Office Depot 2001 Annual Report Download - page 34

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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
(continued)
on various initiatives to improve margin levels in this business segment, but
there is no assurance that these initiatives will prove successful. Some of our
competitors operate only in the contract and/or commercial channels and
therefore may be able to focus more attention on the business services segment,
thereby providing formidable competition. Our failure to adequately address
this segment of our business could put us at a competitive disadvantage rela-
tive to these competitors. In addition, we have reached maximum capacity in
some of our distribution centers that serve our contract and commercial cus-
tomers. In 2002, we plan to open new distribution facilities in Atlanta and
Baltimore. Failure to open these facilities as planned, or material delays in
construction and/or equipping these facilities, could have a material adverse
impact on our anticipated results in 2002.
Sources and Uses of Cash: We believe that our current level of cash and cash
equivalents, future operating cash flows, lease financing arrangements and
funds available under our credit facilities and term loan should be sufficient
to fund our planned expansion, integration and other operating cash needs
for at least the next year. However, there can be no assurance that additional
sources of financing will not be required during the next twelve months as a
result of unanticipated cash demands, opportunities for expansion, acqui-
sition or investment, changes in growth strategy, changes in our warehouse
integration plans or adverse operating results. We could attempt to meet our
financial needs through the capital markets in the form of either equity or
debt financing. Alternative financing will be considered if market conditions
make it financially attractive. There can be no assurance that any additional
funds required by us, whether within the next twelve months or thereafter,
will be available to us on satisfactory terms. Our inability to access needed
financial resources could have a material adverse effect on our financial
position or operating results.
Effects of Certain One-time Charges: During the fourth quarter of 2000, we
conducted a review of all aspects of our business, with particular attention
on our North American Retail Division and on our distribution and supply
chain activities (see the Charges and Credits section of our MD&A for further
details). We expect that these decisions will result in increasing our Company’s
profitability and efficiency in the future. However, this analysis involves many
variables and uncertainties; and, as a result, we may not achieve any of the
expected benefits. In 1999, we announced one-time charges against earnings
for slow-moving inventories in our warehouses and stores and for accelerated
store closings and relocations. There can be no assurance that additional
charges of this nature will not be required in the future as well. In particular,
we expect that a retail store chain, such as our North American Retail Division,
should expect to close a certain number of stores each year, remodel and/or
relocate other stores. We cannot be certain that our decisions to close, remodel
and/or relocate stores will have the desired favorable results on our financial
performance, nor can we anticipate the size and nature of non-recurring
charges associated with such matters. Such charges, if any, could have a
materially adverse impact on our financial position or operating results in
the future.
Economic Downturn: In the past decade, the favorable United States econ-
omy has contributed to the expansion and growth of retailers. Our country
has experienced low inflation, low interest rates, low unemployment and an
escalation of new businesses. The economy has recently begun to show signs
of a downturn. The Federal Reserve dramatically reduced interest rates
throughout 2001 in recognition of the economic downturn and in an effort
to address that downturn. The overall stock market has been in a period of
poor performance throughout 2001. The retail industry, in particular, continues
to display signs of a slowdown, with several specialty retailers, both in and
outside our industry segment, reporting earnings warnings throughout 2001.
One major discount retailer filed for bankruptcy protection earlier in 2002,
further indicating that the slow economy is having an impact on the retail
industry. This general economic slowdown may adversely impact our business
and the results of our operations.
Executive Management: Since the appointment of our new Chief Executive
Officer, we have evolved our management organization to better address the
future goals of our Company. This new organization continues to have vacan-
cies in certain key positions. Various searches are underway to identify the
best individuals to fill these positions; however, the process may be a protracted
one. Furthermore, the new management structure may not be ideal for our
Company and may not result in the benefits expected; and, as a result, may
materially and adversely affect our future operating results.
Disclaimer of Obligation to Update
We assume no obligation (and specifically disclaim any obligation) to update
these Cautionary Statements or any other forward-looking statements con-
tained in this Annual Report to reflect actual results, changes in assumptions
or other factors affecting such forward-looking statements, except as required
by laws and regulations.