Office Depot 2012 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2012 Office Depot annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 174

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174

PART I
Item 1. Business.
Office Depot, Inc. (“Office Depot”) is a global supplier of office products and services. Office Depot was incorporated in Delaware in
1986 with the opening of its first retail store in Fort Lauderdale, Florida. In fiscal year 2012, Office Depot sold $10.7 billion o
f
products and services to consumers and businesses of all sizes through three business segments (or “Divisions”): North American
Retail Division, North American Business Solutions Division and International Division. Sales are processed through multiple
channels, consisting 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 a network of supply chain facilities and delivery operations.
In this Annual Report on Form 10-K (“Annual Report”), unless the context otherwise requires, the “Company”, “Office Depot”,
“we”, “us”, and “our” refer to Office Depot, Inc. and subsidiaries.
Additional information regarding our Divisions is presented below in Part II—Item 7. “Management’s Discussion and Analysis o
f
Financial Condition and Results of Operations” (“MD&A”) and in Note O of the Consolidated Financial Statements located in Part
IV—Item 15. “Exhibits and Financial Statement Schedules” of this Annual Report. We are currently evaluating changes to the
measurement of Division operating income in our management reporting. Under this consideration, which may be implemented in
2013, a significant amount of costs currently managed at the corporate level could be allocated to the Divisions and certain allocation
methodologies updated. When the analysis is compete, prior period reported information may be recast for comparison, using updated
allocations to prior periods where appropriate. For financial information regarding operations in geographic areas, refer to Note O in
the Consolidated Financial Statements located in Part IV—Item 15. “Exhibits and Financial Statement Schedules” of this Annual
Report.
North American Retail Division
The North American Retail Division sells a broad assortment of merchandise through our chain of office supply stores throughout the
United States. We currently offer general office supplies, computer supplies, business machines and related supplies, and office
furniture from national brands as well as our own brands. Our stores also contain a Copy & Print Depot offering printing,
reproduction, mailing, shipping, and other services and we maintain nationwide availability of personal computer (“PC”) support and
network installation service that provides our customers with in-home, in-office and in-store support for their technology needs. Refe
r
to the Merchandising section below for additional product information.
Our retail stores are designed to provide a positive shopping experience for the customer. We strive to optimize visual presentation,
product placement, shelf capacity and in-stock positions. Our goal is to maintain sufficient inventory in the stores to satisfy current
and near-term customer needs, while controlling the overall working capital invested in inventory.
The majority of our retail stores are located in leased facilities that currently average over 20,000 square feet. During 2012, we
committed to significant changes to our store portfolio. Over the next five years, we expect to downsize approximately 500 stores to
either small (averaging 5,900 sales square feet) or mid-size format (averaging 14,800 sales square feet). Approximately 50 stores will
be closed at the end of their lease terms. These plans may change based on market conditions. As of December 29, 2012, we had 79
locations in the small (31) and mid-size (48) store formats. Refer to Part II — Item 7. “MD&A” for additional information on the
North American Retail Division retail strategy.
At the end of 2012, the North American Retail Division operated 1,112 office supply stores throughout the United States. We have
a
broad representation across North America with the largest concentration of our retail stores in Texas, Florida and California. The
count of open stores may include locations temporarily closed for remodels or other factors.
1
TM