Office Depot 2007 Annual Report Download - page 16

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14
disproportionately negative impact on our sales and profits in North America if the economic downturn continues.
Additionally, similar economic factors could impact our operations internationally, as has been experienced in the
UK during 2007.
Compromises of our Information Security: Through our sales and marketing activities, we collect and store
certain personal information that our customers provide to purchase products or services, enroll in promotional
programs, register on our web site, or otherwise communicate and interact with us. We also gather and retain
information about our associates in the normal course of business. We may share information about such persons
with vendors that assist with certain aspects of our business. Despite instituted safeguards for the protection of such
information, we cannot be certain that all of our systems are entirely free from vulnerability to attack. A breach of
our security system resulting in customer or employee personal information being obtained by unauthorized persons
could adversely affect our reputation, disrupt our operations and expose us to claims from customers, financial
institutions, payment card associations and other persons, which could have a material adverse effect on our
business, financial condition and results of operations. In addition, our online operations at www.officedepot.com
depend upon the secure transmission of confidential information over public networks, including information
permitting cashless payments.
Pursuit or Execution of New Business Ventures: Our growth strategy includes expansion via new business
ventures, strategic alliances and acquisitions both in the U.S. and abroad. While we employ several different
valuation methodologies to assess a potential opportunity, we can give no assurance that new business ventures and
strategic alliances will positively affect our financial performance. Acquisitions may result in the diversion of our
capital and our management’s attention from other business issues and opportunities. We may not be able to
assimilate or integrate successfully companies that we acquire, including their personnel, financial systems,
distribution, operations and general operating procedures. If we fail to assimilate or integrate acquired companies
successfully, our business could suffer materially. We may also encounter challenges in achieving appropriate
internal control over financial reporting in connection with the integration of an acquired company. In addition, the
integration of any acquired company, and its financial results, into ours may have a material adverse effect on our
financial condition, results of operations and cash flows.
Financial Covenants in Existing Credit Facility: Our revolving credit facility contains financial covenants,
including a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization. Although
historically none of our covenants have been restrictive to our operations, we may not be able to meet the financial
covenants in the future if minimum fixed charge coverage ratios are not met. A breach of any of these covenants
could result in a default under our revolving credit agreement. Upon the occurrence of an event of default under our
revolving credit agreement, the lenders could elect to declare all amounts outstanding to be immediately due and
payable and terminate all commitments to extend further credit. If the lenders accelerate the repayment of
borrowings, we may not have sufficient assets to repay our revolving credit agreement and our other indebtedness.
Also, should there be an event of default, we may be subject to higher borrowing costs and more restrictive
covenants in future periods. Acceleration of any obligation under any of our material debt instruments will permit
the holders of our other material debt to accelerate their obligations. See “Liquidity and Capital Resources”.
Disclaimer of Obligation to Update
We assume no obligation (and specifically disclaim any such obligation) to update these Risk Factors or any other
forward-looking statements contained in this Annual Report to reflect actual results, changes in assumptions or other
factors affecting such forward-looking statements.
Item 1B. Unresolved Staff Comments.
None.