REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

The Home Depot, Inc.:

We have reviewed the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of ~~November 1, 2015~~July 31, 2016, the related Consolidated Statements of Earnings and Comprehensive Income for the ~~three-month~~three-month and ~~nine-month~~six-month periods ended ~~November 1,~~July 31, 2016 and August 2, 2015, ~~and~~ ~~November 2, 2014~~, and the related Consolidated ~~Statements~~Statement of Cash Flows for the ~~nine-month~~six-month periods ended ~~November 1, 2015~~July 31, 2016 and ~~November~~August 2, ~~2014.~~2015. These Consolidated Financial Statements are the responsibility of the Company's management.

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

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

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheet of The Home Depot, Inc. and subsidiaries as of ~~February 1, 2015~~January 31, 2016, and the related Consolidated Statements of Earnings, Comprehensive Income, Stockholders' Equity, and Cash Flows for the year then ended (not presented herein); and in our report dated March ~~26, 2015, except as to Note 2 and the effects of the change in accounting principle described in Note 2, which is as of August~~ 24, ~~2015,~~2016, we expressed an unqualified opinion on those Consolidated Financial Statements. Our report ~~refers~~on the Consolidated Financial Statements referred to a change in the presentation of certain shipping and handling costs. In our opinion, the information set forth in the accompanying Consolidated Balance Sheet as of ~~February 1, 2015~~January 31, 2016, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.

/s/ KPMG LLP

Atlanta, Georgia

~~November 23, 2015~~August 22, 2016

~~Table of Contents~~


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

FORWARD-LOOKING STATEMENTS

Certain statements contained herein regarding our future performance constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services; net sales growth; comparable store sales; effects of competition; state of the economy; state of the residential construction, housing and home improvement markets; state of the credit markets, including mortgages, home equity loans and consumer credit; demand for credit offerings; inventory and in-stock positions; implementation of store, interconnected retail and supply chain initiatives; management of relationships with our suppliers and vendors; the impact and expected outcome of investigations, inquiries, claims and litigation, including those related to the data breach we discovered in the third quarter of fiscal 2014; issues related to the payment methods we ~~accept and the timing of upgrades and enhancements impacting point of sale devices;~~accept; continuation of share repurchase programs; net earnings performance; earnings per share; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the effect of accounting charges; the effect of adopting certain accounting standards; store openings and closures; financial outlook; and the integration of Interline Brands, Inc. ("Interline") into our organization and the ability to recognize the anticipated synergies and benefits of the acquisition.

Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Part II, Item 1A, "Risk Factors" and elsewhere in this report. You should read such information in conjunction with our Consolidated Financial Statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission ("SEC").

EXECUTIVE SUMMARY AND SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA

Net Sales increased ~~6.4%~~6.6% to ~~$21.8~~$26.5 billion for the ~~third~~second quarter of fiscal ~~2015~~2016 from ~~$20.5~~$24.8 billion for the ~~third~~second quarter of fiscal ~~2014~~.2015. For the first ~~nine~~six months of ~~2015,~~fiscal 2016, Net Sales increased ~~5.5%~~7.7% to ~~$67.5~~$49.2 billion from ~~$64.0~~$45.7 billion for the first ~~nine~~six months of fiscal ~~2014.~~2015. Our total comparable store sales increased ~~5.1%~~4.7% in the ~~third~~second quarter of fiscal ~~2015~~,2016, driven by a ~~4.3%~~2.5% increase in our comparable store average ticket and a 2.2% increase in our comparable store customer ~~transactions and a 0.9% increase in our comparable store average ticket.~~transactions. Comparable store sales for our U.S. stores increased ~~7.3%~~5.4% in the ~~third~~second quarter of fiscal ~~2015~~.2016. For the first ~~nine~~six months of fiscal ~~2015,~~2016, our total comparable store sales increased ~~5.1%,~~5.5% and comparable store sales for our U.S. stores increased ~~6.6%~~6.3%.

For the ~~third~~second quarter of fiscal ~~2015~~,2016, we reported Net Earnings of ~~$1.7~~$2.4 billion and Diluted Earnings per Share of ~~$1.35~~$1.97 compared to Net Earnings of ~~$1.5 billion~~ ~~and Diluted Earnings per Share of~~ ~~$1.15~~ ~~for the~~ ~~third~~ ~~quarter of fiscal~~ ~~2014. For the first nine months of fiscal 2015, we reported Net Earnings of $5.5~~$2.2 billion and Diluted Earnings per Share of ~~$4.29 compared to~~$1.73 for the second quarter of fiscal 2015. For the first six months of fiscal 2016, we reported Net Earnings of ~~$5.0~~$4.2 billion and Diluted Earnings per Share of ~~$3.66~~$3.40 compared to Net Earnings of $3.8 billion and Diluted Earnings per Share of $2.94 for the first ~~nine~~six months of fiscal ~~2014.~~2015.

The results for the second quarter and first ~~nine~~six months of fiscal 2015 included $92 million and $99 million, respectively, of pretax net expenses related to a breach of our payment data systems that we discovered in the third quarter of fiscal 2014 (the "Data Breach"). These charges resulted in a decrease of $0.05 to Diluted Earnings per Share for the second quarter and first six months of fiscal 2015.

The results for the second quarter and first six months of fiscal 2015 included a $144 million pretax gain related to the sale of our remaining equity ownership in HD Supply Holdings, Inc. ("HD Supply"). This gain contributed $0.07 to Diluted Earnings per Share for the second quarter and first ~~nine~~six months of fiscal 2015. ~~The results for the~~ ~~third~~ quarter and first nine months of fiscal 2014 included $100 million and $212 million, respectively, of pretax gains related to the sales of portions of our equity ownership in HD Supply. These gains contributed $0.05 and $0.10 to Diluted Earnings per Share for the ~~third~~ ~~quarter and first nine months of fiscal 2014, respectively.~~

~~The results for the~~ ~~third~~ quarter and first nine months of fiscal 2015 included $20 million and $119 million, respectively, of pretax net expenses related to a breach of our payment data systems that we discovered in the third quarter of fiscal 2014 (the "Data Breach"). These charges resulted in decreases of $0.01 and $0.06 to Diluted Earnings per Share for the ~~third~~ quarter and first nine months of fiscal 2015, respectively. The results for the third quarter and first nine months of fiscal 2014 included $28 million of pretax net expenses related to the Data Breach, which resulted in a decrease of $0.01 to Diluted Earnings per Share for those periods.

~~Table of Contents~~

The results for the first ~~nine~~six months of fiscal 2015 included a $71 million net benefit to our Provision for Income Taxes due primarily to the favorable settlement of a tax audit, resulting in a benefit of $0.05 to Diluted Earnings per Share for the first ~~nine~~six months of fiscal 2015.

During the first quarter of fiscal 2015, we changed our accounting policy for shipping and handling costs from our stores, locations or distribution centers to customers and for online fulfillment center costs. Under the new accounting policy, these costs are included in Cost of Sales, whereas they were previously included in Operating Expenses. The Consolidated Statements of Earnings for the ~~third~~ quarter and first nine months of fiscal 2014 have been reclassified to reflect this change in accounting policy. The impact of this reclassification was an increase of $142 million and $424 million to Cost of Sales for the ~~third~~ quarter and first nine months of fiscal 2014, respectively, and a corresponding decrease to Operating Expenses in the same periods. This reclassification had no impact on Net Sales, Operating Income, Net Earnings or Earnings per Share.

~~Data Breach~~

As previously reported, in the third quarter of fiscal 2014, we confirmed that our payment data systems were breached, which potentially impacted customers who used payment cards at self-checkout systems in our U.S. and Canadian stores. Since the breach, we completed a major payment security project that provides enhanced encryption of payment card data at the point of sale in all of our U.S. and Canadian stores. We have also rolled out EMV chip card technology in our U.S. stores, which adds extra layers of payment card protection for customers who use EMV enabled chip cards. Our Canadian stores were already enabled with EMV chip card technology.

~~Litigation, Claims and Government Investigations~~

In the second quarter of fiscal 2015, the payment card networks made claims against us for costs that they assert they or their issuing banks have incurred in connection with the Data Breach, including incremental counterfeit fraud losses and non-ordinary course operating expenses (such as card reissuance costs), and we recorded an accrual for estimated probable losses we expected to incur in connection with those claims. In the third quarter of fiscal 2015, we entered into settlement agreements with American Express and Discover with respect to their claims.

