Office Depot 2004 Annual Report Download - page 40

38 |Office Depot 2004 Annual Report
goodwill relating to our investment in Japan was written down
in 2004. The impact of any required write-off of goodwill
associated with any units of our company could have a
material adverse impact on our reported financial results in
future periods.
Office Depot is confident that our past practices and
reports filed with the SEC, the New York Stock Exchange and
other reports are in material compliance with all laws and
regulations, but the continued obligation to further enhance
disclosures and make filings that increase the transparency of
our reported results will undoubtedly add to the overall cost
of doing business. And some of the many proposed changes
in accounting policies and principles could dramatically alter
the reported results of our company, as contemplated by at
least certain currently pending proposals among various regu-
latory bodies.
Executive Management: Our former Chairman and Chief
Executive Officer resigned his positions in October 2004. That
role is being filled currently by a member of the company’s
board of directors, Neil R. Austrian, while a search for a per-
manent replacement is conducted. It is possible that the search
process for a new CEO may take longer than currently antici-
pated. It is also possible that an extended delay in identifying
and recruiting a new CEO may have an adverse impact on the
performance of our company. Further, it is possible that during
a period of uncertainty while the recruiting process is underway,
certain other senior executives may elect to depart the com-
pany, resulting in the necessity of filling other senior level man-
agerial positions. Even if they do not elect to leave the company,
their performance may suffer during the interim period, due to
lack of focus on operating matters. Such departures or lack of
management focus, if any, could also have an adverse impact
on the performance of our company.
Possible Changes to our Global Tax Rate: Our Company is
a multi-national, multi-channel reseller of office products. As a
result of our operations in many foreign countries, in addition to
the United States, our global tax rate is derived from a combi-
nation of applicable tax rates in the various jurisdictions in which
we operate. Depending upon the sources of our income, any
agreements we may have with taxing authorities in various juris-
dictions, and the tax filing positions we take, our overall tax
rate may be lower or higher than that of other companies. Our
overall tax rate is dependent upon numerous factors, any one
or more of which may change from time to time, resulting in a
change in our overall tax rate that could be material. Because
income from domestic and international sources may be taxed
at different rates, the shift in mix during a year or over years can
cause the effective tax rate to change. We base our estimate of
an annual effective tax rate at any given point in time upon a cal-
culated mix of the tax rates applicable to our Company and to
estimates of the amount of business likely to be done in any
given geography. We update those estimates quarterly. We also
regularly evaluate the status and likely outcome of uncertain tax
positions. The loss of one or more agreements with taxing juris-
dictions, a change in the mix of our business from year to year
and from country to country, or changes in tax laws in any of
the multiple jurisdictions in which we operate could result in a
favorable or unfavorable change in our overall tax rate, which
change could be material to our reported financial results.
Disclaimer of Obligation to Update
We assume no obligation (and specifically disclaim any
such obligation) to update these Cautionary Statements or any
other forward-looking statements contained in this Annual
Report to reflect actual results, changes in assumptions or other
factors affecting such forward-looking statements.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
See the information in the “Market Sensitive Risks and
Positions” subsection of Management’s Discussion and Analy-
sis of Financial Condition and Results of Operation set forth in
Item 7 hereof.
Item 8. Financial Statements and Supplementary Data.
See Item 15(a) in Part IV.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
The company’s management, with the participation of the
company’s Chief Financial Officer, Charles E. Brown, and the
company’s interim Chief Executive Officer, Neil R. Austrian, has
evaluated the effectiveness of the company’s disclosure con-
trols and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) as of the end of the period
covered by this report. Based on that evaluation, these officers
have concluded that the corporation’s disclosure controls and
procedures are effective for the purpose of ensuring that mate-
rial information required to be in this report is made known to
them by others on a timely basis and that information required
to be disclosed by the company in the reports that it files or sub-
mits under the Exchange Act is accumulated and communi-
cated to the company’s management, including its principal
executive and principal financial officers, as appropriate to
allow timely decisions regarding required disclosure.