What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-15 compared with 2022-03-23 · 205 added, 202 removed, 906 unchanged (31% of the section changed)

8 unchanged sentences

Summary of Significant Accounting Policies

Net Sales and Segment Reporting

Segment Reporting and Net Sales

Property and Leases

7 unchanged sentences

HD Supply Acquisition

Fiscal 2022 Form 10-K 33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

26 unchanged sentences

Shrink is the difference between the recorded amount of inventory and the physical inventory count.

The Company calculates shrink based on actual inventory losses identified as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between physical inventory counts.

The Company calculates shrink based on actual inventory losses identified as a result of physical inventory counts during each fiscal period and estimated inventory losses between physical inventory counts.

The estimate for shrink occurring in the interim period between physical inventory counts is calculated on a store-specific basis and is primarily based on recent shrink results.

2 unchanged sentences

retail stores involved auditor judgment.

Fiscal 2022 Form 10-K 34

The following are the primary procedures we performed to address this critical audit matter.

9 unchanged sentences

March 15, 2023

Fiscal 2022 Form 10-K 35

THE HOME DEPOT, INC.

30 unchanged sentences

Total liabilities 74,883 73,572

Commitments and contingencies (Note 11)

Common stock, par value $ 0.05 ;

7 unchanged sentences

( 87,298 ) ( 80,794 )

Total stockholders’ (deficit) equity ( 1,696 ) 3,299

Total stockholders’ equity (deficit) 1,562 ( 1,696 )

Total liabilities and stockholders’ equity $ 76,445 $ 71,876

See accompanying notes to consolidated financial statements.

Fiscal 2022 Form 10-K 36

THE HOME DEPOT, INC.

11 unchanged sentences

Interest and other (income) expense:

Interest and investment income ( 44 ) ( 47 ) ( 73 )

Interest income and other, net ( 55 ) ( 44 ) ( 47 )

Interest expense 1,617 1,347 1,347

8 unchanged sentences

See accompanying notes to consolidated financial statements.

Fiscal 2022 Form 10-K 37

THE HOME DEPOT, INC.

6 unchanged sentences

Cash flow hedges 9 9 8

Other ( 1 ) 35 —

Total other comprehensive (loss) income, net of tax ( 14 ) ( 33 ) 68

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Fiscal 2022 Form 10-K 38

THE HOME DEPOT, INC.

4 unchanged sentences

Balance at beginning of year $ 90 $ 89 $ 89

Shares issued under employee stock plans 1 — —

Shares issued under employee stock plans, net — 1 —

Balance at end of year 90 90 89

1 unchanged sentence

Balance at beginning of year 12,132 11,540 11,001

Shares issued under employee stock plans 194 229 172

Shares issued under employee stock plans, net 94 194 229

Stock-based compensation expense 366 398 310

2 unchanged sentences

Balance at beginning of year 67,580 58,134 51,729

Cumulative effect of accounting changes — — 26

Net earnings 17,105 16,433 12,866

5 unchanged sentences

Balance at beginning of year ( 704 ) ( 671 ) ( 739 )

Cumulative effect of accounting changes — — ( 31 )

Foreign currency translation adjustments, net of tax ( 22 ) ( 77 ) 60

6 unchanged sentences

Balance at end of year ( 87,298 ) ( 80,794 ) ( 65,793 )

Total stockholders’ (deficit) equity

Total stockholders’ equity (deficit)

$ 1,562 $ ( 1,696 ) $ 3,299

See accompanying notes to consolidated financial statements.

Fiscal 2022 Form 10-K 39

THE HOME DEPOT, INC.

23 unchanged sentences

Cash Flows from Financing Activities:

Proceeds from (repayments of) short-term debt, net 1,035 ( 974 ) ( 365 )

Proceeds from long-term debt, net of discounts and premiums 2,979 7,933 3,420

(Repayments of) proceeds from short-term debt, net ( 1,035 ) 1,035 ( 974 )

Proceeds from long-term debt, net of discounts 6,942 2,979 7,933

Repayments of long-term debt ( 2,491 ) ( 1,532 ) ( 2,872 )

13 unchanged sentences

See accompanying notes to consolidated financial statements.

Fiscal 2022 Form 10-K 40

THE HOME DEPOT, INC.

1 unchanged sentence

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Home Depot, Inc., together with its subsidiaries (the “Company,” “Home Depot,” “we,” “our” or “us”), is a home improvement retailer that sells a wide assortment of building materials, home improvement products, lawn and garden products, décor items, and facilities maintenance, repair and operations products, and provides a number of services, in stores and online.

We also provide a number of services, including home improvement installation services and tool and equipment rental.

We operate in the U.S.

3 unchanged sentences

Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries.

Intercompany transactions are eliminated in consolidation.

Intercompany balances and transactions are eliminated in consolidation.

Our fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31 st .

2 unchanged sentences

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these financial statements in conformity with GAAP.

While we believe these estimates and assumptions are reasonable, actual results could differ from these estimates, including changes due to uncertainty in the current economic environment resulting from the COVID-19 pandemic.

Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Our cash equivalents are carried at fair market value and consist primarily of money market funds.

While we believe these estimates and assumptions are reasonable, actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments purchased with original maturities of three months or less.

Receivables, net

The following table presents components of receivables, net:

11 unchanged sentences

Merchandise Inventories

Inventory cost includes the amount we pay to acquire inventory, including freight and import costs, as well as operating costs associated with our sourcing and distribution network, and is net of certain vendor allowances.

Inventory cost includes the amount we pay to acquire inventory, including freight and import costs, as well as operating costs and depreciation associated with our sourcing and distribution network, and is net of certain vendor allowances.

The majority of our merchandise inventories are stated at the lower of cost (first-in, first-out) or market, as determined by the retail inventory method, which is based on a number of factors such as markups, markdowns, and inventory losses (or shrink).

3 unchanged sentences

We evaluate the inventory valued using a cost method at the end of each quarter to ensure that it is carried at the lower of cost or net realizable value, and the adjustments recorded to merchandise inventories valued under a cost method were not material to our consolidated financial statements at the end of fiscal 2022 or fiscal 2021.

