OfficeMax 2014 Annual Report Download

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Table of Contents



(Mark One)
x

Or
¨



(Exact name of registrant as specified in its charter)
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $0.01 per share NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated fileraccelerated filer,
and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 28, 2014 (based on the closing market price on the Composite Tape on June 27, 2014) was approximately
$3,009,760,984 (determined by subtracting from the number of shares outstanding on that date the number of shares held by affiliates of Office Depot, Inc.).
The number of shares outstanding of the registrant’s common stock, as of the latest practicable date: At January 24, 2015, there were 545,374,602 outstanding shares of Office Depot, Inc. Common Stock, $0.01
par value.
Documents Incorporated by Reference:
Certain information required for Part III of this Annual Report on Form 10-K is incorporated by reference to the Office Depot, Inc. definitive Proxy Statement for its 2015 Annual Meeting of Shareholders, which
shall be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Act of 1934, as amended, within 120 days of Office Depot, Inc.’s fiscal year end.

Table of contents

  • Page 1
    ...the transition period from to Commission file number 1-10948 Office Depot, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6600 North Military Trail, Boca Raton, Florida (Address of principal executive offices) (561...

  • Page 2
    ... with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and...

  • Page 3
    ... of Staples (the "Staples Acquisition"). Under the terms of the Staples Merger Agreement, Office Depot shareholders will receive, for each Office Depot share held by such shareholders, $7.25 in cash and 0.2188 of a share in Staples common stock at closing. Each employee share-based award outstanding...

  • Page 4
    ... stores, a contract sales force, Internet sites, an outbound telephone account management sales force, direct marketing catalogs and call centers, all supported by a network of supply chain facilities and delivery operations. Office Depot currently operates under the Office Depot® and OfficeMax...

  • Page 5
    ... Strategy that anticipates closing at least 400 stores in North America through 2016, which includes the 168 stores closed in 2014. Closures include both Office Depot and OfficeMax locations. The real estate portfolio optimization plan will be adjusted in future periods as market and competitive...

  • Page 6
    ...in-home, in-office and in-store support for their technology needs. Sales are recognized by the respective Division based on how the customer order is placed. North Tmerican Supply Chain We operate a network of distribution centers (or "DCs") and crossdock facilities across the United States, Puerto...

  • Page 7
    ... agreements, alliances and other arrangements. We also offer copy and print services to our customers in Europe through our e-commerce business and certain retail locations. Refer to the "Merchandising" section below for additional product information. As of December 27, 2014, the International...

  • Page 8
    ... market, and prices are adjusted as necessary to further our competitive positioning. We generally target our everyday pricing to be competitive with other resellers of office products. We acquire new customers by selectively mailing specially designed catalogs and by making on-premises sales calls...

  • Page 9
    ... on customer service, the quality and breadth of product selection and convenience. Other office supply retail companies market similarly to us in terms of store format, pricing strategy, product selection and product availability in the markets where we operate, primarily those in the United States...

  • Page 10
    ...; and code of ethical behavior may also be found under the "Investor Relations" section of our website. Our Executive Officers Michiel Allison - Age: 57 Mr. Allison was appointed as our Executive Vice President and Chief People Officer in December 2013. From July 2011 until December 2013, Mr...

  • Page 11
    ... products and services that enhance human physical capability. Juliet Johinsson - Age: 45 Ms. Johansson was appointed as our Executive Vice President and Chief Strategy Officer in March 2014. From May 2012 to September 2013, Ms. Johansson served as Senior Vice President of the Global Commercial...

  • Page 12
    ...and President of International in November 2011 after serving as our Executive Vice President, Corporate Strategy and New Business Development from July 2011 until November 2011, and as our President, North American Business Solutions from July 2007 until November 2011. Prior to joining Office Depot...

  • Page 13
    ... it is consummated, and an award of monetary damages, costs and fees. The costs, delay and management resources associated with litigation related to the Staples Acquisition could adversely affect our business, results of operations and financial condition. We are also subject to restrictions on the...

  • Page 14
    ... have incurred significant costs, including, among other things, the diversion of management resources, for which we will have received little or no benefit if the closing of the Staples Acquisition does not occur. A failed transaction may result in negative publicity and a negative impression of us...

  • Page 15
    ...office supply stores, including Staples, wholesale clubs such as Costco, Sam's Club and BJs, mass merchandisers such as Wal-Mart and Target, computer and electronics superstores such as Best Buy, Internet-based companies such as Amazon.com, food and drug stores, discount stores, and direct marketing...

  • Page 16
    ..., business pirtner ind customer relitionships ind operitions ind result in high costs. Through our sales, marketing activities, and use of third-party information, we collect and store certain personally identifiable information that our customers provide to purchase products or services, enroll...

  • Page 17
    ... that prices will not rise in the near future even above past levels. We operate a large network of stores, delivery centers, and delivery vehicles around the globe. As such, we purchase significant amounts of fuel needed to transport products to our stores and customers as well as shipping costs to...

  • Page 18
    ... products and make them available to our customers when desired and at attractive prices could have an adverse effect on our business and our results of operations. In addition, a material interruption in service by the carriers that ship goods within our supply chain may adversely affect our sales...

  • Page 19
    ...as invest in business expansion through new store openings, capital improvements and acquisitions. A deterioration in our financial results or the impact of significant Merger and integration costs could negatively impact our credit ratings, our liquidity and our access to the capital markets. If we...

  • Page 20
    ... and our financial results. Additional future contributions to the Pension Plans, financial market performance and Internal Revenue Service ("IRS") funding requirements could materially change these expected payments. In connection with OfficeMax's sale of its paper, forest products and timberland...

  • Page 21
    ... foreign tride policies or unstible politicil ind economic conditions. As of December 27, 2014, we sold to customers in 56 countries throughout North America, Europe, Asia/Pacific, and Latin America. We operate whollyowned entities and participate in joint ventures and alliances globally. Sales from...

