FORWARD-LOOKING STATEMENTS

Certain statements regarding our future performance made in this report are forward-looking statements. Forward-looking statements may relate to the demand for our products and services, net sales growth, comparable store sales, impact of cannibalization, store openings and closures, state of the economy, state of the residential construction and housing markets, state of the home improvement market, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the planned recapitalization of the Company, timing of the completion of such recapitalization and the ability to issue debt securities on terms and at rates acceptable to us.

Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. Such statements 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. Some of the material risks and uncertainties that could cause actual results to differ materially from our expectations and projections include but are not limited to: economic conditions in North America and in other countries where we operate; changes in our cost structure; our ability to attract, train and retain highly qualified associates; significant changes to labor laws, including the possible adoption of the Employee Free Choice Act of 2007; risks associated with our distribution strategies and planned RDC roll-out; conditions affecting customer transactions and average ticket, including, but not limited to, improving and streamlining operations, customers' in-store experience and other factors described in Item 1A, "Risk Factors" of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on April 3, 2008. You should read such information in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 and our Financial Statements and related notes in Item 1. The risks and uncertainties described in the Form 10-K include the considerable risks associated with the current economic environment and the possible adverse effects on the Company's results of operations and financial condition.

We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not 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 such statements. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

EXECUTIVE SUMMARY AND SELECTED CONSOLIDATED STATEMENTS OF EARNINGS DATA

For the third quarter of fiscal 2008, we reported Net Earnings from Continuing Operations of $756 million and Diluted Earnings per Share from Continuing Operations of $0.45 compared to Net Earnings from Continuing Operations of $1.1 billion and Diluted Earnings per Share from Continuing Operations of $0.59 for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, we reported Net Earnings from Continuing Operations of $2.3 billion and Diluted Earnings per Share from Continuing Operations of $1.37 compared to Net Earnings from Continuing Operations of $3.5 billion and Diluted Earnings per Share from Continuing Operations of $1.85 for the first nine months of fiscal 2007. Our gross profit margin was 33.7% and our operating margin was 7.4% for the third quarter of fiscal 2008. For the first nine months of fiscal 2008, our gross profit margin was 33.6% and our operating margin was 7.2%.

As a result of our store rationalization plan announced in the first quarter of fiscal 2008, we closed 15 stores and removed approximately 50 stores from the future growth pipeline. We recognized $564 million in total pretax charges for the first nine months of fiscal 2008 related to the store rationalization plan, including $3 million in the third quarter of fiscal 2008. For the first nine months of fiscal 2008, Net Earnings from Continuing Operations were $2.7 billion and Diluted Earnings per Share from Continuing Operations were $1.58, excluding the store rationalization charge. Our gross profit margin was 33.6% and our operating margin was 8.2% for the first nine months of fiscal 2008, excluding the store rationalization charge.

Net Sales decreased 6.2% to $17.8 billion for the third quarter of fiscal 2008 from $19.0 billion for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, Net Sales decreased 5.0% to $56.7 billion from $59.7 billion for the first nine months of fiscal 2007. The slowdown in the global economy and weakness in the U.S. residential construction and home

improvement markets negatively affected our Net Sales for the third quarter and first nine months of fiscal 2008. Our comparable store sales declined 8.3% in the third quarter of fiscal 2008 driven by a 5.5% decline in comparable store customer transactions, as well as a 2.8% decline in our average ticket to $55.86. Due to the 53rd week in fiscal 2007, the third quarter of fiscal 2008 was negatively impacted by a seasonal timing change that reduced Net Sales by approximately $225 million and comparable store sales by approximately 120 basis points.

We remain committed to the long-term health of our business through our strategy of investing in our retail business and through the following five key priorities:

Associate Engagement - We have taken a number of actions to improve associate engagement by changing the way our associates are compensated, recognized and rewarded, including restructuring our success sharing program, an incentive program for our hourly associates driven by individual store performance. As of the end of the third quarter of fiscal 2008, 61% of our stores would be eligible to receive a success sharing payout for the second half of fiscal 2008 compared to 57% of stores for the same period last year.

