Staples 2013 Annual Report Download - page 98

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Risks inherent in international operations also include, among others, the costs and difficulties of managing international
operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights. Other factors that may also
have an adverse impact on our international operations include limitations on the repatriation and investment of funds, foreign
currency exchange restrictions, complex import and export schemes, increased local competition, our lack of familiarity with local
customer preferences, unfavorable foreign trade policies, unstable political or economic conditions, and geopolitical events,
including war and terrorism.
Compromises of our information systems or unauthorized access to confidential information or personal information may
materially harm our business or damage our reputation.
Through our sales and marketing activities and our business operations, we collect and store confidential information and
certain personal information from our customers, vendors and associates. For example, we handle, collect and store personal
information in connection with our customers purchasing products or services, enrolling in our promotional or rewards programs,
registering on our web site or otherwise communicating or interacting with us. We also accept payments using a variety of methods,
including debit and credit cards, gift cards, electronic transfer of funds, and others. We rely on third parties to provide payment
processing services or make certain payments on our behalf. In addition, in the normal course of business, we gather and retain
personal information about our associates and generate and have access to confidential business information. We may share
confidential and personal information with vendors or other third parties in connection with processing of transactions, operating
certain aspects of our business or for marketing purposes. Although we have taken steps designed to safeguard such information,
there can be no assurance that such information will be protected against unauthorized access, use or disclosure. Computer hackers
may penetrate our or our vendors' network security and, if successful, misappropriate such information. A Staples associate,
contractor or other third-party with whom we do business may misuse confidential or personal information to which they have
access; attempt to circumvent our security measures; or inadvertently cause a breach involving such information. Additionally,
methods to obtain unauthorized access to confidential information change frequently and may be difficult to detect, which can
impact our ability to respond appropriately. We could be subject to liability for failure to comply with privacy and information
security laws, for failing to protect personal information, for failing to respond appropriately, or for misusing personal information,
such as use of such information for an unauthorized marketing purpose. Loss, unauthorized access to, or misuse of confidential
or personal information could disrupt our operations, damage our reputation, and expose us to claims from customers, financial
institutions, regulators, payment card associations, employees and other persons, any of which could have an adverse effect on
our business, financial condition and results of operations.
Our effective tax rate may fluctuate.
We are a multi-national, multi-channel provider of products and services. As a result, our effective tax rate is derived
from a combination of applicable tax rates in the various countries, states and other jurisdictions in which we operate. Our effective
tax rate may be lower or higher than our tax rates have been in the past due to numerous factors, including the sources of our
income, any agreements we may have with taxing authorities in various jurisdictions, changes in the laws and the tax filing positions
we take in various jurisdictions. In addition, our effective tax rate may fluctuate quarterly, and the resulting tax rate may be negative
or unusually high as a result of significant charges in a quarter that are not tax deductible, such as goodwill and long-lived asset
impairment. We base our estimate of an effective tax rate at any given point in time upon a calculated mix of the tax rates applicable
to our company and to estimates of the amount of business likely to be done in any given jurisdiction. The loss of one or more
agreements with taxing jurisdictions, a change in the mix of our business from year to year and from country to country, changes
in rules related to accounting for income taxes, adverse outcomes from tax audits that we may be subject to in any of the jurisdictions
in which we operate, or changes in tax laws in any of the multiple jurisdictions in which we operate could result in an unfavorable
change in our effective tax rate which could have an adverse effect on our business and results of our operations.
Fluctuations in foreign exchange rates could lead to lower earnings.
Sales from our delivery operations and stores outside the U.S. are denominated in the currency of the country in which
these operations or stores are located and changes in foreign exchange rates affect the translation of the sales and earnings of these
businesses into U.S. dollars for financial reporting purposes. Additionally, merchandising agreements may also be denominated
in the currency of the country where the vendor resides. Although we attempt to mitigate such risks by sometimes entering into
foreign exchange hedges or utilizing risk management strategies, such hedges and strategies themselves present some risk and
thus may not be entirely successful in mitigating the risk.
We may be unable to attract, train, engage and retain qualified associates.
Our customers value courteous and knowledgeable associates to support customers across all channels. Accordingly, our
performance depends on attracting, training, engaging and retaining a large number of qualified associates. We face intense