Diane Dayhoff - Vice President, Investor Relations Frank Blake - Chairman and Chief Executive Officer Craig Menear - Executive Vice President, Merchandising Carol Tome - Chief Financial Officer and Executive Vice President, Corporate Services

Aram Rubinson - Wolfe Research Eric Bosshard - Cleveland Research Dennis McGill - Zelman & Associates Kate McShane - Citi Scot Ciccarelli - RBC Capital Markets Laura Champine - Canaccord Genuity Seth Basham - Wedbush Securities Jaime Katz - Morningstar Greg Melich - ISI Group Michael Lasser – UBS Mike Baker - Deutsche Bank Gary Balter - Credit Suisse Keith Hughes - SunTrust Alan Rifkin - Barclays

Good day, everyone and welcome to today’s Home Depot Fourth Quarter Earnings Conference Call. Today’s conference is being recorded. (Operator Instructions) Beginning today’s discussion is Ms. Diane Dayhoff, Vice President, Investor Relations. Please go ahead, ma’am.

Thank you, Lisa and good morning to everyone. Joining us on our call today are Frank Blake, Chairman and CEO of The Home Depot; Craig Menear, Executive Vice President, Merchandising; and Carol Tome, Chief Financial Officer and Executive Vice President, Corporate Services. Following our prepared remarks, the call will be opened for analysts’ questions. Questions will be limited to analysts and investors. And as a reminder, we really would appreciate if the participants would limit themselves to one question with one follow-up please. If we are unable to get to your question during the call, please feel free to call our Investor Relations department at (770) 384-2387. Before I turn the call over to Frank, let me remind you that today’s press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to those factors identified in the release and in our filings with the Securities and Exchange Commission. Today’s presentations also include certain non-GAAP measurements. Reconciliation of these measurements is included in the release and is provided on our website. Now, let me turn the call over to Frank Blake.

Thank you, Diane and good morning everyone. Sales for the fourth quarter were $17.7 billion, down 3% from last year. This year’s fourth quarter consisted of 13 weeks compared to last year’s fourth quarter which had 14 weeks. Excluding that additional week in 2012, sales for the fourth quarter were up 3.9% from the prior year. Comp sales were positive 4.4% and our diluted earnings per share were $0.73. Our U.S. stores had a positive comp of 4.9%. From a geographic perspective, 17 of our 19 U.S. regions posted positive comps. The two regions with negative comps were New York and New Jersey, both of which were overlapping last year’s strong repair sales from Hurricane Sandy. Counterbalancing that we had positive comp performance throughout our western and southern divisions and even with the pressure from New York and New Jersey, our northern division positively comped. We grew ticket and comp transactions in the quarter, improved inventory turns and maintained our focus on expense control. Our pro customer had another quarter of sales growth. Adjusting for hurricane impacts, the pro and consumer grew at the same rate in the quarter. Marvin and the operations team continue to focus on improving the experience for our pros. We launched our Pro Xtra program this past fall. With Pro Xtra, our pros contract their purchases, take advantage of exclusive product offers and get access to helpful business tools. The rate of sign-ups has increased and is over 10,000 per week and we will be introducing new functionalities for our pros throughout 2014. In merchandising as Craig will detail, we are pleased with the results of our Black Friday Holiday and Gift Center events during the quarter. We saw strong growth on interconnected retail with dot com sales growing approximately 50% for the quarter on a 13 week basis. Our online customer satisfaction scores improved as we continued to enhance the experience across our full site, mobile and tablet and we’re seeing accelerated improvement in our conversion rates. To support our interconnected retail efforts we recently opened our first of three new direct fulfillment centers. Each facility will have capacity to hold as many as 100,000 SKUs for direct ship to customers. We already have the convenience of 2000 locations throughout the country for buying online and returning or picking up instore. These facilities will now expand our capabilities to ship most orders the same day they are received. As another part of our interconnected efforts last month we acquired Blinds.com. We’re very excited about this acquisition, Blinds.com is the market leader in online window coverings with a compelling, shopping, sales and service experience for customers. In addition to the strength we believe they will bring to us in this category, we also believe they can help us develop best in class capabilities for selling customized, configurable products online. And most importantly their entrepreneurial culture is a great fit with the Home Depot culture. On the International front in local currency our Canadian business had positive comps above the Company average. And just last week we opened the first of our two new Canadian rapid deployment centers. Our Mexican business positively comped for the quarter making it 41 quarters in a row of positive comp growth. Looking at the full year 2013 we significantly exceeded our plan. On a 52 week basis we grew sales by over $5 billion. We had the most transactions in the company history and our best annual comp sales increased since 1999. And looking at our two year stacked comp rates we had very consistent double digit sales increases in every quarter. The company with the help of our vendors was able to respond effectively to this increased demand while maintaining tight operational focus. For 2014 as Carol will detail we expect sales growth of 4.8% and diluted earnings per share of $4.38, a 16.5% increase. 2014 GDP estimates call for low single-digit growth so our 2014 guidance is premised on the housing market as a continuing tailwind for our business. It is not our view that all housing metrics will sustain the growth rates from 2013 going forward. This last year saw a particularly strong recovery in housing prices but we do expect the housing recovery to continue, expect that home prices will increase even though at a lower rate and expect that affordability will support growth in the home improvement market. Year-over-year private fixed residential investment or PFRI, as a percentage of GDP grew to 3.1% in the fourth quarter. This remains well below the 60 year average of approximately 4.6%. Finally today our Board announced a 21% increase in our quarterly dividend to $0.47 per share. This is the 5th dividend increase in as many years and follows our targeted dividend payout of 50% of earnings. We remain committed to discipline capital allocation to create value for our shareholders. We will invest to sustain and grow our business, our intent is to increase our dividend every year and we will use our excess cash for share repurchases. Let me close by thanking our associates for their hard work and dedication. I would like to give special thanks to all of our associates who have helped their customers and their communities through the recent winter storms often under the most difficult of circumstances. It's a great reflection of everyone everyone’s hard work that this have 100% of our stores qualify for success sharing, our profit sharing program for our hourly associates. We set a record for success sharing payout for the full year of 2013 almost a quarter of a $1 billion. We’re proud of that result and look forward to continuing this momentum in 2014. With that let me turn the call over to Craig.

