HD » Topics » 2. DISPOSITION AND ACQUISITIONS

These excerpts taken from the HD 10-K filed Apr 3, 2008.

2.     DISPOSITION AND ACQUISITIONS

On August 30, 2007, the Company closed the sale of HD Supply. The Company received $8.3 billion of net proceeds for the sale of HD Supply and recognized a $4 million loss, net of tax, on the sale of the business, subject to the finalization of working capital adjustments. Also in connection with the sale, the Company purchased a 12.5% equity interest in the newly formed HD Supply for $325 million, which is included in Other Assets in the accompanying Consolidated Balance Sheets.

Also in connection with the sale, the Company guaranteed a $1.0 billion senior secured loan ("guaranteed loan") of HD Supply. The fair value of the guarantee, which was determined to be approximately $16 million, is recorded as a liability of the Company and included in Other Long-Term Liabilities. The guaranteed loan has a term of five years and the Company would be responsible for up to $1.0 billion and any unpaid interest in the event of non-payment by HD Supply. The guaranteed loan is collateralized by certain assets of HD Supply.

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

The following table presents Net Sales and Earnings of HD Supply through August 30, 2007 which have been reclassified to discontinued operations in the Consolidated Statements of Earnings for fiscal 2007, 2006 and 2005 (amounts in millions):

 
  Fiscal Year Ended
 
 
  February 3,
2008

  January 28,
2007

  January 29,
2006

 
Net Sales   $ 7,391   $ 11,815   $ 4,492  
   
 
 
 
Earnings Before Provision for Income
    Taxes
  $ 291   $ 806   $ 315  
Provision for Income Taxes     (102 )   (311 )   (118 )
Loss on Discontinued Operations, net     (4 )        
   
 
 
 
Earnings from Discontinued Operations, net
    of tax
  $ 185   $ 495   $ 197  
   
 
 
 

During fiscal 2007, the Company acquired Ohio Water & Waste Supply, Inc. and Geosynthetics, Inc. These acquisitions operated under HD Supply and were included in the disposition. The aggregate purchase price for acquisitions in fiscal 2007, 2006 and 2005 was $25 million, $4.5 billion and $2.6 billion, respectively, including $3.5 billion for Hughes Supply in fiscal 2006. The Company recorded Goodwill related to the HD Supply businesses of $20 million, $2.8 billion and $1.8 billion for

44



fiscal 2007, 2006 and 2005, respectively, and recorded no Goodwill related to its retail businesses for fiscal 2007 compared to $229 million and $111 million for fiscal 2006 and 2005, respectively, in the accompanying Consolidated Balance Sheets.

2.     DISPOSITION AND ACQUISITIONS



On August 30, 2007, the Company closed the sale of HD Supply. The Company received $8.3 billion of net proceeds for the sale of HD Supply and recognized a
$4 million loss, net of tax, on the sale of the business, subject to the finalization of working capital adjustments. Also in connection with the sale, the Company purchased a 12.5% equity
interest in the newly formed HD Supply for $325 million, which is included in Other Assets in the accompanying Consolidated Balance Sheets.




Also
in connection with the sale, the Company guaranteed a $1.0 billion senior secured loan ("guaranteed loan") of HD Supply. The fair value of the guarantee, which was determined to be
approximately $16 million, is recorded as a liability of the Company and included in Other
Long-Term Liabilities. The guaranteed loan has a term of five years and the Company would be responsible for up to $1.0 billion and any unpaid interest in the event of
non-payment by HD Supply. The guaranteed loan is collateralized by certain assets of HD Supply.



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




The
following table presents Net Sales and Earnings of HD Supply through August 30, 2007 which have been reclassified to discontinued operations in the Consolidated Statements of Earnings for
fiscal 2007, 2006 and 2005 (amounts in millions):




















































































































 
 Fiscal Year Ended
 
 
 February 3,

2008

 January 28,

2007

 January 29,

2006

 
Net Sales $7,391 $11,815 $4,492 
  
 
 
 
Earnings Before Provision for Income

    Taxes
 $291 $806 $315 
Provision for Income Taxes  (102) (311) (118)
Loss on Discontinued Operations, net  (4)    
  
 
 
 
Earnings from Discontinued Operations, net

    of tax
 $185 $495 $197 
  
 
 
 




During fiscal 2007, the Company acquired Ohio Water & Waste Supply, Inc. and Geosynthetics, Inc. These acquisitions operated under HD Supply and were
included in the disposition. The aggregate purchase price for acquisitions in fiscal 2007, 2006 and 2005 was $25 million, $4.5 billion and $2.6 billion, respectively, including
$3.5 billion for Hughes Supply in fiscal 2006. The Company recorded Goodwill related to the HD Supply businesses of $20 million, $2.8 billion and $1.8 billion for



44











fiscal
2007, 2006 and 2005, respectively, and recorded no Goodwill related to its retail businesses for fiscal 2007 compared to $229 million and $111 million for fiscal 2006 and 2005,
respectively, in the accompanying Consolidated Balance Sheets.



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Apr 3, 2008
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