In addition, at least 57 putative class actions have been filed in courts in the U.S. and Canada allegedly arising from the Data Breach. The U.S. class actions have been consolidated for pre-trial proceedings in the United States District Court for the Northern District of Georgia (the "District Court"). That court ordered that the individual class actions be administratively closed in favor of the filing of consolidated class action complaints on behalf of customers and financial institutions allegedly harmed by the Data Breach. In the third quarter of fiscal 2015, we recorded an accrual for estimated probable losses that we expect to incur in connection with the U.S. customer class actions.

The accruals for estimated probable losses in connection with the payment card networks' claims and the U.S. customer class actions are based on currently available information associated with those matters. These estimates may change as new information becomes available or circumstances change. Our accruals are also based on the expectation of reaching negotiated settlements with the claimants and not on any determination that it is probable that we would be found liable for the losses we have accrued were these matters to be litigated.

Other claims have been and may be asserted against us on behalf of customers, payment card issuing banks, shareholders or others seeking damages or other related relief allegedly arising from the Data Breach. In the third quarter of fiscal 2015, two purported shareholder derivative actions were filed in the District Court against certain present and former members of our Board of Directors and executive officers. We are also named as a nominal defendant in both suits, which together assert claims for breaches of fiduciary duty, waste of corporate assets, unjust enrichment and violations of the Securities Exchange Act of 1934. The lawsuits seek unspecified damages, equitable relief to reform our corporate governance structure, restitution, disgorgement of profits, benefits and other compensation obtained by the defendants, and reasonable costs and expenses. In addition, several state and federal agencies, including State Attorneys General, are investigating events related to the Data Breach, including how it occurred, its consequences and our responses. We are cooperating in the governmental investigations, and we may be subject to fines or other obligations. While a loss from these matters, including the Canadian class actions and the U.S. financial institutions class actions, is reasonably possible, we are not able to estimate the costs, or range of costs, related to these matters because the proceedings remain in the early stages, alleged damages have not been specified, there is uncertainty as to the likelihood of a class or classes being certified or the ultimate size of any class if certified, and there are significant factual and legal issues to be resolved. We have not concluded that a loss from these matters is probable; therefore, we have not recorded an accrual for litigation, claims and governmental investigations related to these matters in the third quarter of fiscal 2015. We will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. We believe that the ultimate amount paid on these actions, claims and investigations could have an adverse effect on our consolidated financial condition, results of operations, or cash flows in future periods.

~~Table of Contents~~

~~Expenses Incurred and Amounts Accrued~~

In the third quarter of fiscal 2015, we recorded $20 million of pretax expenses related to the Data Breach. We did not record any related expected insurance proceeds in the third quarter of fiscal 2015. The results for the first nine months of fiscal 2015 included $189 million of pretax gross expenses related to the Data Breach, partially offset by $70 million of expected insurance proceeds, for pretax net expenses of $119 million. Since the Data Breach occurred, we have recorded $252 million of pretax gross expenses related to the Data Breach, partially offset by $100 million of expected insurance proceeds, for pretax net expenses of $152 million. These expenses include costs to investigate the Data Breach; provide identity protection services, including credit monitoring, to impacted customers; increase call center staffing; and pay legal and other professional services, all of which were expensed as incurred. Expenses also include the accruals for estimated probable losses that we expect to incur in connection with the claims made by the payment card networks and the U.S. customer class actions. These expenses are included in Selling, General and Administrative expenses in the accompanying Consolidated Statements of Earnings.

~~Future Costs~~

We expect to incur additional legal and other professional services expenses associated with the Data Breach in future periods and will recognize these expenses as services are received. Costs related to the Data Breach that may be incurred in future periods may include additional liabilities to payment card networks and impacted customers; liabilities from current and future civil litigation, governmental investigations and enforcement proceedings; future expenses for legal, investigative and consulting fees; and incremental expenses and capital investments for remediation activities. We believe that the ultimate amount paid on these services and claims could have an adverse effect on our consolidated financial condition, results of operations, or cash flows in future periods.

~~Insurance Coverage~~

We maintained $100 million of network security and privacy liability insurance coverage in fiscal 2014, above a $7.5 million deductible, to limit our exposure to losses such as those related to the Data Breach. As of November 1, 2015, we had received initial payments totaling $30 million of insurance reimbursements under the fiscal 2014 policy, and expect to receive additional payments. In the first quarter of fiscal 2015, we entered into a new policy, with $100 million of network security and privacy liability insurance coverage, above a $10 million deductible, to limit our exposure to similar losses.

Key Initiatives

In the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016, we continued to focus on the following key initiatives:

Customer ~~Service~~Experience – Our customer ~~service~~experience initiative is anchored on the principles of ~~simplifying the business, creating an emotional connection with customers,~~ putting customers first and taking care of our ~~associates.~~associates, and our commitment to customer service remains strong. We have taken a number of steps to enhance this initiative to provide our customers with a seamless and frictionless shopping experience in our stores, online, on the job site or in their homes. In the first ~~nine~~six months of fiscal ~~2015,~~2016, we ~~continued~~enhanced our dynamic ETA feature for online purchases. Dynamic ETA provides a timelier and more accurately estimated delivery date and we believe it will lead to ~~utilize our second generation FIRST phone, a handheld mobile device used by our store associates, to enhance~~increased conversion and customer ~~service in the stores by allowing associates to convert online sales in the aisle and expedite the checkout process for customers during peak traffic periods.~~satisfaction.

Product Authority – Our product authority initiative is facilitated by our merchandising transformation and portfolio strategy, which is focused on delivering product innovation, assortment and value. In the first ~~nine~~six months of fiscal ~~2015,~~2016, we continued to introduce a wide range of innovative new products to our ~~professional,~~do-it-yourself, do-it-for-me and ~~do-it-yourself~~professional customers, while remaining focused on offering everyday values in our stores and online. We also continued to ~~utilize~~leverage our merchandising assortment planning and pricing tools to better understand customer preferences and to refine our online and in-store product assortment in particular stores orand geographic areas.

~~Disciplined~~Productivity and Efficiency Driven by Capital Allocation ~~Productivity and Efficiency~~– Our approach to driving productivity and efficiency is advanced through continuous operational improvement in ~~the~~our stores and ~~our~~ supply chain, disciplined capital allocation, and building shareholder value through higher returns on invested capital and total value returned to shareholders in the form of dividends and share repurchases. ~~During the third quarter~~We continue to optimize our supply chain through our multi-year program called Project Sync, which is being rolled out gradually to suppliers in several of ~~fiscal 2015,~~our U.S. Rapid Deployment Centers ("RDCs"). This will allow us to significantly reduce our average lead time from supplier to shelf, reduce transportation expenses and improve inventory turns. As we ~~settled a $1.5 billion Accelerated Share Repurchase ("ASR") agreement~~continue to roll out Project Sync, we plan to create an end-to-end solution that ~~was entered into~~benefits all participants in our supply chain, from our suppliers to our transportation providers to our RDC and store associates to our customers.

We did not open or close any stores during the second quarter of fiscal 2015. We received a total of 13.3 million shares of our common stock under the $1.5 billion ASR agreement, including 1.3 million shares received upon settlement of the agreement in the third quarter of fiscal 2015. Also during the third quarter of fiscal 2015, we entered into a $1.375 billion ASR agreement and received an initial delivery of 10.1 million shares of our common stock. In addition to the ASR, we repurchased 5.0 million shares of our common stock through the open market in the third quarter of fiscal 2015. During the first nine months of fiscal 2015, we repurchased a total of 42.4 million shares for $5.0 billion through ASR agreements and the open market.

~~We opened three new stores in Mexico during the third quarter of fiscal~~ ~~2015~~,2016, for a total store count of ~~2,273~~2,275 at the end of the quarter. As of the end of the ~~third~~second quarter of fiscal ~~2015~~,2016, a total of ~~296~~298 of our stores, or ~~13.0%~~13.1%, were located in Canada and Mexico.

~~Table of Contents~~

In August 2015, we completed the acquisition of Interline for $1.7 billion. Interline is a leading national distributor and direct marketer of broad-line maintenance, repair and operations ("MRO") products. We intend to leverage Interline's capabilities and expertise in MRO products to expand our share of the MRO product market with our current customers as well as gain new customers currently served by Interline.

