Office Depot 2009 Annual Report Download

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ÈAnnual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the fiscal year ended December 26, 2009
or
Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-10948
Office Depot, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-2663954
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6600 North Military Trail, Boca Raton, Florida 33496
(Address of principal executive offices) (Zip Code)
(561) 438-4800
(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 New York Stock Exchange
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 ÍNo
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 Í
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 ÍNo
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 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. Í
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 filer” “accelerated filer,” and “smaller reporting company ” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer ÍAccelerated 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 Í
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 27, 2009 (based on the closing market price on
the Composite Tape on June 26, 2009) was approximately $1,253,387,286 (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 23, 2010, there were
274,737,010 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 2010 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
    ... 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 2010 Annual Meeting of Shareholders, which shall be filed with the Securities and Exchange Commission pursuant...

  • Page 2
    ... 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 office supply stores, a contract sales force, an outbound telephone account management sales force, internet sites, direct marketing catalogs and call centers, all supported by our network of supply chain facilities and delivery operations. Additional information regarding our business segments...

  • Page 4
    ... contract and direct customers' orders were filled primarily through deliveries from our distribution centers ("DCs") located across the United States. We closed four DCs during the first half of 2009. Additionally, during 2009, we disposed of our DC in Canada in conjunction with the sale of a small...

  • Page 5
    ... headquarters for Europe/Middle East (The Netherlands), Asia (Hong Kong) and Latin America (South Florida). 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...

  • Page 6
    ... South America. In recent years, this venture, Office Depot de Mexico, has grown in size and scope and now includes 195 retail locations in Mexico, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, and Panama, as well as call centers and distribution centers to support the delivery business in...

  • Page 7
    ... Critical Accounting Policies section of MD&A. We operate separate merchandising functions in North America, Europe and Asia as well as in our joint ventures. Each group is responsible for selecting, purchasing and pricing merchandise as well as managing the product life cycle of our inventory. In...

  • Page 8
    ... imaging and printing. In addition to the in-store locations, we operate ten regional print facilities, which support copy and print orders taken in our North American Retail and North American Business Solutions Divisions. In 2009, we began offering copy and print services to our customers in the...

  • Page 9
    ... management; and (3) issue awareness and market development for environmentally preferable products. We offer thousands of different products containing recycled content, including from 35% to 100% post-consumer waste content paper and technology recycling services in our retail stores. Office Depot...

  • Page 10
    ... of Contract Marketing & Business Development. Ms. Luechtefeld joined Office Depot in 1993, serving as General Manager of the Southern California Region of Office Depot until 1996. Michael Newman - Age: 53 Mr. Newman was appointed Executive Vice President, Chief Financial Officer in August 2008...

  • Page 11
    ... Food Company, serving as President of its Canadian and Southeast Asian operations. He has also held management positions at PepsiCo and Procter & Gamble. Daisy Vanderlinde - Age: 58 Ms. Vanderlinde was appointed Executive Vice President, Human Resources in late 2005. Prior to joining Office Depot...

  • Page 12
    ... and consumer spending resulting from the global recession and the deterioration of global credit markets has caused our comparable store sales to decline from prior periods and we have experienced similar declines in our other domestic and international businesses. Our business and financial...

  • Page 13
    .... See "Liquidity and Capital Resources". Litigation / Regulatory Risks - The company and certain of its directors and executive officers (both current and former officers) are often involved in various legal proceedings, which may involve class action lawsuits, state and federal governmental...

  • Page 14
    ... competitive in the areas of package shipping and copy and print centers. Recently, the so-called warehouse clubs have expanded upon their "in-store" offerings by adding catalog and internet sales channels, offering a broad assortment of office products for sale on a direct delivery basis. In order...

  • Page 15
    International Activity - As of December 26, 2009, we sold to customers in 51 countries throughout North America, Europe, Asia and Latin America. We operate wholly-owned entities, majority-owned entities or participate in other ventures covering 40 countries and have alliances in an additional 11 ...

  • Page 16
    ...We operate a large network of stores and delivery centers around the globe. As such, we purchase significant amounts of fuel needed to transport products to our stores and customers. We also incur significant shipping costs to bring products from overseas producers to our distribution systems. While...

