I would like to know where I find the answer so I can understand how to figure this out myself on further questions.

The financial statements of Home Depot, Inc., appear in Appendix A of this text. These statements contain information describing the details of the company's stockholders' equity. http://lectures.mhhe.com/connect/007802577X/wil2577X_appA_A-A13.pdf

For the most current year shown, how many shares of common stock are authorized? (Enter your answer in billions.)

b) number of shares ___________billion

What is the total stockholders' equity amount for Home Depot for the most recent year reported? (Enter your answer in millions.)

Stock holders equity ___________millions

Revised Pages A APPENDIX A Home Depot 2012 Financial Statements Home Depot Financial Statements Contents Managements Responsibility for Financial Statements A-1 Managements Report on Internal Control over Financial Reporting A-1 Report of the Independent Registered Public Accounting Firm A-2 Consolidated Statements of Earnings A-3 Consolidated Statements of Comprehensive Income A-4 Consolidated Balance Sheets A-5 Consolidated Statements of Stockholders Equity A-6 Consolidated Statements of Cash Flows A-7 Notes to the Consolidated Financial StatementsNote 1, Summary of Significant Accounting Policies; Note 2, China Store Closings A-8A-12 Five-Year Summary of Financial and Operating Results A-13 wil2577X_appA_A-A13.indd 2 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-1 Item 8. Financial Statements and Supplementary Data. Managements Responsibility for Financial Statements The financial statements presented in this Annual Report have been prepared with integrity and objectivity and are the responsibility of the management of The Home Depot, Inc. These financial statements have been prepared in conformity with U.S. generally accepted accounting principles and properly reflect certain estimates and judgments based upon the best available information. The financial statements of the Company have been audited by KPMG LLP, an independent registered public accounting firm. Their accompanying report is based upon an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States). The Audit Committee of the Board of Directors, consisting solely of independent directors, meets five times a year with the independent registered public accounting firm, the internal auditors and representatives of management to discuss auditing and financial reporting matters. In addition, a telephonic meeting is held prior to each quarterly earnings release. The Audit Committee retains the independent registered public accounting firm and regularly reviews the internal accounting controls, the activities of the independent registered public accounting firm and internal auditors and the financial condition of the Company. Both the Companys independent registered public accounting firm and the internal auditors have free access to the Audit Committee. Managements Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of February 3, 2013 based on the framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of February 3, 2013 in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The effectiveness of our internal control over financial reporting as of February 3, 2013 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included on page 28 in this Form 10-K. /s/ FRANCIS S. BLAKE Francis S. Blake Chairman & Chief Executive Officer /s/ CAROL B. TOM Carol B. Tom Chief Financial Officer & Executive Vice President Corporate Services wil2577X_appA_A-A13.indd A1 9/19/13 2:42 PM Revised Pages A-2 Appendix A Home Depot 2012 Financial Statements Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders The Home Depot, Inc.: We have audited The Home Depot, Inc.s internal control over financial reporting as of February 3, 2013, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Home Depot, Inc.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, The Home Depot, Inc. maintained, in all material respects, effective internal control over financial reporting as of February 3, 2013, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheets of The Home Depot, Inc. and subsidiaries as of February 3, 2013 and January 29, 2012, and 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 February 3, 2013, and our report dated March 28, 2013 expressed an unqualified opinion on those consolidated financial statements. /s/ KPMG LLP Atlanta, Georgia March 28, 2013 wil2577X_appA_A-A13.indd A2 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-3 Fiscal Year Ended(1) amounts in