Key questions and answers from the second quarter earnings call conducted by The Home Depot Inc. (HD: chart) on August 19, 2008.

Daniel Binder (Jefferies): Could you quantify the benefits you think you may have seen from the Midwest recovery efforts due to the floods?

Frank Blake: It is at a level of immateriality, probably around $10 million.

Daniel Binder (Jefferies): What was the contribution from international on the total comp store sales?

Frank Blake: International was around 140 basis points.

Christopher Horvers (J.P. Morgan): If you think about everything you do in your backyard in the early Spring to early Summer, any sense on how those categories comped relative to the rest of the mix?

Craig Menear: Those categories actually performed above the company average in the quarter. Overall, when we look at our core seasonal businesses for the entire season, the first half, if you will, they actually were two times better than the company average and we were certainly above what we anticipated in the quarter for those businesses.

Mitchell Kaiser (Piper Jaffray): Could you give us a little more detail on what you are going to do on the processes around the RDC?

Mark Holifield: Yes, we are slowing our 2008 openings but we feel we are on track for a 2010 completion where we would serve 100% of our stores. Our focus at this point is really ensuring a seamless rollout going forward, doing the right thing for our stores and our customers.

The key things that we are focused on -- improving the in-stock at the stores, we are pleased with where we are there. The RDCs have improved the in-stock for the SKUs that are covered by RDC.

We are improving our accuracy of shipments, the quality of timeliness -- and quality and timeliness of loads delivered to our stores and then our throughput productivity, and those are the things we are focused on as we go forward.

Mitchell Kaiser (Piper Jaffray): The goal that 75% of your COGS will go through either the lumber DCs, stocking DCs, or RDCs, is that still consistent with that you are looking for over time?

Mark Holifield: Yes, our end goal is to have 70% to 80% of goods covered through central distribution. Keep in mind though that that includes, as you have said, other DCs besides RDCs to get there.

Budd Bugatch (Raymond James): Did you beat your own internal forecast in the second quarter and if so, at what line items?

Carol B. Tome: We did beat our internal forecast. We beat our sales forecast, we beat our earnings forecast. Now, we did get a benefit from the Quebec settlement which was 1 cent of earnings better than our plan but we had a solid quarter.

And it’s not just on the income statement. We were very pleased with the performance of inventory. We’re managing inventory in a very difficult environment.

Matthew Fassler (Goldman Sachs): And in terms of expense favorability, are there any call-outs that would get in the way in the second half of the year?

Carol B. Tome: Nothing that is material.

Matthew Fassler (Goldman Sachs): You spoke about where you are going to focus your work in the existing DCs. What was it that you saw that led you to slow down the rollout?

Frank Blake: When we opened the Dallas RDC, we saw that that had some significant operational issues in terms of what we had planned. And then we go back and you look at our pilot project in Braselton, the rollout in Chicago and Dallas, and you go gee, there are some significant process improvements that it would be good to make.

And to be candid, we had a lot of discussion about that amongst our senior leadership team and the advantage of a rollout like this in my view is we have got three RDCs up. It’s kind of a perfect time to have that pause, get things really the way you want them before you continue the rollout.

We are trying to do in a very short period of time what other retailers would take 2X or 3X the amount of time to do. The more you can replicate what you are doing and not have to make improvements on the run, the better off we think we will be in the rollout and the easier the integration with the store side of this and the merchandising side.