
		Name: David Novak
		Title:   Co-President

HDS ACQUISITION SUBSIDIARY, INC.
By:	/s/ David Novak
		Name: David Novak
		Title:   Co-President

[Signature page to Amendment No. 3 to Purchase and Sale Agreement]

EX-10.1

Exhibit 10.1

Lehman Brothers Holdings Inc.	Merrill Lynch Capital Corporation
Lehman Brothers Commercial Bank	Merrill Lynch, Pierce, Fenner & Smith Incorporated
Lehman Commercial Paper Inc.	4 World Financial Center
Lehman Brothers Inc.	North Tower
745 Seventh Avenue	250 Vesey Street
New York, New York 10019	New York, New York 10080

July 9, 2007

COMMITMENT LETTER

PERSONAL AND CONFIDENTIAL

The Home Depot, Inc.
2455 Paces Ferry Road N.W.
Atlanta, Georgia 30339

Attention:	Carol B. Tomé
	Chief Financial Officer and
	Executive Vice President-Corporate Services

Ladies and Gentlemen:

This commitment letter agreement (together with all exhibits and schedules hereto, the “Commitment Letter”) will confirm the understanding and agreement among Lehman Brothers Commercial Bank (together with its designated affiliates, “LBCB”), Lehman Brothers Holdings Inc. (together with its designated affiliates, “LBHI”), Lehman Commercial Paper Inc. (“LCPI” and together with LBCB and LBHI, the “Lehman Lenders”), Lehman Brothers Inc. (“Lehman Brothers” and together with the Lehman Lenders, “Lehman”), Merrill Lynch Capital Corporation (“MLCC”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” and together with MLCC, “Merrill Lynch”), The Home Depot, Inc., a Delaware corporation (the “Company”), in connection with the proposed financing for the acquisition of up to 250 million shares of its common stock pursuant to the offer to purchase (the “Offer to Purchase”) (as such amount may be increased as provided therein) dated on or about the date hereof (the “Share Repurchase”) and to provide support for the issuance by the Company of commercial paper in connection with such Share Repurchase.  For purposes of this Commitment Letter, the Lehman Lenders, Lehman Brothers, MLCC and MLPF&S are collectively referred to as “we”, “us” or the “Agents”.  The entering into and borrowings under the Credit Facility (as defined below) by the parties herein described, the Share Repurchase and the payment of any related fees and expenses are herein collectively referred to as the “Transactions”.  The date on which the parties enter into definitive documentation governing the Credit Facility (as defined below) is referred to as the “Closing Date.”

You have advised us that the total funds needed to finance the Transactions (including fees and expenses) will be provided from up to $10.0 billion from (i) the issuance of commercial paper by the Company and/or (ii) direct borrowings by the Company under a Revolving Facility (the “Credit Facility”) among the Company, the Lehman Lenders, MLCC and the financial institutions party thereto.

1.The Commitments.

(a)You have requested that each of (i) the Lehman Lenders and (ii) MLCC, severally and not jointly, (collectively with each other entity that becomes a lender under the Credit Facility, the “Lenders”) commit to provide 50% each of the entire amount of the Credit Facility upon the terms

and subject to the conditions set forth or referred to in this Commitment Letter and in the Summary of Terms of Credit Facility attached hereto as Exhibit A (the “Term Sheet”).

(b)Based on the foregoing, each of (i) the Lehman Lenders and (ii) MLCC is pleased to confirm by this Commitment Letter its several commitment to you (the “Commitment”), to provide or cause one or more of its affiliates to each provide 50% of the entire amount of the Credit Facility.

(c)It is agreed that Lehman Brothers and MLPF&S (each an “Arranger” and together the “Arrangers”) will act as the sole book-runners and sole arrangers for the Credit Facility, that LCPI (or its designated affiliate) will act as the sole and exclusive Administrative Agent (acting in such role, the “Administrative Agent”) for the Credit Facility, and MLCC will act as the sole and exclusive Syndication Agent (acting in such role, the “Syndication Agent”) for the Credit Facility.  Each of the Arrangers, the Administrative Agent, and the Syndication Agent will have the rights and authority customarily given to financial institutions in such roles, but will have no duties other than those expressly set forth herein.  You agree that no other agents, co-agents, arrangers or book-runners will be appointed, no other titles will be awarded, and no compensation (other than that expressly contemplated by the Term Sheet or the Fee Letter referred to below) will be paid, in connection with the Credit Facility unless you and we so agree.

(d)The commitments and agreements of each of the Lehman Lenders, MLCC and the Arrangers described herein are subject to (i) there not having occurred any event, development or circumstance since January 28, 2007 that has caused or would reasonably be expected to cause a material adverse condition or material adverse change in or affecting (A) the financial condition, operations, business or properties of the Company and its subsidiaries, taken as a whole, except as previously disclosed in the Company’s public filings with the Securities and Exchange Commission or (B) the validity or enforceability of any of the Credit Documentation (as defined in the Term Sheet) or the rights and remedies of the Administrative Agent and the Lenders thereunder, (ii) any information or other matter disclosed to the Arrangers prior to the date hereof in connection with the Transactions not proving to have been false or misleading in any material respect at the time such information or other matter was disclosed to the Arrangers, (iii) there not having occurred a material disruption or material adverse change in the financial, banking (including the bank loan syndication market) or capital markets that is reasonably expected to materially impair the syndication of the Credit Facility or the sale or placement of investment grade, senior unsecured corporate debt securities and (iv) the other conditions set forth below or referred to in the Funding Conditions attached hereto as Exhibit B.

2.Fees and Expenses.  In consideration of the execution and delivery of this Commitment Letter by each of the Lehman Lenders and MLCC as a Lender, you agree to pay the fees and expenses set forth in Annex A-I to the Term Sheet and in the Fee Letter dated the date hereof (the “Fee Letter”) as and when payable in accordance with the terms thereof.

3.Indemnification.

(a)The Company hereby agrees to indemnify and hold harmless each of the Lehman Lenders, Lehman Brothers, MLCC, MLPF&S, the other Lenders and each of their respective affiliates and all their respective officers, directors, partners, trustees, employees, controlling persons and agents (each, an “Indemnified Person”) from and against any and all losses, claims, damages and liabilities to which any Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the Credit Facility, the use of the proceeds therefrom, any of the other transactions contemplated by this Commitment Letter or any other transaction related thereto or any claim, litigation, investigation or proceeding relating to any of the foregoing (each a “Claim” and collectively the “Claims”), regardless

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of whether any Indemnified Person is a party thereto, and to reimburse each Indemnified Person promptly upon demand for all reasonable legal and other expenses reasonably incurred by it in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including, without limitation, in connection with the enforcement of the indemnification obligations set forth herein); provided, however, that no Indemnified Person will be entitled to indemnity hereunder in respect of any loss, claim, damage, liability or expense to the extent such loss, claim, damage, liability or expense results from (i) the willful misconduct or gross negligence of such Indemnified Person, (ii) any material breach by such Indemnified Person of its representations or obligations under this Commitment Letter or (iii) the violation by such Indemnified Person of any law, rule or regulation binding upon such Indemnified Person (the matters set forth in the foregoing clauses (i) through (iii) being collectively referred to as the “Indemnity Exclusions”).  In no event will any Indemnified Person be liable on any theory of liability for indirect, special or consequential damages, lost profits or punitive damages as a result of any failure to fund the Credit Facility or otherwise in connection with the Credit Facility.  No Indemnified Person will be liable for any damages arising from the use by unauthorized persons of information, projections or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by unauthorized persons, except to the extent such use resulted from the gross negligence or willful misconduct of such Indemnified Person.