  • Page 22
    ... coverage in the United States have resulted in government and private sector initiatives proposing significant healthcare reforms. The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, is expected to increase our annual employee health care costs, with the most...

  • Page 23
    ... International Division Country # Australia France New Zealand South Korea Sweden TOTAL 4 58 16 21 47 146 The supply chain facilities which we operate in the United States support our North American Retail and North American Business Solutions Divisions and the facilities in Canada support our...

  • Page 24
    ... of Contents International Division. The following tables set forth the locations of our supply chain facilities as of December 27, 2014. The number of facilities in the United States and Canada, as of December 27, 2014, exclude or include certain locations reported in the prior year because of...

  • Page 25
    ... the United States District Court for the Western District of New York in September 2012 as a putative class action alleging violations of the Fair Labor Standards Act and New York Labor Law. The complaint alleges that OfficeMax misclassified its assistant store managers ("ASMs") as exempt employees...

  • Page 26
    ... that Office Depot's use of the fluctuating workweek (FWW) method of pay was unlawful because Office Depot failed to pay a fixed weekly salary and failed to provide its ASMs with a clear and mutual understanding notification that they would receive a fixed weekly salary for all hours worked. The...

  • Page 27
    ... commenced trading on NASDAQ at market open on September 26, 2014. The Company's common stock continues to trade under the ticker symbol "ODP". As of the close of business on January 23, 2015, there were 9,634 holders of record of our common stock. The last reported sale price of the common stock on...

  • Page 28
    ... graph compares the five-year cumulative total shareholder return on our common stock with the cumulative total returns of the S&P 500 index and the S&P Specialty Stores index. The foregoing graph shall not be deemed to be filed as part of this Annual Report and does not constitute soliciting...

  • Page 29
    ... Office Depot, Inc. (3)(4)(5)(6) Net income (loss) available to common shareholders (3)(4)(5)(6) Net earnings (loss) per share: Basic Diluted Statistical Data: Facilities open at end of period: United States: Office supply stores Distribution centers and crossdock facilities International(7): Office...

  • Page 30
    ...$41 million were recognized from settlements. Includes Canadian locations. Fiscal year 2013 includes 144 stores operated by our International Division and 19 stores in Canada operated by our North American Business Solutions Division. These Canadian stores were closed in 2014. 28 (4) (5) (6) (7)

  • Page 31
    ... supplies, facilities products, and office furniture. Most stores also have a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in Canada and the United States, including Puerto Rico...

  • Page 32
    ... Strategy that anticipates closing at least 400 stores in North America through 2016, of which we closed 168 in 2014. We completed modifications to two supply chain facilities to service both Office Depot and OfficeMax banner customers and closed seven facilities. In the next two years, we expect to...

  • Page 33
    ... of the use of an international private brand trade name. The 2013 impairment charge includes a $44 million goodwill impairment triggered by the sale of our interest in Office Depot de Mexico. Both 2014 and 2013 include charges related to underperforming stores in North America. • We incurred...

  • Page 34
    .... The Company is working to offset declines in these categories with enhanced customer service, improved product adjacencies and offerings. Under the Office Depot banner, sales of furniture, supplies, and in Copy and Print Depot increased. Sales in the OfficeMax stores since the Merger date trended...

  • Page 35
    ... pay. At the end of 2014, we operated 1,745 retail stores in the United States, Puerto Rico and the U.S. Virgin Islands. Store opening and closing activity for the last three years has been as follows: Open at Beginning of Period OfficeMax Merger Open at End of Period Closed Opened 2012 2013 2014...

  • Page 36
    ...of Division operating income. These locations primarily serviced contract and other small business customers and, accordingly, were included in results of the North America Business Solutions Division. INTERNTTIONTL DIVISION (In millions) 2014 2013 2012 Sales % change Division operating income % of...

  • Page 37
    ... in 2014 and 2013, respectively. Internally, we analyze our international operations in terms of local currency performance to allow focus on operating trends and results. International Division store count and activity is summarized below: Open at Beginning of Period Office Supply Stores Closed...

  • Page 38
    ... Costs" below. Recovery of purchase price The sale and purchase agreement ("SPA") associated with the 2003 European acquisition included a provision whereby the seller was required to pay an amount to the Company if the acquired pension plan was determined to be underfunded based on 2008 plan...

  • Page 39
    ...As a result of declining sales in recent periods and adoption of our Real Estate Strategy in 2014, the Company has conducted a detailed quarterly store impairment analysis. The analysis includes estimates of store-level sales, gross margins, direct expenses, exercise of future lease renewal options...

  • Page 40
    ...to the closure of stores in Canada. The store impairment analysis for 2013 projected sales declines for several years, then stabilizing. Gross margin and operating cost assumptions were consistent with actual results and planned activities. For the 2013 impairment analysis, identified locations were...

  • Page 41
    ... direct costs to combine the companies. Expenses in 2013 include expenses incurred by Office Depot prior to the Merger and are primarily investment banking and professional fees associated with the transaction, including preparation for regulatory filings and shareholder approvals, as well employee...

  • Page 42
    ... used for the Company's corporate headquarters and personnel not directly supporting the Divisions, including certain executive, finance, audit and similar functions. Following the Merger, unallocated costs also include certain pension expense or credit related to the frozen OfficeMax pension...

  • Page 43
    ...to the favorable settlement of the U.S. Internal Revenue Service ("IRS") examination of the 2009 and 2010 tax years and a $22 million benefit related to the pension settlement since it was a non-taxable purchase price adjustment. Both 2013 and 2012 effective tax rates reflect the impact of valuation...

  • Page 44
    ... $1.1 billion available under the Amended Credit Agreement based on the December 2014 borrowing base certificate, for a total liquidity of approximately $2.2 billion. Approximately $309 million of cash and cash equivalents was held outside the United States and could result in additional...