millions, except per share data February 3, 2013 January 29, 2012 January 30, 2011 NET SALES $ 74,754 $ 70,395 $ 67,997 Cost of Sales 48,912 46,133 44,693 GROSS PROFIT 25,842 24,262 23,304 Operating Expenses: Selling, General and Administrative 16,508 16,028 15,849 Depreciation and Amortization 1,568 1,573 1,616 Total Operating Expenses 18,076 17,601 17,465 OPERATING INCOME 7,766 6,661 5,839 Interest and Other (Income) Expense: Interest and Investment Income (20) (13) (15) Interest Expense 632 606 530 Other (67) 51 Interest and Other, net 545 593 566 EARNINGS BEFORE PROVISION FOR INCOME TAXES 7,221 6,068 5,273 Provision for Income Taxes 2,686 2,185 1,935 NET EARNINGS $ 4,535 $ 3,883 $ 3,338 Weighted Average Common Shares 1,499 1,562 1,648 BASIC EARNINGS PER SHARE $ 3.03 $ 2.49 $ 2.03 Diluted Weighted Average Common Shares 1,511 1,570 1,658 DILUTED EARNINGS PER SHARE $ 3.00 $ 2.47 $ 2.01 THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (1) Fiscal year ended February 3, 2013 includes 53 weeks. Fiscal years ended January 29, 2012 and January 30, 2011 include 52 weeks. See accompanying Notes to Consolidated Financial Statements. wil2577X_appA_A-A13.indd A3 9/19/13 2:42 PM Revised Pages A-4 Appendix A Home Depot 2012 Financial Statements Fiscal Year Ended(1) amounts in millions February 3, 2013 January 29, 2012 January 30, 2011 Net Earnings $ 4,535 $ 3,883 $ 3,338 Other Comprehensive Income (Loss): Foreign Currency Translation Adjustments 100 (143) 206 Cash Flow Hedges, net of tax 5 5 (116) Other (1) (14) (7) Total Other Comprehensive Income (Loss) 104 (152) 83 COMPREHENSIVE INCOME $ 4,639 $ 3,731 $ 3,421 THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (1) Fiscal year ended February 3, 2013 includes 53 weeks. Fiscal years ended January 29, 2012 and January 30, 2011 include 52 weeks. See accompanying Notes to Consolidated Financial Statements. wil2577X_appA_A-A13.indd A4 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-5 amounts in millions, except share and per share data February 3, 2013 January 29, 2012 ASSETS Current Assets: Cash and Cash Equivalents $ 2,494 $ 1,987 Receivables, net 1,395 1,245 Merchandise Inventories 10,710 10,325 Other Current Assets 773 963 Total Current Assets 15,372 14,520 Property and Equipment, at cost 38,491 38,975 Less Accumulated Depreciation and Amortization 14,422 14,527 Net Property and Equipment 24,069 24,448 Notes Receivable 140 135 Goodwill 1,170 1,120 Other Assets 333 295 Total Assets $ 41,084 $ 40,518 LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities: Accounts Payable $ 5,376 $ 4,856 Accrued Salaries and Related Expenses 1,414 1,372 Sales Taxes Payable 472 391 Deferred Revenue 1,270 1,147 Income Taxes Payable 22 23 Current Installments of Long-Term Debt 1,321 30 Other Accrued Expenses 1,587 1,557 Total Current Liabilities 11,462 9,376 Long-Term Debt, excluding current installments 9,475 10,758 Other Long-Term Liabilities 2,051 2,146 Deferred Income Taxes 319 340 Total Liabilities 23,307 22,620 STOCKHOLDERS EQUITY Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.754 billion shares at February 3, 2013 and 1.733 billion shares at January 29, 2012; outstanding: 1.484 billion shares at February 3, 2013 and 1.537 billion shares at January 29, 2012 88 87 Paid-In Capital 7,948 6,966 Retained Earnings 20,038 17,246 Accumulated Other Comprehensive Income 397 293 Treasury Stock, at cost, 270 million shares at February 3, 2013 and 196 million shares at January 29, 2012 (10,694) (6,694) Total Stockholders Equity 17,777 17,898 Total Liabilities and Stockholders Equity $ 41,084 $ 40,518 THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS See accompanying Notes to Consolidated Financial Statements. wil2577X_appA_A-A13.indd A5 9/19/13 2:42 PM Revised Pages A-6 Appendix A Home Depot 2012 Financial Statements Common Stock Treasury Stock amounts in millions, except per share data Shares Amount Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Shares Amount Stockholders Equity Balance, January 31, 2010 1,716 $ 86 $ 6,304 $ 13,226 $ 362 (18) $ (585) $ 19,393 Net Earnings 3,338 3,338 Shares Issued Under Employee Stock Plans 6 42 42 Tax Effect of Stock-Based Compensation 2 2 Foreign Currency Translation Adjustments 206 206 Cash Flow Hedges, net of tax (116) (116) Stock Options, Awards and Amortization of Restricted Stock 214 214 Repurchases of Common Stock (81) (2,608) (2,608) Cash Dividends ($0.945 per share) (1,569) (1,569) Other (6) (7) (13) Balance, January 30, 2011 1,722 $ 86 $ 6,556 $ 14,995 $ 445 (99) $ (3,193) $ 18,889 Net Earnings 3,883 3,883 Shares Issued