What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-13 compared with 2023-03-15 · 197 added, 181 removed, 930 unchanged (29% of the section changed)

10 unchanged sentences

Property and Leases

Goodwill and Intangible Assets

Debt and Derivative Instruments

5 unchanged sentences

Commitments and Contingencies

HD Supply Acquisition

Acquisition s

Fiscal 2023 Form 10-K

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of The Home Depot, Inc.

and subsidiaries (the Company) as of January 29, 2023 and January 30, 2022, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended January 29, 2023, and the related notes (collectively, the consolidated financial statements).

and its subsidiaries (the Company) as of January 28, 2024 and January 29, 2023, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended January 28, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 28, 2024 and January 29, 2023, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended January 28, 2024, in conformity with U.S.

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As discussed in Note 1 to the consolidated financial statements, the majority of the Company’s U.S.

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).

merchandise inventories are stated at the lower of cost 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).

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

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Current liabilities:

Short-term debt $ — $ 1,035

Accounts payable $ 10,037 $ 11,443

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( 95,372 ) ( 87,298 )

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

Total stockholders’ equity

Total liabilities and stockholders’ equity $ 76,530 $ 76,445

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Net earnings $ 15,143 $ 17,105 $ 16,433

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 232 ( 22 ) ( 77 )

1 unchanged sentence

Other 1 ( 1 ) 35

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

Total other comprehensive income (loss), net of tax

241 ( 14 ) ( 33 )

Comprehensive income $ 15,384 $ 17,091 $ 16,400

81 unchanged sentences

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, in stores and online.

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 products, and facilities maintenance, repair and operations products, in stores and online.

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

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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).

The majority of our merchandise inventories are stated at the lower of cost 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).

As the inventory retail value is adjusted regularly to reflect market conditions, inventory valued using the retail method approximates the lower of cost or market.

Certain subsidiaries, including retail operations in Canada and Mexico, and distribution centers, record merchandise inventories at the lower of cost or net realizable value, as determined by a cost method.

These merchandise inventories represent approximately 38 % of the total merchandise inventories balance.

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We evaluate our long-lived assets each quarter for indicators of potential impairment.

Indicators of impairment include current period losses combined with a history of losses, our decision to relocate or close a store or other location before the end of its previously estimated useful life, or when changes in other circumstances indicate the carrying amount of an asset may not be recoverable.

The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally the individual store level.

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

Long-lived assets 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 group’s fair value to determine whether an impairment loss should be recognized.

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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 .

Our real estate leases typically provide the option to extend the lease for five-year terms, and some of our leases include early termination options.

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.

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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.

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

Certain of our lease agreements also include rental payments based on an index or rate, and others include rental payments based on a percentage of sales.

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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 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.

During the third quarter of fiscal 2022, we completed our annual assessment of the recoverability of goodwill for our U.S., Canada, and Mexico reporting units based on qualitative factors.

We performed a qualitative assessment to determine if there were any indicators of impairment and concluded that while there have been events and circumstances in the macro-environment that have impacted us, we have not experienced any entity-specific indicators that would indicate that it is more likely than not that the fair value of any of our reporting units were less than their carrying amounts.

During the third quarter of fiscal 2023, we completed our annual assessment of the recoverability of goodwill for our U.S., Canada, and Mexico reporting units, using a quantitative approach.

The quantitative test for goodwill impairment was performed by determining the fair value of the reporting units using a combination of discounted cash flow and market-based approaches.

The results of our quantitative analysis indicated that the fair value of each of the reporting units substantially exceeded its respective carrying value, including goodwill.

There were no impairment charges related to goodwill for fiscal 2023, fiscal 2022, or fiscal 2021.

The following table presents the changes in the carrying amount of our goodwill:

in millions Fiscal Fiscal

Goodwill, balance at beginning of year $ 7,449 $ 7,126

Acquisitions (1)

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

(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

Additional information regarding our goodwill is included in Note 4 .

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 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.

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

We evaluate our definite-lived intangible assets for impairment when evidence exists that certain triggering events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

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

During the third quarter of fiscal 2023, we completed our annual assessment of the recoverability of our indefinite-lived intangible assets based on quantitative factors and concluded no impairment losses should be recognized.