We generated ~~$7.4~~$6.9 billion of cash flow from operations in the first ~~nine~~six months of fiscal ~~2015.~~2016. This cash flow, along with ~~$4.0~~$3.0 billion of long-term debt issued in the first ~~nine~~six months of fiscal ~~2015,~~2016, was used to ~~fund $5.0~~repay $3.0 billion of 5.40% senior notes that matured on March 1, 2016, fund cash payments of $2.4 billion for share repurchases, pay ~~$2.3~~$1.7 billion of dividends, ~~purchase Interline for $1.7 billion,~~ fund ~~$1.1 billion~~$697 million in capital expenditures and repay ~~$290~~$350 million of short-term borrowings.

Our inventory turnover ratio was ~~5.0~~5.2 times at the end of the ~~third~~second quarter of fiscal ~~2015~~2016 compared to ~~4.8~~5.1 times at the end of the ~~third~~second quarter of fiscal ~~2014.~~2015. Our return on invested capital (computed on net operating profit after tax, a non-GAAP financial measure, for the ~~trailing twelve months and~~most recent twelve-month period, divided by the average of beginning and ending long-term debt and ~~equity) was 26.2%~~equity for the ~~third~~most recent twelve-month period) was 29.0% for the second quarter of fiscal ~~2015~~2016 compared to ~~22.2%~~25.0% for the ~~third~~second quarter of fiscal ~~2014~~.2015. For a reconciliation of net operating profit after tax to Net Earnings, the most comparable GAAP financial measure, and our calculation of return on invested capital, see "Non-GAAP Financial Measures" below.

~~Interconnected~~Interconnecting Retail – Our focus on ~~interconnected~~interconnecting retail ~~which connects our other three key initiatives,~~ is based on building a competitive and seamless platform across all commerce channels. ~~During~~In the ~~third quarter~~first six months of fiscal ~~2015,~~2016, we continued to invest in our interconnected abilities to more effectively meet customers' demands for increased fulfillment options. We completed the ~~pilot~~deployment of our new ~~order alignment system, referred to as COM, which we expect to roll out~~Customer Order Management platform (“COM”) in all of our U.S. stores in the second quarter of fiscal 2016. We also continued the roll out of our Buy Online, Deliver From Store ("BODFS") program, which complements our existing interconnecting retail programs, Buy Online, Ship to ~~invest~~Store ("BOSS") and Buy Online, Pick-up In Store ("BOPIS"). We have seen strong demand for our BODFS program in ~~offering~~certain markets where it has been piloted, and we expect to complete the roll out of BODFS by the end of fiscal 2016.

Additionally, we have fully implemented BOSS via RDC delivery capability, which enables us to fulfill BOSS orders through our ~~customers convenient~~RDC network, leveraging our inventory and fulfillment ~~options for products purchased online. During~~channels, which has resulted in significant cost savings and improved shipping times and customer satisfaction scores. In the ~~third~~second quarter of fiscal 2015, we opened and began shipping products from our third new Direct Fulfillment Center ("DFC") located in Troy Township, Ohio. We expect this facility, along with our other two new DFCs in California and Georgia, to provide us with the capability to reach 90% of our U.S. customers in two business days or less with parcel shipping. We also opened our third online customer contact center in Tempe, Arizona during the quarter.

~~In addition, approximately 42%~~2016, over 40% of our online orders were picked up in our stores through our ~~Buy Online, Pick-up In Store ("BOPIS")~~BOPIS and ~~Buy Online, Ship to Store ("BOSS")~~BOSS offerings ~~in the third quarter of fiscal 2015. We also continued the pilot~~and approximately 90% of our ~~Buy Online, Deliver From Store ("BODFS") program, which we expect to roll out in fiscal 2016 after~~online returns were processed through the ~~roll out~~convenience of ~~COM.~~our stores. Sales from our online channels increased ~~25.2%~~18.8% and ~~26.4%~~20.0% for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015,~~2016, respectively, compared to the same periods last year, and represented ~~5.1% and 5.0%~~5.6% of our total Net Sales for both the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015, respectively.~~

~~Outside of the U.S., we rolled out Mexico's digital commerce site and re-platformed our Canadian website in the first nine months of fiscal 2015.~~2016.

~~Table of Contents~~

We believe the selected sales data, the percentage relationship between Net Sales and major categories in the Consolidated Statements of Earnings and the percentage change in the dollar amounts of each of the items presented below are important in evaluating the performance of our business operations.


	% of Net Sales												% Increase (Decrease) in Dollar Amounts				% of Net Sales												% Increase (Decrease) in Dollar Amounts
	Three Months Ended						Nine Months Ended						% Increase (Decrease) in Dollar Amounts				Three Months Ended						Six Months Ended						% Increase (Decrease) in Dollar Amounts
	November 1, 2015			November 2, 2014			November 1, 2015			November 2, 2014			Three Months		Nine Months		July 31, 2016			August 2, 2015			July 31, 2016			August 2, 2015			Three Months		Six Months
NET SALES	100.0		%	100.0		%	100.0		%	100.0		%	6.4	%	5.5	%	100.0		%	100.0		%	100.0		%	100.0		%	6.6	%	7.7	%
GROSS PROFIT	34.7			34.3			34.2			34.1			7.4		6.0		33.7			33.7			34.0			34.0			6.7		7.6
Operating Expenses:
Selling, General and Administrative	19.1			19.9			18.7			19.2			2.0		2.7		16.6			17.3			17.6			18.5			2.1		2.4
Depreciation and Amortization	1.9			2.0			1.9			1.9			3.2		2.0		1.6			1.7			1.8			1.8			4.1		3.7
Total Operating Expenses	21.0			21.9			20.6			21.1			2.1		2.6		18.2			19.0			19.4			20.3			2.2		2.6

OPERATING INCOME	13.7			12.4			13.7			12.9			16.8		11.4		15.5			14.7			14.6			13.7			12.5		15.0
Interest and Other (Income) Expense:
Interest and Investment Income	—			(0.5		)	(0.2		)	(0.3		)	(93.3	)	(27.9	)	—			(0.6		)	—			(0.3		)	(94.6	)	(90.2	)
Interest Expense	1.1			1.1			1.0			1.0			13.3		9.7		0.9			0.9			1.0			0.9			1.3		11.6
Interest and Other, net	1.1			0.6			0.8			0.6			N/M		30.9		0.9			0.3			0.9			0.6			N/M		67.9

EARNINGS BEFORE PROVISION FOR INCOME TAXES	12.6			11.9			12.9			12.3			12.3		10.5		14.6			14.4			13.6			13.1			8.8		12.5
Provision for Income Taxes	4.7			4.4			4.7			4.6			12.5		8.7		5.4			5.4			5.0			4.7			7.9		14.7
NET EARNINGS	7.9		%	7.5		%	8.2		%	7.8		%	12.2	%	11.5	%	9.2		%	9.0		%	8.6		%	8.3		%	9.3	%	11.3	%
SELECTED SALES DATA⁽¹⁾
Number of Customer Transactions (in millions)	371.1			355.4			1,151.7			1,109.5			4.4	%	3.8	%	430.0			420.4			804.8			780.6			2.3	%	3.1	%
Average Ticket	$	58.03		$	57.55		$	58.72		$	57.90		0.8	%	1.4	%	$	60.87		$	59.42		$	60.48		$	59.04		2.4	%	2.4	%
Sales per Square Foot	$	366.37		$	347.79		$	380.12		$	361.73		5.3	%	5.1	%	$	438.61		$	420.37		$	407.64		$	387.04		4.3	%	5.3	%
Comparable Store Sales Increase (%)⁽²⁾	5.1		%	5.2		%	5.1		%	4.6		%	N/A		N/A		4.7%			4.2%			5.5		%	5.1		%	N/A		N/A
Online Sales (% of Net Sales)⁽³⁾	5.1		%	4.4		%	5.0		%	4.3		%	25.2	%	26.4	%	5.6%			5.0%			5.6		%	5.0		%	18.8	%	20.0	%

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

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(1)	Selected Sales Data does not include results for the Interline acquisition that was completed in the third quarter of fiscal 2015.

(2)

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


(3)	Consists of Net Sales generated online through our Home Depot, Home Decorators Collection and Blinds.com websites for products picked up in stores or delivered to customer locations ~~or picked up in stores~~ through our BOPIS, BOSS and ~~BOSS~~BODFS programs.