Thanks Frank. Good morning everyone. We’re pleased with our performance in the fourth quarter, although the makeup of sales was very different by area of the country [ph]. The departments that outperformed the company’s average comp for the fourth quarter were indoor garden, kitchens, outdoor garden, plumbing, electrical and tools. Bath hardware, paint, décor, lighting, flooring, millwork and lumber performed positively. Comp sales in building materials were negative reflecting tough year-over-year strong comparisons in booking [ph]. Sales for the quarter were driven by great events, including our outstanding Black Friday and strong guest centers and flexible response in seasonal categories, including winter preparedness and decorative holiday. As Frank mentioned, weather had some impact to our sales as we anniversary-ed last year’s Hurricane Sandy sales and the fourth quarter this year saw severe winter storms in some of the coolest temperatures on record in the Midwest and Northeast. As a result, our northern division experienced negative comps in outdoor project categories like lumber and building materials. This negative impact was partially offset by positive performance in weather-related categories like portable heating, pumps, weather stripping and snow removal equipment. In areas of the country that were not affected by difficult weather, we saw continued strength across the store. Across the country including our northern division, maintenance and repair categories like pipe and fittings, air circulation, cleaning and HVAC had comps above the company average. We also saw continued strength in light bulbs, where sales posted a double-digit positive comp for the fourth consecutive quarter. Continued innovation in LED technology is becoming more widely adopted by our customers and is expanding to other categories of the store like decorative and security light. Categories that are traditionally dominated by our pro customers also performed well. For example, dimensional lumber, insulation, concrete, pneumatic fasteners comped above the company average. As I shared with you last quarter, we executed several events planned to drive sales. In decorative holiday, several new products were introduced, including our expanded assortment of pre-lit trees. While the holiday selling season was compressed by one less week compared to 2012, we drove positive comps in these categories, including our online channel. Thanks to our amazing values and execution by our associates, we had one of our best sell-through rates ever. Black Friday sales were the highest on record and gift center sales exceeded our plan. Outstanding exclusive offers driven with our vendor partners allowed us to be first to market with product and resulted in great performance in part to accessories and tools and portable power. Total comp transactions grew by 3.3% for the quarter, while average ticket increased 1.1%. The total impact of ticket growth from commodity inflation was flat. Transactions per ticket under $50 representing approximately 20% of our U.S. sales were up 2.5% for the fourth quarter. Transactions per tickets over $900 also representing approximately 20% of our U.S. sales were up 5.5% in the fourth quarter. The drivers behind the increase in big ticket purchases were appliances and the continued recovery of our pro customer. Now, let me turn our attention to the first quarter. We are excited about the opportunities we have as we entered into our spring selling season. Our new assortment planning tools provides us the ability to optimize our assortments at a local level and help us better prepare for spring. As many of you know, spring is our biggest selling season. So for the fifth consecutive year, we will have our spring Black Friday event. Working with our vendors, we plan to bring in special buyers and extraordinary values on popular spring items like patio furniture, grills, landscape and live goods to name a few. In addition to this, we are also excited about the new products our merchants have added to our assortments. In outdoor living, we are introducing higher end patio furniture from Brown Jordan, that is available online and showcased in some of our stores. This exciting new product allows customers to customize the furniture and fabric to fit their space with fabric options from Sunbrella. We are also adding five new collections to our core patio, which will expand our assortments and offer our customers more options than they have ever had. In grills, Weber’s new exclusive Spirit Series with the Gourmet Barbecue System offers our customers several attachments to enhance the barbecuing experience. And we are also expanding the new brands with the addition of charcoal and gas grills from KitchenAid. New for 2014 in outdoor power is a full line up of cordless power from Eagle, including lawn mowers, string trimmer, blower and hedge trimmer. These tools are powered by a 56 volt Lithium-Ion Battery with 40% more power compared to other batteries in the industry and a remarkable recharging time that allows a dead battery to be fully charged in as a little as 30 minutes. While we’re loaded for the outdoor spring selling season we also have a strong lineup of product for projects inside the home. New for bath, Delta’s ActivTouch H20 hand shower combines a quick [ph] showerhead and hand shower with 9 spray settings and the ease of ActivTouch technology which allows for one hand operation. Also for bath through an exclusive partnership with Polar [ph] we’re introducing a new line up of bathing productions including the toilet seat with an integrated LED light. And for our pro customers we’re introducing a new line of water heaters from Rheem with innovative features and improved diagnostic controls. These water heaters decrease energy usage by 10% as compared to current models and increase available hot water by up to 25% saving both time and money. In addition these models, many of these models already meet the 2015 Department of Energy specifications a whole year in advance and are exclusive to the Home Depot. Heading into 2015 spring selling season, we believe that we’re well-positioned and are excited about the opportunities that it brings. And with that I like to turn the call over to