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

The following table presents information regarding our intangible assets:

January 29, 2023 January 30, 2022

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

Definite-Lived Intangible Assets:

Customer relationships $ 3,034 $ ( 495 ) $ 2,539 $ 3,034 $ ( 326 ) $ 2,708

Trade names 151 ( 16 ) 135 151 ( 8 ) 143

Other 12 ( 12 ) — 12 ( 9 ) 3

Indefinite-Lived Intangible Assets:

Trade names 649 649 649 649

Total Intangible Assets $ 3,846 $ ( 523 ) $ 3,323 $ 3,846 $ ( 343 ) $ 3,503

Our intangible asset amortization expense was immaterial for fiscal 2022, fiscal 2021, and fiscal 2020.

The following table presents the estimated future amortization expense related to definite-lived intangible assets as of January 29, 2023:

in millions Amortization Expense

Fiscal 2023 $ 178

Fiscal 2024 178

Fiscal 2025 178

Fiscal 2026 178

Fiscal 2027 167

Thereafter 1,795

Total $ 2,674

There were no impairment losses related to intangible assets for fiscal 2023, fiscal 2022, or fiscal 2021.

Additional information regarding our intangible assets is included in Note 4 .

Fiscal 2023 Form 10-K

Supplier Finance Programs

We have a supplier finance program whereby we have entered into payment processing agreements with several financial institutions.

Under these agreements, the financial institutions act as our paying agents with respect to accounts payable due to certain suppliers.

Participating suppliers may, at their sole discretion, elect to receive payment for one or more of our payment obligations, prior to their scheduled due dates, at a discounted price from participating financial institutions.

We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program, and our rights and obligations to our suppliers are not impacted.

We do not reimburse suppliers for any costs they incur for participation in the program.

We have not pledged any assets as security or provided any guarantees as part of the program.

We have no economic interest in our suppliers’ decisions to participate in the program.

Our responsibility is limited to making payment to the respective financial institution according to the terms originally negotiated with the supplier, regardless of whether the supplier elects to receive early payment from the financial institution.

The payment terms we negotiate with our suppliers are consistent, irrespective of whether a supplier participates in the program.

Our current payment terms with a majority of our suppliers generally range from 30 to 60 days, which we deem to be commercially reasonable.

Our outstanding payment obligations under our supplier finance program were $ 514 million at January 28, 2024, and $ 480 million at January 29, 2023 and are recorded within accounts payable on the consolidated balance sheets.

The associated payments are included in operating activities within the consolidated statements of cash flows.

We record any premiums or discounts associated with an issuance of long-term debt as a direct addition or deduction to the carrying value of the related senior notes.

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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

Fiscal 2022 Form 10-K 44

recognized in earnings.

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

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

Derivative instruments that are not designated as hedges, if any, are recorded at fair value with unrealized gains or losses reported in earnings each period in the same financial statement line item as the hedged item.

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.

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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 both January 29, 2023 and January 30, 2022.

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.

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

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 $ 1.4 billion at January 28, 2024, and $ 1.3 billion at January 29, 2023.

Fiscal 2023 Form 10-K

Treasury Stock

1 unchanged sentence

We use the weighted average purchase cost to determine the cost of treasury stock that is reissued, if any.

Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock.

Revenue Recognition

We recognize revenue, net of expected returns and sales tax, at the time the customer takes possession of merchandise or when a service is performed.

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At each financial reporting date, we assess our estimates of expected returns, refund liabilities, and return assets.

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

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

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

When we receive payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete.

When we receive payment before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete.

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

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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 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.

As of both January 28, 2024 and January 29, 2023, our performance obligations for unredeemed gift cards were $ 1.1 billion.

Gift card breakage income, which is our estimate of the portion of our outstanding gift card balance not expected to be redeemed, is recognized in net sales and was immaterial in fiscal 2023, fiscal 2022, and fiscal 2021.

We also have agreements with third-party service providers who directly extend credit to customers, manage our PLCC program, and own the related receivables.

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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

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Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels and co-op advertising allowances for the promotion of vendors’ products that are typically based on guaranteed minimum amounts with additional amounts being earned for attaining certain purchase levels.

These vendor allowances are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases.

These vendor allowances are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period, which generally concludes at the end of the calendar year, based on estimates of purchases.

Volume rebates and certain co-op advertising allowances reduce the carrying cost of inventory and are recognized in cost of sales when the related inventory is sold.

Fiscal 2023 Form 10-K

Selling, General and Administrative

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Certain co-op advertising allowances that are reimbursements of specific, incremental, and identifiable costs incurred to promote vendors’ products are recorded as an offset against advertising expense.

