Office Depot 2001 Annual Report Download - page 32

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Office Depot, Inc.
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 companies.
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 infor-
mation 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 iden-
tified certain information as being forward-looking in the context of its pres-
entation, 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 informa-
tion 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 finan-
cial results in the future could differ materially and substantially 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 2002 and in future
years to differ materially from those expressed in any forward-looking state-
ment 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. Even grocery and drug store chains have
begun to carry at least limited supplies of basic office supplies and even tech-
nology items. 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 category, 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 competi-
tion is expected to increase in the future as these companies proliferate and
continue to expand their operations. Many start-up operations that are heav-
ily 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 nevertheless may be for-
midable competitors, particularly for customers who are willing to look for
the absolute lowest price without regard to the other attributes of our busi-
ness 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 importance.
Furthermore, our profitability goals may also serve to inhibit the expansion
of our presence on the Internet, because dedicated Internet concerns are cur-
rently 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 25 to 30
stores in the United States and Canada and 10 to 15 stores in our International
Division during 2002, and we also plan to open two new BSG distribution
centers in Atlanta and Baltimore during 2002. 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 affecting construction schedules, unavailability of accept-
able sites or materials, labor disputes and similar issues could impact antici-
pated store openings. The failure to expand by opening new stores or
distribution centers as planned and the failure to generate the anticipated
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 prof-
itable 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 supply chains, mass merchandisers, warehouse
clubs, computer stores, other contract stationers and Internet-based businesses;