  • Page 45
    ... taxes related to the Company's gain on the disposition of the investment in Office Depot de Mexico. The source of cash from this gain is shown in Investing activities. In 2012, the Company recognized a credit in earnings as the Recovery of purchase price from a 2003 business combination. The cash...

  • Page 46
    ... period end sales, the flow of goods, credit terms, timing of promotions, vendor production planning, new product introductions and working capital management. For our accounting policy on cash management, refer to Note 1, "Summary of Significant Accounting Policies," of the Consolidated Financial...

  • Page 47
    ... repayments on long- and short-term borrowings were $21 million in 2013. During 2012, the Company completed the settlement of a cash tender offer to purchase up to $250 million aggregate principal amount of its outstanding 6.25% senior notes due 2013. The Company also issued $250 million aggregate...

  • Page 48
    ... to pension and postretirement benefits are recorded based on estimates and assumptions. Key factors used in developing estimates of these liabilities include assumptions related to discount rates, rates of return on investments, future compensation costs, healthcare cost trends, benefit payment...

  • Page 49
    ... these policies. Vendor arrangements - Inventory purchases from vendors are generally under arrangements that automatically renew until cancelled with periodic updates or annual negotiated agreements. Many of these arrangements require the vendors to make payments to us or provide credits to be used...

  • Page 50
    ... reviewed quarterly for recoverability of their asset carrying amounts. The analysis uses input from retail store operations and the Company's accounting and finance personnel that organizationally report to the chief financial officer. These projections are based on management's estimates of store...

  • Page 51
    ... remaining term of the lease (including vacancy period), anticipated sublease income, and costs associated with vacating the premises. Lease commitments with no economic benefit to the Company are discounted at the credit-adjusted discount rate at the time of each location closure. With assistance...

  • Page 52
    ... on the amount reported. We are required to calculate our pension expense and liabilities using actuarial assumptions, including mortality assumptions, a discount rate and long-term asset rate of return. For year end 2014 measurement, we updated North America benefit plans' mortality assumptions...

  • Page 53
    ... large numbers of smaller Internet providers featuring special price incentives and one-time deals (such as close-outs), we are experiencing strong competitive pressures from large Internet providers such as Amazon.com and Walmart that offer a full assortment of office products through direct sales...

  • Page 54
    ... of plan assets available to pay benefits, contribution levels and expense are also impacted by the return on the pension plan assets. The pension plan assets include U.S. equities, international equities, global equities and fixed-income securities, the cash flows of which change as equity prices...

  • Page 55
    ...external factors. Commodities Risk We operate a large network of stores and delivery centers around the world. As such, we purchase fuel needed to transport products to our stores and customers as well as pay shipping costs to import products from overseas. We are exposed to potential changes in the...

  • Page 56
    ..., management has concluded that the Company's internal control over financial reporting was effective as of December 27, 2014. Our internal control over financial reporting as of December 27, 2014, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated...

  • Page 57
    ... and Stockholders of Office Depot, Inc. Boca Raton, Florida We have audited the internal control over financial reporting of Office Depot, Inc. and subsidiaries (the "Company") as of December 27, 2014, based on criteria established in Internal Control-Integrated Framework (2013) issued by the...

  • Page 58
    ... principal executive officer, our principal financial officer, and our principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethical Behavior is available free of charge on the "Investor Relations" section of our website at www.officedepot.com. We...

  • Page 59
    ...and "Director Independence," respectively, and is incorporated by reference in this Annual Report. Item 14. Principal Tccountant Fees and Services. Information with respect to principal accounting fees and services and pre-approval policies will be contained in the Proxy Statement under the headings...

  • Page 60
    ... Statements." The financial statement schedules listed in "Index to Financial Statement Schedules." The exhibits listed in the "Index to Exhibits." Exhibit 99 1. Financial statements of Office Depot de Mexico, S.A. de C.V. and Subsidiaries as of July 9, 2013 (Unaudited) and December 31, 2012 58

  • Page 61
    ... S. Vassalluzzo 59 Chief Executive Officer (Principal Executive Officer) and Chairman, Board of Directors Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) Director Director Director...

  • Page 62
    ...Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders' Equity Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm on Financial Statement Schedule Index to Financial Statement Schedule 60 61 62 63 64 65 66 67 - 121 122 123

  • Page 63
    ... fiscal years in the period ended December 27, 2014, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control...

  • Page 64
    ...of Contents OFFICE DEPOT, INC. CONSOLIDTTED STTTEMENTS OF OPERTTIONS (In millions, except per share amounts) 2014 2013 2012 Sales Cost of goods sold and occupancy costs Gross profit Selling, general and administrative expenses Recovery of purchase price Asset impairments Merger, restructuring, and...

  • Page 65
    ...Contents OFFICE DEPOT, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) 2014 2013 2012 Net loss Other comprehensive income (loss), net of tax, where applicable: Foreign currency translation adjustments Amortization of gain on cash flow hedge Change in deferred pension, net...

  • Page 66
    ... income Accumulated deficit Treasury stock, at cost - 5,915,268 shares in 2014 and 2013 Total Office Depot, Inc. stockholders' equity Noncontrolling interests Total equity Total liabilities and stockholders' equity The accompanying notes to consolidated financial statements are an integral...

  • Page 67
    ... Charges for losses on inventories and receivables Earnings from equity method investments Loss on extinguishment of debt Recovery of purchase price Pension plan funding associated with recovery of purchase price Asset impairments Compensation expense for share-based payments Loss (gain) on...

  • Page 68
    ...29, 2012 Acquisition of noncontrolling interest Net loss Other comprehensive income Common stock issuance related to OfficeMax merger Preferred stock dividends Grant of long-term incentive stock Forfeiture of restricted stock Exercise and release of incentive stock (including income tax benefits and...

  • Page 69
    ... will acquire all of the outstanding shares of Office Depot and the Company will become a wholly owned subsidiary of Staples (the "Staples Acquisition"). The Company will survive the Staples Merger as a wholly owned subsidiary of Staples. Under the terms of the Staples Merger Agreement, Office Depot...