Thank you Craig. Good morning. In the fourth quarter sales were $17.7 billion. As Frank mentioned fiscal 2012 included a 53rd week which added approximately $1.2 billion in sales to the fourth quarter and the year. The extra week is not included in our 2013 comp or same store sales calculation. Comp sales were positive 4.4% for the quarter with positive comps of 3.7% in November, 6.9% in December and 3% in January. Comp sales for U.S. stores were positive 4.9% for the quarter. With positive comps of 3.7% in November, 7.8% in December and 3.8% in January. For the year our sales increased 5.4% to $78.8 billion. Excluding sales from the 53rd week in fiscal 2012 total sales for fiscal 2013 increased 5.2%. For the year total company comp sales were positive 6.8% and comps for U.S. stores were positive 7.5%. Our total company gross margin was 35% for the fourth quarter considerably better than our plan and was 10 basis points higher than last year of which 14 basis points came from our U.S. business. The year-over-year expansion in our U.S. business can be explained by the following. First, we experienced 6 basis points of gross margin expansion due to productivity within our supply chain. The remaining 8 basis points of expansion reflects the net impact of a change in the mix of products sold and in some cases higher co-op and rebate levels than last year as we reached higher purchase tiers. For the year we experienced 18 basis points of gross margin expansion. Operating expense as a percent of sales decreased by 26 basis points to 25% in the fourth quarter. Excluding last year’s extra week operating expenses as a percent of sales decreased 554 basis points. Fiscal 2013 operating expense as a percent of sales was 23.1% a decrease of 106 basis points from what we reported last year. On a 52 week basis our expenses grew at 32% of our sales growth rate in-line with our guidance. In the fourth quarter interest and other expense was $178 million an increase of $80 million from last year and for the year interest and other expense totaled $699 million, an increase of $154 million from the prior year. The increase in interest expense is primarily attributable to $4 billion of incremental debt issued in fiscal 2013. Our income tax provision rate was 36% in the fourth quarter and 36.4% for the year. On a reported basis diluted earnings per share for the fourth quarter was $0.73 an increase of 7.4% from last year. On a 13-week basis, diluted earnings per share grew by 19.7%. For the year on a reported basis, diluted earnings per share were $3.76, an increase of 25.3% compared to the prior year. On a 52-week basis, diluted earnings per share grew by 28.3%. One last comment on the earnings per share, you will recall that in fiscal 2012, we incurred a $145 million non-recurring charge related to the closing of our China stores, which had a $0.10 negative impact to fiscal 2012 diluted earnings per share. We have provided a supplementary schedule in our press release that sets forth a year-over-year comparison with and without this charge. Now, moving to our operational metrics. During the fourth quarter, we opened three new stores in Mexico and one in the U.S. and ended the year with 2,263 stores. At the end of the year, selling square footage was $236 million, about flat to last year and sales per square foot increased 4.9% to $334. At the end of the year, inventory was $11 billion, up $347 million from a year ago. Inventory turns were 4.6 times, up from 4.5 times last year. Moving on to our share repurchase program. In the fourth quarter, we received 3.4 million shares related to the true-up of an accelerated share repurchase, or ASR program, we initiated in the third quarter. Additionally, in the fourth quarter, we repurchased $2.1 billion or 26.4 million shares. This included 7.5 million shares repurchased on the open-market and 18.9 million shares repurchased through an ASR program that was initiated and closed in the fourth quarter. For the year, we repurchased a total of $8.5 billion, 111.3 million shares of outstanding stock. Computed on the average of beginning and ending long-term debt and equity for the trailing four quarters, return on invested capital was 20.9%, 390 basis points higher than at the end of fiscal 2012. We detailed our 2014 guidance in our press release, but I want to take a few moments to comment on the highlights. Remember that we guide off of GAAP, so fiscal 2014 guidance will launch from our reported results for fiscal 2013. As we look to 2014, we are basing our sales growth assumptions starting with GDP growth forecast, which for the U.S. are approximately 2.8%. We are also projecting that the U.S. housing market, namely home price appreciation household formation and housing turnover will contribute approximately 200 basis points of comp growth in 2014. While some of the macro and housing data has softened over the last few months, we continued to believe that we are in the moderate stage of housing recovery. As Frank mentioned, home affordability is still quite attractive and we are continuing to see home prices improve, both of which are positive for our business. For the year, we expect comp sales growth of approximately 4.6% and total sales growth of approximately 4.8%. Some may see this as slightly lower than the preliminary 2014 guidance we gave in December of 2013. While nothing has materially changed in our economic outlook, we did adjust our 2014 plan to reflect a weaker Canadian dollar than what we experienced last year. I will also note that the extreme winter weather in February hasn’t been our friend, but our February comps are positive and we know firsthand that many homeowners have some major repairs ahead of them, which suggest we should have a great spring selling season. For 2014, we are projecting no gross margin expansions consistent with our intent to use cost out savings to support recovering and growing lower margin product categories. On the expense front, we are forecasting our expenses to grow at approximately 33% at the rate of our sales growth. For the year, we project that our operating margin will grow by approximately 70 basis points and we expect diluted earnings per share to increase by approximately 16.5% to $4.38. Our earnings per share guidance includes our plan to repurchase approximately $5 billion of outstanding shares during the year using excess cash. Our 2014 capital spending plan is approximately $1.5 billion, an 8% increase from what we spent in fiscal 2013 in support of interconnected retail. For the year, we project cash flow from the business of roughly $8.8 billion. We will use our cash to invest in our business and to return capital to shareholders in the form of share repurchases and dividends. Our commitment to shareholder returns continues to be a hallmark of the Home Depot, on top of our intense repurchase $5 billion of outstanding shares in 2014. As Frank mentioned we just announced a 21% increase in our quarterly dividend which equates to an annual dividend of $1.88 in-line with our targeted dividend payout ratio of 50%. So we thank you for your participation in today’s call and Lisa we’re now ready for questions.