Under Employee Stock Plans 11 1 196 197 Tax Effect of Stock-Based Compensation (2) (2) Foreign Currency Translation Adjustments (143) (143) Cash Flow Hedges, net of tax 5 5 Stock Options, Awards and Amortization of Restricted Stock 215 215 Repurchases of Common Stock (97) (3,501) (3,501) Cash Dividends ($1.04 per share) (1,632) (1,632) Other 1 (14) (13) Balance, January 29, 2012 1,733 $ 87 $ 6,966 $ 17,246 $ 293 (196) $ (6,694) $ 17,898 Net Earnings 4,535 4,535 Shares Issued Under Employee Stock Plans 21 1 678 679 Tax Effect of Stock-Based Compensation 82 82 Foreign Currency Translation Adjustments 100 100 Cash Flow Hedges, net of tax 5 5 Stock Options, Awards and Amortization of Restricted Stock 218 218 Repurchases of Common Stock (74) (4,000) (4,000) Cash Dividends ($1.16 per share) (1,743) (1,743) Other 4 (1) 3 Balance, February 3, 2013 1,754 $ 88 $ 7,948 $ 20,038 $ 397 (270) $ (10,694) $ 17,777 THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY See accompanying Notes to Consolidated Financial Statements. wil2577X_appA_A-A13.indd A6 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-7 Fiscal Year Ended(1) amounts in millions February 3, 2013 January 29, 2012 January 30, 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 4,535 $ 3,883 $ 3,338 Reconciliation of Net Earnings to Net Cash Provided by Operating Activities: Depreciation and Amortization 1,684 1,682 1,718 Stock-Based Compensation Expense 218 215 214 Goodwill Impairment 97 Changes in Assets and Liabilities, net of the effects of acquisitions and disposition: Receivables, net (143) (170) (102) Merchandise Inventories (350) 256 (355) Other Current Assets 93 159 12 Accounts Payable and Accrued Expenses 698 422 (133) Deferred Revenue 121 (29) 10 Income Taxes Payable 87 14 (85) Deferred Income Taxes 107 170 104 Other Long-Term Liabilities (180) (2) (61) Other 8 51 (75) Net Cash Provided by Operating Activities 6,975 6,651 4,585 CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures, net of $98, $25 and $62 of non-cash capital expenditures in fiscal 2012, 2011 and 2010, respectively (1,312) (1,221) (1,096) Proceeds from Sale of Business, net 101 Payments for Businesses Acquired, net (170) (65) Proceeds from Sales of Property and Equipment 50 56 84 Net Cash Used in Investing Activities (1,432) (1,129) (1,012) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Long-Term Borrowings, net of discount 1,994 998 Repayments of Long-Term Debt (32) (1,028) (1,029) Repurchases of Common Stock (3,984) (3,470) (2,608) Proceeds from Sales of Common Stock 784 306 104 Cash Dividends Paid to Stockholders (1,743) (1,632) (1,569) Other Financing Activities (59) (218) (347) Net Cash Used in Financing Activities (5,034) (4,048) (4,451) Change in Cash and Cash Equivalents 509 1,474 (878) Effect of Exchange Rate Changes on Cash and Cash Equivalents (2) (32) 2 Cash and Cash Equivalents at Beginning of Year 1,987 545 1,421 Cash and Cash Equivalents at End of Year $ 2,494 $ 1,987 $ 545 SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR: Interest, net of interest capitalized $ 617 $ 580 $ 579 Income Taxes $ 2,482 $ 1,865 $ 2,067 THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (1) Fiscal year ended February 3, 2013 includes 53 weeks. Fiscal years ended January 29, 2012 and January 30, 2011 include 52 weeks. See accompanying Notes to Consolidated Financial Statements. wil2577X_appA_A-A13.indd A7 9/19/13 2:42 PM Revised Pages A-8 Appendix A Home Depot 2012 Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business, Consolidation and Presentation The Home Depot, Inc. and its subsidiaries (the Company) operate The Home Depot stores, which are full-service, warehousestyle stores averaging approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. The stores stock approximately 30,000 to 40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers and professional customers. The Company also offers over 600,000 products through its Home Depot and Home Decorators Collection websites. At the end of fiscal 2012, the Company was operating 2,256 The Home Depot stores, which included 1,976 stores in the United States, including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam (U.S.), 180 stores in Canada and 100 stores in Mexico. The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Fiscal Year The Companys fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. The fiscal year ended February 3, 2013 (fiscal 2012) includes 53 weeks and fiscal years ended January 29, 2012 (fiscal 2011) and January 30, 2011 (fiscal 2010) include 52 weeks. Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from these estimates. Fair Value of Financial Instruments The carrying amounts of Cash and Cash Equivalents, Receivables and Accounts Payable approximate fair value due to the short-term maturities of these financial instruments. The fair value of the Companys Long-Term Debt is discussed in Note 11. Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Companys cash equivalents are carried at fair market value and consist primarily of money market funds. Accounts Receivable The Company has an agreement with a third-party service provider who directly extends credit to customers, manages the Companys private label credit card program and owns the related receivables. The Company evaluated the third-party entities holding the receivables under the program and concluded that they should not be consolidated by the Company. The agreement with the third-party service provider expires in 2018, with the Company having the option, but no obligation, to purchase the receivables at the end of the agreement. The deferred interest charges incurred by the Company for its deferred financing programs offered to its customers are included in Cost of Sales. The interchange fees charged to the Company for the customers use of the cards and any profit sharing with the third-party service provider are included in Selling, General and Administrative expenses (SG&A). The sum of the three is referred to by the Company as the cost of credit of the private label credit card program. In addition, certain subsidiaries of the Company extend credit directly to customers in the ordinary course of business. The receivables due from customers were $42 million and $45 million as of February 3, 2013 and January 29, 2012, respectively. The Companys valuation reserve related to accounts receivable was not material to the Consolidated Financial Statements of the Company as of the end of fiscal 2012 or 2011. Merchandise Inventories The majority of the Companys Merchandise Inventories are stated at the lower of cost (first-in, first-out) or market, as determined by the retail inventory method. As the inventory retail value is adjusted regularly to reflect market conditions, the 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 market, as determined by a cost method. These Merchandise Inventories represent approximately 24% of the total Merchandise Inventories balance. wil2577X_appA_A-A13.indd A8 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-9 The Company evaluates the inventory valued using a cost method at the end of each quarter to ensure that it is carried at the lower of cost or market. The valuation allowance for Merchandise Inventories valued under a cost method was not material to the Consolidated Financial Statements of the Company as of the end of fiscal 2012 or 2011. Independent physical inventory counts or cycle counts are taken on a regular basis in each store and distribution center to ensure that amounts reflected in the accompanying Consolidated Financial Statements for Merchandise Inventories are properly stated. During the period between physical inventory counts in stores, the Company accrues for estimated losses related to shrink on a store-by-store basis based on historical shrink results and current trends in the business. Shrink (or in the case of excess inventory, swell) is the difference between the recorded amount of inventory and the physical inventory. Shrink may occur due to theft, loss, inaccurate records for the receipt of inventory or deterioration of goods, among other things. Income Taxes Income taxes are accounted for under the asset and liability method. The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Companys consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest substantially all of the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for these non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings. Depreciation and Amortization The Companys Buildings, Furniture, Fixtures and Equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold Improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. The Companys Property and Equipment is depreciated using the following estimated useful lives: Life Buildings 545 years Furniture, Fixtures and Equipment 220 years Leasehold Improvements 545 years Capitalized Software Costs The Company capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software, which is three to six years. These costs are included in Furniture, Fixtures and Equipment as discussed further in Note 4. Certain development costs not