  • Page 70
    ...; the cost method is used when the Company neither shares control nor has significant influence. Fiscal Year: Fiscal years are based on a 52- or 53-week period ending on the last Saturday in December. Certain international locations operate on a calendar year basis; however, the reporting difference...

  • Page 71
    ... and the results of physical counts. In-bound freight is included as a cost of inventories. Also, cash discounts and certain vendor allowances that are related to inventory purchases are recorded as a product cost reduction. The weighted average method is used throughout the Company to determine...

  • Page 72
    ... goodwill associated with the Merger was the first day of the third quarter of 2014. The Company elected to conduct a quantitative assessment of possible goodwill impairment in 2014. In periods that a quantitative test is used, the Company estimates the reporting unit's fair value using discounted...

  • Page 73
    ...included in reported Sales. The Company uses judgment in estimating sales returns, considering numerous factors such as historical sales return rates. The Company also records reductions to revenue for customer programs and incentive offerings including special pricing agreements, certain promotions...

  • Page 74
    ...closures, contract terminations, and additional employee-related costs will be reported in this financial statement line item. Integration activities are expected to continue through 2016. Also, the current and prior period amounts include restructuring-related charges not associated with the Merger...

  • Page 75
    ... Company's stock price on the date of grant. The Merger-date value of former OfficeMax share-based awards was valued using the Black-Scholes model and apportioned between Merger consideration and unearned compensation to be recognized in expense as earned in future periods based on remaining service...

  • Page 76
    Table of Contents OFFICE DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) Tcquisitions: The Company applies the acquisition method of accounting for acquisitions, including mergers where the Company is considered the accounting acquirer. As such, the total consideration is ...

  • Page 77
    ... of the Company being the accounting acquirer. Like Office Depot, OfficeMax is a leader in both business-to-business and retail office products distribution. OfficeMax had operations in the U.S., Canada, Mexico, Australia, New Zealand, the U.S. Virgin Islands and Puerto Rico. The Merger was intended...

  • Page 78
    ... in Boise Cascade Holdings and elimination of the OfficeMax recognition of pension settlement charges in 2012 of $56 million as the related deferred values were removed in purchase accounting; and inclusion in the pro forma year 2012 of $79 million Merger transaction costs incurred by both companies...

  • Page 79
    ... in Mexico was valued, using the same fair value measurement methodologies applied to all assets acquired and liabilities assumed in the Merger and a fair value estimate based on market multiples. The disposition of the joint venture in 2014 resulted in no gain or loss other than transaction costs...

  • Page 80
    ... in the 2014 Consolidated Statements of Operations for this business through the date of sale are as follows: (In millions) Sales Income before income taxes Income attributable to Office Depot, before income taxes Office Depot de Mexico $155 6 4 In the third quarter of 2013, the Company sold its...

  • Page 81
    ... in 2014 include integration-related professional fees, incremental temporary contract labor, salary and benefits for employees dedicated to Merger activity, travel costs, non-capitalizable software integration costs, and other direct costs to combine the companies. Expenses in 2013 primarily...

  • Page 82
    ... OFFICE DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) associated with the restructuring plan consist primarily of approximately $95 million of severance pay and other employee termination benefits, and approximately $25 million associated with lease obligations and other costs...

  • Page 83
    ...sheet accounts. The $137 million incurred in 2014 is comprised of $124 million merger transaction and integration expenses, $9 million European restructuring transaction and integration expenses, $5 million employee noncash equity compensation expenses, and $1 million net credit associated primarily...

  • Page 84
    ...in Corporate in 2013 relate to the Merger. The allocation of the Merger consideration to the reporting units was completed in the third quarter of 2014. As the Company finalized the purchase price allocation in 2014, certain preliminary values were adjusted as additional information became available...

  • Page 85
    ... 2014 sale of that business. As a result of the disposition of its investment in Office Depot de Mexico and the associated return of cash to the U.S. parent, in the third quarter of 2013, the carrying value of the related reporting unit exceeded its fair value. Because the investment was accounted...

  • Page 86
    ... America, and accounted for this investment under the equity method. In the third quarter of 2013, the Company sold its 50 percent investment in Office Depot de Mexico to Grupo Gigante, the joint venture partner. Refer to Note 2 for further details on the disposition. For periods prior to the sale...

  • Page 87
    ...Additionally, in November 2013, the Company received a $35 million cash distribution as part of a distribution that Boise Cascade Holdings made to the holders of its Common Units following an offering of common shares of Boise Cascade Company. This distribution is considered return of investment and...

  • Page 88
    ..., subject to certain terms and conditions, including obtaining increased commitments from existing or new lenders. The amount that can be drawn on the Facility at any given time is determined based on percentages of certain accounts receivable, inventory and credit card receivables (the "Borrowing...

  • Page 89
    ... include limitations in certain circumstances on acquisitions, dispositions, share repurchases and the payment of cash dividends. The Company has never paid a cash dividend on its common stock. The Facility also includes provisions whereby if the global availability is less than $150 million, or...

  • Page 90
    ... debt rating services and there is no default under the Indenture. There are no maintenance financial covenants. The Senior Secured Notes may be redeemed by the Company, in whole or in part, at any time prior to March 15, 2016 at a price equal to 100% of the principal amount plus a make-whole...

  • Page 91
    ...at par, upon maturity in August 2013. Other Long-Term Debt As a result of the Merger, the Company assumed the liability for the amounts in the table above related to the (i) 7.35% debentures, due 2016, (ii) Revenue bonds, due in varying amounts periodically through 2029, and (iii) American & Foreign...

  • Page 92
    ... expenses Change in unrecognized tax benefits Tax expense from intercompany transactions Subpart F and dividend income, net of foreign tax credits Change in tax rate Non-taxable return of purchase price Deferred taxes on undistributed foreign earnings Tax accounting method change ruling Other items...