(b)The Company further agrees that, without the prior written consent of each of Lehman and Merrill Lynch, which consent will not be unreasonably withheld, it will not enter into any settlement of a lawsuit, claim or other proceeding against any Indemnified Person arising out of this Commitment Letter or the Transactions unless such settlement includes an explicit and unconditional release from the party bringing such lawsuit, claim or other proceeding of such Indemnified Person.

(c)In case any action or proceeding is instituted involving any Indemnified Person for which indemnification is to be sought hereunder by such Indemnified Person, then such Indemnified Person will promptly notify the Company of the commencement of any action or proceeding; provided, however, that the failure so to notify the Company will not relieve the Company from any liability that they may have to such Indemnified Person pursuant to this Section 3 or from any liability that they may have to such Indemnified Person other than pursuant to this Section 3.  Notwithstanding the above, following such notification, the Company may elect in writing to assume the defense of such action or proceeding, and, upon such election, they will not be liable for any legal costs subsequently incurred by such Indemnified Person (other than reasonable costs of investigation and providing evidence) in connection therewith, unless (i) they have failed to provide counsel reasonably satisfactory to such Indemnified Person in a timely manner, (ii) counsel provided by the Company reasonably determines that its representation of such Indemnified Person would present it with a conflict of interest or (iii) the Indemnified Person reasonably determines that there may be legal defenses available to it which are different from or in addition to those available to the Company.  In connection with any one action or proceeding, the Company will not be responsible for the fees and expenses of more than one separate law firm (in addition to local counsel) for all Indemnified Persons.

(d)The Company, the Lehman Lenders, Lehman Brothers, MLCC and MLPF&S agree that if any indemnification or reimbursement sought pursuant to this Section 3 is judicially determined to be unavailable for a reason other than those as provided in the Indemnity Exclusions, then the Company will contribute to the amount paid or payable by the Lehman Lenders, Lehman Brothers, MLCC or MLPF&S as the case may be, as a result of such losses, claims, damages, liabilities and expenses for which such indemnification or reimbursement is held unavailable (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and the Lehman Lenders, Lehman Brothers, MLCC or MLPF&S, as the case may be, on the other hand, in connection with the transactions to which such indemnification or reimbursement relates, or (ii) if the allocation provided by

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clause (i) above is judicially determined not to be permitted, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative faults of the Company, on the one hand, and the Lehman Lenders, Lehman Brothers, MLCC or MLPF&S, on the other hand, as well as any other equitable considerations.

4.Expiration of Commitment.  The Commitments will expire at 5:00 p.m., New York City time, on July 9, 2007 unless on or prior to such time you have executed and returned to Lehman Brothers a copy of this Commitment Letter, the Fee Letter and the Engagement Letter.  If you do so execute and deliver to Lehman Brothers this Commitment Letter, the Fee Letter and the Engagement Letter, the Lehman Lenders and MLCC agree to hold their respective Commitments available for you until 5:00 p.m., New York City time, on September 30, 2007.  The Commitments will terminate on the Closing Date, and you agree to rely exclusively on your rights and the commitments set forth in the Credit Documentation in respect of all loans and extensions of credit to be made after the Closing Date.

5.Confidentiality.

(a)This Commitment Letter, the Fee Letter, and the Engagement Letter dated as of the date hereof among you and the Arrangers (the “Engagement Letter”) and the terms and conditions contained herein and therein may not be disclosed by the Company to any person or entity (other than (i) such of your agents and advisors as need to know and agree to be bound by the provisions of this paragraph, (ii) other than with respect to the Fee Letter, disclosures made as part of the Offer to Purchase and related Schedule TO or (iii) as otherwise may be required by law or in response to comments from the Securities and Exchange Commission or other regulatory authority in connection with the Offer to Purchase (including with respect to the Fee Letter)) without the prior written consent of the Lehman Lenders, MLCC and the Arrangers.

(b)You acknowledge that each of Lehman Brothers and its affiliates (the term “Lehman Brothers,” when used in this paragraph, includes all such affiliates, including the Lehman Lenders) and Merrill Lynch and its affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise.  Neither Lehman Brothers nor Merrill Lynch will use confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or their other relationships with you in connection with the performance by Lehman Brothers or Merrill Lynch of services for other companies, and neither Lehman Brothers nor Merrill Lynch will furnish any such information to other companies.  You also acknowledge that neither of Lehman Brothers or Merrill Lynch has any obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained from other companies.

6.Assignment and Syndication.

(a)The parties hereto agree that Lehman and Merrill Lynch will have the right to syndicate the Credit Facility and the Commitment to one or more groups of financial institutions or other investors, identified by us after consultation with you, provided that any such financial institutions and other investors that are not currently participating as lenders under the Company’s existing revolving credit facility shall be subject to approval by the Company (such approval not to be unreasonably withheld or delayed).  Lehman and Merrill Lynch will have the right to manage all aspects of any such syndication in consultation with you, including decisions as to the selection of institutions to be approached and when they will be approached, the acceptance of commitments, the amounts offered, the amounts allocated and the compensation provided.  The Commitments are subject to the Company using all commercially reasonable efforts to assist Lehman Brothers and Merrill Lynch in such syndication process for the Credit Facility and any issuance of commercial paper made to finance the Share Repurchase, including,

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without limitation: (i) ensuring that the syndication efforts benefit from the existing lending relationships of the Company; (ii) arranging for direct contact between senior management and other representatives and advisors of the Company and the proposed Lenders or purchasers; (iii) assisting in the preparation of marketing materials to be used in connection with any syndication; and (iv) hosting, with us, one or more meetings of prospective Lenders or purchasers, and, in connection with any such Lender meeting, consulting with us with respect to the presentations to be made at such meeting, and making available appropriate officers and representatives to rehearse such presentations prior to such meetings, as reasonably requested by us.  You also agree that, at your expense, you will work with Lehman Brothers and MLPF&S to procure a rating for the Credit Facility by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Group prior to the commencement of the general syndication of the Credit Facility.

(b)To assist the Arrangers in its syndication efforts, you agree promptly to prepare and provide to Lehman Brothers such information with respect to the Company and the other transactions contemplated hereby as it may reasonably request, including all financial information as it may reasonably request.  You hereby represent and covenant that all information (the “Information”) that has been or will be made available to us by you or any of your representatives is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements are made.  You understand that in arranging and syndicating the Credit Facility and the Commitment we may use and rely on the Information without independent verification thereof.

(c)To ensure an orderly and effective syndication of the Credit Facility and the Commitment, you agree that, from the date hereof until the earlier of the termination of the syndication as determined by the Arrangers and 45 days following the Closing Date, you will not, and will not permit any of your affiliates to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt facility, or debt or preferred equity security of the Company or any of its subsidiaries (other than (i) debt issued pursuant to your commercial paper program to fund the Share Repurchase or for working capital purposes and other operations in the ordinary course of business and in consultation with the Arrangers, (ii) the syndication of the Credit Facility as contemplated hereby and (iii) any offering of Securities as contemplated by the Engagement Letter), including any renewals or refinancings of any existing debt facility, in each case, if such actions could, in the reasonable judgment of the Arrangers, be expected to interfere in any material respect with the syndication of the Credit Facility, unless the Arrangers have given their prior written consent thereto.

7.Survival.  The provisions of this Commitment Letter relating to the payment of fees and expenses, indemnification and contribution and confidentiality and the provisions of Sections 6 and 8 hereof will survive the expiration or termination of the Commitment or this Commitment Letter (including any extensions) and the execution and delivery of definitive financing documentation.

8.Choice of Law; Jurisdiction; Waivers.

(a)This Commitment Letter will be governed by and construed in accordance with the laws of the State of New York.  The Company hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court or Federal court sitting in the County of New York in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter or the Fee Letter and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court.  The parties hereto hereby waive any objection that they may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought

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in an inconvenient forum.  The parties hereto hereby waive, to the fullest extent permitted by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Commitment Letter or the Fee Letter.