Fiscal 2022 Form 10-K 41

Physical inventory counts or cycle counts are taken on a regular basis in each store and distribution center to ensure that amounts reflected in merchandise inventories are properly stated.

3 unchanged sentences

Historically, the difference between estimated shrink and actual inventory losses has not been material to our annual financial results.

Due to changes in operating conditions during fiscal 2020 as a result of the COVID-19 pandemic, we used the results from a sample of stores that were able to conduct physical inventories as a basis for estimating shrink for those stores at which physical inventory counts were temporarily suspended during fiscal 2020.

We believe the sample of stores that were selected for inventory counts in fiscal 2020 provided a reasonable basis for estimating shrink where a physical inventory count was not performed in fiscal 2020.

During fiscal 2021, we performed all regularly scheduled physical inventory counts, including store locations where physical inventory counts were suspended during fiscal 2020, and the difference between estimated shrink and actual inventory losses was not material.

Property and Equipment

6 unchanged sentences

We capitalize certain costs, including interest, related to construction in progress and the acquisition and development of software.

Costs associated with the acquisition and development of software are amortized using the straight-line method over the estimated useful life of the software, which is three to seven years .

Costs associated with the acquisition and development of software are amortized using the straight-line method over the estimated useful life of the software, which ranges from three to seven years .

Certain development costs not meeting the criteria for capitalization are expensed as incurred.

3 unchanged sentences

The assets of a store with indicators of impairment are evaluated for recoverability by comparing their undiscounted future cash flows with their carrying value.

If the carrying value is greater than the undiscounted future cash flows, we then measure the asset’s fair value to determine whether an impairment loss should be recognized.

If the carrying value is greater than the undiscounted future cash flows, we then measure the asset group’s fair value to determine whether an impairment loss should be recognized.

If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value.

4 unchanged sentences

We assess whether an arrangement is or contains a lease at inception of the contract.

We lease certain retail locations, warehouse and distribution space, office space, equipment, and vehicles.

A substantial majority of our leases have remaining lease terms of one to 20 years, typically with the option to extend the leases for five-year terms.

Some of our leases may include the option to terminate in less than five years .

lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Our leases include certain retail locations, warehouse and distribution space, office space, equipment, and vehicles.

A substantial majority of our leases have remaining lease terms of one to 20 years.

Our real estate leases typically provide the option to extend the lease for five-year terms, and some of our leases may include the option to terminate in less than five years .

The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term.

Based on these determinations, we generally conclude that the exercise of renewal options would not be reasonably certain in determining the lease term at commencement.

Fiscal 2022 Form 10-K 42

The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable.

As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a quarterly basis, as the discount rate for the present value of lease payments.

Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under our lease agreements.

Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased asset are generally our obligations under our lease agreements.

In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligation for those payments is incurred.

13 unchanged sentences

We do not amortize goodwill, but assess the recoverability of goodwill in the third quarter of each fiscal year, or more often if indicators warrant, by determining whether the fair value of each reporting unit supports its carrying value.

Each fiscal year, we may assess qualitative factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to complete quantitative impairment assessments, with a quantitative assessment completed periodically as facts and circumstances warrant.

We completed our last quantitative assessment in fiscal 2019 and concluded that the fair value of our reporting units substantially exceeded their respective carrying values, including goodwill.

7 unchanged sentences

Goodwill, balance at end of year $ 7,444 $ 7,449

(1) Fiscal 2021 includes goodwill from a small acquisition completed during the second quarter.

Fiscal 2020 includes goodwill related to the acquisition of HD Supply.

See Note 12 for details regarding the HD Supply acquisition.

(2) Primarily reflects the net impact of foreign currency translation and immaterial acquisition-related measurement period adjustments.

(1) Represents goodwill from a small acquisition completed during the second quarter of Fiscal 2021.

(2) Reflects the net impact of foreign currency translation.

Fiscal 2022 Form 10-K 43

Other Intangible Assets

Intangible assets other than goodwill are included in other assets on the consolidated balance sheets.

We amortize the cost of definite-lived intangible assets over their estimated useful lives, which range up to 20 years.

We amortize the cost of definite-lived intangible assets on a straight-line basis over their estimated useful lives, which range up to 20 years, as this approximates the pattern of expected economic benefit.

Intangible assets with indefinite lives are tested in the third quarter of each fiscal year for impairment, or more often if indicators warrant.

1 unchanged sentence

There were no impairment losses related to intangible assets for fiscal 2022, fiscal 2021, and fiscal 2020.

The following table presents the gross carrying amount and accumulated amortization relating to intangible assets:

The following table presents information regarding our intangible assets:

January 29, 2023 January 30, 2022

in millions Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

in millions Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Definite-Lived Intangible Assets:

23 unchanged sentences

All derivative instruments are recognized at their fair values in either assets or liabilities at the balance sheet date and are classified as either current or non-current based on each contract’s respective maturity.

While we enter into master netting arrangements, our policy is to present the fair value of derivative instruments gross in our consolidated balance sheets.

While we enter into master netting arrangements, our policy is to present the fair value of derivative instruments on a gross basis in our consolidated balance sheets.

Changes in the fair values for derivative instruments designated as cash flow or net investment hedges are recognized in accumulated other comprehensive income (loss) until the hedged item is recognized in earnings, which for net investment hedges is upon sale or substantial liquidation of the underlying net investment.

Changes in fair value of outstanding fair value hedges and the offsetting changes in fair values of the hedged item are recognized in earnings.

Changes in fair value of outstanding fair value hedges and the offsetting changes in fair values of the hedged item are

Fiscal 2022 Form 10-K 44

recognized in earnings.

We record realized gains and losses from derivative instruments in the same financial statement line item as the hedged item.

1 unchanged sentence

Cash flows from the settlement of derivative instruments appear in the consolidated statements of cash flows in the same categories as the cash flows of the hedged item.

Self-Insurance Reserves

We are self-insured for certain losses related to general liability (including product liability), workers’ compensation, employee group medical, and automobile claims.