N/A – Not Applicable

N/M – Not Meaningful

~~N/A – Not Applicable~~

~~Table of Contents~~

RESULTS OF OPERATIONS

Net Sales for the ~~third~~second quarter of fiscal 2016increased6.6% to $26.5 billion from $24.8 billion for the second quarter of fiscal 2015~~increased6.4%~~ ~~to $21.8 billion~~ ~~from $20.5 billion~~ ~~for the~~ ~~third~~ ~~quarter of fiscal~~ ~~2014~~. For the first ~~nine~~six months of fiscal ~~2015,~~2016, Net Sales increased ~~5.5%~~7.7% to ~~$67.5~~$49.2 billion from ~~$64.0~~$45.7 billion for the comparable period of fiscal ~~2014.~~2015. The increase in Net Sales for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016 primarily reflects the impact of positive comparable store sales driven by increased customer transactions and average ticket growth, as well as sales from Interline, which was acquired in the third quarter of fiscal 2015. The increase in Net Sales was partially offset by pressure from a stronger U.S. dollar, which negatively impacted total sales growth by $181 million and $377 million in the ~~strengthening U.S. dollar.~~ second quarter and first six months of fiscal 2016, respectively.

Total comparable store sales increased ~~5.1%~~4.7% and 5.5% for ~~both~~ the ~~third~~second quarter and first ~~nine months of fiscal 2015.~~

~~The positive comparable store sales for the~~ ~~third~~ ~~quarter and first nine~~six months of fiscal ~~2015~~2016 ~~reflect~~, respectively, which reflects a number of factors, including the execution of our key initiatives, continued strength in our maintenance and repair categories, and an improved U.S. home improvement market. All of our departments posted positive comparable store sales for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015.~~2016. Comparable store sales for our Appliances, Tools, Lumber, Plumbing, Décor, ~~Lighting, Hardware,~~Indoor Garden, Building Materials and ~~Indoor Garden~~Lighting product categories were above the Company average for the ~~third~~second quarter of fiscal 2015. Comparable store sales for our Outdoor Garden, Kitchen and Bath, Electrical, Millwork, Flooring, Lumber and Paint product categories were positive but below the Company average for the third quarter of fiscal 2015.2016. Further, our comparable store customer transactions increased ~~4.3%~~2.2% and ~~3.7%~~3.0% for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016, respectively. Our comparable store average ticket increased ~~0.9% and 1.4%~~2.5% for both the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015, respectively,~~2016, due in part to strong sales in big ticket purchases such as HVAC, appliances ~~roofing~~ and ~~countertops,~~roofing, offset in part by the strength of the U.S. ~~dollar and its resulting impact to non-U.S. dollar average ticket.~~dollar.

Gross Profit increased~~7.4%~~ 6.7% to ~~$7.6~~$8.9 billion for the ~~third~~second quarter of fiscal ~~2015~~2016 from ~~$7.0~~$8.4 billion for the ~~third~~second quarter of fiscal ~~2014~~.2015. Gross Profit increased ~~6.0%~~7.6% to ~~$23.1~~$16.7 billion for the first ~~nine~~six months of fiscal ~~2015~~2016 from ~~$21.8~~$15.5 billion for the first ~~nine~~six months of fiscal ~~2014.~~2015. Gross Profit as a percent of Net Sales, ~~increased 34 basis points to~~ ~~34.7%~~or gross profit margin, was 33.7% for the ~~third~~second quarter of both fiscal 2016 and 2015, ~~compared to 34.3% for the third quarter of fiscal~~ ~~2014. Gross Profit as a percent of Net Sales increased 15 basis points to 34.2%~~ and 34.0% for the first ~~nine~~six months of both fiscal ~~2015 compared to 34.1% for the first nine months of fiscal 2014. The increase in gross~~2016 and 2015. Gross profit margin for the ~~third~~second quarter and first six months of fiscal ~~2015~~2016 reflects ~~higher levels~~the impact of ~~co-op allowances and rebates,~~Interline, which has a lower gross profit margin, offset by benefits from our supply chain driven by lower fuel costs and increased productivity and ~~lower shrink, partially offset by contraction due to the acquisition~~from reaching higher levels of ~~Interline. Gross profit margin for the first nine months of fiscal 2015 reflects benefits from our supply chain partially offset by a change~~co-op allowances and rebates in ~~the mix of products sold.~~certain category classes.

Selling, General and Administrative expenses ("SG&A") increased ~~2.0%~~2.1% to ~~$4.2~~$4.4 billion for the ~~third~~second quarter of fiscal ~~2015~~2016 from ~~$4.1~~$4.3 billion for the ~~third~~second quarter of fiscal ~~2014~~2015, and increased ~~2.7%~~2.4% to ~~$12.6~~$8.7 billion for the first ~~nine~~six months of fiscal ~~2015~~2016 from ~~$12.3~~$8.5 billion for the first ~~nine~~six months of ~~2014.~~fiscal 2015. SG&A for the ~~third~~second quarter and first ~~nine~~six months of fiscal 2015 included ~~$20~~$92 million and ~~$119~~$99 million, respectively, ~~of pretax net expenses related to the Data Breach. SG&A for the third quarter and first nine months of fiscal 2014 included $28 million~~ of pretax net expenses related to the Data Breach. As a percent of Net Sales, SG&A was ~~19.1%~~16.6% for the ~~third~~second quarter of fiscal ~~2015~~2016 compared to ~~19.9%~~17.3% for the ~~third~~second quarter of fiscal ~~2014.~~2015. For the first ~~nine~~six months of fiscal ~~2015,~~2016, SG&A as a percent of Net Sales was ~~18.7%~~17.6% compared to ~~19.2%~~18.5% for the same period last year. The decrease in SG&A as a percent of Net Sales for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016 reflects ~~strong expense controls and~~ expense leverage resulting from the positive comparable store sales environment ~~partially offset by expenses related to the Data Breach.~~and strong expense controls.

Depreciation and Amortization increased ~~3.2%~~4.1% to $~~423~~436 million for the ~~third~~second quarter of fiscal 2016 from $419 million for the second quarter of fiscal 2015 ~~from $410 million~~ ~~for the~~ ~~third~~ ~~quarter of fiscal~~ ~~2014~~. For the first ~~nine~~six months of fiscal ~~2015,~~2016, Depreciation and Amortization increased ~~2.0%~~3.7% to ~~$1.3 billion~~$869 million from ~~$1.2 billion~~$838 million for the ~~same period~~first six months of fiscal ~~2014.~~2015. Depreciation and Amortization as a percent of Net Sales was ~~1.9%~~1.6% for the ~~third~~second quarter of fiscal ~~2015~~2016 compared to ~~2.0%~~1.7% for the ~~third~~second quarter of fiscal ~~2014,~~2015, and was ~~1.9%~~1.8% for the first ~~nine~~six months of both fiscal ~~2015~~2016 and ~~2014.~~2015. Depreciation and Amortization as a percent of Net Sales for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016 reflects expense leverage resulting from the positive comparable store sales environment.

Operating Income increased ~~16.8%~~12.5% to $~~3.0~~4.1 billion for the ~~third~~second quarter of fiscal 2016 from $3.6 billion for the second quarter of fiscal 2015 ~~from~~ ~~$2.6~~. Operating Income increased 15.0% to $7.2 billion for the first six months of fiscal 2016 from $6.2 billion for the first six months of fiscal ~~third~~2015. Operating Income as a percent of Net Sales was 15.5% for the second quarter of fiscal 2016 compared to 14.7% for the second quarter of fiscal 2015. Operating Income as a percent of Net Sales was 14.6% for the first six months of fiscal 2016 compared to 13.7% for the first six months of fiscal 2015.