  • Page 93
    ... purposes. The 2012 effective tax rate includes benefits related to the $16 million favorable settlement of the U.S. Internal Revenue Service ("IRS") examination of the 2009 and 2010 tax years, as well as the recovery of purchase price that is treated as a purchase price adjustment for tax purposes...

  • Page 94
    ... consisted of the following: (In millions) December 27, 2014 December 28, 2013 U.S. and foreign net operating loss carryforwards Deferred rent credit Pension and other accrued compensation Accruals for facility closings Inventory Self-insurance accruals Deferred revenue U.S. and foreign income tax...

  • Page 95
    ... acquired as a result of the Merger. Accordingly, the Company has recorded the deferred tax liabilities associated with the undistributed earnings of such foreign subsidiaries. The following summarizes the activity related to valuation allowances for deferred tax assets: (In millions) 2014 2013 2012...

  • Page 96
    ...and 2009, respectively. The acquired OfficeMax U.S. consolidated group is no longer subject to U.S. federal and state and local income tax examinations for years before 2010 and 2006, respectively. The U.S. federal income tax return for 2013 is under concurrent year review. Generally, the Company is...

  • Page 97
    ...income of $6 million in 2014, $4 million in 2013, and $5 million in 2012. Future minimum lease payments due under the non-cancelable portions of leases as of December 27, 2014 include facility leases that were accrued as store closure costs and are as follows. (In millions) 2015 2016 2017 2018 2019...

  • Page 98
    .... Reported dividends calculated on a per share basis were $221.50 and $94.10 for 2013 and 2012, respectively. In accordance with certain Merger-related agreements, which the Company entered into with the holders of the Company's preferred stock concurrently with the execution of the Merger Agreement...

  • Page 99
    ... shareholders approved, the Office Depot, Inc. 2007 Long-Term Incentive Plan (the "Plan"). The Plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based, and other equity-based incentive awards. Employee share-based awards are...

  • Page 100
    ...purchase Office Depot common stock, on the same terms and conditions adjusted by the 2.69 exchange ratio provided for in the Merger Agreement. The fair value of those options was measured using an option pricing model with the following assumptions: risk-free rate 0.42%; expected life 2.34; dividend...

  • Page 101
    ... stock grants to Company employees typically vest annually over a three-year service period. A summary of the status of the Company's nonvested shares and changes during 2014, 2013, and 2012 is presented below. 2014 2013 2012 Outstanding at beginning of year Granted Assumed - Merger Vested...

  • Page 102
    ... of shares vested during 2014 was approximately $6.3 million. NOTE 14. EMPLOYEE BENEFIT PLTNS Pension and Other Postretirement Benefit Plans Pension and Other Postretirement Benefit Plans - North America The Company has retirement obligations under OfficeMax's U.S. pension plans (the "U.S. Plans...

  • Page 103
    ... in the Consolidated Balance Sheets related to the Company's North America defined benefit pension and other postretirement benefit plans as of year-ends: (In millions) Pension Benefits 2014 2013 Other Benefits 2014 2013 Noncurrent assets Current liabilities Noncurrent liabilities Net amount...

  • Page 104
    ...the amount and timing of future benefit payments. The following table presents the key weighted average assumptions used in the measurement of the Company's benefit obligations as of yearends: Other Benefits Pension Benefits 2014 2013 United States 2014 2013 2014 Canada 2013 Discount rate 102 3.91...

  • Page 105
    ... The following table presents the weighted average assumptions used in the measurement of net periodic benefit: Pension Benefits 2014 2013 Other Benefits United States Canada 2014 2013 2014 2013 Discount rate Expected long-term rate of return on plan assets 4.84% 6.50% 4.76% 6.60% 4.00% -% 3.80...

  • Page 106
    ... the Company's pension plans. The investment policy is structured to optimize growth of the pension plan trust assets, while minimizing the risk of significant losses, in order to enable the plans to satisfy their benefit payment obligations over time. The Company uses benefit payments and Company...

  • Page 107
    ... DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) The following table presents the pension plan assets by level within the fair value hierarchy at year-ends. (In millions) Quoted Prices in Tctive Markets for Identical Tssets (Level 1) Fair Value Measurements at December 27, 2014...

  • Page 108
    ... service benefits ceased for the remaining employees. The sale and purchase agreement ("SPA") associated with the 2003 European acquisition included a provision whereby the seller was required to pay an amount to the Company if the acquired pension plan was determined to be underfunded based on 2008...

  • Page 109
    ... asset in the caption Other assets. Components of Net Periodic Benefit The components of net periodic benefit are presented below: (In millions) 2014 2013 2012 Service cost Interest cost Expected return on plan assets Net periodic pension benefit 107 $ - 10 (14) $ (4) $ - 9 (13) $ (4) $ - 9 (11...

  • Page 110
    ... deferred loss is not expected to be amortized into income during 2015. Assumptions Assumptions used in calculating the funded status included: 2014 2013 2012 Expected long-term rate of return on plan assets Discount rate Inflation 5.55% 3.80% 3.10% 6.33% 4.60% 3.40% 6.00% 4.40% 3.00% The long...

  • Page 111
    ...Contents OFFICE DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) The following table presents the pension plan assets by level within the fair value hierarchy. (In millions) Quoted Prices in Tctive Markets for Identical Tssets (Level 1) Fair Value Measurements at December 27, 2014...

  • Page 112
    ...Office Depot, Inc. Retirement Savings Plan. In connection with the Merger, certain employees still participate in one of two contributory defined contribution savings plans that OfficeMax had in place for most of its salaried and hourly employees: a plan for U.S. employees and a plan for Puerto Rico...

  • Page 113
    ... by the Merger Agreement, 50 percent of the outstanding preferred stock was redeemed and the remaining 50 percent was redeemed in November 2013 in connection with the Merger closing. In periods in which the redeemable preferred stock were outstanding, basic earnings (loss) per share ("EPS") was...