meeting the criteria for capitalization are expensed as incurred. Revenues The Company recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or receives services. The liability for sales returns is estimated based on historical return levels. When the Company receives 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 in the accompanying Consolidated Balance Sheets until the sale or service is complete. The Company also records Deferred Revenue for the sale of gift cards and recognizes this revenue upon the redemption of gift cards in Net Sales. Gift card breakage income is recognized based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is wil2577X_appA_A-A13.indd A9 9/19/13 2:42 PM Revised Pages A-10 Appendix A Home Depot 2012 Financial Statements remote. During fiscal 2012, 2011 and 2010, the Company recognized $33 million, $42 million and $46 million, respectively, of gift card breakage income. This income is included in the accompanying Consolidated Statements of Earnings as a reduction in SG&A. Services Revenue Net Sales include services revenue generated through a variety of installation, home maintenance and professional service programs. In these programs, the customer selects and purchases material for a project, and the Company provides or arranges professional installation. These programs are offered through the Companys stores and in-home sales programs. Under certain programs, when the Company provides or arranges the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue. The Company recognizes this revenue when the service for the customer is complete. All payments received prior to the completion of services are recorded in Deferred Revenue in the accompanying Consolidated Balance Sheets. Services revenue was $3.2 billion, $2.9 billion and $2.7 billion for fiscal 2012, 2011 and 2010, respectively. Self-Insurance The Company is self-insured for certain losses related to general liability (including products liability), workers compensation, employee group medical and automobile claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. The expected ultimate cost of claims is estimated based upon analysis of historical data and actuarial estimates. Prepaid Advertising Television and radio advertising production costs, along with media placement costs, are expensed when the advertisement first appears. Amounts included in Other Current Assets in the accompanying Consolidated Balance Sheets relating to prepayments of production costs for print and broadcast advertising as well as sponsorship promotions were not material at the end of fiscal 2012 and 2011. Vendor Allowances Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels and advertising co-op 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. Volume rebates and certain advertising co-op allowances earned are initially recorded as a reduction in Merchandise Inventories and a subsequent reduction in Cost of Sales when the related product is sold. Certain advertising co-op allowances that are reimbursements of specific, incremental and identifiable costs incurred to promote vendors products are recorded as an offset against advertising expense. In fiscal 2012, 2011 and 2010, gross advertising expense was $831 million, $846 million and $864 million, respectively, and is included in SG&A. Specific, incremental and identifiable advertising co-op allowances were $85 million, $94 million and $90 million for fiscal 2012, 2011 and 2010, respectively, and are recorded as an offset to advertising expense in SG&A. Cost of Sales Cost of Sales includes the actual cost of merchandise sold and services performed, the cost of transportation of merchandise from vendors to the Companys stores, locations or customers, the operating cost of the Companys sourcing and distribution network and the cost of deferred interest programs offered through the Companys private label credit card program. The cost of handling and shipping merchandise from the Companys stores, locations or distribution centers to the customer is classified as SG&A. The cost of shipping and handling, including internal costs and payments to third parties, classified as SG&A was $ 435 million, $430 million and $410 million in fiscal 2012, 2011 and 2010, respectively. Impairment of Long-Lived Assets The Company evaluates its long-lived assets each quarter for indicators of potential impairment. Indicators of impairment include current period losses combined with a history of losses, managements 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. wil2577X_appA_A-A13.indd A10 