1 unchanged sentence

The expected ultimate cost for claims incurred is estimated based upon analysis of historical data and actuarial estimates.

Our self-insurance liabilities, which are included in accrued salaries and related expenses, other accrued expenses and other long-term liabilities in the consolidated balance sheets, were $ 1.3 billion at January 30, 2022 and January 31, 2021.

We also maintain network security and privacy liability insurance coverage to limit our exposure to losses such as those that may be caused by a significant compromise or breach of our data security.

Insurance-related expenses are included in SG&A.

Treasury Stock

6 unchanged sentences

Adjustments related to changes in return estimates were immaterial in fiscal 2022, fiscal 2021, and fiscal 2020.

Net sales include services revenue generated through a variety of installation, home maintenance, and professional service programs.

Services revenue is generated through a variety of installation, home maintenance, and professional service programs.

In these programs, the customer selects and purchases material for a project, and we provide or arrange for professional installation.

1 unchanged sentence

Under certain programs, when we provide or arrange for the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue.

We recognize this revenue when the service for the customer is complete, which is not materially different from recognizing the revenue over the service period as the substantial majority of our services are completed within one week.

We recognize services revenue when the service for the customer is complete, which is not materially different from recognizing the revenue over the service period as the substantial majority of our services are completed within one week.

For products and services sold in stores or online, payment is typically due at the point of sale.

1 unchanged sentence

Such performance obligations are part of contracts with expected original durations of typically three months or less.

January 30, 2022 and January 31, 2021, deferred revenue for products and services was $ 2.6 billion and $ 1.9 billion, respectively.

As of January 29, 2023 and January 30, 2022, deferred revenue for products and services was $ 2.0 billion and $ 2.6 billion, respectively.

We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance.

As of January 30, 2022 and January 31, 2021, our performance obligations for unredeemed gift cards were $ 1.0 billion and $ 839 million, respectively.

As of January 29, 2023 and January 30, 2022, our performance obligations for unredeemed gift cards were $ 1.1 billion and $ 1.0 billion, respectively.

Gift card breakage income, which is our estimate of the portion of our gift card balance not expected to be redeemed, is recognized in net sales and was immaterial in fiscal 2022, fiscal 2021, and fiscal 2020.

3 unchanged sentences

Deferred interest charges incurred for our deferred financing programs offered to these customers, interchange fees charged to us for their use of the cards, and any profit sharing with the third-party service providers are included in net sales.

Fiscal 2022 Form 10-K 45

Cost of Sales

3 unchanged sentences

and the operating cost and depreciation of our sourcing and distribution network.

Vendor allowances that are not reimbursement of specific, incremental, and identifiable costs are also included within cost of sales.

Vendor allowances that are not reimbursements of specific, incremental, and identifiable costs are also included within cost of sales.

Vendor Allowances

26 unchanged sentences

Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Fiscal 2022 Form 10-K 46

We file a consolidated U.S.

23 unchanged sentences

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.

Amendments include removal of certain exceptions to the general principles of Topic 740, “Income Taxes,” and simplification in several other areas.

On February 1, 2021, we adopted ASU No.

2019-12 with no material impact to our consolidated financial condition, results of operations or cash flows.

Recently Issued Accounting Pronouncements

In November 2021, the FASB issued ASU No.

2021-10, “Government Assistance (Topic 832),” to improve the transparency of government assistance received by business entities that are accounted for by applying either the International Accounting Standards 20 grant model or Accounting Standards Codification

958-605 contribution model by analogy.

Topic 832 requires disclosure of the nature of the transactions and the related accounting policy used, the line items on the balance sheet and income statement that are affected and the amounts applicable to each financial statement line item, and significant terms of the transactions.

This standard is effective for fiscal years beginning after December 15, 2021 and should be applied either prospectively or retrospectively.

On January 31, 2022, we adopted ASU No.

2021-10 with no impact to our financial statements or related disclosures as the transactions in scope of this guidance were immaterial.

Recently Issued Accounting Pronouncements

In September 2022, the FASB issued ASU No.

2022-04, “Liabilities—Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations,” to enhance the transparency of supplier finance programs used by an entity in connection with the purchase of goods and services.

The standard requires entities that use supplier finance programs to disclose the key terms, including a description of payment terms, the confirmed amount outstanding under the program at the end of each reporting period, a description of where those obligations are presented on the balance sheet, and an annual rollforward, including the amount of obligations confirmed and the amount paid during the period.

The guidance does not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs.

2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

We are currently evaluating the impact of ASU 2021-10 on our consolidated financial statements and related disclosures.

We are currently evaluating the impact of the standard on our consolidated financial statement disclosures.

In March 2020, the FASB issued ASU No.

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The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform.

These amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

2020-04 is effective as of March 12, 2020 through December 31, 2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020.

While the discontinuance of LIBOR will impact our interest rate swap agreements and certain of our credit arrangements, we do not anticipate the transition to a new reference rate and adoption of this standard will have a material impact on our consolidated financial condition, results of operations, or cash flows.

2020-04 is effective as of March 12,

Fiscal 2022 Form 10-K 47

2020 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020.

This guidance was subsequently amended by ASU No.

2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848,” which was effective upon issuance in December 2022 and extended the temporary relief provided by Topic 848 through December 31, 2024.

While the discontinuance of LIBOR will impact our interest rate swap agreements, we do not anticipate the transition to a new reference rate and adoption of this standard will have a material impact on our consolidated financial condition, results of operations, or cash flows.

Recent accounting pronouncements adopted or pending adoption not discussed above are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

NET SALES AND SEGMENT REPORTING

SEGMENT REPORTING AND NET SALES

We currently conduct our retail operations in the U.S., Canada, and Mexico, each of which represents one of our three operating segments.

Our operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.

For disclosure purposes, we aggregate these three operating segments into one reportable segment due to their similar operating and financial characteristics.

Our operating segments reflect the way in which internally-reported financial information is regularly reviewed by our chief operating decision maker to analyze performance, make decisions and allocate resources.

