Office Depot 2000 Annual Report Download - page 28

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Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private
Securities Litigation Reform Act of 1995
Cautionary Statements
In December 1995, the Private Securities Litigation Reform Act
of 1995 (the “Act”) was enacted by the United States Congress.
The Act, as amended, contains certain amendments to the
Securities Act of 1933 and the Securities Exchange Act of 1934.
These amendments provide protection from liability in private
lawsuits for “forward-looking” statements made by public com-
panies. We want to take advantage of the “safe harbor” provisions
of the Act. In doing so, we have disclosed these forward-looking
statements by informing you in specific cautionary statements
of the circumstances which may cause the information in these
statements not to transpire as expected.
This Annual Report contains both historical information and
other information that you can use to infer future performance.
Examples of historical information include our annual financial
statements and the commentary on past performance contained
in our MD&A. While we have specifically identified certain infor-
mation as being forward-looking in the context of its presentation,
we caution you that, with the exception of information that is
clearly historical, all the information contained in this Annual
Report should be considered to be “forward-looking statements”
as referred to in the Act. Without limiting the generality of the
preceding sentence, any time we use the words “estimate,”
“project,” “intend,” “expect,” “believe,” “anticipate,” “continue,”
and similar expressions, we intend to clearly express that the
information deals with possible future events and is forward-
looking in nature.
Forward-looking information involves risks and uncertainties,
including certain matters that we discuss in more detail below
and in our report on Form 10-K, filed with the Securities &
Exchange Commission. This information is based on various
factors and important assumptions about future events that may
or may not actually come true. As a result, our operations and
financial results in the future could differ materially and substan-
tially from those we have discussed in the forward-looking
statements in this Annual Report. In particular, the factors we
discuss below and in our Form 10-K could affect our actual results
and could cause our actual results in 2001 and in future years
to differ materially from those expressed in any forward-looking
statement made by us or on our behalf in this Annual Report.
Competition: We compete with a variety of retailers, dealers and
distributors in a highly competitive marketplace that includes
high-volume office supply chains, warehouse clubs, computer
stores, contract stationers, and well-established mass merchant
retailers. Well-established mass merchant retailers have the
financial and distribution ability to compete very effectively with
us should they choose to enter the office superstore retail cate-
gory, Internet office supply or contract stationer business or
substantially expand their offering in their existing retail outlets.
This could have a material adverse effect on our business and
results of our operations.
Internet: Internet-based merchandisers also compete with us.
This competition is expected to increase in the future as these
companies proliferate and continue to expand their operations.
Many start-up operations that are heavily focused on Internet
sales may be able to compete with us in the areas of price and
selection. While most of these companies cannot offer the levels
of service and stability of supply that we provide, they neverthe-
less may be formidable competitors, particularly for customers
who are willing to look for the absolute lowest price without
regard to the other attributes of our business model. In addition,
certain manufacturers of computer hardware, software and
peripherals, including certain of our suppliers, have expanded
their own direct marketing of products, particularly over the
Internet. Even as we expand our own Internet efforts, our ability
to anticipate and adapt to the developing Internet marketplace
and the capabilities of our network infrastructure to efficiently
handle our rapidly expanding operations are of critical impor-
tance. Furthermore, our profitability goals may also serve to
inhibit the expansion of our presence on the Internet, because
dedicated Internet concerns are currently evaluated differently
in the financial markets than more established concerns such
as ours. Failure to execute well in any of these key areas could
have a material adverse effect on our future sales growth
and profitability.
Execution of Expansion Plans: We plan to open approximately
50 stores in the United States and Canada and numerous stores
in our International Division during 2001, and we consider our
expansion program to be an integral part of our plan to achieve
anticipated operating results in future years. Circumstances
outside our control, such as adverse weather conditions affect-
ing construction schedules, unavailability of acceptable sites
or materials, labor disputes and similar issues could impact
anticipated store openings. The failure to expand by opening
new stores as planned and the failure to generate the antici-
pated sales growth in markets where new stores are opened
could have a material adverse effect on our future sales growth
and profitability.
Cannibalization of Sales in Existing Office Depot Stores: As
we expand the number of our stores in existing markets, sales
of existing stores may suffer from cannibalization (customers of
our existing stores begin shopping at our new stores). Our new
stores typically require an extended period of time to reach the
sales and profitability levels of our existing stores. Moreover, the
opening of new stores does not ensure that those stores will
ever be as profitable as existing stores, particularly when new
stores are opened in highly competitive markets or markets in
which other office supply superstores may have achieved “first
mover” advantage. Our comparable sales are affected by a
number of factors, including the opening of additional Office
Depot stores; the expansion of our contract stationer business
in new and existing markets; competition from other office sup-
ply chains, mass merchandisers, warehouse clubs, computer