Target 2010 Annual Report Download - page 29

If we fail to protect the security of personal information about our guests, we could be subject to costly
government enforcement actions or private litigation and our reputation could suffer.
The nature of our business involves the receipt and storage of personal information about our guests. If we
experience a data security breach, we could be exposed to government enforcement actions and private litigation.
In addition, our guests could lose confidence in our ability to protect their personal information, which could cause
them to discontinue usage of our credit card products, decline to use our pharmacy services, or stop shopping at
our stores altogether. Such events could lead to lost future sales and adversely affect our results of operations.
Our failure to comply with federal, state or local laws, or changes in these laws could increase our expenses.
Our business is subject to a wide array of laws and regulations. Significant legislative changes that affect our
relationship with our workforce could increase our expenses and adversely affect our operations. Examples of
possible legislative changes affecting our relationship with our workforce include changes to an employer’s
obligation to recognize collective bargaining units, the process by which collective bargaining agreements are
negotiated or imposed, minimum wage requirements, and health care mandates. In addition, changes in the
regulatory environment regarding topics such as banking and consumer credit, Medicare reimbursements, privacy
and information security, product safety or environmental protection, among others, could cause our expenses to
increase without an ability to pass through any increased expenses through higher prices. In addition, if we fail to
comply with applicable laws and regulations, particularly wage and hour laws, we could be subject to legal risk,
including government enforcement action and class action civil litigation, which could adversely affect our results of
operations.
Given the geographic concentration of our stores, natural disasters could adversely affect our results of
operations.
Our three largest states, by total sales, are California, Texas and Florida, areas where hurricanes and
earthquakes are prevalent. Such events could result in significant physical damage to or closure of one or more of
our stores or distribution centers, and cause delays in the distribution of merchandise from our vendors to our
distribution centers and stores, which could adversely affect our results of operations.
Changes in our effective income tax rate could affect our results of operations.
Our effective income tax rate is influenced by a number of factors. Changes in the tax laws, the interpretation of
existing laws, or our failure to sustain our reporting positions on examination could adversely affect our effective tax
rate. In addition, our effective income tax rate generally bears an inverse relationship to capital market returns due
to the tax-free nature of investment vehicles used to economically hedge our deferred compensation liabilities.
If we are unable to access the capital markets or obtain bank credit, our growth plans, liquidity and results of
operations could suffer.
We are dependent on a stable, liquid and well-functioning financial system to fund our operations and growth
plans. In particular, we have historically relied on the public debt markets to raise capital for new store development
and other capital expenditures, the commercial paper market and bank credit facilities to fund seasonal needs for
working capital, and the asset-backed securities markets to partially fund our accounts receivable portfolio. In
addition, we use a variety of derivative products to manage our exposure to market risk, principally interest rate and
equity price fluctuations. Disruptions or turmoil in the financial markets could adversely affect our ability to meet our
capital requirements, fund our working capital needs or lead to losses on derivative positions resulting from
counterparty failures.
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PART I