The following table presents net advertising expense included in SG&A:

in millions Fiscal Fiscal Fiscal

2022 2021 2020

Net advertising expense $ 1,085 $ 1,044 $ 909

Net advertising expense included in SG&A was $ 1.1 billion, $ 1.1 billion, and $ 1.0 billion for fiscal 2023, 2022, and 2021, respectively.

Stock-Based Compensation

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

Fiscal 2022 Form 10-K 46

We recognize interest and penalties related to income tax matters in interest expense and SG&A, respectively, on our consolidated statements of earnings.

Accrued interest and penalties related to income tax matters are recognized in other accrued expenses and other long-term liabilities on our consolidated balance sheets.

We file a consolidated U.S.

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See Note 6 for further discussion.

We recognize interest and penalties related to income tax matters in interest expense and SG&A, respectively, on our consolidated statements of earnings.

Accrued interest and penalties related to income tax matters are recognized in other accrued expenses and other long-term liabilities on our consolidated balance sheets.

We are subject to global intangible low-taxed income (“GILTI”) tax, an incremental tax on foreign income.

We are subject to global intangible low-taxed income tax, an incremental tax on foreign income.

We have made an accounting election to record this tax in the period the tax arises.

Fiscal 2023 Form 10-K

Comprehensive Income

8 unchanged sentences

Recently Adopted 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.

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.

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 the standard on our consolidated financial statement disclosures.

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

On January 30, 2023, we adopted ASU No.

2022-04 with no impact to our consolidated financial condition, results of operations, or cash flows.

In March 2020, the FASB issued ASU No.

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Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

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.

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.

2020-04 was effective as of March 12, 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.

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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.

During the second quarter of fiscal 2023, we amended our existing fixed-to-variable interest rate swap agreements, which were designated as fair value hedges, to transition the variable component of such agreements from LIBOR to SOFR.

Concurrent with these amendments, we elected certain of the optional expedients provided in Topic 848, which allow us to maintain our designation of fair value hedge accounting and application of the shortcut method for these agreements.

The adoption of this guidance did not have a material impact on our consolidated financial condition, results of operations, or cash flows.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The disclosure requirements included in ASU No.

2023-07 are required for all public entities, including entities with a single reportable segment.

2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The guidance is required to be applied on a retrospective basis.

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

Fiscal 2023 Form 10-K

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disclosures on income taxes paid by jurisdiction.

2023-09 is effective for annual periods beginning after December 15, 2024.

The guidance is required to be applied on a prospective basis, with the option to apply the standard retrospectively.

Early adoption is permitted.

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

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.

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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 regularly reviewed by our chief operating decision maker to analyze performance, make decisions and allocate resources.

Our operating segments reflect the way in which internally-reported financial information is regularly reviewed by the chief operating decision maker, who is our President and Chief Executive Officer, 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.

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Major Product Line Merchandising Departments

Building Materials

Building Materials, Electrical/Lighting, Lumber, Millwork, and Plumbing

Appliances, Décor/Storage, Flooring, Kitchen and Bath, and Paint

Hardware, Indoor Garden, Outdoor Garden, and Tools

Building Materials Building Materials, Electrical/Lighting, Lumber, Millwork, and Plumbing

Décor Appliances, Décor/Storage, Flooring, Kitchen and Bath, and Paint

Hardlines Hardware, Indoor Garden, Outdoor Garden, and Tools

Fiscal 2023 Form 10-K

47 unchanged sentences

Depreciation and finance lease amortization expense $ 3,020 $ 2,756 $ 2,650

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

The following table presents the consolidated balance sheet classification related to operating and finance leases:

in millions Consolidated Balance Sheet Classification January 28,

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Total lease liabilities $ 11,400 $ 10,456

(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.

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.2 billion as of both January 28, 2024 and January 29, 2023.

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

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Variable lease cost Selling, general and administrative 486 470 425

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.

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Present value of lease liabilities $ 8,132 $ 3,268

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

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

We have excluded approximately $ 450 million of lease payments (undiscounted basis) for leases that have been signed but have not yet commenced.

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

8 unchanged sentences

Lease assets obtained in exchange for new finance lease liabilities 336 322 672

GOODWILL AND INTANGIBLE ASSETS

The following table presents the changes in the carrying amount of our goodwill:

Fiscal Fiscal

in millions 2023 2022

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

Acquisitions (1)

Goodwill, balance at end of year $ 8,455 $ 7,444

(1) Fiscal 2023 includes the preliminary determination of goodwill related to acquisitions completed within the year.

