Office Depot 2007 Annual Report Download - page 6

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International Division
We sell to customers in 43 countries throughout North America, Europe, Asia and Central America either through
wholly-owned entities, majority-owned entities or other ventures covering 35 countries, and through alliances in an
additional 8 countries. Our International Division sells office products and services through direct mail catalogs,
contract sales forces, internet sites and retail stores, using a mix of company-owned operations, joint ventures,
licensing and franchise agreements, alliances and other arrangements. International operations are managed on a
geographic basis through three regional offices rather than by sales channel; however, for consistency of discussion,
sales channels will be used to describe the activities of the International Division.
The international direct channel was launched in 1990 with the start-up of operations in the United Kingdom
(“UK”). We offer products under the Viking name that is co-branded with Office Depot and we may migrate to the
Office Depot brand in Europe over a multi-year period. We now have catalog offerings in 14 countries outside of
North America. In March 1999, we introduced our first international public internet site for consumers and
businesses in the UK. Today, we operate over 35 separate web sites in the International Division.
In 2000, we launched the Office Depot contract channel in the UK and subsequently expanded the channel to four
additional countries. We further expanded our contract start-up business in 2003 with the acquisition of Guilbert,
S.A. Guilbert operations and customers have been fully integrated into the Office Depot operations since the end of
2006, and we no longer operate under the Guilbert trade name.
We are continuously assessing opportunities to expand our geographic footprint around the globe. During 2006, we
acquired a controlling interest in Best Office in South Korea and a majority stake in AsiaEC, one of the largest
suppliers of office products and services in China. Also in 2006, we increased our ownership interest to a majority
stake in Office Depot Israel and acquired Papirius s.r.o., one of the largest business-to-business suppliers of office
products and services in Eastern Europe.
To appropriately support our geographic expansion, our International Division operates separate regional
headquarters for Europe/Middle East (The Netherlands), Asia (Hong Kong) and Latin America (South Florida).
During 2007, we began to transition our back-office accounting functions in Europe to a shared-services facility in
Eastern Europe and expect to complete the transition process by early 2009.
At the end of 2007, the International Division operated, through wholly-owned or majority-owned entities, 148 retail
stores in France, Japan, Hungary, Israel and South Korea. In addition, we participate under licensing and
merchandise arrangements in 92 stores in South Korea and Thailand.
Since 1994, we have participated in a joint venture in Mexico. In recent years, this venture, Office Depot de Mexico,
has grown in size and scope and now includes 157 retail locations in Mexico, Costa Rica, El Salvador, Guatemala,
Honduras, and Panama, as well as call centers and distribution centers to support the delivery business in certain
areas. We provide services to the venture through management consultation, product selection, product sourcing and
information technology services. Because we participate equally in this business with a partner, we account for the
activity under the equity method and venture sales of approximately $851 million in 2007 are not directly reflected
in our revenues nor in our consolidated retail comparable store statistics.
Including company-owned operations, joint ventures, licensing and franchise agreements we sell office products
through 397 retail stores outside North America.
International Division store and Distribution Center operations are summarized below (includes only wholly-owned
and majority-owned entities):
Office Supply Stores
Open at
Beginning
of Period
Opened/
Acquired Closed
Open at
End
of Period
2005........................................................................ 78 6 14 70
2006........................................................................ 70 55(1) — 125
2007........................................................................ 125 26 3 148