Office Depot 2003 Annual Report Download

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Global Leadership
ANNUAL REPORT 2003

Table of contents

  • Page 1
    Global Leadership ANNUAL REPORT 2003

  • Page 2
    ... supported by 25 distribution centers and 31 call centers. The Company operates an award-winning U.S. Office Depot brand web site at www.officedepot.com, and maintains 31 other public web sites outside North America. Office Depot reports financial results for three operating segments: International...

  • Page 3
    ...North America. Our growing e-commerce presence now includes 31 public web sites as well as the ability to offer customized intranet web sites to our large account segment. Collectively, a robust network of 31 call centers and 25 warehouses supports Office Depot's International Division. • In 2003...

  • Page 4
    ... quarter of 2003, we implemented significant changes in furniture and technology assortments in our North American retail stores. We launched Magellan, the largest business project in Office Depot's history, which we believe will lead to improved sales, margins, comps, and supply-chain performance...

  • Page 5
    ... drive the greatest sales and profit. 5. Excel in Europe. We will build on our office supply leadership position in Europe. Initiatives include completion of the Guilbert integration with Viking/Office Depot processes and systems, implementation of harmonized customer contact and product strategies...

  • Page 6
    ... through our Internet sites • Operate under Office Depot, Viking, and 4Sure.com brand names • 13 regional call centers, 10 public web sites • Develop customized intranet sites in tandem with our customers • Offer over 14,000 stock-keeping units • 22 delivery warehouses North American...

  • Page 7
    ...effect of accounting change: Basic ...Diluted ...Net earnings per share: ...Basic ...Diluted ...Statistical Data: Facilities open at end of period: United States and Canada: Office supply stores ...Customer service centers...Call centers ...International (3): Office supply stores ...Customer service...

  • Page 8
    THIS PAGE INTENTIONALLY LEFT BLANK OFFICE DEPOT 6 2003 ANNUAL REPORT

  • Page 9
    ... Road; Delray Beach, Florida (Address of principal executive offices) (561) 438-4800 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on which registered New York Stock Exchange New York Stock Exchange 59-2663954...

  • Page 10
    ... Services Group, and International Division. These segments include multiple sales channels consisting of office supply stores, a contract sales force, Internet sites, and catalog and call centers, all supported by our network of crossdocks, warehouses and delivery operations. Additional information...

  • Page 11
    ... warehouse and delivery functions for our catalog, contract and Internet customers. Some CSCs also house sales offices, call centers and administrative offices. At the end of 2003, we operated 22 CSCs in the United States, consisting of 12 Office Depot facilities, two Viking facilities and eight...

  • Page 12
    ... new customers by selectively mailing specially designed catalogs to prospective customers. Sometimes we obtain the names of prospective customers in new and existing markets through the use of selected mailing lists from outside marketing information services and other Office Depot 2003 / Form...

  • Page 13
    ... increase the effectiveness of our Office Depot brand catalogs in the future. Our customers can place orders over the Internet, by telephone or by fax using toll-free telephone numbers that route the calls to our call centers. In North America, our call centers are located in Florida, Georgia, Texas...

  • Page 14
    ... 19 years with GTE Corporation in a variety of positions, the latest being Vice President and General Manager of Retail Information Services. Jocelyn Carter-Miller-Age: 46 Ms. Carter-Miller joined our Company in February 2002 as Executive Vice President, Marketing, and Chief Marketing Officer. From...

  • Page 15
    ... the first Office Depot store in Hungary. He also built a delivery business for the Office Depot brand in both countries. Prior to the founding of RIC, Mr. Lepley was Sr. Vice President of Sales and Marketing for Mitsubishi Motor Sales of America, where he worked for 11 years. Monica Luechtefeld...

  • Page 16
    ... two of which are owned and one is leased. We also own a corporate office building in Torrance, California, which is approximately 180,000 square feet in size, and a systems data center in Charlotte, North Carolina which is approximately 53,000 square feet in size. Office Depot 2003 / Form 10-K 14

  • Page 17
    ... II Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters. Our common stock is listed on the New York Stock Exchange (" NYSE") under the symbol " ODP." As of February 13, 2004, there were 3,723 holders of record of our common stock. The last reported sale price of the...