See Note 1 3 for further details.

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

Fiscal 2023 Form 10-K

Intangible Assets

The following table presents information regarding our intangible assets, which are included in other assets on the consolidated balance sheets:

January 28, 2024 (1)

January 29, 2023

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

Definite-Lived Intangible Assets:

Customer relationships $ 3,425 $ ( 670 ) $ 2,755 $ 3,034 $ ( 495 ) $ 2,539

Trade names 227 ( 25 ) 202 151 ( 16 ) 135

Other 12 ( 12 ) — 12 ( 12 ) —

Indefinite-Lived Intangible Assets:

Trade names 649 649 649 649

Total Intangible Assets

$ 4,313 $ ( 707 ) $ 3,606 $ 3,846 $ ( 523 ) $ 3,323

(1) Includes the preliminary allocation of fair value to intangible assets related to acquisitions completed within fiscal 2023.

See Note 1 3 for further details.

Our intangible asset amortization expense was immaterial for fiscal 2023, fiscal 2022, and fiscal 2021.

The following table presents the estimated future amortization expense related to definite-lived intangible assets as of January 28, 2024:

in millions Amortization Expense

Fiscal 2024 $ 207

Fiscal 2025 207

Fiscal 2026 207

Fiscal 2027 198

Fiscal 2028 181

Thereafter 1,957

Total $ 2,957

DEBT AND DERIVATIVE INSTRUMENTS

Short-Term Debt

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

We have a commercial paper program that allows for borrowings up to $ 5.0 billion.

In connection with our program, we have back-up credit facilities with a consortium of banks for borrowings up to $ 5.0 billion, which consist 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 2024.

In July 2023, we completed the renewal of our 364 -day $ 1.5 billion credit facility, extending the maturity from July 2023 to July 2024.

All of our short-term borrowings in fiscal 2023 and fiscal 2022 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 %.

At January 28, 2024 and January 29, 2023, there were no outstanding borrowings under this program.

The following table presents additional information on borrowings under our commercial paper program during fiscal 2023 and fiscal 2022:

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2024 January 29,

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

3.25 % Senior notes due March 2022

Semi-annually — — 700

2.625 % Senior notes due June 2022

Semi-annually — — 1,249

2.70 % Senior notes due April 2023

4 unchanged sentences

Semi-annually 500 499 498

5.125 % Senior notes due April 2025

Semi-annually 500 498 —

3.35 % Senior notes due September 2025

6 unchanged sentences

Semi-annually 1,000 995 994

4.95 % Senior notes due September 2026

Semi-annually 750 746 —

2.875 % Senior notes due April 2027

10 unchanged sentences

Semi-annually 1,000 970 977

4.90 % Senior notes due April 2029

Semi-annually 750 743 —

2.95 % Senior notes due June 2029

52 unchanged sentences

Fiscal 2023 Form 10-K

September 2022 Issuance.

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

• 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.

November 2023 Issuance.

In November 2023, we issued three tranches of senior notes.

• The first tranche consisted of $ 500 million of 5.125 % senior notes due April 30, 2025 at a discount of $ 0.3 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.

Interest on these notes is due semi-annually on April 30 and October 30 of each year, beginning April 30, 2024.

• The second tranche consisted of $ 750 million of 4.95 % senior notes due September 30, 2026 at a discount of $ 1.6 million.

Interest on these notes is due semi-annually on March 30 and September 30 of each year, beginning March 30, 2024.

• The third tranche consisted of $ 750 million of 4.90 % senior notes due April 15, 2029 at a discount of $ 3.4 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning April 15, 2024.

• Issuance costs totaled $ 7 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.

In April 2023, we repaid our $ 1.0 billion 2.70 % senior notes at maturity.

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 the 5.875 % 2036 notes and the 5.125 % 2025 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.

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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.

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Fair Value Hedges.

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 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.

We had outstanding interest rate swap agreements with combined notional amounts of $ 5.4 billion at both January 28, 2024 and January 29, 2023.

These agreements are 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 28, 2024 and January 29, 2023, the fair values of these agreements totaled $ 858 million and $ 778 million, respectively, all of which are recognized in other long-term liabilities on the consolidated balance sheets.

All of our interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under GAAP.

Accordingly, the changes in the fair values of these agreements offset the changes in the fair value of the hedged long-term debt.

Fiscal 2023 Form 10-K

During the second quarter of fiscal 2023, we amended all of our interest rate swap agreements to replace LIBOR with SOFR and concurrently adopted certain expedients provided in Topic 848.