  • Page 17
    ... to conduct business in such locales. Compromises of our Information Security - Through our sales and marketing activities, we collect and store certain personal information that our customers provide to purchase products or services, enroll in promotional programs, register on our web site, or...

  • Page 18
    ... STATES CANADA: Alberta British Columbia Manitoba Ontario Saskatchewan TOTAL CANADA FRANCE HUNGARY ISRAEL SOUTH KOREA SWEDEN TOTAL OUTSIDE NORTH AMERICA 2 14 17 19 14 6 21 1 27 147 9 25 37 2 14 3 1,130 6 7 2 5 1 21 49 17 46 12 13 137 We closed one North American retail store during January 2010...

  • Page 19
    ... DCs in 16 countries outside of the United States and Canada, which support our International Division. The following tables set forth the locations of our supply chain facilities as of January 23, 2010. DCs (North America) State # State # UNITED STATES: Arizona Florida California Colorado Georgia...

  • Page 20
    ... class action lawsuits were filed against the company and certain of its executive officers alleging violations of the Securities Exchange Act of 1934. The allegations made in these lawsuits primarily related to the accounting for vendor program funds. Each of the foregoing lawsuits was filed...

  • Page 21
    Item 4. Submission of Matters to a Vote of Security Holders. The company held a special meeting of stockholders on October 14, 2009. Of the total number of common shares outstanding on August 28, 2009, a total of 224,590,051 were represented in person or by proxy. Results of votes with respect to ...

  • Page 22
    ... and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "ODP." As of the close of business on January 23, 2010, there were 7,459 holders of record of our common stock. The last reported sale price of the common stock on the...

  • Page 23
    ... 12/27/08 12/26/09 Office Depot, Inc. S&P 500 S&P Specialty Stores *$100 invested on 12/25/04 in stock or 12/31/04 in index, including reinvestment of dividends. Indexes calculated on month-end basis. Copyright© 2010 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. The...

  • Page 24
    ... deferred tax assets. See Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information. Fiscal year 2008 Net loss attributable to Office Depot, Inc. and Net loss available to common shareholders include impairment charges for goodwill and trade...

  • Page 25
    ... and office furniture. Most stores also offer a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in the U.S. and Canada directly to businesses through catalogs, internet web sites and...

  • Page 26
    ...major product categories of supplies, technology and furniture, we experienced sales declines compared to 2008. The negative comparable store sales were driven by fewer sales of higher priced, discretionary categories in furniture and technology. The North American Retail Division reported operating...

  • Page 27
    ... opening approximately 20 stores in 2010. Also, we will continue to review locations as leases become due and will close or relocate stores when appropriate. NORTH AMERICAN BUSINESS SOLUTIONS DIVISION (Dollars in millions) 2009 2008 2007 Sales ...% change ...Division operating profit ...% of sales...

  • Page 28
    ... our higher value customers, sales in the direct business declined 11% in local currency in 2009 because of softness in higher priced items such as furniture and technology. Sales in the contract business declined 8% in local currency as larger businesses have reduced their workforces and their...

  • Page 29
    ... 2008 Charges related primarily to asset impairments, inventory write downs and lease accruals. • Supply Chain Initiatives - As a result of the strategic review of our supply chain operations, we consolidated certain facilities in North America and Europe. During 2009, we closed five distribution...

  • Page 30
    ... write downs and costs associated with the restructuring of our back office operations and call centers in Europe. The Charges recognized in 2007 totaled $40 million and related primarily to the consolidation of warehouses and distribution centers in North America and Europe as well as management...

  • Page 31
    ... employee stock grants following approval of the redeemable preferred stock issuance. Change in control features in certain employment contracts could result in additional G&A expenses in future periods if covered executives are involuntarily, or in certain cases, voluntarily terminated. The 2008...

  • Page 32
    ...past 36 months of certain taxing jurisdictions reached or nearly reached loss positions. While we have seen signs that cause us to be optimistic about the future, we are likely to be adding to the accumulated pre-tax losses in these jurisdictions before the projected return to profitability of these...