  • Page 18
    ... effect of accounting change: Basic ...(0.08) Diluted ...(0.08) Net earnings per share: ...Basic ...$ 0.89 Diluted ...0.88 Statistical Data: Facilities open at end of period: United States and Canada: Office supply stores ...900 Customer service centers ...22 Call centers...13 International...

  • Page 19
    ... sales channels consisting of office supply stores, a contract sales force, Internet sites, and catalog and call centers, all supported by our crossdock, warehouse and delivery operations. Each of these segments is described in more detail in Item 1, Business Section, of this Annual Report on Form...

  • Page 20
    ...merchandise primarily relate to our delivery customers, are included in store and warehouse expenses. Because of our multi-channel operations, and because some retail companies include shipping, handling and other distribution costs as a component of cost of goods sold, their measure of gross profit...

  • Page 21
    ...of labor required to operate the stores and by reduced incentive costs in 2003 because the segment did not meet overall performance expectations. Lower sales in both periods contributed to lower credit card fees. Facility and facility maintenance expense increased in 2003 as we added stores and made...

  • Page 22
    ... contract business, and to a lesser extent, the increased distribution of prospecting catalogs (which feature lower priced products) in Europe to support growth into new markets. In 2003, the decrease was partially offset by better buying and increased purchasing discounts following the Company...

  • Page 23
    ... in June, the impact of exchange rates on other international expenses, and costs relating to finance, human resources and merchandising software applications. Employee-related costs declined in 2003 from lower performance-based compensation, partially offset by higher costs for healthcare and other...

  • Page 24
    ... as the timing of year-end purchases and vendor payments. The increase in inventories reflects lower than expected sales in our North American Retail Division during the fourth quarter, and an intentional build up of certain products to support the holiday season and, our new retail merchandising...

  • Page 25
    ..., our average new office supply store requires pre-opening expenses of approximately $0.2 million. In late 2003, we announced our decision to build a new corporate support center in Boca Raton, Florida. We estimate that the center will be completed in the early part of 2006 at a cost in excess of...

  • Page 26
    ... tax positions and Note J for a discussion of our employee benefit plans, including the Guilbert pension plans and the deferred compensation plan. In addition to the above, we have letters of credit totaling $81.5 million outstanding at the end of the year, and we have recourse for private label...

  • Page 27
    ... advertising arrangements can change between years. These arrangements can be influenced by increases or reductions in inventory purchases compared to company plans and programs offered by the vendors. While there are long-standing volume and pricing conventions in the office products business...

  • Page 28
    ... competitors that offer office products over the Internet, featuring special purchase incentives and one-time deals (such as close-outs). Through our own successful Internet and business-to-business web sites, we believe that we have positioned ourselves competitively in the e-commerce arena...

  • Page 29
    ...Services Group slightly higher during the first and third quarters of each year, and sales in our International Division slightly higher in the first and fourth quarters. New Accounting Standards In November 2003, the Emerging Issues Task Force (" EITF") reached a consensus on EITF 03-10,Application...

  • Page 30
    ...Commercial: We compete with a number of contract stationers, mail order and Internet operators and retailers who supply office products and services to large and small businesses, both nationally and internationally. In order to achieve and maintain expected profitability levels, we must continue to...

  • Page 31
    ...Office Depot stores; the expansion of our contract stationer business in new and existing markets; migration of our customers from the retail channel to other channels, including our own Internet sites, commercial and contract channels, competition from other office supply chains, mass merchandisers...

  • Page 32
    ...our future financial performance and results of operations. Global Sourcing of Products/Private Label: In recent years, we have substantially increased the number and types of products which we sell under our own Office Depot௡, Viking௣ , Guilbert௡, NiceDay௣ and other private label brands. We...

  • Page 33
    ... number of such officers who report directly to our Chairman and CEO. At the same time, we announced promotions of two long-time Office Depot executives to fill key executive positions in direct sales and supply chain; and we also announced searches to fill the positions of President, North America...