Product Excitement - We continue to work on our merchandising transformation by redefining how we run our business, implementing a portfolio strategy on products and creating new tools to support better merchandising decision making. As a result, we saw unit share gains against the market in several key merchandising classes. For example, insulation, carpet, ceramic tile, power tools, toilets, faucets, grills and molding all gained share in the third quarter of fiscal 2008. Many of these classes received concentrated merchandising focus and investment, utilizing our portfolio strategy. For example, in molding, we updated the assortments regionally, refined the merchandising sets, improved the value proposition and added point of sale information making it easier for the customer to shop and make a selection. Energy efficient products also performed well this quarter. We will continue to focus on energy efficient products as we enter the holiday season, including an expanded assortment of LED lighting. Our gift centers have strong values on hand tools sets and power tools across a variety of price points, and we are ready to service the storage and organization needs of our customers following the holidays.

Shopping Environment - We continued our store reinvestment program by completing an aggressive list of maintenance projects, including the completion of our lighting upgrade, as well as more complex repair and maintenance activities for hundreds of other stores. In addition to programmatic maintenance, our integrated field and support center teams have rolled out store standards to all stores. We developed and piloted common guidelines on store appearance and shopability, including standards for front apron merchandising, wingstack usage, signage presentation, fixturing and off-shelf product. This initiative helps reduce the amount of time our store managers spend on these issues, removes unnecessary clutter from the aisles and implements a basic consistent approach in terms of appearance.

Product Availability - We continued our supply chain transformation to improve product availability. We have improved our in-stock position, our inventory management systems and processes, and are rolling out new logistics processes and systems. We opened our fourth Rapid Deployment Center ("RDC") in the third quarter of fiscal 2008, and our RDCs now serve approximately 400 of our stores. We plan to open one additional RDC in the fourth quarter of fiscal 2008 and remain committed to our overall roll-out strategy, supporting our goal of increasing our central distribution penetration.

Own the Pro - We have made significant improvements in the services we provide our pro customers, particularly through our pro bid room. The pro bid room, which is available in all of our stores, allows us to leverage the buying power of The Home Depot for the benefit of our pro customers. Our direct ship program allows us to have large orders delivered from our vendors to the customer's job site directly, reducing handling, lead-time and costs while building loyalty with the pro customer.

We opened 14 new stores during the third quarterof fiscal 2008, including two relocations, and temporarily closed one store in Mexico due to a fire, bringing our total store count to 2,268. As of the end of the third quarter of fiscal 2008, 257 stores, or approximately 11%, were located in Canada, Mexico or China compared to 236 as of the end of the third quarter of fiscal 2007.

We generated $4.8 billion of cash flow from operations in the first nine months of fiscal 2008. We used this cash flow to repay $2.0 billion of short-term debt and other debt obligations, fund $1.4 billion in capital expenditures and pay $1.1 billion of dividends.

At the end of the third quarter of fiscal 2008, our long-term debt-to-equity ratio was 56.3% compared to 65.0% at the end of the third quarter of fiscal 2007. Our return on invested capital for continuing operations (computed on the average of beginning and ending long-term debt and equity for the trailing twelve months) was 11.6% for the third quarter of fiscal 2008 compared to 15.0% for the third quarter of fiscal 2007. This decrease reflects the decline in our operating profit and the store

rationalization charge. Excluding the store rationalization charge, our return on invested capital for continuing operations was 12.7%.

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. We believe the information presented in our Management's Discussion and Analysis of Financial Condition and Results of Operations provides an understanding of our business, our operations and our financial condition.

