OfficeMax 2012 Annual Report Download - page 43

Our international operations expose us to the unique risks inherent in foreign operations. Our foreign
operations encounter risks similar to those faced by our U.S. operations, as well as risks inherent in foreign
operations, such as local customs and regulatory constraints, foreign trade policies, competitive conditions,
foreign currency fluctuations and unstable political and economic conditions.
We may be unable to attract and retain qualified associates. We attempt to attract and retain an appropriate
level of personnel in both field operations and corporate functions. We face many external risks and internal
factors in meeting our labor needs, including competition for qualified personnel, prevailing wage rates, as well
as rising employee benefit costs, including insurance costs and compensation programs. Failure to attract and
retain sufficient qualified personnel could interfere with our ability to implement our strategies and adequately
provide services to customers.
We are more leveraged than some of our competitors, which could adversely affect our business plans. A
relatively greater portion of our cash flow is used to service financial obligations including leases and to satisfy
Pension Plans funding obligations (discussed previously). This reduces the funds we have available for working
capital, capital expenditures, acquisitions, new stores, store remodels and other purposes. Similarly, our relatively
greater leverage increases our vulnerability to, and limits our flexibility in planning for, adverse economic and
industry conditions and creates other competitive disadvantages compared with other companies with relatively
less leverage.
Compromises of our information security affecting customer or associate data may adversely affect our
business. 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 website, 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. Computer hackers may attempt to penetrate
our networks or our vendors’ network security and, if successful, misappropriate confidential customer or
business information. In addition, a Company employee, contractor or other third party with whom we do
business may attempt to circumvent our security measures in order to obtain such information or inadvertently
cause a breach involving such information. Loss of customer or business information could 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.
We cannot ensure systems and technology will be fully integrated or updated. We cannot ensure our
systems and technology will be successfully updated. We have plans to continue to update the financial reporting
platform as well as other technology and systems. We will be implementing ongoing upgrades over the next
several years which is a complicated and difficult endeavor. Failure to successfully complete these upgrades
could have an adverse impact on our business and results of operations. Over the last several years, we have
partially integrated the systems of our Contract and Retail businesses. If we do not ultimately fully integrate our
systems, it may constrain our ability to provide the level of service our customers demand which could thereby
cause us to operate inefficiently. In addition, if we are unable to continually add software and hardware,
effectively manage and upgrade our systems and network infrastructure and develop disaster recovery plans, our
business could be disrupted, thus subjecting us to liability and potentially harming our reputation. Any disruption
to the Internet or our technology infrastructure, including a disruption affecting our Web sites and information
systems, may cause a decline in our customer satisfaction, jeopardize accurate financial reporting, impact our
sales volumes or result in increased costs.
We retained responsibility for certain liabilities of the sold paper, forest products and timberland
businesses. In connection with the Sale, we agreed to assume responsibility for certain liabilities of the
businesses we sold. These obligations include liabilities related to environmental, health and safety, tax, litigation
and employee benefit matters. Some of these retained liabilities could turn out to be significant, which could
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