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-11 The assets of a store with indicators of impairment are evaluated by comparing its undiscounted cash flows with its carrying value. The estimate of cash flows includes managements assumptions of cash inflows and outflows directly resulting from the use of those assets in operations, including gross margin on Net Sales, payroll and related items, occupancy costs, insurance allocations and other costs to operate a store. If the carrying value is greater than the undiscounted cash flows, an impairment loss is recognized for the difference between the carrying value and the estimated fair market value. Impairment losses are recorded as a component of SG&A in the accompanying Consolidated Statements of Earnings. When a leased location closes, the Company also recognizes in SG&A the net present value of future lease obligations less estimated sublease income. The Company recorded impairments and lease obligation costs on closings and relocations in the ordinary course of business, as well as for the closing of seven stores in China in fiscal 2012, which were not material to the Consolidated Financial Statements in fiscal 2012, 2011 or 2010. Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over the fair value of net assets acquired. The Company does not amortize goodwill but does 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. The Company assesses 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. During fiscal 2012, for all reporting units other than the China reporting unit, the Company used qualitative factors to determine that its goodwill balances for each reporting unit were not impaired. For the China reporting unit, the Company recorded a charge of $97 million to impair all of the goodwill associated with that reporting unit in fiscal 2012. Impairment charges related to the remaining goodwill were not material for fiscal 2012, 2011 or 2010. The Company amortizes the cost of other intangible assets over their estimated useful lives, which range up to ten years, unless such lives are deemed indefinite. Intangible assets with indefinite lives are tested in the third quarter of each fiscal year for impairment, or more often if indicators warrant. Impairment charges related to other intangible assets were not material for fiscal 2012, 2011 or 2010. Stock-Based Compensation The per share weighted average fair value of stock options granted during fiscal 2012, 2011 and 2010 was $9.86, $7.42 and $6.70, respectively. The fair value of these options was determined at the date of grant using the Black-Scholes option-pricing model with the following assumptions: Fiscal Year Ended February 3, 2013 January 29, 2012 January 30, 2011 Risk-free interest rate 1.2% 2.0% 3.1% Assumed volatility 27.0% 27.3% 26.4% Assumed dividend yield 2.3% 2.7% 2.9% Assumed lives of options 5 years 5 years 5 years Derivatives The Company uses derivative financial instruments from time to time in the management of its interest rate exposure on longterm debt and its exposure on foreign currency fluctuations. The Company accounts for its derivative financial instruments in accordance with the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Subtopic 815-10. Comprehensive Income Comprehensive Income includes Net Earnings adjusted for certain gains and losses that are excluded from Net Earnings under U.S. generally accepted accounting principles. Adjustments to Net Earnings and Accumulated Other Comprehensive Income consist primarily of foreign currency translation adjustments. Foreign Currency Translation Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are generally translated using average exchange rates for the period and equity transactions are translated using the actual rate on the day of the transaction. wil2577X_appA_A-A13.indd A11 9/19/13 2:42 PM Revised Pages A-12 Appendix A Home Depot 2012 Financial Statements Segment Information The Company operates within a single reportable segment primarily within North America. Net Sales for the Company outside the U.S. were $ 8.4 billion, $8.0 billion and $7.5 billion for fiscal 2012, 2011 and 2010, respectively. Long-lived assets outside the U.S. totaled $ 3.1 billion and $3.1 billion as of February 3, 2013 and January 29, 2012, respectively. Reclassifications Certain amounts in prior fiscal years have been reclassified to conform with the presentation adopted in the current fiscal year. 2. CHINA STORE CLOSINGS In fiscal 2012, the Company closed its remaining seven big box stores in China. As a result of the closings, the Company recorded a total charge of $145 million, net of tax, in fiscal 2012. Inventory markdown costs of $10 million are included in Cost of Sales, and $135 million of costs related to the impairment of Goodwill and other assets, lease terminations, severance and other charges are included in SG&A in the accompanying Consolidated Statements of Earnings. 