(b)No Lender will be liable in any respect for any of the obligations or liabilities of any other Lender under this letter or arising from or relating to the transactions contemplated hereby.

9.Miscellaneous.

(a)This Commitment Letter may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.  Delivery of an executed signature page of this Commitment Letter by facsimile transmission will be effective as delivery of a manually executed counterpart hereof.  This Commitment Letter may not be amended or waived except by an instrument in writing signed by Lehman Brothers, the Lehman Lenders, MLCC, MLPF&S and you.

(b)The Company may not assign any of its rights, or be relieved of any of its obligations, under this Commitment Letter, without the prior written consent of each of the Lehman Lenders and MLCC (and any purported assignment without such consent will be null and void).  In connection with any syndication of all or a portion of the Commitment, the rights and obligations of each of the Lehman Lenders and MLCC hereunder may be assigned, in whole or in part, and upon such assignment and assumption by the assignee of all such obligations in respect of the portion of the Commitment so assigned on the terms set forth in this Commitment Letter or on the terms set forth in the definitive financing documents, the Lehman Lenders or MLCC, as the case may be, will be relieved and novated hereunder from its obligations with respect to such portion of the Commitment.

(c)This Commitment Letter and the attached Exhibits set forth the entire understanding of the parties hereto as to the scope of the Commitment and the obligations of the Lenders and the Arrangers hereunder.  This Commitment Letter supersedes all prior understandings and proposals, whether written or oral, between any of the Lenders and you relating to any financing or the transactions contemplated hereby.  This Commitment Letter is in addition to the agreements of the parties contained in the Engagement Letter and the Fee Letter.

(d)This Commitment Letter has been and is made solely for the benefit of the parties signatory hereto, the Indemnified Persons, and their respective heirs, successors and assigns, and nothing in this Commitment Letter, expressed or implied, is intended to confer or does confer on any other person or entity any rights or remedies under or by reason of this Commitment Letter or the agreements of the parties contained herein.

(e)You acknowledge that the Lenders and the Arrangers may be (or may be affiliated with) full service financial firms and as such from time to time may effect transactions for their own account or the account of customers, and hold long or short positions in debt or equity securities or loans of companies that may be the subject of the transactions contemplated by this Commitment Letter.  You hereby waive and release, to the fullest extent permitted by law, any claims you have with respect to such conflicts of interest arising from such transactions, activities, investments or holdings, or arising from the failure of the Lehman Lenders, Lehman Brothers, MLCC, MLPF&S or one or more Lenders or any of their respective affiliates to bring such transactions, activities, investments or holdings to your attention.

(f)You agree to provide us, prior to the Closing Date, with all documentation and other information required by bank regulatory authorities under applicable “know your customer” and

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anti-money laundering rules and regulations, including, without limitation, the U.S.A. Patriot Act., as we may have requested.

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If you are in agreement with the foregoing, kindly sign and return to us the enclosed copy of this Commitment Letter.

Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By:	/s/ A. Tucker Hackett
	Name: A. Tucker Hackett
	Title:   Authorized Signatory
LEHMAN BROTHERS COMMERCIAL BANK
By:	/s/ George James
	Name: George James
	Title:   Chief Credit Officer
LEHMAN COMMERCIAL PAPER INC.
By:	/s/ Clair O’Conner
	Name: Clair O’Conner
	Title:   Managing Director
LEHMAN BROTHERS INC.
By:	/s/ Clair O’Conner
	Name: Clair O’Conner
	Title:   Managing Director
MERRILL LYNCH CAPITAL CORPORATION.
By:	/s/ Stephanie Vallillo
	Name: Stephanie Vallillo
	Title:   Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:	/s/ Stephanie Vallillo
	Name: Stephanie Vallillo
	Title:   Vice President

[Signature Page to Commitment Letter]

Accepted and agreed to as of the
date first above written:
THE HOME DEPOT, INC.
By:	/s/ Carol B. Tomé
	Name:	Carol B. Tomé
	Title:	Chief Financial Officer and
		Executive Vice President-Corporate Services

[Signature Page to Commitment Letter]

EXHIBIT A TO COMMITMENT LETTER

SUMMARY OF TERMS OF CREDIT FACILITY

Set forth below is a summary of certain of the terms of the Credit Facility and the documentation related thereto.  Capitalized terms used and not otherwise defined herein have the meanings set forth in the Commitment Letter to which this Summary of Terms is attached and of which it forms a part.

I.	Parties
	Borrower	The Home Depot, Inc. (the “Company”).
	Guarantors and Security	None.
	Sole Arrangers and Sole Book-Runners	Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (in such capacity, the “Arrangers”).
	Administrative Agent	Lehman Commercial Paper Inc. (or its designated affiliate and in such capacity, the “Administrative Agent”).
	Syndication Agent	Merrill Lynch Capital Corporation (in such capacity, the “Syndication Agent”).
	Lenders	Banks, financial institutions and other entities that become lenders pursuant to the Credit Documentation (as defined below) (collectively, the “Lenders”).
II.	Type and Amount of Credit Facility
	Revolving Credit Facility	A revolving credit facility (the “Revolving Facility” or the “Credit Facility”; the commitments thereunder, the “Revolving Credit Commitments”) in the amount of up to $10.0 billion (the loans thereunder, the “Loans”).
	Availability	The Revolving Credit Facility shall be available on a revolving basis during the period commencing on the Closing Date and ending on November 21, 2007 (the “Revolving Credit Termination Date”).
	Maturity	The Revolving Credit Termination Date.
	Purpose	The proceeds of the Loans will be used to finance the Share Repurchase, to provide support for the issuance by the Borrower of commercial paper in connection with such Share Repurchase and to pay

A-1

		related fees and expenses.
III.	Certain Payment Provisions
	Fees and Interest Rates	Interest rates to be consistent with those provided in the Company’s Credit Agreement dated as of December 16, 2005, as amended (the “Existing Credit Agreement”) and fees as set forth on Annex I.
	Optional Prepayments and Commitment Reductions	Loans may be prepaid and Revolving Credit Commitments may be reduced without premium or penalty (other than LIBOR breakage costs) in minimum amounts to be agreed upon and substantially consistent with the Existing Credit Agreement.
	Mandatory Prepayments and Commitment Reductions	100% of the net cash proceeds of any sale or issuance or incurrence of any debt or equity (including preferred equity) securities (other than issuances pursuant to employee stock plans, issuances of commercial paper, and other exceptions and thresholds to be agreed) after the Closing Date by the Company or any of its subsidiaries will be applied to prepay the Loans and permanently reduce the Revolving Credit Commitments.
		100% of the net cash proceeds of any asset sales (subject to exceptions for store sales in the ordinary course of business and other exceptions and thresholds to be agreed) after the Closing Date by the Company or any of its subsidiaries will be applied to prepay the Loans and permanently reduce the Revolving Credit Commitments. To the extent the Share Repurchase is consummated and the sum of (x) the amounts borrowed under the Credit Facility on the Closing Date and (y) the amounts of the Revolving Credit Commitments needed after the Closing Date to support commercial paper issued to finance the Share Repurchase (such amounts under this clause (y) the “Support Commitments”) are less than $10.0 billion in the aggregate, any Revolving Credit Commitments in excess of all such amounts shall be permanently terminated. The Support Commitments shall terminate on the earlier of (x) the Revolving Credit Termination Date and (y) the date on which such commercial paper issued to finance the Share Repurchase is refinanced