For the second quarter of fiscal ~~2014. Operating Income increased 11.4% to $9.2 billion for the first nine months of fiscal 2015 from $8.3 billion for the first nine months of fiscal 2014.~~

~~For the~~ ~~third~~ ~~quarter of fiscal~~ ~~2015~~2016, we recognized ~~$240~~$228 million of Interest and Other, net, compared to $~~113~~84 million for the ~~third~~second quarter of fiscal ~~2014~~2015. We recognized ~~$517~~$465 million of Interest and Other, net, for the first ~~nine~~six months of fiscal ~~2015~~2016 compared to ~~$395~~$277 million for the same period last year. Interest and Other, net, for the second quarter and first six months of fiscal 2015 included a $144 million pretax gain related to the sale of our remaining equity ownership in HD Supply. Interest and Other, net, as a percent of Net Sales was ~~1.1%~~0.9% for the ~~third~~second quarter of fiscal 2016 compared to 0.3% for the second quarter of fiscal 2015 ~~compared to 0.6% for the~~ ~~third~~ ~~quarter of fiscal~~ ~~2014~~. Interest and Other, net, as a percent of Net Sales was ~~0.8%~~0.9% for the first ~~nine~~six months of fiscal ~~2015~~2016 compared to 0.6% for the first ~~nine~~six months of fiscal ~~2014.~~2015. These results reflect ~~a $144 million pretax gain in the first nine months of fiscal 2015 related to the sale of our remaining equity ownership in HD Supply compared to pretax gains of $100 million and $212 million in the~~ ~~third~~ ~~quarter and first nine months of fiscal 2014,~~

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~~respectively, related to the sales of portions of our equity ownership in HD Supply. This was partially offset by~~ additional interest expense incurred in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2015~~2016 due primarily ~~due~~ to higher long-term debt ~~issued in June 2014, May 2015 and September 2015.~~balances.

Our combined effective income tax rate was ~~36.4%~~36.8% for the first ~~nine~~six months of fiscal ~~2015~~2016 compared to ~~37.0%~~36.1% for the first ~~nine~~six months of fiscal ~~2014~~2015. The effective income tax rate for the first ~~nine~~six months of fiscal 2015 reflects a $71 million net benefit to our Provision for Income Taxes due primarily to the favorable settlement of a tax audit.

Diluted Earnings per Share were $~~1.35~~1.97 and ~~$4.29~~$3.40 for the ~~third~~second quarter and first ~~nine~~six months of fiscal 2016, respectively, compared to $1.73 and $2.94 for the second quarter and first six months of fiscal 2015, ~~respectively, compared to $1.15~~ ~~and $3.66 for the~~ ~~third~~ ~~quarter and first nine months of fiscal~~ ~~2014~~, respectively. The ~~gains~~gain on the ~~sales~~sale of our remaining equity ownership ofin HD Supply contributed a benefit of $0.07 to Diluted Earnings per Share for the second quarter and first ~~nine~~six months of fiscal 2015 ~~compared to a benefit of $0.10 for the first nine months of fiscal 2014, of which $0.05 was recognized in the third quarter of fiscal 2014.~~. Expenses related to the Data Breach had a negative ~~impacts~~impact of ~~$0.01 and $0.06~~$0.05 to Diluted Earnings per Share for the ~~third~~second quarter and first ~~nine~~six months of fiscal 2015~~, respectively, compared to a negative impact of $0.01 for both the~~ ~~third~~ ~~quarter and first nine months of fiscal~~ ~~2014~~. Diluted Earnings per Share for the first ~~nine~~six months of fiscal 2015 also reflect $0.05 of benefit from the favorable settlement of a tax audit.

Non-GAAP Financial Measures

To provide clarity, internally and externally, about our operating performance, we supplement our reporting with certain non-GAAP financial measures. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. Non-GAAP financial measures presented herein may differ from similar measures used by other companies.

Return on Invested Capital

We believe return on invested capital ("ROIC") is meaningful for investors and management because it measures how effectively we deploy our capital base. We define ROIC as net operating profit after tax ("NOPAT"), a non-GAAP financial measure, for the most recent twelve-month period divided by the average of beginning and ending long-term debt, including current maturities, and equity for the most recent twelve-month period.

The following table provides our ROIC calculation and reconciles NOPAT, a non-GAAP financial measure, to Net Earnings, a GAAP financial measure, for the twelve months ended July 31, 2016 and August 2, 2015 (amounts in millions):



	For the Twelve Months Ended
	July 31, 2016			August 2, 2015
Net Earnings	$	7,440		$	6,729
Add:
Interest and Other, net	941			488
Provision for Income Taxes	4,329			3,771
Operating Income	12,710			10,988
Subtract:
Income Tax Adjustment ⁽¹⁾	4,655			3,981
Net Operating Profit After Tax	$	8,055		$	7,007

Average Debt and Equity ⁽²⁾	$	27,757		$	28,010

Return on Invested Capital (NOPAT / Average Debt and Equity)	29.0		%	25.0		%

—————


(1)	Income Tax Adjustment is defined as Operating Income multiplied by the Company's effective tax rate.


(2)	Average Debt and Equity is defined as the average of beginning and ending long-term debt, including current maturities, and equity for the most recent twelve-month period.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides us with a significant source of liquidity. ~~During~~For the first ~~nine~~six months of fiscal ~~2015~~2016, Net Cash Provided by Operating Activities was $~~7.4~~6.9 billion compared to $~~6.2~~5.9 billion for the same period in fiscal ~~2014~~2015. This increase was primarily due to a ~~$572~~$431 million increase in Net Earnings resulting from higher comparable store sales and expense leverage, and ~~a $519 million increase in cash flows from Accounts Payable~~the effective management of Merchandise Inventories and ~~Accrued Expenses related to increased purchases and the timing of payments, as well as expenses accrued related to the Data Breach.~~other working capital items.

Net Cash Used in Investing Activities for the first ~~nine~~six months of fiscal ~~2015~~2016 was ~~$2.6 billion~~$674 million compared to $~~767~~553 million for the same period in fiscal ~~2014~~2015. This change was primarily due to $144 million less in Proceeds from Sales of Investments in the ~~acquisition~~first six months of ~~Interline. The aggregate purchase price of this acquisition was $1.7 billion, of which a portion was used for the repayment of substantially all of Interline's existing indebtedness. See Note 4~~fiscal 2016 compared to the ~~Consolidated Financial Statements included~~same period in ~~this report.~~fiscal 2015.

Net Cash Used in Financing Activities for the first ~~nine~~six months of fiscal ~~2015~~2016 was ~~$3.4~~$4.4 billion compared to ~~$5.2~~$2.1 billion for the same period of fiscal ~~2014~~.2015. This change was primarily the result of ~~$2.0~~$2.5 billion ~~more~~less in incremental long-term debt issued in the first six months of ~~net Proceeds from Long-Term Borrowings and $535~~fiscal 2016, partially offset by $644 million less in Repurchases of Common Stock ~~partially offset by $375 million more in Cash Dividends Paid to Stockholders and $290 million in Repayments of Short-Term Borrowings~~ in the first ~~nine~~six months of fiscal ~~2015~~2016 compared to the same period ofin fiscal ~~2014.~~2015.

In ~~September 2015,~~February 2016, we issued ~~$500 million~~$1.35 billion of ~~floating rate~~2.00% senior notes due ~~September 15, 2017~~April 1, 2021 (the "2017 notes") and $1.0 billion of 3.35% senior notes due September 15, 2025 (the "2025 notes") at a discount of $1 million (together, the "September 2015 issuance"). The 2017 notes bear interest at a variable rate determined quarterly equal to the three-month LIBOR rate plus 37 basis points. Interest on the 2017 notes is due quarterly on March 15, June 15, September 15 and December 15 of each year, beginning December 15, 2015. Interest on the 2025 notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2016. The net proceeds of the September 2015 issuance were used to fund our recently completed acquisition of Interline.

~~In May 2015, we issued $1.25 billion of 2.625% senior notes due June 1, 2022 (the "2022~~"2021 notes") at a discount of $5 million, $1.3 billion of 3.00% senior notes due April 1, 2026 (the "2026 notes") at a discount of $8 million, and ~~$1.25 billion~~$350 million of 4.25% senior notes due April 1, 2046 (the "2046 notes") at a ~~discount~~premium of $3$2 million (together, the ~~"May~~"February 2016 issuance"). The 2046 notes form a single series with our $1.25 billion of 4.25% senior notes due April 1, 2046 that were issued in May 2015, ~~issuance").~~and have the same terms. The aggregate principal amount outstanding of our senior notes due April 1, 2046 is $1.6 billion. Interest on the ~~2022~~2021 and 2026 notes is due semi-annually on ~~June~~April 1 and ~~December~~October 1 of each year, beginning ~~December~~October 1, ~~2015.~~2016. Interest on the 2046 notes is due semi-annually on April 1 and October 1 of each year, beginning April 1, 2016, with interest accruing from October 1, 2015. The net proceeds of the ~~May 2015~~February 2016 issuance were used ~~for general corporate purposes, including repurchases of shares of~~to repay our ~~common stock.~~

In the first quarter of fiscal 2015, we entered into an ASR agreement with a third-party financial institution to repurchase $850 million of our common stock. Under this agreement, we paid $850 million to the financial institution and received an initial delivery of 7.0 millionshares in the first quarter of fiscal 2015. The transaction was completed later in the first quarter of fiscal 2015, at which time we received 500 thousand additional shares. The final number of shares delivered upon settlement of the $850 million ASR agreement was 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.