3. DEBT GUARANTEE In connection with the sale of HD Supply, Inc. on August 30, 2007, the Company guaranteed a $1.0 billion senior secured amortizing term loan of HD Supply. The original expiration date of the guarantee was August 30, 2012. In March 2010, the Company amended the guarantee to extend the expiration date to April 1, 2014. The fair value of the guarantee at August 30, 2007 was $16 million and was recorded as a liability of the Company in Other Long-Term Liabilities. The extension of the guarantee increased the fair value of the guarantee to $67 million, resulting in a $51 million charge to Interest and Other, net, for fiscal 2010. In April 2012, the term loan guarantee was terminated. As a result, the Company reversed its $67 million liability related to the guarantee, resulting in a $67 million pretax benefit to Interest and Other, net, for fiscal 2012. wil2577X_appA_A-A13.indd A12 9/19/13 2:42 PM Revised Pages Appendix A Home Depot 2012 Financial Statements A-13 amounts in millions, except where noted 2012(1) 2011 2010 2009 2008 STATEMENT OF EARNINGS DATA(2) Net sales $ 74,754 $ 70,395 $ 67,997 $ 66,176 $ 71,288 Net sales increase (decrease) (%) 6.2 3.5 2.8 (7.2) (7.8) Earnings before provision for income taxes 7,221 6,068 5,273 3,982 3,590 Net earnings 4,535 3,883 3,338 2,620 2,312 Net earnings increase (decrease) (%) 16.8 16.3 27.4 13.3 (45.1) Diluted earnings per share ($) 3.00 2.47 2.01 1.55 1.37 Diluted earnings per share increase (decrease) (%) 21.5 22.9 29.7 13.1 (39.6) Diluted weighted average number of common shares 1,511 1,570 1,658 1,692 1,686 Gross margin - % of sales 34.6 34.5 34.3 33.9 33.7 Total operating expenses - % of sales 24.2 25.0 25.7 26.6 27.5 Interest and other, net - % of sales 0.7 0.8 0.8 1.2 1.1 Earnings before provision for income taxes - % of sales 9.7 8.6 7.8 6.0 5.0 Net earnings - % of sales 6.1 5.5 4.9 4.0 3.2 BALANCE SHEET DATA AND FINANCIAL RATIOS(2) Total assets $ 41,084 $ 40,518 $ 40,125 $ 40,877 $ 41,164 Working capital 3,910 5,144 3,357 3,537 2,209 Merchandise inventories 10,710 10,325 10,625 10,188 10,673 Net property and equipment 24,069 24,448 25,060 25,550 26,234 Long-term debt 9,475 10,758 8,707 8,662 9,667 Stockholders equity 17,777 17,898 18,889 19,393 17,777 Book value per share ($) 11.97 11.64 11.64 11.42 10.48 Long-term debt-to-equity (%) 53.3 60.1 46.1 44.7 54.4 Total debt-to-equity (%) 60.7 60.3 51.6 49.9 64.3 Current ratio 1.34:1 1.55:1 1.33:1 1.34:1 1.20:1 Inventory turnover 4.5x 4.3x 4.1x 4.1x 4.0x Return on invested capital (%) 17.0 14.9 12.8 10.7 9.5 STATEMENT OF CASH FLOWS DATA Depreciation and amortization $ 1,684 $ 1,682 $ 1,718 $ 1,806 $ 1,902 Capital expenditures 1,312 1,221 1,096 966 1,847 Cash dividends per share ($) 1.160 1.040 0.945 0.900 0.900 STORE DATA Number of stores 2,256 2,252 2,248 2,244 2,274 Square footage at fiscal year-end 235 235 235 235 238 Increase (decrease) in square footage (%) (1.3) 1.3 Average square footage per store (in thousands) 104 104 105 105 105 STORE SALES AND OTHER DATA Comparable store sales increase (decrease) (%)(3) 4.6 3.4 2.9 (6.6) (8.7) Weighted average weekly sales per operating store (in thousands) $ 627 $ 601 $ 581 $ 563 $ 601 Weighted average sales per square foot ($) 319 299 289 279 298 Number of customer transactions 1,364 1,318 1,306 1,274 1,272 Average ticket ($) 54.89 53.28 51.93 51.76 55.61 Number of associates at fiscal year-end (in thousands)(2) 340 331 321 317 322 Five-Year Summary of Financial and Operating Results The Home Depot, Inc. and Subsidiaries (1) Fiscal year 2012 includes 53 weeks; all other fiscal years reported include 52 weeks. (2) Continuing operations only. (3) Includes Net Sales at locations open greater than 12 months, including relocated and remodeled stores and excluding closed stores. Retail stores become comparable on the Monday following their 365th day of operation. Comparable store sales is intended only as supplemental information and is not a substitute for Net Sales or Net Earnings presented in accordance with generally accepted accounting principles. Net Sales for the 53rd week of fiscal 2012 are not included in comparable store sales results for fiscal 2012. wil2577X_appA_A-A13.indd A13 9/19/13 2:42 PM