UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report October 17, 2001
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 (I.R.S. Employer
incorporation or organization) Identification No.)
2200 Old Germantown Road, Delray Beach, Florida 33445
(Address of principal executive offices) (Zip Code)
(561) 438-4800
(Registrant's telephone number, including area code)
Former name or former address, if changed since last report: N/A
ITEM 5. OTHER EVENTS
1. On October 17, 2001, Office Depot, Inc. issued a press release, with
earnings information for its third fiscal quarter, ended September 29,
2001. A copy of the press release is attached hereto as Exhibit 99.1.1 and
incorporated by reference herein.
2. On October 16, 2001, Office Depot, Inc. issued a press release announcing
the appointment of Charles Brown as its new Chief Financial Officer and
James Walker as Senior Vice President, Finance and Controller. Walker will
now serve as the Company's principal accounting officer, succeeding Mr.
Brown. A copy of the press release is attached hereto as Exhibit 99.1.2 and
incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1.1 Press release dated October 17, 2001, announcing financial results for
the Company's third fiscal quarter, ended September 29, 2001.
99.1.2 Press release dated October 16, 2001, announcing appointment of
Charles Brown as Chief Financial Officer and James Walker as Senior
Vice President, Finance and Controller for the Company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OFFICE DEPOT, INC.
Date: October 17, 2001 By: /S/ DAVID C. FANNIN
David C. Fannin
Executive Vice President and
General Counsel
OFFICE
DEPOT(R)
NEWS RELEASE
--------------------------------------------------------------------------------
CONTACT: Eileen H. Dunn
Vice President, Investor Relations/public Relations
561/438-4930
edunn@officedepot.com
OFFICE DEPOT ANNOUNCES THIRD QUARTER 2001 RESULTS
O Operating Profit Increases 107% and Eps Up 25% Over Prior Year
O Strong Gross Margin Improvement Across All Businesses
O Operating Cost Percentages in Bsg Reach a Five Year Low
O Free Cash Flow Rises 110%
(DELRAY BEACH, FL) OCTOBER 17, 2001 - OFFICE DEPOT, INC. (NYSE: ODP), the
world's largest seller of office products, today announced third quarter results
for the period ended September 29, 2001.
Sales for the third quarter of 2001 decreased 1% to $2.8 billion compared to the
third quarter in 2000. For the first nine months of 2001, sales decreased 2% to
$8.4 billion compared to the same period last year. Comparable worldwide sales
in the 824 stores and 40 delivery centers that have been open for more than one
year decreased 2% for the third quarter and 1% for the first nine months of
2001. Worldwide e-commerce sales grew 60% to $402.0 million during the quarter,
and 69% to $1.1 billion for the first nine months of 2001, compared to their
respective periods in 2000.
Operating profit for the third quarter of 2001 increased 107% to $101.5 million
dollars compared to the third quarter in 2000. For the first nine months of
2001, operating profit declined 7% to $279.0 million as compared to the same
period last year. Included in the 2001 operating profit was an after tax gain of
$6.7 million for the third quarter and nine months from the planned sale of the
Company's warehouse facility in London, and after tax costs totaling $24.7
million for the third quarter and $24.9 million for nine months, primarily
related to the resolution of certain non-recurring employee claims and the
write-down of impaired assets in existing stores in accordance with FAS 121
guidance. Operating profit in 2000 included after tax charges of $16.3 million
for the third quarter and $22.2 million for the first nine months, primarily to
provide for the severance costs associated with a number of changes in the
Company's senior executive management.
Earnings per share grew 25%, as the Company recorded net income of $62.5 million
(or $0.20 per share) for the third quarter of 2001 as compared to $50.6 million
(or $0.16 per share) for the same period in 2000. Third quarter results for 2000
included after tax gains on the sale of investments of $24.6 million.
Excluding non-recurring events, the Company generated net income of $80.1
million (or $0.26 per share) for the third quarter of 2001, an increase of 89%
over the $42.3 million (or $0.14 per share) reported in the third quarter in
2000.
On a year-to-date basis, the Company recorded net income of $160.8 million (or
$0.53 per share) for the first nine months of 2001 as compared to $217.6 million
(or $0.67 per share) for the same period in 2000. Included in the results for
the first nine months of 2001 were after tax charges related to write-downs of
investments in certain Office Depot Internet marketing partners totaling $5.4
million. Results for the first nine months of 2000 included after tax gains on
the sale of investments of $36.5 million.