  • Page 114
    ... investment in Boise Cascade was calculated using the number of shares the Company indirectly held in Boise Cascade multiplied by its closing stock price as of the last trading day prior to the balance sheet date. The investment in Boise Cascade Holdings was fully disposed of in 2014. Refer to...

  • Page 115
    ...to the closure of stores in Canada. The store impairment analysis for 2013 projected sales declines for several years, then stabilizing. Gross margin and operating cost assumptions were consistent with actual results and planned activities. For the 2013 impairment analysis, identified locations were...

  • Page 116
    ... OFFICE DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) A review of the North American Retail portfolio during 2012 concluded with a plan for each location to maintain its current configuration, downsize to either small or mid-size format, relocate, remodel, renew or close...

  • Page 117
    ...contract replaced the previous supply contract executed in 2004 with Boise Paper. The Company assumed the commitment under a paper supply contract to buy OfficeMax's North American requirements for office paper, subject to certain conditions, including conditions under which the Company may purchase...

  • Page 118
    ... Contents OFFICE DEPOT, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) Indemnifications Indemnification obligations may arise from the Asset Purchase Agreement between OfficeMax Incorporated, OfficeMax Southern Company, Minidoka Paper Company, Forest Products Holdings, L.L.C. and Boise...

  • Page 119
    ... supplies, facilities products, and office furniture. Most stores also have a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in Canada and the United States, including Puerto Rico...

  • Page 120
    ...and services through direct mail catalogs, contract sales forces, Internet sites, and retail stores in Europe and Asia/Pacific. Following the date of the Merger, the former OfficeMax U.S. Retail business is included in the North American Retail Division. The former OfficeMax United States and Canada...

  • Page 121
    ... Retail North American Business Solutions Corporate, Eliminations, and Other* (In millions) International Consolidated Total Sales Division operating income Capital expenditures Depreciation and amortization Charges for losses on receivables and inventories Net earnings from equity method...

  • Page 122
    ...of the United States or single customer that accounts for 10% or more of the Company's total sales. Geographic financial information relating to the Company's business is as follows (in millions). 2014 Sales 2013 2012 Property and Equipment, Net 2014 2013 2012 United States International Total $12...

  • Page 123
    ...tax gain of approximately $235 million resulting from the sale of Office Depot de Mexico and preferred stock dividends of $22 million associated to redemption in July 2013. Net income available to common stockholders includes (i) impact of the Merger of $939 million in Sales and $(39) million in Net...

  • Page 124
    ... Office Depot, Inc. Boca Raton, Florida We have audited the consolidated financial statements of Office Depot, Inc. and subsidiaries (the "Company") as of December 27, 2014 and December 28, 2013, and for each of the three fiscal years in the period ended December 27, 2014, and the Company's internal...

  • Page 125
    Table of Contents INDEX TO FINTNCITL STTTEMENT SCHEDULES Page Schedule II - Valuation and Qualifying Accounts and Reserves All other schedules have been omitted because they are not applicable, not required or the information is included elsewhere herein. 123 124

  • Page 126
    ... millions) Column A Column B Column C Column D Deductions - Write-offs, Payments and Other Adjustments Column E Description Balance at Beginning of Period Additions - Charged to Expense Balance at End of Period Allowance for doubtful accounts: 2014 2013 2012 124 $ $ $ 26 23 20 8 14 15 16 11 12...

  • Page 127
    ... Annual Report on Form 10-K, filed with the SEC on February 25, 2014). Second Supplemental Indenture, dated as of November 22, 2013, between Office Depot Inc., Mapleby Holdings Merger Corporation, OfficeMax Incorporated, OfficeMax Southern Company, OfficeMax Nevada Company, OfficeMax North America...

  • Page 128
    ...(Maker) and Boise Southern Company (Initial Holder) dated October 29, 2004 (Incorporated by reference from OfficeMax Incorporated's Quarterly Report on Form 10-Q, filed with the SEC on November 9, 2004). Lease Agreement dated November 10, 2006, by and between Office Depot, Inc. and Boca 54 North LLC...

  • Page 129
    ... on December 5, 2013).* 2013 Restricted Stock Unit Award Agreement between the Company and Stephen E. Hare (Incorporated by reference from Office Depot, Inc.'s Current Report on Form 8-K, filed with the SEC on December 5, 2013).* 2013 Performance Share Award Agreement between the Company and Stephen...

  • Page 130
    ...on November 18, 2013).* 2013 Restricted Stock Unit Award Agreement between the Company and Roland C. Smith (Incorporated by reference from Office Depot, Inc.'s Current Report on Form 8-K, filed with the SEC on November 18, 2013).* 2013 Performance Share Award Agreement between the Company and Roland...

  • Page 131
    ... by reference from Office Depot, Inc.'s Annual Report on Form 10-K, filed with the SEC on February 25, 2014). Paper Purchase Agreement dated June 25, 2011 between Boise White Paper, L.L.C. and OfficeMax Incorporated (Incorporated by reference from OfficeMax Incorporated's Quarterly Report on Form 10...

  • Page 132
    ...Director Restricted Stock Unit Award Agreement (Incorporated by reference from OfficeMax Incorporated's Current Report on Form 8-K, filed with the SEC on July 29, 2008).* Form of 2009 Nonqualified Stock Option Award Agreement (Incorporated by reference from OfficeMax Incorporated's Current Report on...

  • Page 133
    ... Compensation Plan (Incorporated by reference from OfficeMax Incorporated's Quarterly Report on Form 10-Q, filed with the SEC on November 6, 2008).* List of Office Depot, Inc.'s Subsidiaries Consent of Independent Registered Public Accounting Firm Consent of Independent Auditors Certification...

  • Page 134
    ... Trust Indenture dated as of October 1, 1985, between Boise Cascade Corporation and U.S. Bank Trust National Association (as successor in interest to Morgan Guaranty Trust Company of New York) was filed as exhibit 99.2 in OfficeMax Incorporated's Current Report on Form 8-K filed on December 10, 2001...