  • Page 33
    ...receivables and currency exchange rates. As of December 26, 2009, we had not sold any receivables under this agreement. We hold cash throughout our service areas, but we principally manage our cash through regional headquarters in North America and Europe. We may move cash between those regions from...

  • Page 34
    ...financial covenants. In December 2008, the company's credit rating was downgraded which provided the counterparty to the company's private label credit card program the right to terminate the agreement and require the company to repurchase the outstanding balance credit card receivables. The company...

  • Page 35
    ... of goods, credit terms, timing of promotions, vendor production planning, new product introductions and working capital management. For our accounting policy on cash management, see Note A of the Notes to Consolidated Financial Statements. The change in cash flows from operating activities during...

  • Page 36
    ... businesses at various points over the next year. Also during 2008, we acquired under previously existing put options all remaining minority interest shares of our joint ventures in Israel and China. During 2007, we acquired a Canadabased office products delivery company. Additionally in both 2008...

  • Page 37
    ... program. Under the terms of this agreement, we have recourse for most private label credit card receivables transferred to the third party. This arrangement is a component of our overall liquidity resources, which we consider adequate to satisfy our cash needs at least over the next twelve months...

  • Page 38
    ... below additional information on those policies. Vendor arrangements - Our inventory purchases from vendors are generally under evergreen arrangements with periodic updates or annual negotiated agreements. Many of these arrangements require the vendors to make payments to us or provide credits to be...

  • Page 39
    ... 2008, we recognized a $15 million Charge to adjust that inventory to the net contracted value. That adjustment had no impact on the remaining inventory in other stores or in our supply chain. During 2009, we completed the closure of stores in North America and Japan and certain distribution centers...

  • Page 40
    ... associated with facility closures are included in store and warehouse operating and selling expenses in our Consolidated Statements of Operations. Because the 2008 and 2009 facility closures are considered part of a company-wide business review, the accretion of the discounted lease liability and...

  • Page 41
    ...result in increased competitive pressures on pricing, product selection and services provided. Many of these retail competitors, including discounters, warehouse clubs, and drug stores and grocery chains, carry basic office supply products. Some of them also feature technology products. Many of them...

  • Page 42
    ...the global economy experienced over the past two years negatively impacted our sales and profits. Liquidity Factors - Historically, we have generated positive cash flow from operating activities and have had access to broad financial markets that provide the liquidity we need to operate our business...

  • Page 43
    ... on our financial condition, results of operations or cash flows. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 (the "Act") provides protection from liability in private lawsuits for "forward-looking" statements made by public companies under certain circumstances...

  • Page 44
    ... in our 2009 Annual Report on Form 10-K. Other risk factors are incorporated into the text of our MD&A, which should itself be considered a statement of future risks and uncertainties, as well as management's view of our businesses. Item 7A. Quantitative and Qualitative Disclosures About Market Risk...

  • Page 45
    ... our assessment, management has concluded that the company's internal control over financial reporting was effective as of December 26, 2009. Our internal control over financial reporting as of December 26, 2009, has been audited by Deloitte & Touche LLP, an independent registered public accounting...

  • Page 46
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Office Depot, Inc.: We have audited the internal control over financial reporting of Office Depot, Inc. and subsidiaries (the "Company") as of December 26, 2009, based on criteria established in Internal Control...

  • Page 47
    ... for our 2010 Annual Meeting of Shareholders. We have adopted a Code of Ethical Behavior in compliance with applicable rules of the SEC that applies to our principal executive officer, our principal financial officer, and our principal accounting officer or controller, or persons performing similar...

  • Page 48
    ... policies are incorporated herein by reference to information included in the Proxy Statement for our 2010 Annual Meeting of Shareholders. PART IV Item 15. Exhibits and Financial Statement Schedules. (a) The following documents are filed as a part of this report: 1. The financial statements listed...

  • Page 49
    ...duly authorized on this 23rd day of February 2010. OFFICE DEPOT, INC. By /s/ STEVE ODLAND Steve Odland Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities...

  • Page 50
    ... FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ...Consolidated Statements of Operations ...Consolidated Statements of Comprehensive Income (Loss) ...Consolidated Statements of Stockholders' Equity ...Consolidated Statements of Cash...