Bruce Nelson, Office Depot's CEO, commented, "Our impressive third quarter
results reflect the enormous operating performance improvements we have made in
the past year, despite the very difficult domestic economic environment, only
exacerbated by the tragic events of September 11. This quarter was the first
time in ten quarters that operating profit exceeded year-over-year comparisons.
While total sales decreased 1%, operating profit (before non-recurring charges)
rose to 4.6% of sales, its highest level since the first quarter of 2000. The
economic slowdown following the events of September 11 negatively impacted sales
by an estimated $58 million in the third quarter, but we were still able to
generate $525 million in free cash flow during the first nine months of 2001, a
110% improvement over the same period last year.
"I am most encouraged by our operating performance this quarter and our results
should give shareholders some insight into our true earnings potential, once
stability and growth return to the U.S. and world economies. During the past
three quarters, we have consistently demonstrated our ability to execute, and to
meet or exceed our commitments to employees, customers and shareholders. While
the short-term outlook for our economy is uncertain, Office Depot's long-term
prospects for consistent revenue and earnings growth have never been better. We
are fully committed to continually growing our worldwide industry leadership
position.
FOURTH QUARTER OUTLOOK
"Looking ahead, as the full economic impact of the terrorist attacks on America
and the world continues to unfold, there are too many economic and political
uncertainties to accurately predict our customers' purchasing patterns over the
next several months and the related impact on our operating results. During the
early part of the fourth quarter, our North American Retail and BSG comp sales
have not yet returned to their pre-September 11 levels.
"We do expect our gross margins, compared to last year, will remain strong, and
that our relentless focus on execution and achieving operating improvements will
continue to offset some of the sales shortfall we are experiencing.
"Retail comps after September 11 and in the first two weeks of the fourth
quarter were tracking in the negative teens range, significantly below our
negative mid-single digit expectation prior to September 11, with much weaker
comps on weekends than during the week. However, during the past week there has
been some improvement in comp sales trends. Higher ticket items such as
technology are performing worse than core office supplies, and store transaction
counts are down across the entire chain. At this time, it is virtually
impossible to predict
spending trends for the upcoming holiday season. Historically, December is our
third largest retail sales month of the year, heavily influenced by holiday
business purchases.
"Current trends in our BSG are in the negative single digit range, but as more
and more corporate layoffs continue, our confidence in positive growth for our
medium to large-size customer base is beginning to erode. So far in the fourth
quarter, we have not seen any significant signs of slowing growth in our
International business, although there is some weakness in Germany. At this
point in time, our International business remains on track to meet current
expectations."
Nelson concluded his remarks with, "It is still too early in the quarter to
provide detailed guidance on our overall expectations for the fourth quarter.
However, if current sales trends continue and the outlook for the holiday season
at retail remains grim, we see a $0.03 to $0.05 risk to current consensus
numbers for the fourth quarter. As we have done in the past, we will provide
further insight and guidance on our operating performance for the fourth quarter
with our mid-quarter update scheduled for the middle part of November."
ADDITIONAL THIRD QUARTER HIGHLIGHTS:
o Acquired 4Sure.com, Inc. and the businesses of its two Web-based
retail outlets, Computers4Sure.com and Solutions4Sure.com. This
acquisition enables Office Depot to target a unique customer
segment with a team of highly trained, technically experienced
professionals dedicated to offering the "tech savvy" buyer both
broad technical knowledge and superior customer service.
4Sure.com maintains a "virtual" inventory of more than 60,000
products that are drop shipped directly to customers.
o Successfully completed a $250 million, seven year senior
subordinated note offering.
o Launched the European Business Services Division into France -
our fourth new country in less than 12 months. This new
international channel enables Office Depot to target medium to
large-sized corporate accounts through outside sales
representatives serviced from the Company's existing extensive
logistics network.
o Launched our ninth Viking e-commerce Web site in Austria under
the URL WWW.VIKINGDIREKT.AT. The Company now offers 14 unique Web
sites in nine countries around the world, including 12 public Web
sites and two customized contract business-to-business sites.
o Named by Ziff Davis SMART BUSINESS magazine as one of the top 50
U.S. companies that has successfully used the Internet to expand
and enhance our business.
