OfficeMax 2015 Annual Report Download - page 21

Table of Contents

We are involved in various legal proceedings, which from time to time may involve class action lawsuits, state and federal governmental inquiries, audits and
investigations, environmental matters, employment, tort, state false claims act, consumer litigation and intellectual property litigation. At times, such matters
may involve directors and/or executive officers. Certain of these legal proceedings, including government investigations, may be a significant distraction to
management and could expose our Company to significant liability, including settlement expenses, damages, fines, penalties, attorneys’ fees and costs, and
non-monetary sanctions, including suspensions and debarments from doing business with certain government agencies, any of which could have a material
adverse effect on our business and results of operations.

Circumstances outside of our control could negatively impact anticipated store openings, joint ventures, strategic alliances and franchise arrangements. We
cannot provide assurance that our new store openings, including some newly sized or formatted stores or retail concepts, will be successful. There may be
unintended consequences of adding joint venture, strategic alliances and franchising partners to the Office Depot model, such as the potential for
compromised operational control in certain countries and inconsistent international brand image. These joint venture, strategic alliances and franchise
arrangements may also add complexity to our processes, and may require unanticipated operational adjustments in the future that could adversely impact our
business and results of operations.


As of December 26, 2015, we sold to customers in 59 countries throughout North America, Europe, Asia/Pacific, and Latin America. We operate wholly-
owned entities and participate in joint ventures and alliances globally. Sales from our operations outside the U.S. are denominated in local currency, which
must be translated into U.S. dollars for reporting purposes and therefore our consolidated earnings can be significantly impacted by fluctuations in world
currency markets. We are required to comply with multiple foreign laws and regulations that may differ substantially from country to country, requiring
significant management attention and cost. In addition, the business cultures in certain areas of the world are different than those that prevail in the U.S., and
we may be at a competitive disadvantage against other companies that do not have to comply with standards of financial controls or business integrity that
we are committed to maintaining as a U.S. publicly traded company.

We are subject to regulatory matters relating to our corporate conduct and the conduct of our business, including securities laws, consumer protection laws,
advertising regulations, privacy and cybersecurity laws, and wage and hour regulations and anti-corruption legislation. Certain jurisdictions have taken a
particularly aggressive stance with respect to such matters and have implemented new initiatives and reforms, including more stringent disclosure and
compliance requirements. To the extent that we are subject to more challenging regulatory environments and enhanced legal and regulatory requirements,
such exposure could have a material adverse effect on our business, including the added cost of increased compliance measures that we may determine to be
necessary.
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