In the second quarter of fiscal 2015, we entered into an ASR agreement with a third-party financial institution to repurchase $1.5 billion of our common stock. Under this agreement, we paid $1.5 billion to the financial institution and received an initial delivery of 12.0 million~~shares in the second quarter of fiscal 2015. The transaction was completed in the third quarter of fiscal~~

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2015, at which time we received 1.3 million additional shares. The final number of shares delivered upon settlement of the $1.5 billion ASR agreement was 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.

In the third quarter of fiscal 2015, we entered into an ASR agreement with a third-party financial institution to repurchase $1.375 billion of our common stock. Under this agreement, we paid $1.375 billion to the financial institution and received an initial delivery of 10.1 millionshares in the third quarter of fiscal 2015. The final number of shares delivered upon settlement of the $1.375 billion ASR agreement will be determined in the fourth quarter of fiscal 2015 with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount.

~~We have commercial paper programs~~5.40% senior notes that allow for borrowings up to $2.0 billion. In connection with the programs, we have a back-up credit facility with a consortium of banks for borrowings up to $2.0 billion. The credit facility expires in December 2019 and contains various restrictive covenants. At Novembermatured on March 1, 2015, we were in compliance with all of the covenants, and they are not expected to impact our liquidity or capital resources. During the first nine months of fiscal 2015, all of our short-term borrowings were under these commercial paper programs, and the maximum amount outstanding at any time during the first nine months of fiscal 2015 was $720 million. As of November 1, 2015, there were no borrowings outstanding under the commercial paper programs or the related credit facility.2016.

In ~~the second quarter of~~ fiscal 2015, we entered into forward starting interest rate swap agreements with a combined notional amount of $1.0 billion, accounted for as cash flow hedges, to hedge interest rate fluctuations in anticipation of ~~issuing long-term debt~~the February 2016 issuance. In connection with the February 2016 issuance, we paid $89 million to ~~refinance debt maturing~~settle these forward starting interest rate swap agreements. This amount, net of income taxes, is included in Accumulated Other Comprehensive Loss and is being amortized to Interest Expense over the term of the 2026 notes.

We have commercial paper programs that allow for borrowings up to $2.0 billion. In connection with these programs, we have a back-up credit facility with a consortium of banks for borrowings up to $2.0 billion. The credit facility expires in December 2019 and contains various restrictive covenants. At July 31, 2016, we were in compliance with all of the covenants, and they are not expected to impact our liquidity or capital resources. During the first six months of fiscal ~~2016.~~2016, all of our short-term borrowings were under these commercial paper programs, and the maximum amount outstanding at any time during the first six months of fiscal 2016 was $617 million. As of July 31, 2016, there were no borrowings outstanding under the commercial paper programs or the related credit facility.

As of ~~November 1, 2015~~July 31, 2016, we had ~~$3.0~~$4.0 billion in Cash and Cash Equivalents. We believe that our current cash position, access to the long-term debt capital markets and cash flow generated from operations should be sufficient not only for our operating requirements but also to enable us to complete our capital expenditure programs and fund dividend payments, share repurchases ~~obligations incurred as a result of the Data Breach~~ and any required long-term debt payments through the next several fiscal years. In addition, we have funds available from our commercial paper programs and the ability to obtain alternative sources of financing.

RECENT ACCOUNTING PRONOUNCEMENTS

~~In April 2015,~~For a summary of recently issued accounting pronouncements which may be applicable to us, see Note 1 to the Consolidated Financial ~~Accounting Standards Board ("FASB") issued~~Statements included in this report.

On February 1, 2016, we adopted Accounting Standards Update ("ASU") No. 2015-03, ~~"Interest~~ –"Interest–Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("and ASU No. ~~2015-03"), which requires an entity~~2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes". See Note 2 to ~~present debt issuance costs related to a recognized debt liability as a direct deduction from~~ the ~~carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by~~Consolidated Financial Statements included in this ASU. This guidance is effective for annual reporting periods beginning after December 15, 2015 and for interim and annual reporting periods thereafter, and retrospective application is required. We do not believe that ASU No. 2015-03 will have a material impact on our consolidated financial statements and related disclosures.

~~In August 2015, the FASB issued Accounting Standards Update No. 2015-15, "Interest~~ – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" ("ASU No. 2015-15"), which states that ASU No. 2015-03 does not address debt issuance costs for line-of-credit arrangements, and therefore the SEC staff would not object to an entity deferring and presenting these related debt issuance costs as an asset and subsequently amortizing the deferred issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not believe that ASU No. 2015-15 will have a material impact on our consolidated financial statements and related disclosures.report.

~~Table of Contents~~


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risks results primarily from fluctuations in interest rates. We are also exposed to risks from foreign currency exchange rate fluctuations on the translation of our foreign operations into U.S. dollars and on the purchase of goods by these foreign operations that are not denominated in their local currencies. There have been no material changes to our exposure to market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2015~~January 31, 2016 as filed with the SEC on March ~~26,~~ 24, 2016 ("2015 ~~("2014~~ Form 10-K").


Item 4.	Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the ~~Company’s~~Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective.

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended ~~November 1, 2015~~July 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

Except as set forth below, there were no material changes during the ~~third~~second quarter of fiscal ~~2015~~2016 to our disclosure in Item 3 of our ~~2014~~2015 Form 10-K.

For a description of the litigation and government inquiries related to the Data Breach, see ~~Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and~~ Note 34 to the Consolidated Financial Statements included in Part I, Item 1, "Financial Statements", which description is incorporated herein by reference.


Item 1A.	Risk Factors

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed under Item 1A, "Risk Factors" and elsewhere in our ~~2014~~2015 Form 10-K. These risks and uncertainties could materially and adversely affect our business, financial condition and results of operations. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business. There have been no material changes in the risk factors discussed in our ~~2014~~2015 Form 10-K.

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

(a) Unregistered Sales of Equity Securities

During the ~~third~~second quarter of fiscal ~~2015~~2016, the Company issued ~~506~~4,164 deferred stock units under The Home Depot, Inc. Non-Employee ~~Directors’~~Directors' Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and Rule 506 of the SEC's Regulation D thereunder. The deferred stock units were credited to the accounts of those non-employee directors who elected to receive all or a portion of board retainers in the form of deferred stock units instead of cash during the ~~third~~second quarter of fiscal ~~2015~~2016. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in this plan.

During the ~~third~~second quarter of fiscal ~~2015~~2016, the Company credited ~~1,224~~1,126 deferred stock units to participant accounts under The Home Depot FutureBuilder Restoration Plan pursuant to an exemption from the registration requirements of the Securities Act for involuntary, non-contributory plans. The deferred stock units convert to shares of common stock on a one-for-one basis following the termination of service as described in this plan.

(b) Purchases of Equity Securities

In the first quarter of fiscal 2015, the Board of Directors authorized an $18.0 billion share repurchase program. Through the end of the ~~third~~second quarter of fiscal ~~2015~~2016, the Company has repurchased shares of its common stock having a value of approximately $~~5.0~~9.5 billion under this program. The number and average price of shares purchased in each fiscal month of the ~~third~~second quarter of fiscal ~~2015~~2016 are set forth in the table below:

Period
Total
Number of
Shares
Purchased⁽¹⁾

Average Price
Paid
Per Share⁽¹⁾

Total Number of
Shares Purchased as
Part of Publicly
Announced Program⁽²⁾

Dollar Value of
Shares that May Yet
Be Purchased
Under the Program⁽²⁾
August 3, 2015 – August 30, 2015⁽³⁾
3,764,835
$ 114.56
3,761,178
$ 14,626,082,050
August 31, 2015 – September 27, 2015⁽⁴⁾
12,700,671
$ 114.70
12,656,026
$ 12,957,000,867
September 28, 2015 – November 1, 2015 5,190
$ 121.14
—
$ 12,957,000,867
16,470,696
$ 114.67
16,417,204



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Program⁽²⁾	Dollar Value of Shares that May Yet Be Purchased Under the Program⁽²⁾
May 2, 2016 – May 29, 2016	2,952,801	$	134.09	2,945,810	$	9,355,001,347
May 30, 2016 – June 26, 2016	2,928,503	$	128.99	2,922,690	$	8,978,002,421
June 27, 2016 – July 31, 2016	3,590,485	$	133.20	3,588,476	$	8,500,002,478
	9,471,789	$	132.18	9,456,976

(1)

These amounts include repurchases pursuant to the ~~Company’s~~Company's 1997 and Amended and Restated 2005 Omnibus Stock Incentive Plans (the “Plans”). Under the Plans, participants may surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. Participants in the Plans may also exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs.