(Operator Instructions). We will take our first question from Aram Rubinson from Wolfe Research. Aram Rubinson - Wolfe Research: I wanted to ask you a question about growth kind of beyond recovery, a lot of companies in cyclical businesses is turned to acquisitions when economy growth moderates. Wondering if you can tell us a little bit about your appetite for acquisitions as it is today and also as you look at few years out in the economy moderates a little bit, how you think that might develop?

I will let Carol comment on this as well but I would say what you see from us now and what I would expect to continue is that we use acquisitions really not as a supplement to sales growth but as a supplement to competences that we think are important to add to our capabilities and I would anticipate that that would be the case going forward.

Yes indeed Aram we have got a filter that looks at opportunities for growth through acquisitions just in that light, how can they enable our existing business. So if you look at Blinds.com the most recent acquisition that we made are not only are we getting a terrific online configurator one that’s much better than what we have we’re also getting a another [ph] call center and these people know how to close sales. This is enabling business of ours that we think has huge growth potential. Aram Rubinson - Wolfe Research: And so growth won't become let’s say post recovery from acquisitions, would we be kind of banking more on share repurchase, more on added leverage or is there some other innovation that you would hope, point us to and think about what it might look like five years from now. Thank you.

So Aram we constantly think also about taking share and expanding categories in our store and improving the productivity of our store and we have actually been through quite a long period of not having growth in our market and we have some experience of being able to generate positive comp growth even in the flat to down housing market. 2010, 2011 were not friendly years in the housing market and we were positively confident.

And we will go next to Eric Bosshard from Cleveland Research. Eric Bosshard - Cleveland Research: Wondering if you can speak a little bit to your terming the recovery now in the moderate space, did you look through the last three months or the last six months? What you’re seeing different in terms of consumer demand and appetite either around categories or price points or in the area of discretionary remodel. But how you’re seeing that evolve and if anything has changed in the last three months relative to the prior three months in terms of the intensity or the areas for demand (indiscernible).

So Eric again let Carol comment on some of the macro things that we’re seeing but I would also just prefix this by saying it's difficult to tease those conclusions out from a quarter where you’ve a lot of particularly unusual weather and some unusual overlaps for us. So as Carol mentioned in her comments we do see housing as a tailwind but not perhaps quite as much as it was in 2013 but again if you look just at the last quarter hard to tease out some of the specifics on that.

