Target 2011 Annual Report Download - page 32

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 is influenced inversely by 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. Our
continued access to these markets depends on multiple factors including the condition of debt capital markets, our
operating performance and maintaining strong debt ratings. If our credit ratings were lowered, our ability to access
the debt markets and our cost of funds for new debt issuances could be adversely impacted. Each of the credit
rating agencies reviews its rating periodically, and there is no guarantee our current credit rating will remain the
same. 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.
A significant disruption in our computer systems could adversely affect our operations.
We rely extensively on our computer systems to manage inventory, process guest transactions and summarize
results. Our systems are subject to damage or interruption from power outages, telecommunications failures,
computer viruses and malicious attacks, security breaches and catastrophic events. If our systems are damaged or
fail to function properly, we may incur substantial costs to repair or replace them, and may experience loss of critical
data and interruptions or delays in our ability to manage inventories or process guest transactions, which could
adversely affect our results of operations.
Our plan to expand retail operations into Canada could adversely affect our financial results.
Our plan to enter the Canadian retail market is our first expansion of retail operations outside of the United
States. Our ability to successfully open the expected number of Canadian Target stores on schedule depends, in
large measure, upon our ability to remodel existing assets, build our supply chain capabilities and technology
systems and recruit, hire and retain qualified team members. In addition, access to local suppliers of certain types
of goods may limit our ability to offer the expected assortment of merchandise in certain markets. The effective
execution of our strategy is also contingent on our ability to design new marketing programs that positively
differentiate us from other retailers in Canada. If we do not effectively execute our expansion plan in Canada, our
financial performance could be adversely affected.
Item 1B. Unresolved Staff Comments
Not applicable.
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