Staples 2007 Annual Report Download - page 86

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tax filing positions we take in various jurisdictions. We base our estimate of an effective tax rate at any given point in time
upon a calculated mix of the tax rates applicable to our company and to estimates of the amount of business likely to be
done in any given jurisdiction. The loss of one or more agreements with taxing jurisdictions, a change in the mix of our
business from year to year and from country to country, changes in rules related to accounting for income taxes, changes
in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be
subject to in any of the jurisdictions in which we operate, could result in an unfavorable change in our effective tax rate
which could have an adverse effect on our business and results of our operations.
Our information security may be compromised.
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 or our vendors’ network
security and, if successful, misappropriate confidential customer or business information. In addition, a Staples associate,
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, damage our reputation, and expose us to claims from customers, financial
institutions, payment card associations and other persons, any of which could have an adverse effect on our business,
financial condition and results of operations. In addition, compliance with tougher privacy and information security laws
and standards may result in significant expense due to increased investment in technology and the development of new
operational processes.
Various legal proceedings may adversely affect our business and financial performance.
We are involved in various legal proceedings, which include consumer, employment, intellectual property, tort and
other litigation. Some of these legal proceedings are discussed in greater detail under the caption ‘‘Legal Proceedings’’
and in Note F in the Notes to the Consolidated Financial Statements contained in this report. The resolution of these
legal proceedings could require us to pay substantial amounts of money or take actions that adversely affect our
operations. In addition, defending against these proceedings may involve significant time and expense. Given the large
size of our operations and workforce, the visibility of our brand and our position as an industry leader, we may regularly
be involved in legal proceedings that could adversely affect our business and financial performance.
We may not consummate our proposed acquisition of Corporate Express or realize any benefits if we do complete the
acquisition.
On February 19, 2008, we announced that we had made a proposal to Corporate Express NV, a Dutch office
products distributor with operations in North America, Europe, Australia and New Zealand to acquire all of the
outstanding shares of its ordinary stock for cash consideration of 7.25 Euros per ordinary share, representing a total
enterprise value of approximately 2.5 billion Euros (approximately $3.7 billion). Corporate Express, in a public statement
issued the same day, rejected our proposal. We cannot provide any assurances that the proposed acquisition will be
consummated. If we are unable to complete the proposed acquisition, we may have incurred substantial expenses and
diverted significant management time and resources from our ongoing business. Even if we consummate the proposed
acquisition of Corporate Express, we may not realize any of the anticipated benefits of the acquisition, and we may
encounter difficulties in the integration of the operations of Corporate Express.
Item 1B. Unresolved Staff Comments
None.
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