  • Page 34
    .... The Company's management, with the participation of the Company' s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company' s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act...

  • Page 35
    ...2003, the number of securities remaining available for future issuance has been reduced by approximately 390,000 shares of restricted stock. (3) The Company currently settles essentially all share needs under the ESPP, the 401(k) Plan, and related deferred compensation plan, by open market purchases...

  • Page 36
    ... Office Depot 2003 / Form 10-K Capacity Chief Executive Officer (Principal Executive Officer) and Chairman of the Board Executive Vice President, Finance and Chief Financial Officer (Principal Financial Officer) Senior Vice President, Finance and Controller (Principal Accounting Officer) Director...

  • Page 37
    ... ...Consolidated Statements of Earnings ...Consolidated Statements of Stockholders'Equity ...Consolidated Statements of Cash Flows ...Notes to Consolidated Financial Statements ...Independent Auditors'Report on Financial Statement Schedule...36 37 38 39 40 41-54 55 35 Office Depot 2003 / Form 10-K

  • Page 38
    ..., in 2003 the Company changed its method of accounting for cooperative advertising arrangements to conform to the requirements of Emerging Issues Task Force Issue No. 0216 upon adoption of such principle. Certified Public Accountants Miami, Florida February 23, 2004 Office Depot 2003 / Form 10...

  • Page 39
    OFFICE DEPOT, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 27, 2003 December 28, 2002 ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Receivables, net of allowances of $34,173 in 2003 and $29,149 in 2002 ...Merchandise ...

  • Page 40
    OFFICE DEPOT, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) 2003 2002 2001 Sales ...Cost of goods sold and occupancy costs ...Gross profit...Store and warehouse operating and selling expenses ...General and administrative expenses ...Other operating expenses ......

  • Page 41
    ... income tax benefits) ...Issuance of stock under employee stock purchase plans ...Direct Stock Purchase Plans ...Amortization of long-term incentive stock grant ...Balance at December 27, 2003 ... The accompanying notes are an integral part of these statements. 39 Office Depot 2003 / Form 10...

  • Page 42
    ... in merchandise inventories ...Net decrease (increase) in prepaid expenses and other assets ...Net (decrease) increase in accounts payable, accrued expenses and deferred credits ...Total adjustments...Net cash provided by operating activities ...Cash flows from investing activities: Sale (purchase...

  • Page 43
    ... Canada under the Office Depot௡, Viking Office Products௡, Viking Direct௡, 4Sure.com௡, Guilbert௡, and NiceDay௣ brand names. Products and services are offered through wholly owned retail stores, contract business-to-business sales relationships, commercial catalogs and multiple web sites...

  • Page 44
    ... were recognized in 2003, 2002 and 2001, respectively, relating to certain under-performing retail stores. Facility Closure Costs: The Company regularly reviews store performance against expectations and closes stores not meeting investment requirements. Costs associated with closures resulting...

  • Page 45
    ... our stock-based compensation plans been determined using the fair value method prescribed by Statement of Financial Accounting Standard (" FAS") No. 123,Accounting for Stock-Based Compensation, as amended, the Company would have recognized additional compensation expense, net of related tax effects...

  • Page 46
    ... or financial position. Office Depot 2003 / Form 10-K 44 NOTE B- Discontinued Operations In August 2002, the Company announced its decision to sell its Australian operations. Accordingly, the Australian portion of the Company' s business is reported as a discontinued operation in the International...

  • Page 47
    ... at currency rates in effect at the time of actual cash settlement. The price is subject to an upward adjustment of euro 40 million in cash or the Company's common stock if the price per share of Office Depot common stock closes at or above $20 per share for any five consecutive trading days during...

