HD Supply Reports Sales Of $2 Billion For 2Q

ATLANTA-- HD Supply today reported net sales for the 2010 fiscal second quarter ended August 1, 2010 of $2.0 billion, an increase of $1 million compared to the second quarter of fiscal 2009. Operating income for the fiscal second quarter of 2010 was $26 million, an increase of $7 million compared to the second quarter of fiscal 2009.

ATLANTA-- HD Supply today reported net sales for the 2010 fiscal second quarter ended August 1, 2010 of $2.0 billion, an increase of $1 million compared to the second quarter of fiscal 2009. Operating income for the fiscal second quarter of 2010 was $26 million, an increase of $7 million compared to the second quarter of fiscal 2009. Liquidity at the end of the second quarter of fiscal 2010 was $1.3 billion, an increase of over $130 million versus the first quarter of fiscal 2010, and over $400 million versus the end of fiscal 2009.

Consolidated net loss for the second quarter of fiscal 2010 was $115 million, compared to a net loss of $89 million for the same period in fiscal 2009. Net loss in the second quarter of fiscal 2010 and fiscal 2009 included non-cash charges of $33 million and $4 million, respectively, to increase the valuation allowance against the company's deferred tax assets. Excluding the 2010 and 2009 charges for valuation allowances, the net loss of $82 million in the second quarter of fiscal 2010 compares with a net loss of $85 million in the second quarter of fiscal 2009. Net sales for the first six months of fiscal 2010 were $3.8 billion, a decline of 2.8 percent compared to the first six months of fiscal 2009.

Operating income in the first six months of fiscal 2010 improved $11 million to $5 million compared with an operating loss of $6 million in the first six months of fiscal 2009. Consolidated net loss for the first six months of fiscal 2010 was $317 million, compared to a net loss of $79 million for the same period in fiscal 2009. Net loss in the first six months of fiscal 2010 included a $117 million non-cash charge to increase the valuation allowance against the company's deferred tax assets. Net loss in the first six months of fiscal 2009 included a non-operating pre-tax gain of $200 million ($123 million after-tax) resulting from the extinguishment of senior subordinated debt and a $5 million non-cash charge to increase the valuation allowance against the company's deferred tax assets.

Excluding the 2010 and 2009 charges for valuation allowances and the 2009 gain from the debt extinguishment, net loss of $200 million in the first six months of fiscal 2010 compares with a net loss of $197 million in the first six months of fiscal 2009.

"As we enter the second half of this year, we are beginning to see signs of economic and industry stabilization and are cautiously optimistic. We continue to invest in the critical growth areas for our business that will uniquely position HD Supply to grow faster than the markets as they recover. Over the past six months, we have enhanced our product mix, continued to improve our operational efficiencies and have made critical investments in our technology systems. In addition, our teams are intensely focused on maintaining and growing current customer relationships, and earning new business by providing outstanding service to our customers," stated Joe DeAngelo, CEO, HD Supply. "Our growing liquidity and the extension of the majority of our debt maturities to 2014 enhances our solid financial position."

In March 2010, HD Supply entered into amendments to its $1.3 billion Cash Flow Credit Agreement and its $2.1 billion ABL Credit Agreement, which extended approximately $874 million of the Term Loan principal and $1.75 billion under the ABL Credit Agreement to April 1, 2014.

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