A-2

		with securities issued in the capital markets.
IV.	Conditions	The availability of the Credit Facility is subject to the conditions set forth on Exhibit B to the Commitment Letter.
		The making of each extension of credit will be conditioned upon (i) the accuracy of all representations and warranties in all material respects in the definitive financing documentation with respect to the Credit Facility (the “Credit Documentation”) (other than (A) the material adverse change, (B) litigation representations and (C) representations that relate solely to an earlier date), and (ii) there being no default or event of default in existence at the time of, or after giving effect to the making of, the Loans.
V.	Certain Documentation Matters	The Credit Documentation will contain representations, warranties, affirmative covenants, negative covenants and events of default consistent with those contained in the Existing Credit Agreement.
	Representations and Warranties	Substantially consistent with the Existing Credit Agreement.
	Affirmative Covenants	Substantially consistent with the Existing Credit Agreement.
	Financial Covenants	None.
	Negative Covenants	Substantially consistent with the Existing Credit Agreement.
	Events of Default	Substantially consistent with the Existing Credit Agreement.
	Voting	Amendments and waivers with respect to the Credit Documentation will require the approval of Lenders holding not less than a majority of the aggregate amount of the Loans, except that (i) the consent of each Lender directly and adversely affected thereby will be required with respect to (a) reductions in the amount or extensions of the scheduled date of final maturity of any Loan, (b) reductions in the rate of interest or extensions of any due date thereof, (c) increases in the amount or extensions of the expiry date of any Lender’s commitment or (d) modifications to the pro rata provisions of the Credit Documentation and (ii) the consent of 100% of the Lenders will be required with respect to modifications to

A-3

	any of the voting percentages.
Assignments and Participations	Each Lender may assign any or all of its loans and commitments to its affiliates or to one or more banks, financial institutions or other entities. Except for assignments to another Lender or to an affiliate of a Lender or assignments of funded Loans, assignments will require the consent of the Administrative Agent and, so long as no event of default has occurred and is continuing, the Company (which consent in each case will not be unreasonably withheld or delayed). No consent shall be required in connection with an assignment to a Federal Reserve Bank. Partial assignments (other than to another Lender or to an affiliate of a Lender), must be at least $15.0 million unless otherwise agreed by the Company and the Administrative Agent. Upon assignment, the assignee will become a Lender for all purposes under the Credit Documentation under documentation reasonably acceptable to the Administrative Agent. Promissory notes will be issued under the Credit Facility only upon request.
Yield Protection	The Credit Documentation will contain customary provisions relating to increased costs, loss of yield and “breakage costs” and substantially as set forth in the Existing Credit Agreement.
Expenses and Indemnification	The Company will pay (i) all reasonable out-of-pocket expenses of the Administrative Agent and the Arrangers associated with the syndication of the Credit Facility and the preparation, negotiation, execution, delivery and, if the Credit Facility is syndicated to Lenders other than affiliates of the Arrangers, administration (limited to an amount to be agreed upon following the Closing Date) of the Credit Documentation and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel (as separately agreed by the Company, the Administrative Agent and the Lenders) and the charges of IntraLinks) and (ii) all reasonable out-of-pocket expenses of the Administrative Agent and the Lenders (including the reasonable fees, disbursements and other charges of counsel) in connection with the enforcement of the Credit Documentation or in any bankruptcy case or insolvency proceeding.
	The Administrative Agent, the Arrangers and the Lenders (and their affiliates and each of their respective officers, directors, partners, trustees, employees,

A-4

	controlling persons and agents) will be indemnified against any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof on terms consistent with those set forth in the Existing Credit Agreement.
Governing Law and Forum	State of New York.
Counsel to the Administrative Agent and the Arrangers	Cahill Gordon & Reindel LLP.

A-5

Annex I

Interest and Certain Fees

Interest Rate Options	Consistent with Existing Credit Agreement. The Company may elect that the loans comprising each borrowing bear interest at a rate per annum equal to:
	(i) the Base Rate plus the Applicable Margin (“Base Rate Loans”); or
	(ii) the LIBOR Rate plus the Applicable Margin (“LIBOR Loans”).
	As used herein:
	“Base Rate” means the higher of (i) the prime lending rate as established by JPMorgan Chase Bank, N.A. and in effect from time to time (the “Prime Rate”), and (ii) the federal funds effective rate from time to time plus 0.5%.
	“Applicable Margin” means the applicable margin per annum based upon the applicable ratios of Consolidated Funded Debt to Consolidated Total Tangible Capital (each as defined in the Existing Credit Agreement) on the pricing grid attached hereto as Annex I-A (the “Pricing Grid”).
	“LIBOR Rate” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) at which eurodollar deposits for one, two or three months (as selected by the Company) are offered in the interbank eurodollar market.
	No new LIBOR interest period may be selected when any event of default is continuing.
Interest Payment Dates	For Base Rate Loans, quarterly in arrears.
	For LIBOR Loans, on the last day of each relevant interest period.
Facility Fee	The Borrower shall pay a facility fee calculated at a rate per annum determined in accordance with the Pricing Grid on the aggregate amount of the Revolving Facility (whether drawn or undrawn), payable on the Closing Date and thereafter quarterly in arrears

I-1

	and at maturity.
Default Rate	Overdue amounts (including overdue interest) will bear interest at a rate equal to 2% per annum above the applicable rate.
Rate and Fee Basis	All per annum rates will be calculated on the basis of a year of 360 days (or 365 days, in the case of Base Rate Loans the interest rate payable on which is then based on the Prime Rate) and the actual number of days elapsed.

I-2

Annex I-A

Applicable Margin (in basis points per annum)

Pricing Level	Total Funded Debt/Total Tangible  Capital	Facility  Fee (bps)	LIBOR Loan Margin (bps)	LIBOR First Drawn (bps)
1	<25.00%	4.0	11	15.0
2	>25.00% and <35.00%	4.5	10.5	15.0
3	>35.00% and <45.00%	5.5	17.0	22.5
4	>45.00%	7.0	28.0	35.0

I-1

EXHIBIT B TO COMMITMENT LETTER

FUNDING CONDITIONS

Capitalized terms used but not defined herein have the meanings assigned to them in the Commitment Letter to which this Exhibit B is attached and of which it forms a part.  The availability of the Credit Facility is conditioned upon satisfaction of, among other things, the conditions precedent summarized below.

(a)The Company shall have executed and delivered definitive financing documentation with respect to the Credit Facility consistent with the Term Sheet and otherwise reasonably satisfactory to the Administrative Agent, the Arrangers and the Company.

(b)There shall not exist any default or event of default under the Credit Facility.

(c)The Share Repurchase shall have been consummated pursuant to the Offer to Purchase on terms and conditions acceptable to the Arrangers (it being understood that the terms and conditions set forth in the draft Offer to Purchase delivered to the Arrangers on July 6, 2007 are acceptable), and no provision thereof shall have been waived, amended, supplemented or otherwise modified in a manner materially adverse to the interests of the Company or the Lenders without the written consent of the Arrangers.

(d)The Company shall have complied with all of its obligations under and agreements in the Commitment Letter, the Engagement Letter and the Fee Letter.

(e)All governmental, regulatory and third party approvals necessary in connection with the Transactions and the financing contemplated hereby shall have been obtained and be in full force and effect, without any action being taken or threatened by any competent authority that could reasonably be expected to restrain, prevent or otherwise impose material adverse conditions on the Share Repurchase or the financing thereof.

(f)The Company’s corporate credit ratings shall on the Closing Date be BBB+ (with a stable outlook) or better by S&P and Baa1 (with a stable outlook) or better by Moody’s, and in each case neither ratings organization shall have announced that it has such rating under surveillance or review, with possible negative implications, for a reduction to a rating below BBB+ or Baa1, as the case may be.

(g)If the closing date occurs after September 12, 2007, the Company shall have delivered to the Arrangers its unaudited interim consolidated financial statements for the quarterly period ended July 29, 2007.