  • Page 48
    ... 15 of each year. The Notes contain provisions that, in certain circumstances, place financial restrictions or limitations on the Company. Simultaneous with completing the offering, the Company liquidated a treasury rate lock, the proceeds of $16.6 million have Office Depot 2003 / Form 10-K 46

  • Page 49
    ... operations before income taxes and cumulative effect of accounting change consisted of the following: (Dollars in thousands) 2003 2002 2001 North America ...International ...Total... $227,962 217,078 $445,040 $352,645 126,560 $479,205 $176,711 137,242 $313,953 47 Office Depot 2003 / Form 10-K

  • Page 50
    ... at the Federal statutory rate to the provision for income taxes: (Dollars in thousands) 2003 2002 2001 Self-insurance accruals ...Inventory ...Vacation pay and other accrued compensation...Reserve for bad debts ...Reserve for facility closings ...Acquisition and integration costs...Unrealized loss...

  • Page 51
    ... to Office Depot common stock, and no additional shares may be issued under the plan. The fair market value of these restricted stock awards was approximately $10.0 million at the date of the grants. Prior to the merger, the vesting period was 15 years. Because of the plan's change in control...

  • Page 52
    ... share needs under this plan are now satisfied through open market purchases. However, the Company is authorized to issue up to 1,860,379 shares under this plan. Retirement Savings Plans The Office Depot Retirement Savings Plan, which was approved by the Board of Directors, allows eligible employees...

  • Page 53
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) payments and certain investment assumptions. This information is not available for the acquired plans. The purchase and sale agreement related to the Guilbert acquisition included a provision whereby the seller is required to pay to Office Depot the...

  • Page 54
    ...453 10,218 Office Depot operates in three reportable segments: North American Retail Division, Business Services Group (" BSG" ), and International Division. Each of these segments is managed separately primarily because it serves different customer groups. The accounting policies for each segment...

  • Page 55
    OFFICE DEPOT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Senior management evaluates the performance of each business segment based on segment operating profit, which is defined as sales less cost of goods sold, and store and warehouse operating expenses. General and administrative ...

  • Page 56
    ... effect of accounting change in the fourth quarter of 2003 includes pre-tax charges of $32.4 million to adjust our lease termination costs related to our stores closed in prior periods and our sale or write-down of certain internet investments. See Note A for further information. Office Depot 2003...

  • Page 57
    ... AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Office Depot, Inc.: We have audited the consolidated balance sheets of Office Depot, Inc. and subsidiaries (the " Company") as of December 27, 2003 and December 28, 2002 and the related consolidated statements of...

  • Page 58
    INDEX TO FINANCIAL STATEMENTS SCHEDULE Schedule II- Valuation and Qualifying Accounts and Reserves ... Page 57 All other schedules have been omitted because they are not applicable, not required or the information is included elsewhere herein. Office Depot 2003 / Form 10-K 56

  • Page 59
    ... Column D Deductions- Write-offs, Payments and Other Adjustments Column E Balance at End of Period Description Allowance for doubtful accounts: 2003 ...2002 ...2001 ... $ 29,149 32,228 33,682 $ 25,645 22,103 23,226 $ 20,621 25,182 24,680 $ 34,173 29,149 32,228 57 Office Depot 2003 / Form 10-K

  • Page 60
    ... of July 2, 2001, between the Company and SunTrust Bank, N.A., relating to the 10% Senior Subordinated Notes due 2008 Office Depot, Inc. Long-Term Equity Incentive Plan* 1997-2001 Office Depot, Inc. Designated Executive Incentive Plan* Form of Indemnification Agreement, dated as of September 4, 1996...

  • Page 61
    ...(14) Incorporated by reference from the Company' s Quarterly Report on Form 10-Q, filed with the Commission on October 27, 2003. Upon request, the Company will furnish a copy of any exhibit to this report upon the payment of reasonable copying and mailing expenses. 59 Office Depot 2003 / Form 10-K

  • Page 62
    ... to make disclosure. Confidential information shall not be used for personal advantage. 6. Report violations of this Code of Ethics to the General Counsel and/or the Vice President, Internal Audit of the Company, or directly to the Audit Committee of the Board of Directors of the Company, as soon as...