  • Page 51
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Office Depot, Inc.: We have audited the accompanying consolidated balance sheets of Office Depot, Inc. and subsidiaries (the "Company") as of December 26, 2009 and December 27, 2008, and the related consolidated statements...

  • Page 52
    OFFICE DEPOT, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) December 26, 2009 December 27, 2008 ASSETS Current assets: Cash and cash equivalents ...Receivables, net of allowances of $32,802 in 2009 and $45,990 in 2008 ...Inventories ...Deferred income taxes ......

  • Page 53
    OFFICE DEPOT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) 2009 2008 2007 Sales ...Cost of goods sold and occupancy costs ...Gross profit ...Store and warehouse operating and selling expenses ...Goodwill and trade name impairments ...Other asset impairments ...

  • Page 54
    OFFICE DEPOT, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands, except per share amounts) 2009 2008 2007 Net earnings (loss) ...Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ...Amortization of gain on cash flow hedge ...Change in ...

  • Page 55
    ... purchase plans ...10,666 Direct stock purchase plans ...Amortization of long-term incentive stock grant ...Balance at December 27, 2008 ...280,800,135 Purchase of subsidiary shares from noncontrolling interest ...Comprehensive loss, net of tax: Net loss ...Foreign currency translation adjustments...

  • Page 56
    ...(used in) investing activities ...25,321 (338,669) (372,525) Cash flows from financing activities: Net proceeds from exercise of stock options and sale of stock under employee stock purchase plans ...35 503 29,332 Tax benefit from employee share-based exercises ...- 89 18,266 Acquisition of treasury...

  • Page 57
    ... of Business: Office Depot, Inc. ("Office Depot") is a global supplier of office products and services under the Office Depot® brand and other proprietary brand names. As of December 26, 2009, we sold to customers in 51 countries throughout North America, Europe, Asia and Latin America. We operate...

  • Page 58
    ...-sale debt securities and reported at fair market value, based on quoted market prices using the specific identification method. Receivables: Trade receivables, net, totaled $770.1 million and $849.6 million at December 26, 2009 and December 27, 2008, respectively. An allowance for doubtful accounts...

  • Page 59
    ... under contracts, adjusted for anticipated sublease benefits and discounted at the company's risk-adjusted rate at the time of closing. During 2008 and 2009, we recorded charges relating to leases on retail stores and supply chain facilities closed as part of a company-wide business review. These...

  • Page 60
    ...at December 26, 2009 and December 27, 2008, respectively. Revenue Recognition: Revenue is recognized at the point of sale for retail transactions and at the time of successful delivery for contract, catalog and internet sales. Sales taxes collected are not included in reported sales. We use judgment...

  • Page 61
    ... and included in store and warehouse operating and selling expenses. Self-Insurance: Office Depot is primarily self-insured for workers' compensation, auto and general liability and employee medical insurance programs. Self-insurance liabilities are based on claims filed and estimates of claims...

  • Page 62
    ... of 20 consecutive trading days. The Preferred Stock also may participate in dividends on common stock, if declared. However, if the closing price of the common stock on the record date for a dividend payment is less than $45.00 per share, the company may not declare or pay a cash dividend on the...

  • Page 63
    ...of 2008, we performed an internal review of assets and processes with the goal of positioning the company to deal with the degradation in the global economy and to benefit from its eventual improvement. The results of that internal review led to decisions to close stores, exit certain businesses and...

  • Page 64
    ... 2008 charges related primarily to asset impairments, inventory write downs and lease accruals. • Supply Chain Initiatives - As a result of the strategic review of our supply chain operations, we consolidated certain facilities in North America and Europe. During 2009, we closed five distribution...

  • Page 65
    ...of warehouses and distribution centers in North America and Europe as well as management restructuring and call center consolidation in Europe. Exit cost accruals related to the activities described above are as follows: (Dollars in millions) Beginning Balance Charges Incurred Cash Payments Non-cash...

  • Page 66
    ... cash flows of a store cannot support the carrying amount of the store's assets, an impairment charge to bring the assets to estimated fair value is recorded to operations as a component of store and warehouse operating and selling expenses. Because of the downturn in our business in late 2008...

