Home Depot 2008 Annual Report Download - page 11

Our ability to obtain additional financing on favorable terms, if needed, could be adversely affected by the volatility in
the capital markets.
We obtain and manage liquidity from the positive cash flow we generate from our operating activities and our access to
capital markets, including our commercial paper programs supported by a long-term bank line-of-credit commitment.
Although we currently maintain a strong investment grade rating and had no outstanding commercial paper obligations as
of the end of fiscal 2008, there is no assurance that our ability to obtain additional financing through the capital markets,
if needed, will not be adversely impacted if the current recessionary trends persist or worsen. Continued volatility in the
capital markets could result in diminished availability of credit, higher cost of borrowing and lack of confidence in the
equity market, making it more difficult to obtain additional financing on terms that are favorable to us.
The implementation of our supply chain and technology initiatives could disrupt our operations in the near term, and
these initiatives might not provide the anticipated benefits or might fail.
We have made, and we plan to continue to make, significant investments in our supply chain and technology. These
initiatives are designed to streamline our operations to allow our associates to continue to provide high quality service to
our customers and to provide our customers with a better experience. The cost and potential problems and interruptions
associated with the implementation of these initiatives could disrupt or reduce the efficiency of our operations in the near
term. In addition, our improved supply chain and new or upgraded technology might not provide the anticipated benefits,
it might take longer than expected to realize the anticipated benefits, or the initiatives might fail altogether.
We may not timely identify or effectively respond to consumer trends, which could adversely affect our relationship
with customers, the demand for our products and services and our market share.
It is difficult to successfully predict the products and services our customers will demand. The success of our business
depends in part on our ability to identify and respond to evolving trends in demographics and consumer preferences.
Failure to design attractive stores and to timely identify or effectively respond to changing consumer tastes, preferences,
spending patterns and home improvement needs could adversely affect our relationship with customers, the demand for
our products and services and our market share.
The inflation or deflation of commodity prices could affect our prices, demand for our products, sales and profit
margins.
Prices of certain commodity products, including lumber and other raw materials, are historically volatile and are subject to
fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market
speculation, government regulations and periodic delays in delivery. Rapid and significant changes in commodity prices
may affect our sales and profit margins.
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. Also, passage of the
Employee Free Choice Act or other similar laws in Congress could lead to higher labor costs by encouraging unionization
efforts among our associates and disruption of store operations.
Our success depends upon our ability to attract, train and retain highly qualified associates.
To be successful, we must attract, train and retain a large number of highly qualified associates while controlling labor
costs. Our ability to control labor costs is subject to numerous external factors, 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.
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