For disclosure purposes, we aggregate these three operating segments into one reportable segment due to the similar nature of their operations and economic characteristics.

The following table presents net property and equipment, classified by geography:

1 unchanged sentence

2023 January 30,

2021 February 2,

2022 January 31,

Net property and equipment – in the U.S.

24 unchanged sentences

Hardware, Indoor Garden, Outdoor Garden, and Tools

The following table presents net sales by major product lines (and related services):

Fiscal 2022 Form 10-K 48

The following table presents net sales by major product line (and related services):

Fiscal Fiscal Fiscal

4 unchanged sentences

Net sales $ 157,403 $ 151,157 $ 132,110

Net sales for certain merchandising departments were reclassified in fiscal 2021.

As a result, prior year amounts have been reclassified to conform with the current year presentation.

The following table presents net sales by merchandising department (and related services):

20 unchanged sentences

Certain percentages may not sum to totals due to rounding.

Net sales for certain merchandising departments were reclassified in fiscal 2021.

As a result, prior year net sales have been reclassified to conform with the current year presentation.

Prior year percent of net sales data also reflects the new classifications.

PROPERTY AND LEASES

12 unchanged sentences

Net property and equipment $ 25,631 $ 25,199

Fiscal 2022 Form 10-K 49

The following table presents depreciation and finance lease amortization expense, including depreciation and finance lease amortization expense included in cost of sales:

3 unchanged sentences

The following table presents the consolidated balance sheet location of assets and liabilities related to operating and finance leases:

in millions Consolidated Balance Sheet Caption January 30,

in millions Consolidated Balance Sheet Classification January 29,

2023 January 30,

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Total lease liabilities $ 10,456 $ 9,419

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.0 billion as of January 30, 2022 and $ 815 million as of January 31, 2021.

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.2 billion as of January 29, 2023 and $ 1.0 billion as of January 30, 2022.

The following table presents components of lease cost, excluding short-term lease cost and sublease income which are immaterial:

Consolidated Statement of Earnings Caption (1)

Consolidated Statement of Earnings Classification (1)

Fiscal Fiscal

5 unchanged sentences

Variable lease cost Selling, general and administrative 470 425 277

Net lease cost $ 1,886 $ 1,338 $ 1,246

Total lease cost $ 2,046 $ 1,886 $ 1,338

(1) Costs associated with our sourcing and distribution network are recorded in cost of sales, with the exception of interest on finance lease liabilities.

7 unchanged sentences

Finance leases 4.3 % 4.7 %

The following table presents approximate future minimum lease payments under operating and finance leases at January 30, 2022:

Fiscal 2022 Form 10-K 50

The following table presents approximate future minimum payments under operating and finance leases at January 29, 2023:

in millions Operating

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We have excluded approximately $ 2.1 billion of leases (undiscounted basis) that have not yet commenced.

These leases will commence primarily between fiscal 2022 and 2023 with lease terms of up to 20 years.

These leases are expected to commence primarily in fiscal 2023 with lease terms of up to 30 years.

The following table presents supplemental cash flow information related to leases:

10 unchanged sentences

Short-Term Debt

At January 30, 2022, we had commercial paper programs that allowed for borrowings up to $ 3.0 billion.

All of our short-term borrowings in fiscal 2021 and fiscal 2020 were under these commercial paper programs.

In connection with these programs, we had back-up credit facilities with a consortium of banks for borrowings up to $ 3.0 billion at January 30, 2022, which consisted of a five-year $ 2.0 billion credit facility scheduled to expire in December 2023 and a 364 -day $ 1.0 billion credit facility scheduled to expire in December 2022.

In December 2021, we completed the renewal of our 364 -day $ 1.0 billion credit facility, extending the maturity from December 2021 to December 2022.

At January 30, 2022, we had $ 1.0 billion of outstanding borrowings under our commercial paper programs.

At January 31, 2021, there were no outstanding borrowings under our commercial paper programs.

The following table presents certain information on our commercial paper programs:

dollars in millions January 30,

2022 January 31,

Weighted average interest rate 0.1 % — %

In July 2022, we expanded our commercial paper program from $ 3.0 billion to $ 5.0 billion to further enhance our financial flexibility.

All of our short-term borrowings in fiscal 2022 and fiscal 2021 were under our commercial paper program.

In connection with our program, we had back-up credit facilities with a consortium of banks for borrowings up to $ 5.0 billion at January 29, 2023, which consisted of a five-year $ 3.5 billion credit facility scheduled to expire in July 2027 and a 364 -day $ 1.5 billion credit facility scheduled to expire in July 2023.

These facilities replaced our previously existing five-year $ 2.0 billion credit facility, which was scheduled to expire in December 2023, and our 364 -day $ 1.0 billion credit facility, which was scheduled to expire in December 2022.

At January 29, 2023, we had no borrowings outstanding under our commercial paper program, and at January 30, 2022, we had $ 1.0 billion of borrowings outstanding under our commercial paper program with a weighted-average interest rate of 0.1 %.

The following table presents additional information on borrowings under our commercial paper program during fiscal 2022 and fiscal 2021:

Fiscal Fiscal

in millions 2022 2021

Maximum amount outstanding during the period $ 2,745 $ 1,368

Average daily short-term borrowings 269 45

Fiscal 2022 Form 10-K 51

Long-Term Debt

5 unchanged sentences

2023 January 30,

2.00 % Senior notes due April 2021

Semi-annually — — 1,350

Floating rate senior notes due March 2022 Quarterly $ — $ — $ 300

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Semi-annually 1,100 1,099 1,098

2.70 % Senior notes due April 2025

Semi-annually 500 498 —

3.35 % Senior notes due September 2025

Semi-annually 1,000 998 998

4.00 % Senior notes due September 2025

Semi-annually 750 748 —

3.00 % Senior notes due April 2026

4 unchanged sentences

Semi-annually 750 744 —

2.50 % Senior notes due April 2027

Semi-annually 750 745 744

2.80 % Senior notes due September 2027

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Semi-annually 1,000 942 981

3.25 % Senior notes due April 2032

Semi-annually 1,250 1,237 —

4.50 % Senior notes due September 2032

Semi-annually 1,250 1,242 —

5.875 % Senior notes due December 2036

26 unchanged sentences

Semi-annually 1,000 983 982

3.625 % Senior notes due April 2052

Semi-annually 1,500 1,458 —

4.95 % Senior notes due September 2052

Semi-annually 1,000 980 —

3.50 % Senior notes due September 2056

Semi-annually 1,000 973 973

Total senior notes $ 41,150 $ 39,908 $ 35,815

Finance lease obligations;

payable in varying installments through January 31, 2055 3,236 2,766

payable in varying installments through April 30, 2076 $ 3,285 $ 3,236

Total long-term debt 43,193 39,051

2 unchanged sentences

(1) Includes unamortized discounts, premiums, debt issuance costs, and the effects of fair value hedges.

