Staples 2015 Annual Report Download - page 91

FORWARD-LOOKING STATEMENTS
STAPLES 13
Global sourcing of many of the products we sell is an
important factor in our financial performance. Our ability to find
qualified vendors and access products in a timely and efficient
manner is a significant challenge, especially with respect to
goods sourced outside the United States. Political instability,
the financial instability of suppliers, trade restrictions, tariffs,
foreign currency exchange rates, transport capacity and costs,
inflation and other factors relating to foreign trade are beyond
our control. We also rely upon many independent service
providers for services that are important to many aspects of our
business. If our service providers fail or are unable to perform
as expected and we are unable to replace them quickly, our
business could be harmed at least temporarily until we are
able to do so and potentially, in some cases, permanently.
These and other issues could adversely affect our reputation,
business and financial performance.
Various legal proceedings may adversely affect our
business and financial performance.
We are involved in various private legal proceedings, which
include consumer, employment, intellectual property,
commercial, tort and other litigation. We are subject to
potentially increasing challenges by private litigants regarding
compliance with local, state and national labor regulations,
whether meritorious or not. In addition, companies have
increasingly been subject to employment related class action
litigation, and we have experienced “wage and hour” class
action lawsuits. We expect that these trends will continue to
affect us. We are also subject to claims that the technology
we use or the products we sell infringe intellectual property
rights of third parties. Such claims, whether meritorious or
not, involve significant managerial resources and can become
costly. Generally, we have indemnification protections in
our agreements which our vendors or licensors often have
honored; however, there are no assurances that such vendors
or licensors will continue to do so in the future. We estimate
exposure and establish reserves for our estimated significant
liabilities, however, litigation is inherently unpredictable and
the outcome of legal proceedings and other contingencies
could be unexpected. Some verdicts or decisions may not
be reasonable or based on law or prior precedent, in which
case we will vigorously contest and appeal such decisions.
Other outcomes may require us to pay substantial amounts
of money or take actions that adversely affect our operations.
In addition, defending against these claims may involve
significant time and expense. Given the large size of our
operations and workforce, the visibility of our brand and our
position as an industry leader, we may regularly be involved in
legal proceedings that could adversely affect our business and
financial performance.
Failure to comply with laws, rules and regulations could
negatively affect our business operations and financial
performance.
Our business is subject to federal, state, local and international
laws, rules and regulations, such as state and local wage and
hour laws, the U.S. Foreign Corrupt Practices Act, the False
Claims Act, the Employee Retirement Income Security Act
(“ERISA”), securities laws, import and export laws (including
customs regulations), privacy and information security
regulations, unclaimed property laws, and many others. The
complexity of the regulatory environment in which we operate
and the related cost of compliance are both increasing due to
legal and regulatory requirements, increased enforcement and
our ongoing expansion into new markets and new channels.
In addition, as a result of operating in multiple countries, we
must comply with multiple foreign laws and regulations that
may differ substantially from country to country and may
conflict with corresponding U.S. laws and regulations. We may
also be subject to investigations or audits by governmental
authorities and regulatory agencies, which can occur in the
ordinary course of business or which can result from increased
scrutiny from a particular agency towards an industry, country
or practice. If we fail to comply with laws, rules and regulations
or the manner in which they are interpreted or applied, we may
be subject to government enforcement action, class action
litigation or other litigation, damage to our reputation, civil and
criminal liability, damages, fines and penalties, and increased
cost of regulatory compliance, any of which could adversely
affect our results of operations and financial performance.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of January 30, 2016, we operated a total of 1,907
retail stores in 46 states and the District of Columbia in the
United States, 10 provinces and 2 territories in Canada, and
in Finland, Germany, the Netherlands, Norway, Portugal,
Sweden, the United Kingdom, Argentina, Australia and Brazil.
As of that same date, we also operated 104 distribution and
fulfillment centers in 28 states in the United States, 7 provinces
in Canada, and in Denmark, Finland, France, Germany, Italy,
the Netherlands, Norway, Poland, Portugal, Spain, Sweden,
the United Kingdom, China, Argentina, Brazil and Australia.