                                                        % of Net Sales                              % Increase (Decrease)
                                     Three Months Ended                Nine Months Ended              in Dollar Amounts
                                November 2,      October 28,      November 2,      October 28,       Three         Nine
                                   2008             2007             2008             2007          Months        Months
NET SALES                              100.0 %          100.0 %          100.0 %          100.0 %       (6.2 )%       (5.0 )%

GROSS PROFIT                            33.7             33.4             33.6             33.4         (5.4 )        (4.6 )

Operating Expenses:
Selling, General and
Administrative                          23.8             21.9             24.0             21.3          2.0           7.0
Depreciation and
Amortization                             2.5              2.3              2.4              2.1          3.5           7.4
Total Operating Expenses                26.3             24.1             26.4             23.4          2.1           7.1

OPERATING INCOME                         7.4              9.3              7.2             10.0        (25.0 )       (31.7 )

Interest (Income) Expense:
Interest and Investment
Income                                     -             (0.2 )              -             (0.1 )      (79.3 )       (80.6 )
Interest Expense                         0.9              0.8              0.9              0.8          1.9          (2.4 )
Interest, net                            0.8              0.7              0.8              0.7         20.8           9.8

EARNINGS FROM CONTINUING
OPERATIONS BEFORE PROVISION
FOR INCOME TAXES                         6.6              8.6              6.4              9.3        (28.5 )       (34.9 )
Provision for Income Taxes               2.3              3.0              2.3              3.4        (26.8 )       (35.4 )
EARNINGS FROM CONTINUING
OPERATIONS                               4.3 %            5.7 %            4.1 %            5.9 %      (29.4 )%      (34.6 )%

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

SELECTED SALES DATA
Number of Customer
Transactions (in millions)               315              326              989            1,021         (3.4 )%       (3.1 )%
Average Ticket                 $       55.86    $       57.48    $       56.97    $       58.26         (2.8 )%       (2.2 )%
Weighted Average Weekly
Sales Per Operating Store
(in thousands)                 $         597    $         651    $         640    $         696         (8.3 )%       (8.0 )%
Weighted Average Sales per
Square Foot                    $      295.95    $      323.36    $      317.26    $      345.72         (8.5 )%       (8.2 )%
Comparable Store Sales
Decrease (%)(1)                         (8.3 )%          (6.2 )%          (7.5 )%          (6.3 )%       N/A           N/A

RESULTS OF OPERATIONS

Net Sales for the third quarter of fiscal 2008 decreased 6.2%, or $1.2 billion, to $17.8 billion from $19.0 billion for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, Net Sales decreased 5.0%, or $3.0 billion, to $56.7 billion from $59.7 billion for the comparable period in fiscal 2007.

The decrease in Net Sales for the third quarter and first nine months of fiscal 2008 reflects the impact of negative comparable store sales, partially offset by Net Sales from new stores in the first nine months of fiscal 2008 of $1.5 billion, including $439 million in the third quarter of fiscal 2008. Comparable store sales decreased 8.3% for the third quarter of fiscal 2008 compared to a decrease of 6.2% for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, comparable store sales decreased 7.5% compared to a decrease of 6.3% for the same period of fiscal 2007. Due to the 53rd week in fiscal 2007, the third quarter of fiscal 2008 was negatively impacted by a seasonal timing change that reduced Net Sales by approximately $225 million and comparable store sales by approximately 120 basis points. For the first nine months of fiscal 2008, this seasonal timing change added approximately $151 million to Net Sales and approximately 30 basis points to our comparable store sales.

There were a number of factors that contributed to our comparable store sales decline. The U.S. residential construction and home improvement markets continued to be soft and consumers were challenged due to higher unemployment and an across the board tightening of consumer credit availability. We saw relative strength in Building Materials, Hardware, Plumbing, Garden and Paint as comparable store sales in these areas were above or at the Company average for the third quarter of fiscal 2008. Comparable store sales for Lumber, Flooring, Kitchen/Bath, Electrical and Millwork were below the Company average for the third quarter of fiscal 2008. The softness in our big ticket categories negatively impactedaverage ticket, which decreased 2.8% to $55.86 for the third quarter of fiscal 2008 and decreased 2.2% to $56.97 for the first nine months of fiscal 2008.