Fiscal 2022 Form 10-K 52

September 2022 Issuance.

In September 2022, we issued three tranches of senior notes.

• The first tranche consisted of $ 1.0 billion of 1.50 % senior notes due September 15, 2028 (the “2028 notes”) at a discount of $ 4 million.

Interest on the 2028 notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2022.

• The second tranche consisted of $ 1.0 billion of 1.875 % senior notes due September 15, 2031 (the “2031 notes”) at a discount of $ 6 million.

Interest on the 2031 notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2022.

• The third tranche consisted of $ 1.0 billion of 2.75 % senior notes due September 15, 2051 (the “2051 notes”) at a discount of $ 11 million (together with the 2028 notes and the 2031 notes, the “September 2021 issuance”).

Interest on the 2051 notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2022.

• Issuance costs for the September 2021 issuance totaled $ 17 million.

All of our senior notes, other than our outstanding floating rate notes, may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date.

With respect to the 3.25 % 2022 notes and the 5.875 % 2036 notes, the redemption price is equal to the greater of (1) 100 % of the principal amount of the notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due after the related redemption date.

With respect to all other notes, the redemption price is equal to the greater of (1) 100 % of the principal amount of the notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date, as defined in the respective notes.

Additionally, if a Change in Control Triggering Event occurs, as defined in the notes, holders of all notes have the right to require us to redeem those notes at 101 % of the aggregate principal amount of the notes plus accrued interest up to the redemption date.

In March 2021, we repaid our $ 1.35 billion 2.00 % senior notes that had a maturity date of April 2021.

• The first tranche consisted of $ 750 million of 4.00 % senior notes due September 15, 2025 at a discount of $ 0.3 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• The second tranche consisted of $ 1.25 billion of 4.50 % senior notes due September 15, 2032 at a discount of $ 1 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• The third tranche consisted of $ 1.0 billion of 4.95 % senior notes due September 15, 2052 at a discount of $ 14 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• Issuance costs totaled $ 15 million.

March 2022 Issuance.

In March 2022, we issued four tranches of senior notes.

• The first tranche consisted of $ 500 million of 2.70 % senior notes due April 15, 2025 at a discount of $ 1 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The second tranche consisted of $ 750 million of 2.875 % senior notes due April 15, 2027 at a discount of $ 4 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The third tranche consisted of $ 1.25 billion of 3.25 % senior notes due April 15, 2032 at a discount of $ 6 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The fourth tranche consisted of $ 1.5 billion of 3.625 % senior notes due April 15, 2052 at a discount of $ 32 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• Issuance costs totaled $ 22 million.

In March 2022, we repaid our $ 700 million 3.25 % senior notes and $ 300 million floating rate senior notes at maturity.

In May 2022, we repaid our $ 1.25 billion 2.625 % senior notes, which had a maturity date of June 2022, at the Par Call Date for the notes.

All of our senior notes may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date.

With respect to the 5.875 % 2036 notes, the redemption price is equal to the greater of (1) 100 % of the principal amount of the notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due after the related redemption date.

With respect to all other notes, prior to the Par Call Date, as defined in the respective notes, the redemption price is equal to the greater of (1) 100 % of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date.

On or after the Par Call Date, the redemption price is equal to 100 % of the principal amount of the notes.

Additionally, if a Change in Control Triggering Event occurs, as defined in the notes, holders of all such notes have the right to require us to redeem those notes at 101 % of the aggregate principal amount of the notes plus accrued interest up to the redemption date.

The indentures governing the notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity.

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however, none are expected to impact our liquidity or capital resources.

Fiscal 2022 Form 10-K 53

Maturities of Long-Term Debt.

9 unchanged sentences

Derivative Instruments and Hedging Activities

We use derivative and nonderivative instruments as part of our normal business operations in the management of our exposure to fluctuations in foreign currency exchange rates and interest rates on certain debt.

We use derivative instruments as part of our normal business operations in the management of our exposure to fluctuations in foreign currency exchange rates and interest rates on certain debt.

Our objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and minimize the risk of changes in the fair value of our senior notes.

Fair Value Hedges.

We had outstanding interest rate swap agreements with combined notional amounts of $ 5.4 billion at January 30, 2022 and $ 4.4 billion at January 31, 2021.

We had outstanding interest rate swap agreements with combined notional amounts of $ 5.4 billion at January 29, 2023 and January 30, 2022.

These agreements were accounted for as fair value hedges that swap fixed for variable rate interest to hedge changes in the fair values of certain senior notes.

At January 30, 2022, the fair values of these agreements totaled $ 191 million, with $ 58 million recognized in other assets and $ 249 million

recognized in other long-term liabilities on the consolidated balance sheet.

At January 29, 2023, the fair values of these agreements totaled $ 778 million, all of which is recognized in other long-term liabilities on the consolidated balance sheet.

At January 30, 2022, the fair values of these agreements totaled $ 191 million, with $ 58 million recognized in other assets and $ 249 million recognized in other long-term liabilities on the consolidated balance sheet.

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At January 29, 2023 and January 30, 2022, the notional amounts and the fair values of these contracts were not material.

