Home Depot 2008 Annual Report Download - page 12

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, lease obligations, 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 that arise from time to time in the ordinary course of business. Litigation is
inherently unpredictable, and 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 result in excessive verdicts.
Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of
management’s attention and resources from other matters.
The regulatory environment related to information security and privacy is increasingly rigorous, and a significant
privacy breach could adversely affect our business.
The protection of our customer, employee and company data is important to us. The regulatory environment related to
information security and privacy is increasingly rigorous, with new and constantly changing requirements applicable to
our business. In addition, our customers have a high expectation that we will adequately protect their personal
information. A significant breach of customer, employee or company data could damage our reputation and result in lost
sales, fines and lawsuits.
Any inability to open new stores on schedule will delay the contribution of these new stores to our financial
performance.
We expect to increase our presence in certain existing markets and enter new markets. Our ability to open new stores will
depend primarily on our ability to identify attractive locations, negotiate leases or real estate purchase agreements on
acceptable terms, attract and train qualified employees, and manage pre-opening expenses, including construction costs.
Environmental regulations, local zoning issues and other laws related to land use affect our ability to open new stores.
Failure to effectively manage these and other similar factors will affect our ability to open stores on schedule, which will
delay the impact of these new stores on our financial performance.
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