  • Page 63
    ... SAS OD International, Inc. The Office Club, Inc. Office Depot of Texas, L.P. Office Depot International (UK) Limited Viking Office Products, Inc. Office Depot International BV Delaware France Delaware California Delaware United Kingdom California Netherlands 61 Office Depot 2003 / Form 10-K

  • Page 64
    ...change in method of accounting for cooperati ve advertising arrangements) included in the Annual Report on Form 10-K of Office Depot, Inc. for the year ended December 27, 2003. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Miami, Florida February 25, 2004 Office Depot 2003 / Form 10-K 62

  • Page 65
    ...information; and b) 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. Date: February 25, 2004 /s/ BRUCE NELSON Bruce Nelson Chief Executive Officer 63 Office Depot 2003 / Form...

  • Page 66
    ..., that involves management or other employees who have a significant role in the registrant' s internal control over financial reporting. Date: February 25, 2004 /s/ CHARLES E. BROWN Charles E. Brown Executive Vice President, Finance and Chief Financial Officer Office Depot 2003 / Form 10-K 64

  • Page 67
    ...the Annual Report on Form 10-K of Office Depot, Inc. (the " Company") for the fiscal year ended December 27, 2003 as filed with the Securities and Exchange Commission on the date hereof (the " Report"), Bruce Nelson, as Chief Executive Officer of the Company, and Charles E. Brown, as Chief Financial...

  • Page 68
    THIS PAGE INTENTIONALLY LEFT BLANK Office Depot 2003 / Proxy Statement 66

  • Page 69
    ... Annual Report You must own shares of Office Depot common stock as of the close of business on March 10, 2004 (the " Record Date") to attend and vote at our Annual Meeting and any adjournment thereof. Our 2003 Annual Report is enclosed with these proxy materials. By order of the Board of Directors...

  • Page 70
    ...Named Executive Officers Compensation Committee Report on 2003 Compensation Section 16(a) Beneficial Ownership Reporting Compliance Copies of Form 10-K Available 2005 Shareholder Proposals Common Stock Performance Graph Comparison of Five-Year Cumulative Total Return Appendix A- Corporate Governance...

  • Page 71
    ...by mailing your request to our Corporate Secretary at our corporate headquarters so that it is received not later than 4:00 p.m., on May 13, 2004, (2) by filing a proxy with a later date, or (3) by voting your shares by ballot in person at the Annual Meeting. 69 Office Depot 2003 / Proxy Statement

  • Page 72
    ... years, contact us by calling or writing to our Department of Investor Relations at our Corporate Headquarters at: 2200 Old Germantown Road, Delray Beach, FL 33445 or call us at: 800-937-3600 x87641. Two or more shareholders sharing an address can request delivery of a single copy of our annual...

  • Page 73
    ...Viking. He also serves as a director of Hughes Electronics, a publicly traded company. David W. Bernauer Age: 59 Mr. Bernauer is a candidate to serve as a director of our Company for the first time in 2004. He has served since 2003 as Chairman, President & Chief Executive Officer of Walgreen Company...

  • Page 74
    .... He has taught courses in marketing, business logistics, the management of service operations, business policy and service management. He is also a director of Limited Brands, a publicly held company and Intelliseek, Inc., a privately held company. Patricia A. McKay Age: 45 Ms. McKay is a candidate...

  • Page 75
    ... of a proposed nominee. A second method is an awareness of persons who are successful in business, the non-profit sector or a profession, whether personally known to a member of the Board or not. Such persons are contacted from time to time to ask whether they would be willing to serve. If they...

  • Page 76
    ... of internal controls. 5. Oversees compliance with Code of Ethical Conduct. 1. Approves salaries and incentive compensation of elected officers, as well as the compensation of our Board members. 2. Reviews compensation of certain other executive management employees. 3. Administers employee benefit...

  • Page 77
    ... company. All members of our Audit Committee, our Compensation Committee and our Corporate Governance & Nominating Committee have been determined by our Board to be independent directors within the applicable listing standards of the New York Stock Exchange (the " Exchange"). Our Board has reviewed...