During fiscal 2019, we settled our outstanding cross currency swap agreements accounted for as cash flow hedges, which hedged foreign currency fluctuations on certain intercompany debt, resulting in a gain of $ 118 million.

Additionally, the realized and unrealized gains and losses on these instruments were not material during fiscal 2022, fiscal 2021, and fiscal 2020.

We also settled forward-starting interest rate swap agreements in prior years, which were used to hedge the variability in future interest payments attributable to changing interest rates on forecasted debt issuances.

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Net Investment Hedges.

We had outstanding foreign currency forward contracts as well as certain nonderivative instruments accounted for as net investment hedges, which were immaterial at January 31, 2021.

These agreements hedged against foreign currency exposure on our net investment in certain subsidiaries.

During fiscal 2021, we settled all outstanding net investment hedges and the related foreign currency translation adjustment amounts recorded in accumulated other comprehensive loss upon settlement were immaterial.

There were no arrangements accounted for as net investment hedges outstanding as of January 30, 2022.

During fiscal 2022, we issued foreign currency forward contracts accounted for as net investment hedges, which hedged against foreign currency exposure on our net investment in certain subsidiaries.

These foreign currency forward contracts were immaterial and were settled in fiscal 2022.

The related foreign currency translation adjustment amounts recorded in accumulated other comprehensive loss upon settlement were also immaterial.

There were no arrangements accounted for as net investment hedges outstanding as of January 29, 2023 or January 30, 2022.

We generally enter into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty.

To further limit our credit risk, we enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain derivative instruments exceeds or falls below contractually established thresholds.

The cash collateral both held and posted by the Company related to derivative instruments under our collateral security arrangements was immaterial as of January 30, 2022 and January 31, 2021.

The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $ 634 million as of January 29, 2023, which was recorded in other current assets on the consolidated balance sheet.

We did not hold any cash collateral as of January 29, 2023, and cash collateral both held and posted was immaterial as of January 30, 2022.

Fiscal 2022 Form 10-K 54

Provision for Income Taxes

28 unchanged sentences

Total $ 5,372 $ 5,304 $ 4,112

On August 16, 2022, the Inflation Reduction Act of 2022 (“2022 Tax Act”) was enacted into law.

The key tax provisions include a 15% minimum tax on adjusted financial statement income.

We do not expect any impact to the Company’s effective tax rate as a result of the new 15% minimum tax under the 2022 Tax Act.

Fiscal 2022 Form 10-K 55

Deferred Taxes

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The following table presents our noncurrent deferred tax assets and noncurrent deferred tax liabilities, netted by tax jurisdiction, as presented on the consolidated balance sheets:

in millions January 30,

in millions Consolidated Balance Sheet Classification January 29,

2023 January 30,

Other assets $ 344 $ 305

Deferred income taxes ( 909 ) ( 1,131 )

Deferred tax assets Other assets $ 319 $ 344

Deferred tax liabilities Deferred income taxes ( 1,019 ) ( 909 )

Net deferred tax liabilities $ ( 700 ) $ ( 565 )

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Substantially all of our current year foreign cash earnings in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore.

Therefore, the tax effects of repatriation (including applicable state and local taxes and foreign withholding taxes) of such cash earnings have been provided for in the accompanying consolidated statements of earnings.

Therefore, the tax effects of repatriation for applicable state taxes and foreign withholding taxes of such cash earnings have been provided for in the accompanying consolidated statements of earnings.

We have the intent and ability to reinvest substantially all of the $ 4.1 billion of non -cash unremitted earnings of our non-U.S.

subsidiaries indefinitely.

Accordingly, no provision for state and local taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings.

It is impracticable for us to determine the amount of

unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation.

Accordingly, no provision for state taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings.

It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation.

Fiscal 2022 Form 10-K 56

Tax Return Examination Status

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Unrecognized Tax Benefits

The following table presents reconciliations of the beginning and ending amount of our gross unrecognized tax benefits:

The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:

in millions Fiscal Fiscal Fiscal

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Unrecognized tax benefits balance at end of fiscal year $ 643 $ 570 $ 540

Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $ 479 million, $ 458 million, and $ 407 million at January 30, 2022, January 31, 2021, and February 2, 2020, respectively.

Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $ 537 million, $ 479 million, and $ 458 million at January 29, 2023, January 30, 2022, and January 31, 2021, respectively.

Interest and Penalties

Net adjustments to accruals for interest and penalties associated with uncertain tax positions were immaterial in fiscal 2021, fiscal 2020, and fiscal 2019.

Net adjustments to accruals for interest and penalties a ssociated with uncertain tax positions were immaterial in fiscal 2022, fiscal 2021, and fiscal 2020.

Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of January 29, 2023 and January 30, 2022.

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Stock Rollforward

The following table presents a reconciliation of the number of shares of our common stock and cash dividends per share:

The following table presents a reconciliation of the number of shares of our common stock outstanding and cash dividends per share:

shares in millions Fiscal Fiscal Fiscal

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Balance at beginning of year 1,792 1,789 1,786

Shares issued under employee stock plans 3 3 4

Shares issued under employee stock plans, net 2 3 3

Balance at end of year 1,794 1,792 1,789

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Cash dividends per share $ 7.60 $ 6.60 $ 6.00

Fiscal 2022 Form 10-K 57

Share Repurchases

In May 2021, our Board of Directors approved a $ 20.0 billion share repurchase authorization.

This new authorization replaced the previous authorization of $ 15.0 billion, which was approved February 2019, and does not have a prescribed expiration date.

In August 2022, our Board of Directors approved a $ 15.0 billion share repurchase authorization that replaced the previous authorization of $ 20.0 billion, which was approved in May 2021.

This new authorization does not have a prescribed expiration date.

As of January 29, 2023, approximately $ 12.5 billion of the $ 15.0 billion share repurchase authorization remained available.

In March 2020, we suspended our share repurchases to enhance our liquidity position during the COVID-19 pandemic.

In March 2020, we suspended our share repurchases to enhance our liquidity position as a result of the COVID-19 pandemic.

We resumed share repurchases in the first quarter of fiscal 2021.

