Home Depot 2007 Annual Report Download - page 23

including prevailing wage rates and health and other insurance costs. In addition, many of our associates are in hourly positions with historically
high turnover rates. We compete with other retail businesses for these associates and invest significant resources in training and motivating them.
We also depend on our executives and other key associates for our success. There is no assurance that we will be able to attract or retain highly
qualified associates in the future.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting
matters could significantly affect our financial results or financial condition.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a
wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, inventories, self-insurance, tax matters
and litigation, are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their
interpretation or changes in underlying assumptions, estimates or judgments could significantly change our reported or expected financial
performance or financial condition.
Increased competition could adversely affect prices and demand for our products and services and could decrease our market share.
We operate in markets that are highly competitive. We compete principally based on price, store location, customer service and assortment of
merchandise. In each market we serve, there are a number of other home improvement stores, electrical, plumbing and building materials supply
houses and lumber yards. With respect to some products, we also compete with discount stores, local, regional and national hardware stores,
mail order firms, warehouse clubs, independent building supply stores and other retailers. In addition, we compete with specialty design stores or
showrooms, some of which are only open to interior design professionals, local and regional distributors, and wholesalers and manufacturers that
sell products directly to their customer bases. Intense competitive pressures from one or more of our competitors could affect prices or demand
for our products and services. If we are unable to timely and appropriately respond to these competitive pressures, our financial performance and
our market share could be adversely affected.
We are involved in a number of legal proceedings, and while we cannot predict the outcomes of such proceedings and other contingencies
with certainty, some of these outcomes may adversely affect our operations or increase our costs.
We are involved in a number of legal proceedings, including government inquiries and investigations, and consumer, employment, tort and other
litigation. We cannot predict the outcomes of these proceedings and other contingencies, including environmental remediation and other
proceedings commenced by government authorities, with certainty. The outcome of some of these proceedings and other contingencies could
require us to take or refrain from taking actions which could adversely affect our operations or could require us to pay substantial amounts of
money. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management's attention
and resources from other matters.
Our costs of doing business could increase as a result of changes in federal, state or local regulations.
Changes in the federal, state or local minimum wage or living wage requirements or changes in other wage or workplace regulations could
increase our costs of doing business. In addition, changes in federal, state or local regulations governing the sale of some of our products or tax
regulations could increase our costs of doing business.
Item 1B. Unresolved Staff Comments.
Not applicable.
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