  • Page 67
    ... table: North American Retail Division North American Business Solutions Division (Dollars in thousands) International Division Total Balance as of December 29, 2007 Goodwill ...Accumulated impairment losses ...2008 Changes: Goodwill acquired during the year ...Purchase price adjustments on 2007...

  • Page 68
    ...: (Dollars in thousands) 2010 2011 2012 2013 2014 NOTE F - DEBT ... $2,843 2,545 2,545 2,545 2,545 Debt consists of the following: (Dollars in thousands) December 26, 2009 December 27, 2008 Short-term borrowings and current maturities of long-term debt: Short-term borrowings ...Capital lease...

  • Page 69
    ...financial covenants. In December 2008, the company's credit rating was downgraded which provided the counterparty to the company's private label credit card program the right to terminate the agreement and require the company to repurchase the outstanding balance credit card receivables. The company...

  • Page 70
    ...50,602 728 12,710 72,017 (38,183) (34,856) $ 63,018 The components of earnings (loss) before income taxes consisted of the following: (Dollars in thousands) 2009 2008 2007 North America ...International ...Total ... $ (271,520) (39,632) $ (311,152) $ (733,342) (846,306) $(1,579,648) $276,040 181...

  • Page 71
    ... consisted of the following: (Dollars in thousands) December 26, 2009 December 27, 2008 Foreign and state net operating loss carryforwards ...Deferred rent credit ...Vacation pay and other accrued compensation ...Accruals for facility closings ...Inventory ...Self-insurance accruals ...Deferred...

  • Page 72
    ... tax benefits during 2009: (Dollars in thousands) 2009 2008 Beginning Balance ...Additions based on tax positions related to the current year ...Additions for tax positions of prior years ...Reductions for tax positions of prior years ...Statute expirations ...Settlements ...Ending Balance...

  • Page 73
    ... portions of our leases as of December 26, 2009. These minimum lease payments include facility leases that were accrued as store closure costs. Additional information including optional lease renewals follows this table. (Dollars in thousands) 2010 ...2011 ...2012 ...2013 ...2014 ...Thereafter...

  • Page 74
    ...: Office Depot has a private label credit card program that is managed by a third-party financial services company. We transfer the credit card receivable balance each business day, with the difference between the transferred amount and the amount received recognized in store and warehouse operating...

  • Page 75
    ... class action lawsuits were filed against the company and certain of its executive officers alleging violations of the Securities Exchange Act of 1934. The allegations made in these lawsuits primarily related to the accounting for vendor program funds. Each of the foregoing lawsuits was filed...

  • Page 76
    ... In February 2010, the company's board of directors approved a stock option exchange program, subject to approval by the company's shareholders. If approved by shareholders, employees with existing stock options that have an exercise price in excess of the higher of the 52-week high closing price of...

  • Page 77
    ...through open market purchases. This plan was terminated, effective December 31, 2008. Retirement Savings Plans Eligible company employees may participate in the Office Depot, Inc. Retirement Savings Plan (401(k) Plan), which was approved by the board of directors. This plan allows those employees to...

  • Page 78
    ...and the funded status of the plan to amounts recognized on our balance sheets: (Dollars in thousands) December 26, 2009 December 27, 2008 Changes in projected benefit obligation: Obligation at beginning of period ...Service cost ...Interest cost ...Member contributions ...Benefits paid ...Actuarial...

  • Page 79
    ... dates, respectively. The components of net periodic expense are presented below: (Dollars in thousands) 2009 2008 2007 Service cost ...Interest cost ...Expected return on plan assets ...Curtailment and settlement ...Net periodic pension (credit) cost ...Assumptions used in calculating the funded...

  • Page 80
    ... contracts in 2009 and anticipates purchasing approximately $5 million in 2010. NOTE J - DERIVATIVE INSTRUMENTS AND HEDGING As a global supplier of office products and services we are exposed to risks associated with changes in foreign currency exchange rates, commodity prices and interest rates...