  • Page 135
    ... Gas Corporation Reliable Express Corporation Picabo Holdings, Inc. OMX Timber Finance Holdings II, LLC OMX Timber Finance Holdings I, LLC OfficeMax Incorporated OfficeMax Southern Company OfficeMax Nevada Company OMX, Inc. OfficeMax North America, Inc. North American Card and Coupon Services, LLC...

  • Page 136
    ... NA B.V.) Office Depot Netherlands B.V. Office Depot (Netherlands) C.V. Heteyo Holdings BV. Guilbert International B.V. Office Depot (Operations) Holdings B.V. Office Depot Coöperatief W.A. Office Depot Europe B.V. Xtreme Office B.V. OfficeMax New Zealand Limited Office Depot Puerto Rico, LLC 134...

  • Page 137
    ... Svanström & Cu AB) Office Depot GmbH Office Depot Holding GmbH Office Depot International (UK) Limited Viking Direct (Holdings) Limited Office Depot UK Limited Guilbert UK Pension Trustees Ltd Guilbert UK Holdings Ltd Niceday Distribution Centre Ltd Office 1 (1995) Ltd Office 1 Ltd Reliable UK Ltd...

  • Page 138
    ... Depot, Inc. and subsidiaries (the "Company"), and the effectiveness of the Company's internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the fiscal year ended December 27, 2014. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Boca Raton...

  • Page 139
    ... vary from accounting principles generally accepted in the United htates of America, the nature and effects of which are presented in Note 19 in such consolidated financial statements), appearing in the Annual Report on Form 10-K of mffice Depot, Inc. for the year ended December 27, 2014. /s/ Ma...

  • Page 140
    ...15d-14(a) Certification I, Roland C. Smith, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Office Depot, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made...

  • Page 141
    ...Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ STEPHEN E. HARE Name: Stephen E. Hare Title: Executive Vice President and Chief Financial Officer Date: February 24, 2015 139

  • Page 142
    ...Title: Chief Executive Officer Date: February 24, 2015 /s/ STEPHEN E. HARE Name: Stephen E. Hare Title: Chief Financial Officer Date: February 24, 2015 A signed original of this written statement required by Section 1350 of Title 18 of the United States Code has been provided to the Company and will...

  • Page 143
    Exhibit 99 Office Depot de México, S. A. de C. V. and Subsidiaries Consolidated Financial Statements as of July 9, 2013(Unaudited) and December 31, 2012 and for the Period from January 1, 2013 to July 9, 2013 (Unaudited) and for the Years Ended December 31, 2012 and 2011

  • Page 144
    Office Depot de México, S. A. de C. V. and Subsidiaries Consolidated Financial Statements for the Period from January 1, 2013 to July 9, 2013 (Unaudited) and for the Years Ended 2012 and 2011 Table of contents Page Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of...

  • Page 145
    ... opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall...

  • Page 146
    ... in certain significant respects from accounting principles generally accepted in the United States of America ("U.S. GAAP"). Information relating to the nature and effect of such differences is presented in Note 19 to the accompanying consolidated financial statements. The accompanying consolidated...

  • Page 147
    ... and stockholders' equity Current liabilities: Trade accounts payable Office Depot Asia Holding Limited - Related party Accrued expenses Taxes payable Total current liabilities Employee benefits Total liabilities Stockholders' equity: Common stock Retained earnings Foreign currency translation Total...

  • Page 148
    ... Income For the period from January 1, 2013 to July 9, 2013 (unaudited) and for the years ended December 31, 2012 and 2011 (In thousands of Mexican pesos) 09/07/2013 (Unaudited) 31/12/2012 31/12/2011 Revenues: Net sales Other Costs and expenses: Cost of sales Selling, administrative and...

  • Page 149
    ...the period from January 1, 2013 to July 9, 2013 (unaudited) and for the years ended December 31, 2012 and 2011 (In thousands of Mexican pesos) Common stock Retained earnings Foreign currency translation Total stockholders' equity Balances as of January 1, 2011 Dividends paid ($10.81 pesos per share...

  • Page 150
    ... Inventories Prepaid expenses Trade accounts payable Accrued expenses Income taxes paid Other liabilities Net cash provided by operating activities Investing activities: Purchases of equipment and investments in leasehold improvements Proceeds from sale of equipment Interest received Net cash used...

  • Page 151
    ... in Mexico that sells office supplies and electronic goods, and a printing service specializing in the retail and catalogue business for office supplies. 2. Significant events On July 9, 2013, Grupo Gigante, S. A. B. de C. V. ("Grupo Gigante") acquired 50% of the outstanding shares of the Company...

  • Page 152
    ... the sale of services and office supplies, 99.999000% located in Honduras. Operates stores specializing in the sale of services and office supplies, 100.000000% located in Panama. The distribution and handling of office supplies inventories as well 99.922000% as printed forms, located in Mexico. The...

  • Page 153
    ... distribution and handling of office supplies inventories as well as fabrication of printed forms, located in Colombia, (subsidiary of 100.000000% OD Colombia, S. A. S.). This company has not initiated operations as of the date of these 99.000000% consolidated financial statements and it is located...

  • Page 154
    ...in value are recognized in comprehensive financing (cost) income of the period Concentration of credit risk IThe Company sells products to customers primarily in the retail trade in Mexico. The Company conducts periodic evaluations of its customers' financial condition and generally does not require...

  • Page 155
    ... Company amortizes the cost of its intangible assets with definite useful lives over such estimated useful lives. These lives are reviewed at least annually to determine whether events and circumstances warrant a revision. Useful lives are as follows: Years h. Customer list Non-compete agreement...

  • Page 156
    ... related to seniority premiums and, severance payments are recognized as they accrue and are calculated by independent actuaries based on the projected unit credit method using nominal interest rates. Statutory employee profit sharing (PTU)-PTU is recorded in the results of the year in which...