Our international businesses began to feel some of the economic pressure that we have experienced in the U.S. in the third quarter of fiscal 2008. Our comparable store sales for Canada and China were at the Company average for the third quarter of fiscal 2008. For the first nine months of fiscal 2008, comparable store sales for Canada were above the Company average and were positive for China. Our stores in Mexico posted double digit comparable store sales in both the third quarter and first nine months of fiscal 2008.

In order to meet our customer service objectives, we strategically open stores near market areas served by existing stores ("cannibalize") to enhance service levels, gain incremental sales and increase market penetration. Our new stores cannibalized approximately 7% of our existing stores as of the third quarter of fiscal 2008, which had a negative impact to comparable store sales of approximately 1%.

Gross Profit decreased 5.4% to $6.0 billion for the third quarter of fiscal 2008 from $6.3 billion for the third quarter of fiscal 2007. Gross Profit decreased 5.0% to $19.0 billion for the first nine months of fiscal 2008 from $19.9 billion for the first nine months of fiscal 2007. Gross Profit as a percent of Net Sales increased 27 basis points to 33.7% for the third quarter of fiscal 2008 compared to 33.4% for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, Gross Profit as a percent of Net Sales was 33.6% compared with 33.4% for the comparable period of fiscal 2007, an increase of 16 basis points. The increase in Gross Profit as a percent of Net Sales for the third quarter of fiscal 2008 reflects a 23 basis point benefit from lower markdowns coupled with a smarter approach to promotions that covered the cost of our new lower price program and a 14 basis point benefit resulting from a decline in the penetration in our kitchen and appliance category. These increases were partially offset by a contraction of 10 basis points associated with clearance activities in connection with the one-time conversion of our Canadian stores to their new enterprise resource planning system.

Selling, General and Administrative Expense ("SG&A") increased 2.0% to $4.2 billion for the third quarter of fiscal 2008 from $4.1 billion for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, SG&A increased 7.0% to $13.6 billion from $12.7 billion for the first nine months of fiscal 2007. As a percent of Net Sales, SG&A was 23.8% for the third quarter of fiscal 2008 compared to 21.9% for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, SG&A as a percent of Net Sales was 24.0% compared to 21.3% for the same period last year. Excluding the store rationalization charge, SG&A as a percent of Net Sales for the first nine months of fiscal 2008 was 23.0%, an increase of 173 basis points over the prior year. For the third quarter of fiscal 2008, the increase in SG&A as a percent of Net Sales reflects the impact of negative comparable store sales, as well as an increase of approximately 70 basis points due to higher cost of credit associated with the private label credit card program. For the third quarter and first nine months of fiscal 2008, the penetration

of the private label credit card sales was 28% for both periods, as compared to 30% and 29% for the third quarter and first nine months of fiscal 2007, respectively.

Depreciation and Amortization increased 3.5% to $446 million for the third quarter of fiscal 2008 from $431 million for the third quarter of fiscal 2007. Depreciation and Amortization was $1.3 billion for the third quarter of both fiscal 2008 and fiscal 2007. Depreciation and Amortization as a percent of Net Sales was 2.5% for the third quarter of fiscal 2008 compared to 2.3% for the third quarter of fiscal 2007, and was 2.4% for the first nine months of fiscal 2008 compared to 2.1% for the same period in fiscal 2007. The increase as a percentage of Net Sales in both periods was primarily due to sales deleverage and the depreciation of our investments in shorter lived assets like store resets and technology.

Operating Income decreased 25.0% to $1.3 billion for the third quarter of fiscal 2008 from $1.8 billion for the third quarter of fiscal 2007. Operating Income decreased 31.7% to $4.1 billion for the first nine months of fiscal 2008 from $6.0 billion for the first nine months of fiscal 2007. Operating Income as a percent of Net Sales was 7.4% for the third quarter of fiscal 2008 compared to 9.3% for the third quarter of fiscal 2007, and was 7.2% for the first nine months of fiscal 2008 compared to 10.0% for the first nine months of fiscal 2007. Excluding the store rationalization charge, our Operating Income as a percent of Net Sales was 8.2% for the first nine months of fiscal 2008.

