Macy's 2010 Annual Report Download - page 16

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obligations to the Company. In some cases, the Company depends upon such third parties to provide essential
leaseholds, products, services or other benefits, including with respect to store and distribution center locations,
merchandise, advertising, software development and support, logistics, other agreements for goods and services
in order to operate the Company’s business in the ordinary course, extensions of credit, credit card accounts and
related receivables, and other vital matters. Current economic, industry and market conditions could result in
increased risks to the Company associated with the potential financial distress or insolvency of such third parties.
If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, the rights
and benefits of the Company in relation to its contracts, transactions and business relationships with such third
parties could be terminated, modified in a manner adverse to the Company, or otherwise impaired. The Company
cannot make any assurances that it would be able to arrange for alternate or replacement contracts, transactions
or business relationships on terms as favorable as the Company’s existing contracts, transactions or business
relationships, if at all. Any inability on the part of the Company to do so could negatively affect the Company’s
cash flows, financial condition and results of operations.
A material disruption in the Company’s computer systems could adversely affect the Company’s business or
results of operations.
The Company relies extensively on its computer systems to process transactions, summarize results and
manage its business. The Company’s computer systems are subject to damage or interruption from power
outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events
such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by the
Company’s employees. If the Company’s computer systems are damaged or cease to function properly, the
Company may have to make a significant investment to fix or replace them, and the Company may suffer loss of
critical data and interruptions or delays in its operations in the interim. Any material interruption in the
Company’s computer systems could adversely affect its business or results of operations.
A privacy breach could result in negative publicity and adversely affect the Company’s business.
The protection of customer, employee, and company data is critical to the Company. The regulatory
environment surrounding information security and privacy is increasingly demanding, with the frequent
imposition of new and constantly changing requirements across business units. In addition, customers have a
high expectation that the Company will adequately protect their personal information. A significant breach of
customer, employee, or company data could attract a substantial amount of media attention, damage the
Company’s customer relationships and reputation and result in lost sales, fines, or lawsuits.
A regional or global health pandemic could severely affect the Company’s business.
A health pandemic is a disease that spreads rapidly and widely by infection and affects many individuals in
an area or population at the same time. If a regional or global health pandemic were to occur, depending upon its
location, duration and severity, the Company’s business could be severely affected. Customers might avoid
public places in the event of a health pandemic, and local, regional or national governments might limit or ban
public gatherings to halt or delay the spread of disease. A regional or global health pandemic might also
adversely impact the Company’s business by disrupting or delaying production and delivery of materials and
products in its supply chain and by causing staffing shortages in its stores.
The Company is subject to numerous regulations that could adversely affect its business.
The Company is subject to customs, child labor, truth-in-advertising and other laws, including consumer
protection regulations and zoning and occupancy ordinances that regulate retailers generally and/or govern the
importation, promotion and sale of merchandise and the operation of retail stores and warehouse facilities.
Although the Company undertakes to monitor changes in these laws, if these laws change without the Company’s
knowledge, or are violated by importers, designers, manufacturers or distributors, the Company could experience
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