As we look at the macro we think housing will be a contributor to our growth next year, we’re about 200 basis points. We think it contributed about 250 basis points in 2013. Biggest driver is home price appreciation. And in last years, home prices were up double-digit, we are not forecasting that. In 2014, we think they will be up around 6%. Now, home prices have 21% to go before they return to peak some preference to conservative outlook, but we think it’s a realistic outlook to build a plan on. One comment I might say about the consumer and Craig maybe you want to jump in on this is that as we look at sales against opening price points of good, better, best, all the way to premium, we have seen growth in premium priced products in all four quarters including this last quarter. So it doesn’t really seem to us I think a change in the consumer, I mean, there (indiscernible) of other disruptions for sure, but it doesn’t really seem like there is a change in the consumer.

No, not at all. And as Carol mentioned, we are seeing to grow opportunity going up the line structure. And I think the other comment would be that over the past few quarters we have shared that our pro-business has been recovering. So you are seeing growth across categories like lumber and building materials that historically during the downturn weren’t as strong. Eric Bosshard - Cleveland Research: Perfect. Thank you very much.

Thanks, Eric.

And we will take our next question from Dennis McGill from Zelman & Associates. Dennis McGill - Zelman & Associates: Hi, good morning. I guess first question you noted that areas not impacted by weather, which I guess were few in far between saw continued strength, can you maybe just put the numbers behind that or maybe if you look out west where snow weather is much (indiscernible)?

So Dennis, the Western division was our strongest performing division and that was the least impacted by weather. Dennis McGill - Zelman & Associates: And I guess when you say maintaining the strength, is it fair to say comps were comparable than to the prior quarter?

In the Western division, I would say that our comps were about the twice the company average. Dennis McGill - Zelman & Associates: Okay, that’s helpful. And then Carol, I think you mentioned that gross margins were well above plan, you kind of went through the levers there versus a year ago, but relative to plan where would be upside driven and how does that kind of factor into the flat outlook for ‘14?

Sure. Well, you remember that we were anniversary-ing strong sales from Hurricane Sandy. We had about $235 million of sales that we had anniversary-ied. Nonetheless, we built a plan that had our building materials department growing year-on-year. And as Craig pointed out, it didn’t grow year-on-year. And that’s a good news from a margin perspective, because we had a benefit from a lower penetration of a lower margin category. So that was one big change. The other change is the purchasing peers that we hit in certain categories and this is just a function of demand. So we had new purchasing tiers for refrigeration, installation, plumbing repair, we hadn’t planned on that and that gave us higher co-op and rebate. Dennis McGill - Zelman & Associates: Okay, perfect. Thank you. Best of luck.

Thank you.

Thank you.

And we will go next to Kate McShane from Citi. Kate McShane - Citi: Thank you. I am hoping to follow-up on question asked previously with regards to the housing market trends, Carol, you always expressed your thoughts on changes in the environment, and I wondered if you could add your perspective on any opportunity for the easing of plumbing work or the lowering of FICO scores and how that might play into your guidance?

Yes. We thought all along that credit availability was the big driver of the housing recovery and the shape of the recovery curve. We are very encouraged by what we have seen at Wells Fargo. Wells Fargo has announced that they are taking the FICO scores for FHA loans, down from what was 640 to now 600. We think that will be very good particularly for those new households who are buying their first home, that also is a good new story when you think about the affordability curve, because if you look at an affordability zone, mortgages that are $100,000 mortgage and this would be a great mortgage for an FHA loan that stays in the affordability zone until mortgage rates reach 9%. So we are encouraged by this. So we also hear that other lenders are starting to discuss loosening up, it’s still a very tight environment, make no mistake, but there are encouraging signs. Kate McShane - Citi: Okay, thank you. And if I could just quickly follow-up about the sales from the expected region by weather, how much do you think will be pushed into Q1 and how much do you think is just lost at this point?

Really, we don’t see any loss at this stage of the game. It’s very, very early obviously in the quarter and we are experiencing what maybe many ways of sales a more typical winter

And we will take our next question from Scot Ciccarelli from RBC Capital Markets. Scot Ciccarelli - RBC Capital Markets: Carol I know you’ve mentioned about a number of macro factors but are there certain factors you’re particularly concerned about now and then I guess for both Frank and Carol when you guys kind of talk about PFRI as a percentage of GDP call it 3.1 today the long term average of 4.6% is it realistic to get back to 4.6% or what is the more, what do you think is the realistic target to kind of reach overtime given the current environment and current size of GDP?

So Scot on the factors that we are concerned about Carol just went through a discussion on one of them that has been a long standing concern which is credit availability and indicated we’re starting to see some improvement there but that’s certainly been a key factor that we have watched in terms of the recovery of PFRI and whether it gets back to 4.6% that’s economist would tell you things have the tendency to revert to the mean but there are always exceptions to the rule. It will take us a while that’s exactly right.