(h)The Administrative Agent shall have received such legal opinions, documents and other instruments as are customary for transactions of this type and substantially consistent with those delivered pursuant to the Existing Credit Agreement.

(i)The Company will use commercially reasonable efforts to place commercial paper as available to the Company in the market up to the amount of the Revolving Commitments.

C-1

EX-10.2

Exhibit 10.2

Lehman Brothers Holdings Inc.
Lehman Brothers Commercial Bank
Lehman Commercial Paper Inc.
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019 Merrill Lynch Capital Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
North Tower
250 Vesey Street
New York, New York  10080

August 10, 2007

AMENDMENT NO. 1 TO
COMMITMENT LETTER

PERSONAL AND CONFIDENTIAL

The Home Depot, Inc.
2455 Paces Ferry Road N.W.
Atlanta, Georgia  30339

Attention:Carol B. Tomé

Chief Financial Officer and

Executive Vice President-Corporate Services

Ladies and Gentlemen:

Reference is made to that certain commitment letter agreement (together with all exhibits and schedules hereto, the “Commitment Letter”) dated July 9, 2007 by and among Lehman Brothers Commercial Bank (together with its designated affiliates, “LBCB”), Lehman Brothers Holdings Inc. (together with its designated affiliates, “LBHI”), Lehman Commercial Paper Inc. (“LCPI” and together with LBCB and LBHI, the “Lehman Lenders”), Lehman Brothers Inc. (“Lehman Brothers” and together with the Lehman Lenders, “Lehman”), Merrill Lynch Capital Corporation (“MLCC”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” and together with MLCC, “Merrill Lynch”), The Home Depot, Inc., a Delaware corporation (the “Company”), in connection with the Offer to Purchase (as amended on or about the date hereof) and to provide support for the issuance by the Company of commercial paper in connection with such Share Repurchase.  Defined terms not otherwise defined herein shall have the meaning set forth in the Commitment Letter.

This letter (the “Amendment”) hereby amends the Commitment Letter to remove paragraph (f) on Exhibit B and replace it with the following:

“(f)The Company’s corporate credit ratings shall on the Closing Date be BBB+ or better by S&P and Baa1 or better by Moody’s, and in each case neither ratings organization shall have announced a reduction to a rating below BBB+ or Baa1, as the case may be.”

Except as set forth above, this amendment does not supersede, replace, amend or otherwise modify the Commitment Letter or the commitments or obligations of the parties thereto in any respect.

If you are in agreement with the foregoing, kindly sign and return to us the enclosed copy of this Amendment.

Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By:	/s/ Frank P. Turner
Name: Frank P. Turner
Title:   Vice President
LEHMAN BROTHERS COMMERCIAL BANK
By:	/s/ Brian McNany
Name: Brian McNany
Title:   Authorized Signatory
LEHMAN COMMERCIAL PAPER INC.
By:	/s/ Frank P. Turner
Name: Frank P. Turner
Title:   Vice President
LEHMAN BROTHERS INC.
By:	/s/ Frank P. Turner
Name: Frank P. Turner
Title:   Vice President
MERRILL LYNCH CAPITAL CORPORATION.
By:	/s/ John C. Rowland
Name: John C. Rowland
Title:   Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:	/s/ John C. Rowland
Name: John C. Rowland
Title:   Vice President

[Signature Page to Amendment]

Accepted and agreed to as of the

date first above written:

THE HOME DEPOT, INC.

By:	/s/ Carol B. Tomé
Name: Carol B. Tomé
Title:   Chief Financial Officer and
Executive Vice President-Corporate Services

[Signature Page to Amendment]

EX-10.3

Exhibit 10.3

May 24, 2007

Mr. Joseph J. DeAngelo
2455 Paces Ferry Road
Atlanta, Georgia  30339

Dear Joe:

As you are aware, The Home Depot, Inc. (the “Company”) is exploring strategic alternatives with respect to HD Supply, Inc. and its subsidiaries, (“HDS,” which for purposes of this Agreement shall include its successors as provided in Section 14 hereof) and the businesses comprising the HDS financial reporting segment (together with HDS, the “HDS Business Segment”).  As you know, such alternatives include the possibility of a sale of the HDS Business Segment to a third party (any sale to a third party of the companies/business divisions comprising the HDS Business Segment having aggregate annualized sales (as set forth in the HDS business plan for Fiscal 2007) of at least 70% of the aggregate annualized sales of the HDS Business Segment (as set forth in HDS business plan for Fiscal 2007), a “Sale,” it being understood that neither an initial public offering of some or all of the HDS Business Segment nor a spin-off to the Company’s shareholders of some or all of the companies/business divisions comprising the HDS Business Segment shall constitute a Sale).  The Company wishes to ensure your continued service and dedication as it explores alternatives for the HDS Business Segment.  This letter agreement (this “Agreement”) memorializes certain compensation terms that will apply upon and following a Sale.  Prior to the effective date of the consummation of a Sale (the closing date of any Sale, “Closing Date”), the terms of the letter agreement between you and the Company dated January 23, 2007 (“Current Agreement”) shall continue to apply.

1.             Effective Date.  Subject to Section 7, this Agreement shall be effective as of the date hereof; provided, however, that the provisions hereunder shall not be operative (a) unless and until the Closing Date of a Sale has occurred (prior to the date on which this Agreement expires) or (b) if you do not continue to be employed by the Company through the Closing Date.  Upon the Closing Date of a Sale, this Agreement shall supersede in its entirety the Current Agreement, which shall be without further force or effect.  This Agreement will expire on the earlier of:  (i) the date the Company announces its intention to forego a Sale of the HDS Business Segment, and (ii) the last day of the Company’s 2007 fiscal year, if no Sale has occurred by such date (provided that if a definitive agreement providing for a Sale has been executed prior to such last day but the Closing Date has not yet occurred (other than due to a subsequent termination of any such definitive agreement)), the reference herein to such last day shall be deemed to refer to June 30, 2008).

2.             Employment Termination.  Your employment with the Company will terminate on the Closing Date, simultaneous with the time that this Agreement supersedes the Current Agreement.  For purposes of clarity, it is understood that such termination of your employment with the Company will not be deemed to be an involuntary termination of employment for purposes of the final paragraph of page 2 (relating to involuntary termination), or a termination by the Company for cause or by you for good reason, as contemplated by page 3, of the Current Agreement.

3.             Accelerated Vesting Benefit.  In the event of a Sale, subject to your continued employment through the Closing Date, all stock options to acquire Company common stock and restricted shares of Company common stock that are outstanding as of the Closing Date and that were granted to you prior to January 1, 2007 will vest (the accelerated vesting provided by this sentence, the “Accelerated Vesting Benefit”).  For purposes of the preceding sentence, the award of 24,283 shares of restricted stock granted to you on February 22, 2007 but approved during the preceding fiscal year shall be deemed to have been granted prior to January 1, 2007.  Notwithstanding anything herein to the contrary, the Accelerated Vesting Benefit is subject to your execution of a release of claims against the Company and its respective affiliates in a form satisfactory to the Company substantially in the form set forth on Exhibit A hereto (a “Release”).

4.             Retention Bonus; Transaction Bonus.

(a)  The Retention Bonus.  In the event of a Sale, you will, subject to your continued employment with HDS (or the purchaser thereof) through the earlier of (x) the first anniversary of the Closing Date and (y) December 1, 2008 (such earlier date, the “Retention Bonus Vesting Date”), receive a cash retention payment (the “Retention Bonus”).  The amount of the Retention Bonus shall equal the product of (i) the average closing stock price of the Company’s common stock over the 30 trading days immediately preceding the Closing Date (the “Average Closing Stock Price”) multiplied by (ii) 107,285.  The Retention Bonus shall be paid to you by HDS as soon as administratively practicable following the Retention Bonus Vesting Date but in no event later than December 31, 2008, subject to your continued employment through the Retention Bonus Vesting Date (except as otherwise provided in Section
4(c) below).