In the third quarter of fiscal 2008, we recognized $151 million of net Interest Expense compared to $125 million in the third quarter of fiscal 2007. Net Interest Expense as a percentage of Net Sales was 0.8% for the third quarter of fiscal 2008 compared to 0.7% for the third quarter of fiscal 2007. Net Interest Expense included less interest income as a result of lower investable cash balances offset by lower interest expense primarily arising from a favorable tax settlement.

Our combined effective income tax rate for continuing operations decreased to 36.1% for the first nine months of fiscal 2008 from 36.4% for the comparable period of fiscal 2007. The decrease in our effective income tax rate reflects a favorable income tax settlement as well as lower state and foreign effective tax rates.

Diluted Earnings per Share from Continuing Operations were $0.45 and $1.37 for the third quarter and first nine months of fiscal 2008, respectively, compared to $0.59 and $1.85 for the third quarter and first nine months of fiscal 2007, respectively. Excluding the store rationalization charge, Diluted Earnings per Share from Continuing Operations for the first nine months of fiscal 2008 were $1.58, a decrease of 14.6% from the first nine months of fiscal 2007. Diluted Earnings per Share were favorably impacted by the repurchase of shares of our common stock related to our tender offer completed in September of fiscal 2007, as well as the repurchase of 2.4 million shares of our common stock for $70 million in the third quarter of fiscal 2008.

On August 30, 2007, the Company closed the sale of HD Supply. Discontinued operations for the third quarter and first nine months of fiscal 2007 consist of the results of operations of HD Supply. Net Sales from discontinued operations were $1.2 billion and Earnings from Discontinued Operations, net of tax, were $20 million for the third quarter of fiscal 2007. Net Sales from discontinued operations were $7.4 billion and Earnings from Discontinued Operations, net of tax, were $185 million for the first nine months of fiscal 2007.

To provide clarity, internally and externally, about our operating performance for the first nine months of fiscal 2008, we supplemented our reporting with non-GAAP measurements to reflect the store rationalization charge as described more fully in Note 3 to the Consolidated Financial Statements. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measurements. We believe these non-GAAP measurements provide management and investors with meaningful information to understand and analyze our performance. The following reconciles the non-GAAP measurements reflecting the store rationalization charge to the reported GAAP information for the first nine months of fiscal 2008:

(Amounts In Millions, Except Per Share Data)

                                                                   Store
                                                              Rationalization        Non-GAAP
                                             As Reported           Charge           Measurement
Net Sales                                   $      56,681    $                -    $      56,681
Cost of Sales                                      37,651                    10           37,641
Gross Profit                                       19,030                   (10 )         19,040
Operating Expenses:
Selling, General and Administrative                13,595                   552           13,043
Depreciation and Amortization                       1,342                     2            1,340
Total Operating Expenses                           14,937                   554           14,383
Operating Income                                    4,093                  (564 )          4,657
Interest, net                                         472                     -              472
Earnings From Continuing Operations
Before Provision for Income Taxes                   3,621                  (564 )          4,185
Provision for Income Taxes                          1,307                  (209 )          1,516
Earnings from Continuing Operations         $       2,314    $             (355 )  $       2,669

Diluted Earnings per Share from
Continuing Operations                       $        1.37    $            (0.21 )  $        1.58

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated from operations provides us with a significant source of liquidity. During the first nine months of fiscal 2008, Net Cash Provided by Operating Activities was $4.8 billion compared to $5.2 billion for the same period of fiscal 2007. This change was primarily a result of decreased Net Earnings and improved inventory management.

Net Cash Used in Investing Activities for the first nine months of fiscal 2008 was $1.4 billion compared to $5.6 billion provided by investing activities for the same period of fiscal 2007. The change in Net Cash Used in/Provided by Investing Activities was primarily the result of $8.3 billion of net proceeds from the sale of HD Supply in the third quarter of fiscal 2007 and $1.1 billion less in capital expenditures than the same period in fiscal 2007.

During the first nine months of fiscal 2008, Net Cash Used in Financing Activities was $3.0 billion compared with $10.8 billion for the same period of . . .