The other thing I would just point out Scot that we’re looking at is household information, (indiscernible) was pretty weak but when you think about whether was it so weak and goes back to credit availability. So we need to get those millennial into a home and again really happy with what we’re seeing at Wells Fargo. Scot Ciccarelli - RBC Capital Markets: So basically credit is kind of what you’re looking at driving all the other data whether it's turnover, housing prices, et cetera, you think that’s going to be the major let’s call it Delta in that equation.

That Scot plus the economy, I mean the underlying engine remains job growth, we need people to be getting jobs. We need GDP growing and then we have absorbed and more than absorbed I mean there is no overcapacity in the housing market. We’re actually down to a very, very low inventory level. So it really does come back if you have got the job growth, if you have got GDP growth then the other key factor to watch is the credit availability.

And we will go next to Laura Champine from Canaccord Genuity. Laura Champine - Canaccord Genuity: Could you comment on your market share trends in the quarter?

Yes so if you look at a rolling ’12 basis we were up roughly 35 basis points to 26.5% based on the NYSE data and when we look at third party data that tracks consumer only spending we were up in roughly 10 out of 22 key classes or departments if you will. So 10 departments 22 classes. So we feel good about the fact that we’re continuing to grow share.

And we will take our next question from Seth Basham with Wedbush Securities. Seth Basham - Wedbush Securities: First question is around share gains as well, can you help us understand what’s happening with appliances, how much share are you getting appliances as clear relative to recent quarters?

When we look at the most recent quarter it shows based on again third party tracking that we have picked up about a 180 basis points of share in the quarter and that compares to about a 170 basis points on a rolling 12 which would be over the four quarters obviously.

Appliances contributed about 60 basis points of our comp growth in the quarter. Seth Basham - Wedbush Securities: And then secondly if I may follow-up regarding the macro if you think about credit availability being relatively tight and you look at some metrics like DTI, debt to income and LTD ratios, are those something tied to norms in the past. So how do you rectify that against other dimensions of credit availability?

Seth if you work for a financial institution and you took billions of dollars of losses you’re in an interest rate environment that is so low it's hard to make a book. I mean it is going to be shy and you’re going to very cautious in terms of underwriting. I would imagine and this is like financial institutions will tell us. So while there is, it's a better environment to lend into and I suspect that’s why banks are starting to signal that they are willing to change and that’s a tough road for those folks.

And we will go next to Jaime Katz from Morningstar. Jaime Katz - Morningstar: Good morning. Thanks for taking my call. Can you guys comment just on how on the next Canadian businesses have been doing, add a little bit more color? And then maybe talk about how you guys are planning on marketing to the pro business this year to grow that business little faster?

Okay. Jaime, on the Canadian and Mexican business, first comment on Mexico, as I said, Mexico has now had 41 quarters in a row of positive comp growth. This year that performance, I mean, we say that and we sort of don’t spend a lot of time dwelling on that, but this year that performance was really pretty extraordinary in the context of what was happening in the Mexican economy, which went through a significant adjustment and a significant adjustment that was centered very much around changes in housing policy. So we are very pleased with how our business not only has historically performed, but performed this year again positively comping in a difficult environment. Then on Canada, Canada adjusting for FX had a stronger comp growth in the fourth quarter than the company average. Again, we are very pleased with how our Canadian business is doing. We feel like we are well-positioned in that competitive environment and that’s been positively comping really for the last several quarters in a row there. Jaime Katz - Morningstar: And marketing to the pro?

Yes.

From a pro perspective, Frank mentioned our program we launched Pro Xtra, which we are excited about, we are signing up 10,000 customers per week and so great momentum there. And also we are pleased with our mobile app in pro just allowing us to really help our pros run a better business, leverage some of our online tools and connect our pro both virtually and in our brick-and-mortar locations. So in addition to that, we are going to continue to be aggressive on conventional means of advertising like radio, which really resonates well with our pros, but at the end of the day for pros, it’s about a couple of fundamental things and that is convenience, our great service they get in and out fast and value, and we are going to focus on those three things as well. Jaime Katz - Morningstar: Thank you. Nice quarter.

Thank you.

Thank you.

We will take our next question from Greg Melich from ISI Group. Greg Melich - ISI Group: Hi, thanks. Two questions. One was just on the comp trend through the quarter and into this quarter, I was surprised just how strong December was given how strong it was a year ago, could you explain what that was and the impact of Sandy and it looks like January was the weakest month of the quarter, how much of that was weather and what do you expect those trends are how they looking into February?

As it relates to December, let me address that first, we had, as I mentioned in my comments, we had a record setting Black Friday. We had great gift center sales that exceeded our plans. Events were a strong part of December sales overall. And we had a terrific season as it related to our decorative holiday and wild trees. And so we are very, very pleased with the performance and the programs that our merchants put together and while our stores took that and drove and our associates just did an excellent job. When you look at January, certainly as you would expect, with some of the weather impacts and partially the contrary, we saw a little bit of softening in the more discretionary spend categories in that month and certainly that was a factor. So the mix of sales changed in the month of January.