These amendments did not result in any change to our application of hedge accounting or have a material impact to our consolidated financial statements.

See Note 1 for further discussion.

Cash Flow Hedges.

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We expect an immaterial amount recorded in accumulated other comprehensive loss as of January 28, 2024 to be reclassified into earnings within the next 12 months.

Net Investment Hedges.

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 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

The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $ 714 million and $ 634 million as of January 28, 2024 and January 29, 2023, which was recorded in other current assets on the consolidated balance sheets.

We did not hold any cash collateral as of January 28, 2024 or January 29, 2023.

Provision for Income Taxes

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Provision for income taxes $ 4,781 $ 5,372 $ 5,304

Fiscal 2023 Form 10-K

The following table presents our combined federal, state, and foreign effective tax rates:

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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.

There was no impact on the Company’s effective tax rate as a result of the 15% minimum tax under the 2022 Tax Act.

Additionally, as of the end of fiscal 2023, the Organization for Economic Cooperation and Development (“OECD”) has published rules for a new global minimum tax framework through its base erosion and profit shifting pillar two project (“BEPS Pillar Two”), and various governments around the world have enacted or are in the process of enacting legislation on these rules.

Many member states have committed to adopting BEPS Pillar Two, which calls for a global minimum tax of 15% to be effective for tax years beginning in 2024.

The OECD guidance published to date includes transition and safe harbor rules around the implementation of the BEPS Pillar Two global minimum tax.

We are monitoring developments and evaluating the impacts these new rules will have on our effective tax rate, including eligibility to qualify for these safe harbor rules, and at this time do not expect the impact to be material.

Fiscal 2023 Form 10-K

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Total deferred tax assets, net of valuation allowance 3,591 3,202

Merchandise inventories — ( 14 )

Property and equipment ( 988 ) ( 992 )

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Net deferred tax liabilities $ ( 550 ) $ ( 700 )

As of January 29, 2023, we recorded deferred tax assets of $ 115 million for net operating losses, primarily related to state jurisdictions.

These losses expire at various dates beginning in 2023.

As of January 28, 2024, we recorded deferred tax assets of $ 99 million for net operating losses and $ 69 million for tax credits, primarily related to state jurisdictions.

These losses and credits expire at various dates beginning in 2024 and 2025, respectively.

We have concluded that it is more likely than not that tax benefits related to substantially all net operating losses will be realized based upon the expectation that we will generate the necessary taxable income in future periods.

We have concluded that it is not more likely than not that tax benefits related to substantially all tax credits will be realized prior to expiration, and a valuation allowance has been recorded against these tax credits.

The overall change in our valuation allowance was not material in fiscal 2023.

Fiscal 2023 Form 10-K

Reinvestment of Unremitted Earnings

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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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federal, state and local, and foreign tax authorities.

As of January 29, 2023, the Company is no longer subject to U.S.

federal examinations by tax authorities for years before fiscal 2010.

federal tax returns for fiscal years 2010 through 2021, with the exception of 2015, are currently under examination by the IRS.

With respect to the fiscal years 2010 to 2014, the IRS has issued a proposed adjustment relating to transfer pricing between our entities in the U.S.

We are defending our position using all available remedies.

With respect to fiscal years 2010 to 2014, the IRS had issued a proposed adjustment relating to transfer pricing between our entities in the U.S.

and China, which was resolved during fiscal year 2023 with no material impact to our consolidated financial condition, results of operations, or cash flows.

There are also ongoing U.S.

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Interest and Penalties

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

Net adjustments to accruals for interest and penalties a ssociated with un certain tax positions were immaterial in fiscal 2023, fiscal 2022, and fiscal 2021.

Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of January 28, 2024 and January 29, 2023.

Fiscal 2023 Form 10-K

STOCKHOLDERS’ EQUITY

4 unchanged sentences

Common stock:

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

Shares at beginning of year 1,794 1,792 1,789

Shares issued under employee stock plans, net 2 2 3

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

Shares at end of year 1,796 1,794 1,792

Treasury stock:

Balance at beginning of year ( 757 ) ( 712 ) ( 709 )

Shares at beginning of year ( 778 ) ( 757 ) ( 712 )

Repurchases of common stock ( 26 ) ( 21 ) ( 45 )

Balance at end of year ( 778 ) ( 757 ) ( 712 )

Shares at end of year ( 804 ) ( 778 ) ( 757 )

Shares outstanding at end of year 992 1,016 1,035

Cash dividends per share $ 8.36 $ 7.60 $ 6.60

Fiscal 2022 Form 10-K 57

Share Repurchases

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.