(2)	In the first quarter of fiscal 2015, the Board of Directors authorized an $18.0 billion share repurchase program that replaced the previous authorization. The program does not have a prescribed expiration date.

~~(3)~~

In the second quarter of fiscal 2015, the Company paid $1.5 billion under an ASR agreement and received an initial delivery of 12.0 million shares. The transaction was completed in the third quarter of fiscal 2015, at which time the Company received 1.3 million additional shares to settle the agreement. The Average Price Paid Per Share was calculated with reference to the volume weighted average price per share of the Company's common stock over the term of the agreement, less a negotiated discount. See Note 7 to the Consolidated Financial Statements included in this report.

~~(4)~~

In the third quarter of fiscal 2015, the Company paid $1.375 billion under an ASR agreement and received an initial delivery of 10.1 million shares. The final number of shares delivered upon settlement of the agreement will be determined with reference to the volume weighted average price per share of the Company's common stock over the term of the agreement, less a negotiated discount. See Note 7 to the Consolidated Financial Statements included in this report.

~~Table of Contents~~


Item 6.	Exhibits

Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in brackets. All other exhibits are filed or furnished herewith.



^*3.1		Amended and Restated Certificate of Incorporation of The Home Depot, Inc. [Form 10-Q filed on September 1, 2011, Exhibit 3.1]

^*3.2		By-Laws of The Home Depot, Inc. (Amended and Restated Effective ~~August 21, 2014)~~March 3, 2016). [Form 8-K filed on ~~August 21, 2014,~~March 8, 2016, Exhibit 3.2]

12.1		Statement of Computation of Ratio of Earnings to Fixed Charges.

15.1		~~Acknowledgement~~Acknowledgment of Independent Registered Public Accounting Firm, dated ~~November 23, 2015.~~

^*~~18.1~~		~~Preferability Letter of Independent Registered Public Accounting Firm, dated May 26, 2015.~~ ~~[Form 10-Q filed on May 27, 2015, Exhibit 18.1]~~ August 22, 2016.

31.1		Certification of the Chief Executive Officer and President pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

31.2		Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

32.1		Certification of Chief Executive Officer and President furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer and Executive Vice President – Corporate Services furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended ~~November 1, 2015,~~July 31, 2016, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.

~~Table of Contents~~

SIGNATURES

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




	THE HOME DEPOT, INC.
	(Registrant)

By:	/s/ CRAIG A. MENEAR
	Craig A. Menear
	Chairman, Chief Executive Officer and
	President

	/s/ CAROL B. TOMÉ
	Carol B. Tomé
	Chief Financial Officer and
	Executive Vice President – Corporate Services

~~November 23, 2015~~August 22, 2016

(Date)

~~Table of Contents~~

INDEX TO EXHIBITS




Exhibit		Description

Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in brackets. All other exhibits are filed or furnished herewith.

^*3.1		Amended and Restated Certificate of Incorporation of The Home Depot, Inc. [Form 10-Q filed on September 1, 2011, Exhibit 3.1]

^*3.2		By-Laws of The Home Depot, Inc. (Amended and Restated Effective ~~August 21, 2014)~~March 3, 2016). [Form 8-K filed on ~~August 21, 2014,~~March 8, 2016, Exhibit 3.2]


12.1		Statement of Computation of Ratio of Earnings to Fixed Charges.

15.1		~~Acknowledgement~~Acknowledgment of Independent Registered Public Accounting Firm, dated ~~November 23, 2015.~~

*18.1		~~Preferability Letter of Independent Registered Public Accounting Firm, dated May 26, 2015.~~ ~~[Form 10-Q filed on May 27, 2015, Exhibit 18.1]~~ August 22, 2016.

31.1		Certification of the Chief Executive Officer and President pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

31.2		Certification of the Chief Financial Officer and Executive Vice President – Corporate Services pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

32.1		Certification of Chief Executive Officer and President furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer and Executive Vice President – Corporate Services furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended ~~November 1, 2015,~~July 31, 2016, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.

2723



Delaware		95-3261426
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2455 Paces Ferry Road, Atlanta, Georgia		30339
(Address of principal executive offices)		(Zip Code)



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨



		Page
Part I. Financial Information

Item 1.	Financial Statements

	CONSOLIDATED BALANCE SHEETS— As of ~~November 1, 2015~~July 31, 2016 and ~~February 1, 2015~~January 31, 2016	3

	CONSOLIDATED STATEMENTS OF EARNINGS— Three and ~~Nine~~Six Months Ended ~~November 1,~~July 31, 2016 and August 2, 2015 ~~and November 2, 2014~~	4

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME— Three and ~~Nine~~Six Months Ended ~~November 1,~~July 31, 2016 and August 2, 2015 ~~and November 2, 2014~~	5

	CONSOLIDATED STATEMENTS OF CASH FLOWS— ~~Nine~~Six Months Ended ~~November 1,~~July 31, 2016 and August 2, 2015 ~~and November 2, 2014~~	6

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7

	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1412

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1513

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2319

Item 4.	Controls and Procedures	2319

Part II. Other Information

Item 1.	Legal Proceedings	2319

Item 1A.	Risk Factors	2319

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2420

Item 6.	Exhibits	2521

Signatures		2622

Index to Exhibits		2723


amounts in millions, except share and per share data	November 1, 2015			February 1, 2015			July 31, 2016			January 31, 2016
ASSETS
Current Assets:
Cash and Cash Equivalents	$	3,040		$	1,723		$	4,018		$	2,216
Receivables, net	1,942			1,484			1,995			1,890
Merchandise Inventories	12,495			11,079			12,323			11,809
Other Current Assets	1,129			1,016			605			569
Total Current Assets	18,606			15,302			18,941			16,484
Property and Equipment, at cost	39,116			38,513			39,834			39,266
Less Accumulated Depreciation and Amortization	16,922			15,793			17,859			17,075
Net Property and Equipment	22,194			22,720			21,975			22,191
Goodwill	2,111			1,353			2,106			2,102
Other Assets	1,241			571			1,225			1,196
Total Assets	$	44,152		$	39,946		$	44,247		$	41,973
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-Term Debt	$	—		$	290		$	—		$	350
Accounts Payable	7,236			5,807			8,273			6,565
Accrued Salaries and Related Expenses	1,354			1,391			1,453			1,515
Sales Taxes Payable	556			434			663			476
Deferred Revenue	1,513			1,468			1,666			1,566
Income Taxes Payable	192			35			346			34
Current Installments of Long-Term Debt	3,047			38			43			77
Other Accrued Expenses	2,078			1,806			2,081			1,941
Total Current Liabilities	15,976			11,269			14,525			12,524
Long-Term Debt, excluding current installments	17,815			16,869			20,900			20,789
Other Long-Term Liabilities	1,949			1,844			1,874			1,965
Deferred Income Taxes	793			642			291			379
Total Liabilities	36,533			30,624			37,590			35,657
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.771 billion shares at November 1, 2015 and 1.768 billion shares at February 1, 2015; outstanding: 1.268 billion shares at November 1, 2015 and 1.307 billion shares at February 1, 2015	88			88
Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.775 billion shares at July 31, 2016 and 1.772 billion shares at January 31, 2016; outstanding: 1.236 billion shares at July 31, 2016 and 1.252 billion shares at January 31, 2016							88			88
Paid-In Capital	8,966			8,885			9,549			9,347
Retained Earnings	30,246			26,995			33,492			30,973
Accumulated Other Comprehensive Loss	(662		)	(452		)	(778		)	(898		)
Treasury Stock, at cost, 503 million shares at November 1, 2015 and 461 million shares at February 1, 2015	(31,019		)	(26,194		)
Treasury Stock, at cost, 539 million shares at July 31, 2016 and 520 million shares at January 31, 2016							(35,694		)	(33,194		)
Total Stockholders’ Equity	7,619			9,322			6,657			6,316
Total Liabilities and Stockholders’ Equity	$	44,152		$	39,946		$	44,247		$	41,973