(b)           The Transaction Bonus Amount.  In the event of a Sale, you will, subject to your continued employment with HDS through the Retention Bonus Vesting Date, receive a transaction bonus payment from HDS. The “Transaction Bonus Amount” shall be a cash payment in an amount determined based on the satisfaction of performance goals related to a Sale, in each case to be determined and communicated to you in writing by the Leadership and Development and Compensation Committee of the Company’s Board of Directors (which communication will also set forth the timing of payment of the Transaction Bonus Amount).

(c)           Termination of Employment in Connection with a Sale.  If following the Closing Date you are involuntarily terminated by HDS without Cause or as a result of your disability or you resign from HDS for Good Reason or die following the Closing Date but prior to the Retention Bonus Vesting Date (each, a “Qualifying Termination”), you will receive the Retention Bonus from HDS at the time set forth in Section 4(a) above.  With respect to the

Transaction Bonus Amount, upon a Qualifying Termination prior to the Retention Bonus Vesting Date, you will continue to be entitled to the payment of the Transaction Bonus Amount at the times and in the amounts communicated to you in accordance with Section 4(b) above.

(d)           Notwithstanding anything herein to the contrary, the payment of the Retention Bonus and any portion of the Transaction Bonus Amount is subject to your execution of a Release.

(e)           Definitions.  For purposes of this Agreement:

“Cause” shall mean the occurrence of one of the following events following the Closing Date:  (i) conviction of any felony involving theft or moral turpitude, (ii) conduct that constitutes willful gross neglect or willful gross misconduct with respect to your employment duties which results in material economic harm to HDS, or (iii) willful conduct that constitutes a material violation of HDS’s substance abuse, compliance or any other policies applicable to you, which may be in effect at the time of the occurrence.

“Good Reason” shall mean the occurrence of one of the following events following the Closing Date without your prior written consent:  (i) HDS decreases your base salary and target annual cash bonus opportunity (it being understood that the actual metrics and achievement levels are to be determined by HDS in its discretion, but shall in good faith be designed to offer you a reasonable opportunity to achieve target levels of achievement), in the aggregate, below your aggregate base salary and target annual cash bonus opportunity (exclusive of any bonuses payable hereunder) in effect on the Closing Date, (ii) you are not covered by a severance plan or agreement that provides a benefit of at least 24 months’ base salary (at a rate no lower than your base salary on the date hereof) continuation upon a termination by HDS without Cause, (iii) you are removed as chief executive officer (or its equivalent) of HDS (it being understood that the divestiture by a purchaser of, or transfer from you of control over, portions of the HDS Business Segment shall not constitute such a removal, so long as you continue to be chief executive officer (or its equivalent) with respect to more than 50% (based on aggregate annualized sales) of the HDS Business Segment), or (iv) your principal place of employment is relocated to a location that is not within either the Atlanta, Georgia or Orlando, Florida metropolitan areas.

5.             Severance in Connection with a Sale.  In the event of a Sale, if both of the following occur: (a) HDS (or the purchaser thereof) offers you (or offers to continue your) employment only on terms that would result in you being able to terminate for Good Reason and (b) you are not employed by HDS as of immediately following the Closing Date, subject to your execution of a Release, (i) you will receive the Accelerated Vesting Benefit set forth in Section 3, (ii) HDS will pay you the Retention Bonus at the time set forth in Section 4(a) above, (iii) HDS will pay you the Transaction Bonus Amount at the times and in the amounts set forth in Section 4(b) above, and (iv) HDS will pay you 24 months of base salary continuation, payable subject to Section 12 in equal installments in accordance with HDS’s normal payroll practices.  Notwithstanding anything contained herein, in no event will you be entitled to duplicate payments under this Agreement.

6.             Vested Equity and Sale.  All of your stock options to acquire Company common stock that are vested as of the Closing Date (included any stock options that accelerated pursuant to Section 3) will be forfeited if not exercised within 90 days of the Closing Date, and all of your unvested equity (i.e., stock options, restricted stock, and performance shares) shall be forfeited and cancelled immediately as of such Closing Date.

7.             Incentive Awards.  You hereby agree that, to the extent not previously earned and vested prior to the Closing Date, your Fiscal 2005-2007 and Fiscal 2006-2008 LTIP awards shall be forfeited and cancelled effective as of the Closing Date. If a definitive agreement providing for a Sale is executed prior to the last day of the 2007 fiscal year, your bonus for such year shall be determined as follows: Subject to your continued employment through the end of such year (or, if earlier, the Closing Date), you will be paid by the Company, on the date annual bonuses are distributed to Company employees generally, a bonus based on actual HDS performance (but disregarding any unbudgeted special charges related to the Company’s discontinuance of operations determined in accordance with GAAP) relative to the targets referenced in the next sentence, which bonus amount shall be determined by the Company in good faith in its sole discretion.  The performance goals for the fiscal year 2007 bonus are the monthly EBIT targets set forth on Schedule A hereto.  Such bonus will, if the Closing Date occurs prior to the end of the 2007 fiscal year, be prorated based on the actual number of days in such fiscal year before the Closing Date, and determined by comparing performance through the last full month prior to the Closing Date to the year-to-date performance goal referenced in the preceding sentence as of such last full month.  Such bonus (whether or not prorated) will be based 100% on achievement of the foregoing financial targets and will have no discretionary portion based on individual performance.  The provisions of this Section 7 shall become effective upon the execution prior to the last day of the 2007 fiscal year of a definitive agreement providing for a Sale, and shall at such time supersede any previous Company actions, or communications to you, in respect of annual bonus for the 2007 fiscal year.

8.             At-Will Employment.  Both you and the Company have the absolute power to terminate your employment at any time for any reason, notwithstanding any other obligation under this Agreement.  This Agreement should not be construed, nor is it intended to be, a contract of employment for a specified period of time.

9.             Confidential Information and Trade Secrets.

(a)           You acknowledge that through your employment you have acquired and had access to, and will continue to acquire and have access to, the Company’s Confidential Information and that through your employment with HDS you have acquired and had access to, and will continue to acquire and have access to, the Confidential Information of HDS. You acknowledge and agree that you will not publish, disclose or use any Confidential Information, except in connection with the good faith performance of your duties for the Company and HDS, provided that following a Sale, you will not be able to publish, disclose or use the Confidential Information of the Company for any purpose, except that you may comply with legal process and governmental inquiry and you shall not be prevented from using Confidential Information of the HDS Business Segment (even if they overlap with those of the Company) while you are employed by HDS (or the purchaser thereof).  Further, any claims of violation of these

provisions with regard to HDS Confidential Information shall be that of HDS and not of the Company.  You agree that, during your employment and thereafter, you will hold in confidence all Confidential Information and will not, except as provided above disclose, publish or make use of such Confidential Information, unless compelled by law, it being agreed that you will promptly notify the Company or HDS (as applicable) upon becoming aware that you may be so compelled by law to disclose, publish or make use of such Confidential Information.  You further agree to return all documents, disks or any other item or source containing Confidential Information, or any other Company or HDS property (as applicable), to the Company or HDS (as applicable) on or before your termination date from the applicable entity, provided that you may retain and use the contact information in your address books.  “Confidential Information” shall include any data or information, other than trade secrets, that is valuable to the Company or HDS (as applicable) or any of their respective affiliates, and not generally known to competitors of the Company or HDS (as applicable) or other outsiders, regardless of whether the confidential information is in printed, written, or electronic form, retained in your memory, or has been compiled or created by you.  This includes, but is not limited to:  technical, financial, personnel, staffing, payroll, computer systems, marketing, advertising, merchandising, operations, strategic planning, product, vendor, customer or store planning data, trade secrets or other information similar to the foregoing.