  • Page 157
    ... of uncollectible accounts Balance at ending of period 09/07/2013(Unaudited) 31/12/2012 31/12/2011 7. Inventories $ 5,728 10,259 4,109 $ 612 (2,042) 7,556 $ (287) 2,489 1,406 $ 6,053 5,728 10,259 09/07/2013 (Unaudited) 31/12/2012 Inventories Allowance for obsolete inventories Goods in...

  • Page 158
    ...leasehold improvements as well as intangibles detailed in Note 8. 9. Intangible assets 09/07/2013 (Unaudited) 31/12/2012 Intangible assets with finite useful lives: Non-compete agreement Customer list Accumulated amortization Intangible asset with indefinite useful life: Trademark $ 22,473 101,726...

  • Page 159
    ...each of the three following years is as follows: Remaining period of 2013 2014 2015 10. Employee benefits a. The Company pays seniority premium benefits to its employees, which consist of a lump sum payment of 12 days' wage for each year worked, calculated using the most recent salary, not to exceed...

  • Page 160
    ..., the Company must make payments equivalent to 2% of its workers' daily integrated salary to a defined contribution plan that is part of the retirement savings system. The expense for the period from January 1, 2013 to July 9, 2013 and for the years ended December 31, 2012 and 2011 was $8,244...

  • Page 161
    ... Company at the rate in effect upon distribution. Any tax paid on such distribution may be credited against annual and estimated income taxes of the year in which the tax on dividends is paid and the following two fiscal years. The balances of the stockholders' equity tax accounts as of July 9, 2013...

  • Page 162
    ... out in the ordinary course of business, were as follows: 09/07/2013 (Unaudited) 31/12/2012 31/12/2011 Sales: Restaurantes Toks, S. A. de C. V. Servicios Gastronómicos Gigante, S. A. de C. V. Servicios Toks, S. A. de C. V. Distribuidora Store Home, S. A. de C. V. Unidad de Servicios Compartidos...

  • Page 163
    ...V. Purchase of inventories: Office Depot Asia Holding Limited b. Balances due from related parties are as follows: 23,125 3,867 1,364 3,682 I 40,142 1,161 2,680 15,558 1,957 4,832 38,891 3,088 170 9,687 I 18,899 2,433 I 269,706 954 897 196,739 1,929 I 426,262 09/07/2013 (Unaudited) 31/12/2012...

  • Page 164
    ... Income taxes in Mexico The Company is subject to ISR and IETU and pays the greater of the two. ISR -The rate was 30% in 2013 and 2012 and as a result of the new 2014 ISR law (2014 Law), it will continue at 30% in 2014 and subsequent years. IETU - IETU was eliminated as of 2014; therefore, through...

  • Page 165
    ... of period 2013 2012 2011 d. As of December 31, the main items that give rise to a deferred IETU liability are: 93,068 75,587 79,242 I 17,481 21,147 I I 24,802 93,068 93,068 75,587 09/07/2013 (Unaudited) 2012 Deferred IETU liability: Accounts receivable from affiliated companies Vehicles...

  • Page 166
    ...are certain executory costs such as real estate taxes, insurance and common area maintenance on most of the Company's facility leases. The table below shows future minimum lease payments due under the non-cancelable portions of our leases as of July 9, 2013. 2013 2014 2015 2016 2017 Thereafter $ 213...

  • Page 167
    ... by the Company under the contract. In October 2008, the Company was ordered under the counterclaim to comply with the terms of the sublease agreement, which requires the construction of an Office Depot store on the plot of land. The Company filed an appeal in January 2009. On August 19, 2010, the...

  • Page 168
    ... respect to the effects of these new provisions on its financial information. 19. Differences between MFRS and accounting principles generally accepted in the United States of America ("U.S. GAAP") The accompanying consolidated financial statements of the Company are prepared in accordance with...

  • Page 169
    ... follows: 09/07/2013 (Unaudited) 31/12/2012 Property, equipment and leasehold improvements Intangible assets Goodwill Total adjustment $394,446 377 13,897 $408,720 $407,875 450 13,897 $422,222 U.S. GAAP generally requires the use of the historical cost basis of accounting, except when an entity...

  • Page 170
    ... seniority premiums, pension plans and severance payment are recognized as they accrue determined based on actuarial calculations using the projected unit credit method. The liability recognized under MFRS does not include unrecognized items such as actuarial gains and losses and prior service costs...

  • Page 171
    Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost as of and for the year ended December 31, 2012: 09/07/2013 % 31/12/2012 % Discount of the projected benefit obligation at present value Salary increase Minimum wage increase rate (iii) 8.19 5.73 4.27 ...

  • Page 172
    ...as follows: 09/07/2013 (Unaudited) 31/12/2012 Reconciliation of deferred income...employee retirement obligations Effects of rent holidays Effects of amortization of goodwill Effects of actuarial gains in other comprehensive income Total U.S. GAAP adjustments... doubtful accounts Inventories Accrued ...

  • Page 173
    ... amount of the benefit taken will be sustained upon review, based on technical merits of the position taken. The tax years that remain subject to examination by tax authorities are 2008 to 2013. (vii) Addinional presennanion and disclosure differences (a) Fair value of financial insnrumenns and fair...

  • Page 174
    ... commissions on interest-free sales offered to customers, where such sale is ultimately financed by the bank and not the Company. In those cases, the sale price of the product sold is increased. Those additional commissions are included within comprehensive financing cost under MFRS. Under U.S. GAAP...

  • Page 175
    ... to related party Repayments of banks borrowings Dividends paid Net cash used in financing activities Effect of exchange rate changes on cash Cash and cash equivalents: Net increase (decrease) for the year Beginning of period End of the period Supplemental disclosures of cash flow information Cash...

  • Page 176
    ... under U.S. GAAr: The following are new pronouncements issued under U.S. GAAP which will be effective in future reporting periods: In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Comprehensive Income (Topic 220): Reporning...

  • Page 177