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
amounts in millions, except per share data	November 1, 2015			November 2, 2014			November 1, 2015			November 2, 2014			July 31, 2016			August 2, 2015			July 31, 2016			August 2, 2015
NET SALES	$	21,819		$	20,516		$	67,539		$	64,014		$	26,472		$	24,829		$	49,234		$	45,720
Cost of Sales	14,254			13,473			44,430			42,207			17,545			16,464			32,516			30,176
GROSS PROFIT	7,565			7,043			23,109			21,807			8,927			8,365			16,718			15,544
Operating Expenses:
Selling, General and Administrative	4,161			4,080			12,623			12,293			4,388			4,299			8,669			8,462
Depreciation and Amortization	423			410			1,261			1,236			436			419			869			838
Total Operating Expenses	4,584			4,490			13,884			13,529			4,824			4,718			9,538			9,300
OPERATING INCOME	2,981			2,553			9,225			8,278			4,103			3,647			7,180			6,244
Interest and Other (Income) Expense:
Interest and Investment Income	(7		)	(105		)	(160		)	(222		)	(8		)	(149		)	(15		)	(153		)
Interest Expense	247			218			677			617			236			233			480			430
Interest and Other, net	240			113			517			395			228			84			465			277
EARNINGS BEFORE PROVISION FOR INCOME TAXES	2,741			2,440			8,708			7,883			3,875			3,563			6,715			5,967
Provision for Income Taxes	1,016			903			3,170			2,917			1,434			1,329			2,471			2,154
NET EARNINGS	$	1,725		$	1,537		$	5,538		$	4,966		$	2,441		$	2,234		$	4,244		$	3,813

Weighted Average Common Shares	1,268			1,327			1,284			1,348			1,235			1,283			1,242			1,291
BASIC EARNINGS PER SHARE	$	1.36		$	1.16		$	4.31		$	3.68		$	1.98		$	1.74		$	3.42		$	2.95
Diluted Weighted Average Common Shares	1,274			1,334			1,290			1,356			1,240			1,289			1,247			1,298
DILUTED EARNINGS PER SHARE	$	1.35		$	1.15		$	4.29		$	3.66		$	1.97		$	1.73		$	3.40		$	2.94
Dividends Declared per Share	$	0.59		$	0.47		$	1.77		$	1.41		$	0.69		$	0.59		$	1.38		$	1.18


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


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


	Nine Months Ended						Six Months Ended
amounts in millions	November 1, 2015			November 2, 2014			July 31, 2016			August 2, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings	$	5,538		$	4,966		$	4,244		$	3,813
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization	1,384			1,345			978			915
Stock-Based Compensation Expense	177			174			133			122
Gain on Sales of Investments	(144		)	(212		)	—			(144		)
Changes in Assets and Liabilities, net of the effects of acquisitions:
Changes in Assets and Liabilities:
Receivables, net	(220		)	(221		)	(91		)	(232		)
Merchandise Inventories	(1,176		)	(975		)	(495		)	(828		)
Other Current Assets	57			(87		)	(38		)	(17		)
Accounts Payable and Accrued Expenses	1,582			1,063			1,773			2,017
Deferred Revenue	50			88			94			187
Income Taxes Payable	295			191			389			287
Deferred Income Taxes	(148		)	25			(86		)	(81		)
Other	(29		)	(110		)	(24		)	(105		)
Net Cash Provided by Operating Activities	7,366			6,247			6,877			5,934
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures	(1,083		)	(999		)	(697		)	(705		)
Proceeds from Sales of Investments	144			212			—			144
Payments for Businesses Acquired, net	(1,662		)	—
Proceeds from Sales of Property and Equipment	24			20			23			8
Net Cash Used in Investing Activities	(2,577		)	(767		)	(674		)	(553		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of Short-Term Borrowings, net	(290		)	—			(350		)	(290		)
Proceeds from Long-Term Borrowings, net of discount	3,991			1,981
Proceeds from Long-Term Borrowings, net of discounts							2,989			2,492
Repayments of Long-Term Debt	(29		)	(30		)	(3,023		)	(19		)
Repurchases of Common Stock	(5,043		)	(5,578		)	(2,441		)	(3,085		)
Proceeds from Sales of Common Stock	149			178			121			134
Cash Dividends Paid to Stockholders	(2,287		)	(1,912		)	(1,718		)	(1,533		)
Other Financing Activities	86			150			1			161
Net Cash Used in Financing Activities	(3,423		)	(5,211		)	(4,421		)	(2,140		)
Change in Cash and Cash Equivalents	1,366			269			1,782			3,241
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(49		)	(17		)	20			(28		)
Cash and Cash Equivalents at Beginning of Period	1,723			1,929			2,216			1,723
Cash and Cash Equivalents at End of Period	$	3,040		$	2,181		$	4,018		$	4,936


2.	~~CHANGE IN~~RECENTLY ADOPTED ACCOUNTING ~~POLICY~~PRONOUNCEMENTS



	Accrued Liabilities			Insurance Receivable
Balance at August 3, 2014	$	—		$	—
(Expenses incurred) insurance receivable recorded	(43		)	15
Payments made (received)	35			—
Balance at November 2, 2014	(8		)	15
(Expenses incurred) insurance receivable recorded	(20		)	15
Payments made (received)	16			(10		)
Balance at February 1, 2015	(12		)	20
(Expenses incurred) insurance receivable recorded	(16		)	9
Payments made (received)	9			(20		)
Balance at May 3, 2015	(19		)	9
(Expenses incurred) insurance receivable recorded	(153		)	61
Payments made (received)	20			—
Balance at August 2, 2015	(152		)	70
(Expenses incurred) insurance receivable recorded	(20		)	—
Payments made (received)	7			—
Balance at November 1, 2015	$	(165	)	$	70



	Fair Value
Cash	$	6
Receivables	263
Inventories	325
Property and Equipment	56
Intangible Assets	563
Goodwill	782
Other Assets	85
Total assets acquired	2,080

Current Liabilities	197
Other Liabilities	215
Total liabilities assumed	412

Net assets acquired	$	1,668



Agreement Date	Settlement Date	Amount		Initial Shares Delivered	Additional Shares Delivered	Total Shares Delivered
Q1 2015	Q1 2015	$	850	7.0	0.5	7.5
Q2 2015	Q3 2015	$	1,500	12.0	1.3	13.3
Q3 2015⁽¹⁾	TBD	$	1,375	10.1	TBD	TBD



	Accrued Liabilities			Insurance Receivable
Balance at January 31, 2016	$	(34	)	$	70
(Expenses incurred) insurance receivable recorded in the first quarter of fiscal 2016	(2		)	—
Payments made (received) in the first quarter of fiscal 2016	9			(15		)
Balance at May 1, 2016	$	(27	)	$	55
(Expenses incurred) insurance receivable recorded in the second quarter of fiscal 2016	(2		)	—
Payments made (received) in the second quarter of fiscal 2016	—			(10		)
Balance at July 31, 2016	$	(29	)	$	45



•	Level 1 –	Observable inputs that reflect quoted prices in active markets
•	Level 2 –	Inputs other than quoted prices in active markets that are either directly or indirectly observable
•	Level 3 –	Unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions


	Fair Value at November 1, 2015 Using							Fair Value at February 1, 2015 Using						Fair Value at July 31, 2016 Using						Fair Value at January 31, 2016 Using
	Level 1		Level 2			Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2			Level 3
Derivative agreements - assets	$	—	$	193		$	—	$	—	$	124	$	—	$	—	$	253	$	—	$	—	$	213		$	—
Derivative agreements - liabilities	—		(49		)	—		—		—		—		—		—		—		—		(82		)	—
Total	$	—	$	144		$	—	$	—	$	124	$	—	$	—	$	253	$	—	$	—	$	131		$	—


~~Item 1.~~	~~Financial Statements~~


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


3.	~~COMMITMENTS AND CONTINGENCIES~~


4.	~~INTERLINE ACQUISITION~~