Office Depot 2011 Annual Report Download - page 5

DC activity for the last three years has been as follows:
Open at
Beginning
of Period
Opened/
Acquired
Closed/
Sold
Open at
End
of Period
2009 ............................................ 20 — 5 15
2010 ............................................ 15 1 3 13
2011 ............................................ 13 — — 13
Inventory is held in our DCs at levels we believe sufficient to meet current and anticipated customer needs. We
utilize processes to evaluate the appropriate timing and quantity of reordering with the objective of controlling
our investment in inventory, while at the same time ensuring customer satisfaction. Certain purchases are sent
directly from the manufacturer to our customers. Some supply chain facilities and some retail locations also
house sales offices and administrative offices supporting our contract business.
Our out-bound delivery and our inbound direct import operations are currently provided by third-party carriers.
Because sales and marketing efforts have similarities between the North American Business Solutions Division
and the International Division, those topics are addressed separately after the three segment discussions, though
they are integral to understanding the processes and management of these Divisions. Also, the Merchandising
section below provides additional product information.
International Division
As of December 31, 2011, Office Depot sold to customers in 60 countries throughout North America, Europe,
Asia and Latin America. We operate wholly-owned entities, majority-owned entities or participate in other
ventures covering 41 countries and have alliances in an additional 19 countries. The Merchandising section
below provides information on product offerings throughout the company. International Division operates
separate regional headquarters for Europe in The Netherlands and for Asia in Hong Kong.
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. We maintain DCs and call centers throughout Europe and Asia to
support these operations. Currently, we have catalog offerings in 13 countries outside of North America and
operate more than 40 separate public web sites in the International Division. At the end of 2011, the International
Division operated, through wholly-owned or majority-owned entities, 131 retail stores in France, Hungary, South
Korea and Sweden. In addition, we participate under licensing and merchandise arrangements in South Korea,
Thailand, Israel, Japan and the Middle East. Following a strategic review of the business in late 2008, we closed
our retail operations in Japan during 2009. During 2010, we sold the remaining operating entity in Japan as well
as the operating entity in Israel and entered into Office Depot licensing agreements with the respective buyers for
continued presence in those markets. During 2011, we acquired additional operations in Sweden, adding
customers to both the contract and retail distribution channels.
Since 1994, we have participated in a joint venture selling office products and services in Mexico and Central
and South America. In recent years, this venture, Office Depot de Mexico, has grown in size and scope and now
includes 232 retail locations in Mexico, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, and Panama,
as well as call centers and DCs to support the delivery business in certain areas. Because we participate equally
in this business with a partner, we account for the activity under the equity method and venture sales of
approximately $1,139 million in 2011 are neither reflected in our revenues nor in our consolidated retail
comparable store statistics. Our portion of venture results is included in Miscellaneous income, net in the
Consolidated Statements of Operations.
3