(b)           You also acknowledge that through your employment you have acquired and had access to, and will continue to acquire and have access to, the Company’s Trade Secrets and those of HDS.  You further acknowledge that the Company and HDS have made reasonable efforts under the circumstances to maintain the secrecy of their Trade Secrets.  You agree to hold in confidence all Trade Secrets of the Company and HDS (as applicable) that come into your knowledge during your employment with either the Company or HDS (as applicable) and you shall not disclose, publish or make use of at any time such Trade Secrets for so long as the information remains a Trade Secret, except in the good faith performance of your duties.  Following a Sale, you will not be able to disclose, publish or make use of the Trade Secrets of the Company for any purpose, provided that the foregoing shall not prevent you from using the Trade Secrets of the HDS Business Segment (even if they overlap with those of the Company) while you are employed by HDS (or the purchaser thereof) provided you may comply with legal process and governmental inquiry, and any claim of violation of these provisions with regard to HDS trade secrets shall be that of HDS and not of the Company.  “Trade Secret” means information, without regard to form, including, but not limited to, any technical or non-technical data, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plans, strategic plans, product plans or list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information:  (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

10.           Non-Competition and Non-Solicitation.

(a)           Subject to Section 10(c), you agree that you will not, while employed by the Company or HDS (as applicable) or any of their respective affiliates, and (i) with respect to the Company, for two years following the  Closing Date, and (ii) with respect to HDS, for two years following your termination of employment with HDS and its affiliates (which shall include a termination of employment in the event HDS does not offer you, or offer to continue your, employment), enter into or maintain an employment, contractual or other relationship, either directly or indirectly, to provide executive, managerial, consulting or finance services to any company or entity engaged in any way in a business that materially competes (in any market or location), directly or indirectly, (A) as this provision relates to the Company, in the home improvement retail and professional supply industries with the Company or any of its affiliates in the United States, Canada, Puerto Rico, Mexico, China or any other location in which they currently conduct business or plan to conduct business prior to the end of the applicable above-referenced two-year period or (B) as this provision relates to HDS, in the industrial wholesale construction industry with HDS or any of its affiliates in the United States, Canada, Puerto Rico, Mexico, China or any other location in which they currently conduct business or plan to conduct business prior to the end of the applicable above-referenced two-year period, in each case without the prior written consent of the Company and/or HDS (as applicable), which may be approved or denied in the Company’s and/or HDS’s (as applicable) discretion.

(b)           You agree that while employed by the Company or HDS (as applicable) or any of their respective affiliates, and (i) as this provision relates to the Company, for three years following the Closing Date, and (ii) as this provision relates to HDS, for three years following your termination of employment with HDS or its affiliates (which shall include a termination of employment in the event HDS does not offer you, or offer to continue your, employment) (either period referred to herein as the “Non-Solicit Restricted Period”), you will not, directly or indirectly, solicit (A) with respect to the Company, any person who is (or was during the six-month period prior to such solicitation) an employee of the Company or its affiliates (other than an employee of the HDS Business Segment as of immediately prior to the consummation of a Sale) and (B) with respect to HDS, any person who is an employee (or was during the six-month period prior to such solicitation) of HDS or its affiliates as of immediately following the Closing Date or thereafter, to terminate his or her relationship with the Company or HDS (as applicable) or any of their respective affiliates. The foregoing shall not be violated by general advertising that is not specifically targeted at employees of the Company or HDS (as applicable).

(c)           The Company acknowledges and agrees that during your period of employment with HDS following a Sale, Section 10(a) shall not prohibit you from performing services for HDS or shall apply to actions taken by you in the course of such employment.  In the event your employment with HDS terminates prior to the expiration of the applicable restricted period as it relates to the Company under Section 10(a), the foregoing exception shall not apply, and the Company shall be entitled to enforce the restrictions set forth in Section 10(a) against you as those restrictions relate to the businesses of the Company and of the HDS Business Segment as it existed on the Closing Date.

(d)           The Company, HDS and you acknowledge that the time, scope, geographic area and other provisions of Sections 9 and 10 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of

the activities contemplated by this Agreement.  You acknowledge and agree that the terms of Sections 9 and 10: (i) are reasonable in light of all of the circumstances, (ii) are sufficiently limited to protect the legitimate interests of the Company and HDS and their respective affiliates, (iii) impose no undue hardship on you, (iv) are not injurious to the public, (v) were a condition to the willingness of the Company and HDS to provide the payments under this Agreement and (vi) were relied upon by the Company and HDS in connection with pursuit of a Sale.  You further acknowledge and agree that (A) your breach of the provisions of Section 9 or 10 will cause the Company and HDS irreparable harm, which cannot be adequately compensated by money damages, and (B) if the Company and/or HDS elects to prevent you from breaching such provisions by obtaining an injunction against you, there is a reasonable probability of the Company’s or HDS’s eventual success on the merits.  You consent and agree that, notwithstanding the provisions of Section 17, if you commit any such breach or threaten to commit any breach, the Company and HDS (as applicable) shall be entitled to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting any bond or other security and without the necessity of proof of actual damage, in addition to, and not in lieu of, such other remedies as may be available to the Company and HDS for such breach, including the recovery of money damages. In the event that any provision of Section 9 or 10 shall be determined by any court of competent jurisdiction to be unenforceable by reason of such provision extending for too great a period of time or over too great a geographical area or by reason of such provision being too extensive in any other respect, such provision(s) shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(e)           You agree and understand that each of the Company and HDS, as applicable, shall have the right to enforce the provisions of Sections 9 and 10 against you.

11.           Tax Withholding.  Any payments provided for under this Agreement shall be paid net of any applicable withholding tax required under federal, state or local law and any additional withholding tax to which you have agreed.

12.           Code Section 409A.  This Agreement is intended to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent applicable, and shall be construed accordingly.  Notwithstanding the foregoing provisions of this Agreement, to the extent that you are classified as a “specified employee” within the meaning of Section 409A of the Code (with such classification to be determined in accordance with the methodology established by the applicable employer), cash severance amounts pursuant to Section 5(iv) that would otherwise be payable under this Agreement during the six-month period immediately following your termination of employment with the Company or HDS (as applicable) shall instead be paid, on the first business day after the date that is six months following your “separation from service” within the meaning of Section 409A of the Code.  If any compensation provided by this Agreement may result in the application of Section 409A of the Code, the Company (or following the Closing Date, HDS) shall take any actions it deems necessary, including modifying the Agreement, in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A of the Code or

to comply with the provisions of Section 409A of the Code, but shall to the extent possible maintain the same economic intent.

13.           Severability of Provisions.  In the event that any provision in this Agreement is determined to be legally invalid or unenforceable by any court of competent jurisdiction, and cannot be modified to be enforceable, the affected provision shall be stricken from the Agreement, and the remaining terms of the Agreement and its enforceability shall remain unaffected.

14.           Successors and Assigns.  HDS will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of HDS (including to substantially all of the HDS Business Segment) to assume and agree in a writing delivered to you to perform this Agreement in the same manner and to the same extent that HDS would be required to perform it if no such succession had taken place (but without duplication of payments), and you hereby consent to any such assumption.  As used in this Agreement, “HDS” shall mean HDS as hereinbefore defined and any successor to its business and/or assets (including to substantially all of the HDS Business Segment).   The Company may at any time and from time to time assign its rights and obligations hereunder to any of its subsidiaries or affiliates, provided that no such assignment shall relieve the Company from its specific obligations hereunder or impair the Company’s right to enforce this Agreement against you.  The obligations of the Company and HDS under this Agreement are several, not joint.