  • Page 81
    ... contract is marked to market at each reporting period with changes recognized in earnings. As of December 26, 2009, no fuel contracts remained open with the company. Interest rate changes on our obligations may result from external market factors, as well as changes in our credit rating. We manage...

  • Page 82
    ... terminate the agreements at the reporting date, taking into account current exchange rates. The values are based on market-based inputs or unobservable inputs that are corroborated by market data. NOTE K - CAPITAL STOCK Preferred Stock In connection with issuance of the Preferred Stock, the company...

  • Page 83
    ...ACTIVITIES Additional supplemental information related to the Consolidated Statements of Cash Flows is as follows: (Dollars in thousands) 2009 2008 2007 Cash interest paid (net of amounts capitalized) ...Cash taxes paid (refunded) ...Non-cash asset additions under capital leases ...Non-cash paid-in...

  • Page 84
    ...- SEGMENT INFORMATION Office Depot operates in three segments: North American Retail Division, North American Business Solutions Division, and International Division. Each of these segments is managed separately primarily because it serves a different customer group. The accounting policies for each...

  • Page 85
    ... and China. During 2007, we acquired Axidata, Inc., a Canada-based office products delivery company. The subsequent activities have been included in our North American Business Solutions Division. The transactions for 2008 and 2007 have been included in our consolidated results since the dates of...

  • Page 86
    ... Sheets. The following tables provide summarized unaudited information from the balance sheet and statement of earnings for Office Depot de Mexico: (Dollars in thousands) 2009 2008 2007 Statement of earnings: Sales ...Gross profit ...Net income ...(Dollars in thousands) $825,603 243,957 61,159...

  • Page 87
    ...Third Quarter Fourth Quarter(1) Fiscal Year Ended December 27, 2008 Net sales ...Gross profit ...Net earnings (loss) attributable to Office Depot, Inc...Net earnings (loss) available to common shareholders ...Net earnings (loss) per share*: Basic ...Diluted ...* (1) $3,962,017 1,168,680 68,773 68...

  • Page 88
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Office Depot, Inc.: We have audited the consolidated financial statements of Office Depot, Inc. and subsidiaries (the "Company") as of December 26, 2009 and December 27, 2008, and for each of the three...

  • Page 89
    INDEX TO FINANCIAL STATEMENT SCHEDULES Page Schedule II - Valuation and Qualifying Accounts and Reserves ... 88 All other schedules have been omitted because they are not applicable, not required or the information is included elsewhere herein. 87

  • Page 90
    SCHEDULE II OFFICE DEPOT, INC. VALUATION AND QUALIFYING ACCOUNTS (In thousands) 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 ...

  • Page 91
    ... Office Depot, Inc.'s Annual Report on Form 10-K filed with the SEC on February 23, 2010) Offer Letter dated August 22, 2008, for the Employment of Michael Newman as the Chief Financial Officer of Office Depot, Inc.* Office Depot, Inc. 2007 Long-Term Incentive Plan* Form of Indemnification Agreement...

  • Page 92
    ...administrative agent, Bank of America, N.A. as syndication agent and Citibank, N.A. Wachovia Bank, N.A. and General Electric Capital Corporation as documentation agents.** (filed with Office Depot, Inc.'s Annual Report on Form 10-K filed with the SEC on February 23, 2010) Change of Control Agreement...

  • Page 93
    ... and Restated Merchant Services Agreement, dated October 13, 2009, by and between Office Depot, Inc. and Citibank N.A. Office Depot, Inc. Amended Long-Term Incentive Plan* List of Office Depot, Inc.'s Significant Subsidiaries (filed with Office Depot, Inc.'s Annual Report on Form 10-K filed with the...

  • Page 94
    ... Number Exhibit 32 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed with Office Depot, Inc.'s Annual Report on Form 10-K filed with the SEC on February 23, 2010) Management contract or compensatory plan...

  • Page 95
    ... Statement for Office Depot, Inc.'s 2008 Annual Meeting of Shareholders, filed with the SEC on March 13, 2008. (21) Incorporated by reference from Office Depot, Inc.'s Current Report on Form 8-K, filed with the SEC on February 11, 2009. (22) Incorporated by reference from Office Depot, Inc.'s Annual...