We don’t like to use weather as an excuse, but we think we probably lost $100 million in the month of January. Atlanta was frozen for (indiscernible)…. Greg Melich - ISI Group: My other question was sort of bigger picture one to address it, we did implement the Affordable Care Act and one of the things we are watching was how many of your employees take up the new plan structured, anything you can update us there in terms of take up rates of your own plan or how you are baking into your guidance for SG&A will be helpful?

Yes, Greg. We are not going to get into the specific details around take up other than to say it was consistent with what we planned for. Greg Melich - ISI Group: Was it up, I assume?

Yes. Greg Melich - ISI Group: And I assume the guidance didn’t change?

The guidance didn’t change. Our HR team has done a fabulous job of working through ways to mitigate any cost pressures that may come at us by re-bidding out placement services, plan redesigns. So we are providing insurance for our associates and taking care of our shareholders at the same time.

And we will go now to Michael Lasser from UBS. Michael Lasser – UBS: Frank it seems like home prices and home price appreciation has been the biggest driver of the market for the last 12 to 18 months. At what point do you think turnover will again overtake that and you may see a recoupling between home improvement comps and housing turnover.

It's an interesting question. We were just talking about that question amongst ourselves and interestingly historically for us housing turnover has not been that great a predicator of our sales. If you go back over time and so I’m not sure that the way the housing market will play out for us that as price appreciation slows down the correlation will shift to another element of the market.

So just a couple of data points for you, I find this to be very interesting. If you look at the correlation between housing turnover and home improvement sales between 2000 and 2013. You’ve got a high R squared something like 0.7. If you look at it from the puree of 2010 to 2013, the R squared is 0.3. So the housing market is changing, it's a good way to explain but not necessarily good way to predict. Michael Lasser – UBS: Carol I guess if you look at the metric from 2000 and 2010 presumably R squared would be higher?

Little bit but not much. Michael Lasser – UBS: Okay my second question is on the acquisition of Blinds.com, as you become more proficient with interacting and engaging your customers online do you think that puts you more in the crosshairs or potentially more in the crosshairs of the online only retailers?

We think we’re in those crosshairs. Michael Lasser – UBS: But even more so than you already are I think…

We don’t think that does anything to our being in the crosshairs. We first of acquisition like Blinds.com as Carol said the explanation for it is the competences that it brings internally to allow us to better compete in interconnected retail but we imagine that pretty much everybody out there with an internet only offering that relates to home improvement already has a target on us. Michael Lasser – UBS: Okay fair enough. Let me ask one last question, what’s the duration look like from extreme weather conditions and spending associate with a repair from that. How would you contrast it to perhaps Tornado or Hurricane related spending? Thank you.

Michael that totally depends actually no win-spring breaks. So I would suspect there are and I can look at my own yard. There are people who have right now in needs [ph] but depending on when the spring breaks will depend on what that duration time is between the recognition of the need and the action to make it happen.

We will take our next question from Mike Baker from Deutsche Bank. Mike Baker - Deutsche Bank: Two questions one on buyback so 5 billion this year it was really upside to that, I think a year ago you talked about 4.6 billion but said it could be upside to take on more debt and you surely did that and upside the number. A year later we are closer to a 2.0 target leverage ratio I think so just wondering if you can characterize any upside in that $5 billion number.

Well today we’re planning $5 billion using excess cash and to your point we’re not at our max target of two time’s adjusted debt to EBITDA. Today we would have about $1.9 billion of borrowing availability if we were to leverage up to that target and we don’t have any plans to do that right now. We raised a whole lot of debt last year and it's always a good idea to let some time lapse before you go back to the market. Just got have excellent execution. Mike Baker - Deutsche Bank: Yeah makes sense. The second question and maybe this is just looking at you finally but your comp guidance suggest a 200 basis points of deceleration from 2013. I think about 50 basis points of that comes from housing. The other 150 basis points deceleration is that just being conservative not just prudent to expect the comp at 7% every year or is it something else in there that we should be thinking about?

I have asked you to think about commodities. In 2013, we enjoyed commodity inflation, not thinking that’s going to happen this year. In fact, we are going to have some pressure from commodity price deflation. So that would be one driver. The other driver as you know is that we rolled out our extended clients’ assortment to many of our stores, looking at 500 stores. So we will be lapping it against that. So that’s just a little bit of headwinds on us. Mike Baker - Deutsche Bank: And we don’t plan on storms.

Thank you. We don’t. Mike Baker - Deutsche Bank: Right.

But we will take them. Mike Baker - Deutsche Bank: Yes, very helpful. Just to go to can you quantify that quantity or is it commodity impact in ‘13 and ‘14?

