Office Depot 2012 Annual Report Download - page 14

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isruption of global sourcing activities or our own brands quality concerns could negatively impact brand reputation and
earnings.
In recent years, we have substantially increased the number and types of products that we sell under our own brands including Office
Depot and other proprietary brands. Sources of supply may prove to be unreliable, or the quality of the globally sourced products
may vary from our expectations and standards. Economic and civil unrest in areas of the world where we source such products, as
well as shipping and dockage issues, could adversely impact the availability or cost of such products, or both. Moreover, as we see
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indemnities from the manufacturers of these products, the uncertainty of realization of any such indemnity and the lack o
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understanding of U.S. product liability laws in certain parts of Asia make it more likely that we may have to respond to claims o
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complaints from our customers. Most of our goods imported to the U.S. arrive from Asia through ports located on the U.S. west coast
and we are therefore subject to potential disruption due to labor unrest, security issues or natural disasters affecting any or all of these
ports.
Changes in tax laws in any of the multiple jurisdictions in which we operate can cause fluctuations in our overall tax rate
impacting our reported earnings.
Our global tax rate is derived from a combination of applicable tax rates in the various domestic and international jurisdictions in
which we operate. Depending upon the sources of our income, any agreements we may have with taxing authorities in various
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urisdictions, and the tax filing positions we take in these jurisdictions, our overall tax rate may fluctuate significantly from othe
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companies or even our own past tax rates. At any given point in time, we base our estimate of an annual effective tax rate upon
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calculated mix of the tax rates applicable to our Company and to estimates of the amount of income likely to be generated in any
given geography. The loss of one or more agreements with taxing jurisdictions, a change in the mix of our business from year to yea
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and from country to country, changes in rules related to accounting for income taxes, changes in tax laws in any of the multiple
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urisdictions in which we operate or adverse outcomes from the tax audits that regularly are in process in any of the jurisdictions in
which we operate could result in an unfavorable change in our overall tax rate.
We are subject to legal proceedings and legal compliance risks.
We are involved in various legal proceedings, which from time to time may involve class action lawsuits, state and federal
governmental inquiries, audits and investigations, employment, tort, consumer litigation and intellectual property litigation. At times,
such matters may involve directors and/or executive officers. Certain of these legal proceedings, including government investigations,
may be a significant distraction to management and could expose our Company to significant liability, including damages, fines,
penalties, attorneys’ fees and costs, and non-monetary sanctions, including suspensions and debarments from doing business with
certain government agencies, any of which could have a material adverse effect on our business and results of operations.
Failure to successfully manage our domestic and international business could have an adverse effect on our operations and
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inancial results.
Circumstances outside of our control could negatively impact anticipated store openings, joint ventures and franchise arrangements.
We cannot provide assurance that our new store openings, including some newly sized or formatted stores or retail concepts, will be
successful. There may be unintended consequences of adding joint venture and franchising partners to the Office Depot model, such
as the potential for compromised operational control in certain countries and inconsistent international brand image. These joint
venture and franchise arrangements may also add complexity to our processes and may require unanticipated operational adjustments
in the future that could adversely impact our operations and financial results.
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