  • Page 78
    ...for two stock split which became effective April 1, 1999. In April 2000, our shareholders voted in favor of a Plan amendment to increase the number of shares with respect to which awards may be granted under the Plan to the current level of 47,068,750 shares. Office Depot 2003 / Proxy Statement 76

  • Page 79
    ... in the office supplies business in many key countries in Europe. In the same four-year period, our e-commerce business worldwide has enjoyed spectacular growth to over $2.6 billion in annual sales in 2003. With these expansions of our business, we have added a number of key personnel, including new...

  • Page 80
    ...of the fair market value of a share of our stock on the grant date. The exercise price of an incentive option awarded to a person who owns stock constituting more than 10% of the voting power of our Company may not be less than 110% of such fair market value on such date. The Plan also provides that...

  • Page 81
    ...of the Code or any stock exchange listing requirements. Certain Federal Income Tax Consequences of the Plan The following discussion is intended only as a brief summary of the federal income tax rules relevant to options or shares issued under the Plan, as based upon the Code as currently in effect...

  • Page 82
    ... compensation be deductible without regard to the limits of Section 162(m) of the Code. Vote Required for the Plan Amendment The affirmative vote of a majority of the votes cast by the holders of shares of Office Depot Common stock represented in person or by proxy at our Annual Meeting is required...

  • Page 83
    ... years ended December 28, 2002 and December 27, 2003, and (ii) the review of our quarterly financial statements set forth in our Quarterly Reports on Form 10-Q for each of our fiscal quarters during 2002 and 2003, as well as fees paid to our audit firm for audit-related work, tax compliance, tax...

  • Page 84
    ... New York Stock Exchange (the " Exchange"), our Board has determined that each member of our Audit Committee is financially literate as required by such listing standards. During fiscal year 2003, this Committee met seven times, four times in person and three times by telephonic communication prior...

  • Page 85
    ... after the consummation of the offer, (v) stays open for at least 60 business days and is extended in the event of a price increase or a competing offer, (vi) commits the offeror to buying all other shares of the Corporation Common Stock at a prices not less 83 Office Depot 2003 / Proxy Statement

  • Page 86
    ...Fannin All Directors and Executive Officers as a Group (23 Persons in Total) * 2% Includes shares of common stock subject to options which are exercisable within 60 days of March 10, 2004. See table below for detail. (1) The information about Capital Research and Management Company (" Capital") is...

  • Page 87
    ... International Limited (" FIL"), in which Mr. Johnson and members of his family control approximately 40% of the voting stock, provides (with various foreign based subsidiaries) investment advisory and management services to a number of non-U.S. investment companies and institutional investors...

  • Page 88
    ... " NEOs") for services rendered during the 2001, 2002 and 2003 fiscal years. Summary Compensation Table Annual Compensation Principal Position Chairman and Chief Executive Officer President, North American Stores Long-Term Compensation Awards Awards & Payouts(1) Other Annual Compensation $(2) 74,070...

  • Page 89
    ... of the stock options granted in 2003 by the Company to the persons listed above. The hypothetical values shown were calculated based upon the following assumptions: For all, the volatility rate is equal to 40%, and the dividend yield (representing the current per-share annualized dividends divided...

  • Page 90
    ... or extended. Office Depot, Inc. has ceased making any loans of any type to executive officers for any purposes whatsoever and no longer will extend or maintain credit to, or renew any extension of credit, in the form of a personal loan, to or for the benefit of any of its executive officers or...

  • Page 91
    ... (3) years, regardless of whether Mr. Nelson remains employed by our Company during that period of time. Mr. Nelson received 575,000 stock option grants during 2003, in the regular course of stock option grants made to our executives by our Compensation Committee. Change in Control Agreement. Mr...

  • Page 92
    ... Presidents, (a) performance accelerated stock options and (b) performance shares. Annual Bonus. The bonus compensation of our executive officers is generally determined pursuant to our bonus plans, which provide for cash awards to eligible participants, based upon objectives determined each year...