It would be – I am going to be rounding here, it’s 80 to 90 basis points. Mike Baker - Deutsche Bank: Of the swing?

Yes. Mike Baker - Deutsche Bank: Okay, thank you.

Yes.

We will take our next question from Gary Balter from Credit Suisse. Gary Balter - Credit Suisse: Thank you. Just following up actually on the last question, how much share – how much of your comp sort of helped by share gain from some competitors that maybe struggling and what do you assume in your 2014 guidance?

Well, as Craig pointed out, pursuant to the NYEX definition, we enjoyed share appreciation in 2013 about 35 basis points of share appreciation. We still tend to build the plan based on share capture, that doesn’t mean Gary that we won’t do everything to get that share capture and take care of our customers. So we don’t tend to plan for that. Gary Balter - Credit Suisse: Okay. And then you made some comments on Canada and the currency decline, is there a way and I am not a senior play economist, but given the declines that you have seen in their currency, which makes their purchasing power a little bit better for Canadians, do you think that that will help the underlying business at some point putting aside the currency impact?

The healthy underlying business in Canada? Gary Balter - Credit Suisse: Yes, I am sorry, go ahead.

As I said, Gary, the performance of our Canadian business very, very pleased with it. And our Canadian business is doing well in an environment where our competitors, Rona and some others are having great difficulty. So we expect continued success there, frankly regardless of the currency.

Okay, thank you. And we will take our next question from Keith Hughes from SunTrust. Keith Hughes - SunTrust: Thank you. You finished off a great year with products – our projects $900 or greater given your comping against that in 2014, what kind of number you are expecting there in the same-store sale guidance you gave earlier?

So we actually plan our year based on growth for both transactions as well as ticket and we plan that roughly equal. And if you look at the year, we are pretty close to that in terms of it was pretty balanced between tickets and transactions. Keith Hughes - SunTrust: I was asking specifically around the transactions greater than $900?

No, Keith, we wouldn’t plan at that level. Keith Hughes - SunTrust: Right, okay. Is your sense that it will be greater than the comp sales or come back down in line with it?

No, I think is if we see the continued recovery, I think the opportunity there driven by continuing pro-business, driven by customers taking on larger projects if their home values continue to hold, I think we could expect to see the bigger ticket continue to grow.

And from a shape of the year perceptive, I think the growth has been heavier in the back half than the first half, because we are still anniversary-ing from Sandy storms. In Q1, we have had about $150 million more or less in Q1 and Q2 was an outstanding year for us. So I think if we are trying to build a model that way, Keith, that’s how I would build this. Keith Hughes - SunTrust: Okay, thank you.

Yes.

So Lisa, we have time for one more question.

Okay. And we will take our next question from Alan Rifkin from Barclays. Alan Rifkin - Barclays: Thank you very much. Your growth in the dot com side of the business is quite admirable and given the investments that you have made to-date, one would have to assume that dot com continues to outpace the brick-and-mortar side. Carol, what effect on EBIT margins going forward will an accelerated growth on the dot com side of the business have on EBIT?

Well, couple of things about the profitability of our dot com business, first, year-on-year was much more profitable this year than last year, which is a good news story. And as we think about 2014 and beyond, we factored into our guidance the impact of a dot com business that’s growing faster than the core, because to your point it is. Alan Rifkin - Barclays: Okay and one last question if I may, just playing Devil’s Advocate here. I believe in the past you have actually said that the single most important macroeconomic variable to your business is GDP even greater than that of housing because GDP obviously incorporates housing plus everything else. Your guidance for GDP is actually higher in 2014 than 2013 and so even with the expected deflation in commodity prices that you’re anticipating in 2014 why are we not looking for a slightly higher comp than what you’ve laid out today?

So Alan I will make couple of comments and then Carol can add to them. Our commentary around GDP is being the most significant thing for us was those comments were given in the context of housing market that was frankly still flat to down. So in 2010 and 2011 when we were positively comping, what we were expressing was that that was a reflection of a recovery of GDP, we were not yet seeing and the country wasn’t seeing a tailwind from housing. What we tried to layout both in our June 2012 and our December 2013 conferences was now we see a time when housing will be a tailwind to GDP and when you compare ’14 to ’13 a somewhat less of a tailwind than we saw in ’13. Carol if you want to add some comments there?

Sure if you think of the drivers of housing that most impacted our business we do believe home prices will appreciate in 2014 but at half the rate they appreciated in 2013. So that is a year-over-year change. In terms of turnover we think the turnover as a percentage of units will be about 4% for that down slightly from 2013. All of this is a directionally correct but in place model, we’re taking all the data that we can Alan and we come up with our point of view on what the business will do.

Well thank you all today for joining us on our conference call and we look forward to you on our next quarter’s conference call.

Ladies and gentlemen this does conclude today’s conference and we thank you for your participation.