In August 2023, our Board of Directors approved a $ 15.0 billion share repurchase authorization that replaced the previous authorization of $ 15.0 billion, which was approved in August 2022.

The August 2023 authorization does not have a prescribed expiration date.

As of January 28, 2024, approximately $ 12.3 billion of the $ 15.0 billion share repurchase authorization remained available.

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:

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$ 8,074 $ 6,504 $ 15,001

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.

The cost of shares repurchased 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 and excise taxes incurred on share repurchases.

FAIR VALUE MEASUREMENTS

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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.

Fiscal 2023 Form 10-K

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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January 28, 2024 January 29, 2023

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

in millions Fair Value (Level 2) Fair Value (Level 2)

Derivative agreements – assets

$ — $ — $ — $ — $ 58 $ —

Derivative agreements – liabilities

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$ ( 859 ) $ ( 778 )

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.

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

Our derivative instruments are discussed further in Note 5 .

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Long-lived assets, goodwill, and other intangible assets are subject to nonrecurring fair value measurement for the assessment of impairment.

We did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis during fiscal 2022, fiscal 2021, or fiscal 2020.

We did not have any material assets or liabilities that were measured and recognized at fair value on a nonrecurring basis during fiscal 2023, fiscal 2022, or fiscal 2021.

Other Fair Value Disclosures

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

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

January 28, 2024 January 29, 2023

in millions Fair Value

(Level 1) Carrying

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At January 28, 2024, there was $ 454 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of two years .

Fiscal 2023 Form 10-K

The award types issued under the Plans are as follows:

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Assumed lives of options 6 years 6 years 6 years

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 2023:

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Additionally, the majority of our restricted stock awards may become non-forfeitable upon the associate’s attainment of age 60 , provided the associate has had five years of continuous service.

Fiscal 2023 Form 10-K

We have also granted performance share awards under the Plans.

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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 2023:

31 unchanged sentences

Under the outstanding ESPPs at January 28, 2024, 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, 2024.

Fiscal 2023 Form 10-K

EMPLOYEE BENEFIT PLANS

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At January 28, 2024, the Benefit Plans and the Restoration Plans held a total of 5.0 million shares of our common stock in trusts for plan participants.

Fiscal 2022 Form 10-K 61

WEIGHTED AVERAGE COMMON SHARES

The following table presents the reconciliation of our basic to diluted weighted average common shares:

The following table presents the reconciliation of our basic to diluted weighted average common shares as well as the number of anti-dilutive securities excluded from diluted weighted average common shares:

in millions Fiscal Fiscal Fiscal

9 unchanged sentences

In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

HD SUPPLY ACQUISITION

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.

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 following table summarizes total purchase consideration:

Total cash consideration for outstanding shares $ 8,637

Value of stock-based awards attributed to services already rendered (1)

Total purchase consideration $ 8,692

(1) In connection with the completion of the acquisition, all HD Supply stock-based awards were cash settled for an aggregate value of $ 111 million.

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 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.

Pro forma results of operations would not be materially different as a result of the acquisition and therefore are not presented.

During fiscal 2023, we completed three individually immaterial acquisitions for total aggregate cash purchase consideration of $ 1.5 billion .

Based on preliminary acquisition date fair values, we recognized aggregate definite-lived intangible assets of $ 469 million with a weighted average amortization period of 17 years, primarily related to customer relationships, and goodwill of $ 998 million.

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

The portion of goodwill generated through these acquisitions that is expected to be deductible for U.S.

federal and state tax purposes is not material.

Fiscal 2023 Form 10-K

We have completed preliminary valuation analyses necessary to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition dates.

These fair values were based on management’s estimates and assumptions;

however, the amounts indicated above are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the respective acquisition dates.

Accordingly, there may be adjustments to the assigned values of acquired assets and liabilities, including, but not limited to, intangible assets and their respective estimated useful lives.

The final determination of the fair values and related income tax impacts will be completed as soon as practicable, and within the measurement period of up to one year from the respective acquisition dates as permitted under GAAP.

Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined.

Net sales and net earnings for fiscal 2023 attributable to these acquisitions in the aggregate after their respective acquisition dates were immaterial.

Pro forma results of operations would not be materially different as a result of the acquisitions in the aggregate and therefore are not presented.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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