15.           Entire Agreement.  This Agreement constitutes the entire understanding between the parties and supersedes all prior agreements and undertakings, except that, as set forth above, the Current Agreement shall remain in effect until the Closing Date of a Sale.  The parties have not relied on any oral statements that are not included in this Agreement.  Any amendment to this Agreement must be in writing.

16.           Governing Law.  This Agreement shall be construed, interpreted and applied in accordance with the law of the State of Delaware, without giving effect to the choice of law provisions thereof.

17.           Arbitration.  Subject to Section 10(d), any dispute, controversy or claim arising out of or related to this Agreement, including, but not limited to, a claim for breach or an action for declaratory judgment regarding the validity of this Agreement or any provision hereof (a “Claim”), shall be settled by final and binding arbitration pursuant to the rules of the American Arbitration Association.  Any such arbitration shall be conducted by one arbitrator mutually acceptable to the parties, who has substantial experience in the matters covered by this Agreement.  If the parties are unable to agree on the arbitrator within thirty (30) days of one party’s giving the other party written notice of intent to arbitrate, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration.  The decision of the arbitrator shall be conclusive and binding on the parties.  The arbitration shall be conducted in Atlanta, Georgia or such other location to which the parties may agree.  The arbitrator shall have the authority to determine the arbitrability of any Claim.  The parties understand and agree that the arbitrator shall have the authority to award any remedy or relief

that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of preliminary and permanent injunctive relief.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of the Company or HDS (as applicable) except as may otherwise be required by law.  The losing party shall bear the reasonable attorneys’ fees and expenses of both parties in the event of any dispute governed by this Section 17 or by Section 10(d), provided that you shall not be liable for the fees and expenses of the Company or HDS if the arbitrator finds that your overall position was not frivolous and was advanced in good faith.

18.           Limitation of Actions.  Any arbitration or other claim with respect to any benefit payable or other matter arising out or relating to this Agreement must be formally initiated no later than one (1) year after the claim arises or be forever barred.

19.           Advice of Counsel.  You acknowledge in executing this Agreement that you have had the opportunity to seek the advice of independent legal counsel and that you have read and understood all of the terms and provisions of this Agreement.  This Agreement will not be construed against any party by reason of the drafting or preparation hereof.

To evidence and confirm your agreement to all the terms and conditions set forth in this Agreement, please execute and date the enclosed copy of this Agreement in the space provided below.

	THE HOME DEPOT, INC.
	/s/ Francis S. Blake
	Francis S. Blake
	Chairman and Chief Executive Officer
	HD SUPPLY, INC.
	/s/ Carol B. Tomé
	Carol B. Tomé
	Vice President and Treasurer
ACCEPTED AND AGREED:

/s/ Joseph J. DeAngelo	May 25, 2007
Joseph J. DeAngelo	Date

EX-12.1

Exhibit 12.1

THE HOME DEPOT, INC. AND SUBSIDIARIES

RATIO OF EARNINGS TO FIXED CHARGES

($ in millions, except ratio data)

																Six Months
	Fiscal Year (1)															Ended
	2002			2003			2004			2005			2006			July 29, 2007
Earnings From Continuing Operations Before Income Taxes	$	5,813		$	6,762		$	7,790		$	8,967		$	8,502		$	3,924
Less: Capitalized Interest	(59		)	(50		)	(40		)	(51		)	(47		)	(23		)
Add:
Portion of Rental Expense under operating leases deemed to be the equivalent of interest	130			142			162			177			257			104
Interest Expense	95			111			109			192			437			365
Adjusted Earnings	$	5,979		$	6,965		$	8,021		$	9,285		$	9,149		$	4,370
Fixed Charges:
Interest Expense	$	95		$	111		$	109		$	192		$	437		$	365
Portion of Rental Expense under operating leases deemed to be the equivalent of interest	130			142			162			177			257			104
Total Fixed Charges	$	225		$	253		$	271		$	369		$	694		$	469
Ratio of Earnings to Fixed Charges (2)	26.5		x	27.5		x	29.6		x	25.2		x	13.2		x	9.3		x

(1)  Fiscal years 2006, 2005, 2004, 2003 and 2002 refer to the fiscal years ended January 28, 2007, January 29, 2006, January 30, 2005, February 1, 2004 and February 2, 2003, respectively.

(2)  For purposes of computing the ratios of earnings to fixed charges, “earnings” consist of earnings from continuing operations before income taxes plus fixed charges, excluding capitalized interest.  “Fixed charges” consist of interest incurred on indebtedness including capitalized interest, amortization of debt expenses and the portion of rental expense under operating leases deemed to be the equivalent of interest.  The ratios of earnings to fixed charges are calculated as follows:

(earnings from continuing operations before income taxes)+(fixed charges)-(capitalized interest)

(fixed charges)

1

EX-15.1

Exhibit 15.1

ACKNOWLEDGEMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of The Home Depot, Inc.:

We acknowledge our awareness of the incorporation by reference of our report dated August 31, 2007, included within the Quarterly Report on Form 10-Q of The Home Depot, Inc. for the three-month and six-month periods ended July 29, 2007, in the following Registration Statements:

DESCRIPTION	REGISTRATION  STATEMENT NUMBER
Form S-3
DepotDirect stock purchase program	333-131799
Debt securities	333-135280
Form S-8
The Home Depot, Inc. Non-U.S. Employee Stock Purchase Plan	033-58807
The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan	333-61733
The Home Depot Canada Registered Retirement Savings Plan	333-38946
The Home Depot, Inc. Restated and Amended Employee Stock Purchase Plan	333-110423
The Home Depot, Inc. Non-Qualified Stock Option and Deferred Stock Units Plan and Agreement	333-56722
The Home Depot, Inc. Deferred Stock Units Plan and Agreement	333-62316
The Home Depot, Inc. Deferred Stock Units Plan and Agreement	333-62318
The Home Depot, Inc. Deferred Stock Units Plan and Agreement	333-72016
The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan	333-125331
The Home Depot Futurebuilder and The Home Depot Futurebuilder for Puerto Rico	333-125332

Pursuant to Rule 436 under the Securities Act of 1933 (“the Act”), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of that Act.

/s/ KPMG, LLP

Atlanta, Georgia

August 31, 2007

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Francis S. Blake, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Home Depot, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 29, 2007

/s/ FRANCIS S. BLAKE

Francis S. Blake

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Carol B. Tomé, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Home Depot, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 29, 2007

/s/ CAROL B. TOMÉ

Carol B. Tomé

Chief Financial Officer and

Executive Vice President – Corporate Services

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 *

In connection with the Quarterly Report of The Home Depot, Inc. (the “Company”) on Form 10-Q (“Form 10-Q”) for the period ended July 29, 2007 as filed with the Securities and Exchange Commission on the date hereof, I, Francis S. Blake, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ FRANCIS S. BLAKE

Francis S. Blake

Chairman and Chief Executive Officer

August 29, 2007

*A signed original of this written statement required by Section 906 has been provided to The Home Depot, Inc. and will be retained by The Home Depot, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 *

In connection with the Quarterly Report of The Home Depot, Inc. (the “Company”) on Form 10-Q (“Form 10-Q”) for the period ended July 29, 2007 as filed with the Securities and Exchange Commission on the date hereof, I, Carol B. Tomé, Chief Financial Officer and Executive Vice President – Corporate Services of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ CAROL B. TOMÉ

Carol B. Tomé

Chief Financial Officer and

Executive Vice President – Corporate Services

August 29, 2007

*A signed original of this written statement required by Section 906 has been provided to The Home Depot, Inc. and will be retained by The Home Depot, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.