Home Depot 2010 Annual Report Download - page 14

A failure of a key information technology system or process could adversely affect our business.
We rely extensively on information technology systems, some of which are managed by third-party service
providers, to analyze, process and manage transactions and data. We also rely heavily on the integrity of this data
in managing our business. We or our service providers could experience errors, interruptions, delays or
cessations of service in key portions of our information technology infrastructure, which could significantly
disrupt our operations and be expensive, time consuming and resource-intensive to remedy.
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, while simplifying customer interaction and providing our customers with a
more interconnected retail experience. The cost and potential problems and interruptions associated with the
implementation of these initiatives, including those associated with managing third-party service providers and
employing new web-based tools and services, 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.
Disruptions in our supply chain and other factors affecting the distribution of our merchandise could
adversely impact our business.
A disruption within our logistics or supply chain network, including damage or destruction to our distribution
centers, could adversely affect our ability to deliver inventory in a timely manner, which could impair our ability
to meet customer demand for products and result in lost sales or damage to our reputation. Such a disruption
could negatively impact our financial performance or financial condition.
Our costs of doing business could increase as a result of changes in, increased enforcement of, or adoption of
new federal, state or local laws and regulations.
We are subject to various federal, state or local laws and regulations that govern different aspects of our business.
Recently, there have been a large number of legislative and regulatory initiatives and reforms, as well as
increased enforcement of existing laws and regulations by federal, state and local agencies. Changes in, increased
enforcement of, or adoption of new federal, state or local laws and regulations governing minimum wage or
living wage requirements, other wage or workplace regulations, the sale of some of our products, transportation,
logistics, taxes, energy costs or environmental matters, could increase our costs of doing business or impact our
store operations. Healthcare reform under the Patient Protection and Affordable Care Act and the Health Care
and Education Reconciliation Act of 2010 enacted in March 2010 could adversely impact our labor costs and our
ability to negotiate favorable terms under our benefit plans for our associates.
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 back-up credit facility with a
consortium of banks. Although we currently maintain a strong investment grade rating and had no outstanding
commercial paper obligations as of the end of fiscal 2010, there is no assurance that our ability to obtain
additional financing through the capital markets, if needed, will not be adversely impacted due to economic
conditions. New or incremental tightening in the credit markets, low liquidity and 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.
8