  • Page 93
    ... vesting schedule than TSO' s (5 years versus 3 years), and a shorter option life (7 years versus 10 years), but the PSO' s may vest significantly earlier if the Company' s share price reaches certain performance levels prior to the five-year vesting period. Value of Stock Options Awarded in 2003...

  • Page 94
    ...the Internal Revenue Code generally disallows a tax deduction to public companies for compensation exceeding $1 million paid to our Named Executive Officers. However, certain " at risk" portions of our executive officers' compensation (those portions currently being stock option grants, annual bonus...

  • Page 95
    ... Annual Report on Form 10-K for our fiscal year ended December 27, 2003, which includes our consolidated financial statements and notes to our financial statements, to any shareholder upon written request. Requests should be sent to the Vice President, Investor Relations & Corporate Communciations...

  • Page 96
    ... will be brought before our Annual Meeting. If, however, other matters do come before the Meeting, it is the intention of the persons named as representatives in the accompanying proxy to vote in accordance with the recommendation of our Board of Directors. Office Depot 2003 / Proxy Statement 94

  • Page 97
    ... adopted by the Board of Directors (the " Board") of Office Depot, Inc. (the " Corporation") to assist the Board in the exercise of its responsibilities under the Sarbanes-Oxley Act of 2002 (the " Act") and the New York Stock Exchange (" NYSE") Rules for Listed Companies. These Guidelines reflect...

  • Page 98
    ... not per se disqualify that person from being deemed Independent, provided that the Director is not personally involved in making business decisions related to the vendor or customer relationship with the Corporation and is not directly compensated based upon the size or nature of the relationship...

  • Page 99
    ...year. These meetings can be in person or held telephonically. The Corporate Secretary shall establish, maintain and publicly disclose a method for interested parties to communicate directly with the non-management Directors as a group or the Lead Independent Director. 22. Board Materials Distributed...

  • Page 100
    .... • The Compensation Committee shall report to the full Board of Directors all forms of compensation paid (or payable in the future) to the Chief Executive Officer and the next four most highly compensated executives of the Company. This includes any and all deferred compensation payment plans. 27...

  • Page 101
    ... Board") of Office Depot, Inc. (the " Company") to assist the Board in monitoring the systems of internal controls, the integrity of the financial reporting process, and the financial statements and reports of the Company; the performance of the Company' s internal audit function (" Global Corporate...

  • Page 102
    ... pursuant to the Securities Exchange Act of 1934, as amended (the " Exchange Act") and regulations of the SEC. 7. The Committee shall at least annually, obtain and review a report by the Company's Independent Accountant describing: the firm' s internal quality-control procedures; any material issues...

  • Page 103
    ...such steps. 17. The Committee shall review with the Independent Accountant and the Vice President of GCAS: • T he adequacy of the Company's internal controls including computerized information system controls and security. • Any related significant findings and recommendations of the Independent...

  • Page 104
    ... President GCAS legal and regulatory matters that, in the opinion of management, may have a material impact on the financial statements, related Company compliance policies, and programs and reports received from regulators. 19. The Committee shall periodically review the Code of Ethical Behavior...

  • Page 105
    THIS PAGE INTENTIONALLY LEFT BLANK 103 Office Depot 2003 / Proxy Statement

  • Page 106
    ... of Office Depot's common stock through the Company's direct stock purchase plan. Enrollment materials, including the prospectus, are available on the Company's web site, under Company Information/Investor Relations/Stock Purchase, or call Mellon Investor Services at (800) 681-8059. DIVIDEND POLICY...

  • Page 107
    ...older stores to build a more competitive model CONTROL COSTS WHILE ENHANCING QUALITY ➁ - Introduce a world-wide focused approach to process excellence - Continue to improve our industry-leading supply chain - Leverage our global size and scope to introduce more globally-sourced products CREATE...

  • Page 108
    ... GERMANY ISRAEL Global Leadership UNITED STATES CANADA MEXICO IRELAND ...REPORT Office Depot is committed to the environment. This report is printed with soy-based ink on paper that contains 100% post consumer recycled content and is processed chlorine free. The cover and coated pages are printed...