The following table presents information about our repurchases of common stock, all of which were completed through open market purchases, with the exception of the shares repurchased during fiscal 2019 through ASR agreements noted below:

The following table presents information about our repurchases of common stock, all of which were completed through open market purchases:

Fiscal Fiscal Fiscal

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These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period.

Accelerated Share Repurchase Agreements

We enter into ASR agreements from time to time with third-party financial institutions to repurchase shares of our common stock.

Under an ASR agreement, we pay a specified amount to the financial institution and receive an initial delivery of shares.

This initial delivery of shares represents the minimum number of shares that we may receive under the agreement.

Upon settlement of the ASR agreement, the financial institution delivers additional shares, with the final number of shares delivered determined with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount.

The transactions are accounted for as equity transactions and are included in treasury stock when the shares are received, at which time there is an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share.

The following table presents the terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above (in millions):

Date Settlement

Date Agreement

Amount Initial

Shares Delivered Additional

Shares Delivered Total

Shares Delivered

Q3 2019 Q4 2019 820 3.2 0.4 3.6

FAIR VALUE MEASUREMENTS

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Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The levels of the fair value hierarchy are:

observable inputs such as quoted prices in active markets for identical assets or liabilities;

inputs other than quoted prices in active markets in Level 1 that are either directly or indirectly observable;

unobservable inputs for which little or no market data exists, therefore requiring management judgment to develop the Company’s own models with estimates and assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:

Fair Value at January 30, 2022 Using Fair Value at January 31, 2021 Using

in millions Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant

Observable Inputs

(Level 2) Significant

Unobservable Inputs

(Level 3) Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant

Observable Inputs

(Level 2) Significant

Unobservable Inputs

January 29, 2023 January 30, 2022

in millions Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Derivative agreements – assets

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The fair values of our derivative instruments are determined using an income approach and Level 2 inputs, which include the respective interest rate or foreign currency forward curves and discount rates.

Our derivative instruments are discussed further in Note 4 .

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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The carrying amounts of cash and cash equivalents, receivables, short-term debt, and accounts payable approximate fair value due to their short-term nature.

Fiscal 2022 Form 10-K 58

The following table presents the aggregate fair values and carrying values of our senior notes:

2022 January 31,

January 29, 2023 January 30, 2022

in millions Fair Value

6 unchanged sentences

The Home Depot, Inc.

Amended and Restated 2005 Omnibus Stock Incentive Plan (the “2005 Plan”) and The Home Depot, Inc.

1997 Omnibus Stock Incentive Plan (the “1997 Plan” and collectively with the 2005 Plan, the “Plans”) provide that incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred shares, and other stock-based awards may be issued to certain of our associates and non-employee directors.

Under the 2005 Plan, the maximum number of shares of our common stock authorized for issuance is 255 million shares, with any award other than a stock option or stock appreciation right reducing the number of shares available for issuance by 2.11 shares.

At January 30, 2022, there were approximately 117 million shares available for future grants under the 2005 Plan.

No additional equity awards could be issued from the 1997 Plan after the adoption of the 2005 Plan on May 26, 2005.

Omnibus Stock Incentive Plan, as Amended and Restated May 19, 2022 (the “Omnibus Plan”) and The Home Depot, Inc.

1997 Omnibus Stock Incentive Plan (the “1997 Plan” and collectively with the Omnibus Plan, the “Plans”) provide that incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred shares, and other stock-based awards may be issued to certain of our associates and non-employee directors.

Under th e Omnibus Plan, the maximum number of shares of our common stock authorized for issuance is 80 million shares plus a number of shares (not to exceed 10 million) related to underlying awards outstanding as of May 19, 2022, which can be returned to the share pool if those awards are subsequently terminated or expire unexercised, or are cancelled, forfeited or lapse for any reason, with any award other than a stock option or stock appreciation right reducing the number of shares available for issuance by 2.11 shares.

At January 29, 2023, there were approximately 80 million shares available for future grants under the Omnibus Plan.

No additional equity awards could be issued from the 1997 Plan after May 26, 2005.

The following table presents total stock-based compensation expense, net of estimated forfeitures, including expense related to our ESPPs, and related income tax benefit:

4 unchanged sentences

After-tax stock-based compensation expense $ 294 $ 317 $ 252

At January 30, 2022, there was $ 496 million of unamortized stock-based compensation expense, which is expected to be recognized over a weighted average period of two years .

At January 29, 2023, there was $ 424 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of two years .

The award types issued under the Plans are as follows:

3 unchanged sentences

Additionally, a majority of our stock options may become non-forfeitable upon the associate reaching age 60 , provided the associate has had five years of continuous service.

No incentive stock options have been issued under the 2005 Plan.

No incentive stock options have been issued under the Omnibus Plan.

We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model.

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Assumed lives of options 6 years 6 years 6 years

The following table presents the total intrinsic value of stock options exercised:

in millions Fiscal Fiscal Fiscal

2021 2020 2019

Total intrinsic value of stock options exercised $ 237 $ 217 $ 241

Fiscal 2022 Form 10-K 59

The following table presents a summary of stock option activity by number of shares and weighted average exercise price during fiscal 2022:

7 unchanged sentences

Outstanding at end of year 3,626 167.66

Shares of common stock issued from stock option exercises may be issued from authorized and unissued common stock or treasury stock.

The following table presents the total intrinsic value of stock options exercised:

in millions Fiscal Fiscal Fiscal

2022 2021 2020

Total intrinsic value of stock options exercised $ 61 $ 237 $ 217

The following table presents details regarding outstanding and exercisable stock options at January 29, 2023:

6 unchanged sentences

Exercisable 2,448 457 3.2 years 130.00

Shares of common stock issued from stock option exercises may be issued from authorized and unissued common stock or treasury stock.

Restricted Stock and Performance Share Awards.

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The fair value of the restricted stock units is based on the closing stock price on the date of grant and is expensed over the period during which the units vest.

Fiscal 2022 Form 10-K 60

The following table presents a summary of restricted stock, performance shares, and restricted stock unit activity during fiscal 2022:

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Each deferred share entitles the non-employee director to one share of common stock to be received following termination of Board service.

Recipients of deferred shares have no voting rights and receive dividend equivalents that accrue and are paid out in the form of additional shares of stock upon payout of the underlying shares following termination of

The fair value of the deferred shares is based on the closing stock price on the date of grant and is expensed immediately upon grant.

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Employee Stock Purchase Plans

We maintain two ESPPs (a U.S.

We maintain two ESPPs:

and a non-U.S.

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The purchase price of shares under the ESPPs is equal to 85 % of the stock’s fair market value on the last day of the purchase period, which is a six-month period ending on December 31 and June 30 of each year.

During fiscal 2021, there were approximately one million shares purchased under the ESPPs at an average price of $ 305.14 .

During fiscal 2022, there were approximately 1 million shares purchased under the ESPPs at an average price of $ 247.86 .

Under the outstanding ESPPs at January 29, 2023, associates have contributed $ 22 million to purchase shares at 85 % of the stock’s fair market value on the last day of the current purchase period, June 30, 2023.

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We make cash contributions each payroll period up to specified percentages of associates’ contributions as approved by our Board of Directors.

We also maintain the Restoration Plan to provide certain associates deferred compensation that they would have received under the Benefit Plans as a matching contribution if not for the maximum compensation limits under the Internal Revenue Code.

We fund the Restoration Plan through contributions made to a grantor trust, which are then used to purchase shares of our common stock in the open market.

The following table presents our contributions to the Benefit Plans and the Restoration Plan:

We also maintain the Restoration Plans to provide certain associates deferred compensation that they would have received under the Benefit Plans as a matching contribution if not for the maximum compensation limits under the Internal Revenue Code.

We fund the Restoration Plans through contributions made to grantor trusts, which are then used to purchase shares of our common stock in the open market.

The following table presents our contributions to the Benefit Plans and the Restoration Plans:

in millions Fiscal Fiscal Fiscal

2022 2021 2020

Contributions to the Benefit Plans and the Restoration Plan $ 278 $ 267 $ 213

At January 30, 2022, the Benefit Plans and the Restoration Plan held a total of 5.5 million shares of our common stock in trust for plan participants.

Contributions to the Benefit Plans and the Restoration Plans $ 280 $ 278 $ 267

At January 29, 2023, the Benefit Plans and the Restoration Plans held a total of 5.3 million shares of our common stock in trusts for plan participants.

Fiscal 2022 Form 10-K 61

WEIGHTED AVERAGE COMMON SHARES

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On November 16, 2020, we announced that we entered into a definitive agreement to acquire HD Supply, a leading national distributor of MRO products to multifamily, hospitality, healthcare, and government housing facilities, among others.

We believe the acquisition of HD Supply will help position the Company to accelerate sales growth by better serving both existing and new MRO customers.

Under the terms of the merger agreement, a subsidiary of Home Depot made a cash tender offer to purchase all outstanding shares of HD Supply common stock for $ 56 per share.

All of the conditions of the offer were satisfied, and the acquisition was completed on December 24, 2020.

Under the terms of the merger agreement, a subsidiary of Home Depot made a cash tender offer to purchase all outstanding shares of the common stock of HD Supply Holdings, Inc., the ultimate parent entity of HD Supply, for $ 56 per share, and the acquisition was completed on December 24, 2020.

The acquisition was funded through cash on hand, a portion of which was replaced with the proceeds from our issuance of $ 3.0 billion of senior notes in January 2021.

The acquisition was accounted for in accordance with Accounting Standards Codification Topic 805 "Business Combinations" and, accordingly, HD Supply’s results of operations have been consolidated in the Company’s financial statements since December 24, 2020, the date of acquisition.

We recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of December 24, 2020.

Adjustments to our preliminary purchase price allocation recognized in fiscal 2021 were immaterial, and our purchase price allocation is now finalized.

Acquisition-related costs were expensed as incurred and totaled $ 110 million in fiscal 2020, including the $ 56 million charge related to the settlement of stock-based awards noted below.

The following table summarizes total purchase consideration:

4 unchanged sentences

As the settlement of the awards was at the discretion of the Company, the portion of the fair value of the awards attributed to services previously provided of $ 55 million was included as part of purchase consideration, with the remaining $ 56 million recognized as post-combination expense within SG&A in our consolidated statement of earnings for fiscal 2020.

The following table summarizes the recorded fair values of the assets acquired and liabilities assumed:

in millions Fair Value

Other current assets 879

Goodwill 4,872

Other assets (1)

Total assets acquired $ 10,599

Current liabilities $ 817

Long-term liabilities (2)

Total liabilities assumed $ 1,907

(1) Includes identifiable intangible assets of $ 3.3 billion.

(2) Includes deferred tax liabilities of $ 815 million primarily resulting from the difference in book and tax basis related to identifiable intangible assets.

The fair value of identifiable intangible assets was determined by using certain estimates and assumptions that are not observable in the market.

The fair values were determined using an income based approach, which included significant assumptions such as the amount and timing of projected cash flows, growth rates, customer attrition

rates, discount rates, and the assessment of the asset’s life cycle.

The fair value and estimated useful lives of identifiable intangible assets follows:

in millions Useful Life (Years) Fair Value

Customer relationships 19 $ 2,630

Trade name – indefinite lived Indefinite 520

Trade names – definite lived 20 150

Total identifiable intangible assets $ 3,300

The goodwill arising from the acquisition is primarily attributable to operational synergies and acceleration of growth strategy, as well as the assembled workforce.

The goodwill generated in the acquisition is not expected to be deductible for U.S.

federal and state tax purposes.

The total purchase consideration of $ 8.7 billion, less cash acquired of $ 912 million, resulted in a net cash outflow of $ 7.8 billion on the consolidated statement of cash flows in fiscal 2020.

Net sales and net earnings for fiscal 2020 attributable to HD Supply after the completion of the acquisition were immaterial.

2 unchanged sentences

Not applicable.

Fiscal 2022 Form 10-K 62

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data