SEGMENT RESULTS
NORTH AMERICAN RETAIL DIVISION
THIRD QUARTER YEAR-TO-DATE
-------------------------------------------------- --------------- ---------------- --------------- ----------------
(IN MILLIONS OF DOLLARS) 2001 2000 2001 2000
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales $1,469.5 $1,587.1 $4,364.9 $4,798.8
COGS and Occupancy Costs 1,110.6 1,257.3 3,359.9 3,729.3
------- ------- ------- -------
Gross Profit 358.9 329.8 1,005.0 1,069.5
Operating and Selling Expenses 270.8 244.0 757.4 723.9
----- ----- ----- -----
Segment Operating Profit 88.1 85.8 247.6 345.6
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales in the North American Retail Division declined 7% in the third quarter and
9% for the first nine months of 2001 as compared to the same periods last year.
Comparable store sales in the 792 stores in the U.S. and Canada that have been
open for more than one year decreased by 7% in the third quarter and 9% for the
first nine months of 2001 in comparison to the third quarter and first nine
months of 2000, respectively.
Comparable retail sales trends prior to September 11 were tracking in the
negative 4-5% range, consistent with the Company's previous guidance. For the
three weeks after the September 11 attacks, retail comparable store sales fell
into the negative teens range, resulting in a full quarter performance of
negative 7%. The Company estimates that the events of September 11 negatively
impacted retail sales by approximately $35 million dollars. Sales of technology
products, while weak prior to September 11, were more heavily impacted in the
period following the terrorist attacks.
Gross margins in the North American Retail Division improved 364 basis points in
the quarter as a result of the continued mix shift away from technology, our
successful re-merchandising initiatives, and improved margins on Back-to-School
products, as well as easier comparisons because of last year's paper, ink and
toner price reductions. Operating costs as a percent of sales, excluding
non-recurring items, rose 128 basis points as a result of the loss of leverage
from negative retail comparable sales performance that was exacerbated after
September 11.
Included in store operating profit were costs totaling $26.1 million ($17.0
million after tax benefits) primarily related to the write-down of impaired
assets in existing stores in accordance with FAS 121 guidance. These costs are
related to asset impairments on 23 stores, a majority of which did not have
sufficient operating performance at the time we completed our comprehensive
business review in the latter months of 2000 to warrant action. Before the
impact of these charges, store operating profit rose to 7.8% of sales, its
highest level since the first quarter of 2000.
CEO Nelson commented, "This is an admirable achievement in light of the overall
economy and the estimated $35 million negative sales impact following the events
of September 11. It is a
testimony to the remarkable improvements in customer service and execution that
our 26,000 North American Retail employees have accomplished."
During the third quarter, we opened 17 new office supply superstores, net of
closures, in 10 states and one Province. At the end of the quarter, Office Depot
operated a total of 846 office product superstores throughout the United States
and Canada.
BUSINESS SERVICES GROUP ("BSG")
THIRD QUARTER YEAR-TO-DATE
-------------------------------------------------- --------------- ---------------- --------------- ----------------
(IN MILLIONS OF DOLLARS) 2001 2000 2001 2000
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales $947.1 $899.2 $2,841.9 $2,653.8
COGS and Occupancy Costs 643.7 627.4 1,951.0 1,823.5
----- ----- ------- -------
Gross Profit 303.4 271.8 890.9 830.3
Operating and Selling Expenses 211.7 216.5 664.8 644.3
----- ----- ----- -----
Segment Operating Profit 91.7 55.3 226.1 186.0
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales in the Business Services Group increased 5% for the third quarter and 7%
for the first nine months of 2001 as compared to the corresponding periods last
year. Included in third quarter BSG results for the first time were the sales of
4Sure.com. Excluding sales from 4sure.com, BSG sales increased 3% for the third
quarter of 2001.
Prior to September 11, BSG comparable sales trends (excluding the benefit from
4Sure.com) tracked in the 4% range, consistent with the Company's previous
guidance. Sales dropped off to the negative single digit range immediately after
the attacks, which resulted in comparable sales performance in the quarter of
approximately 3%, a loss of almost $15 million in revenues.
Gross margins for BSG improved 181 basis points in part from the Company's
continued strict adherence to its volume dependent pricing programs. Operating
and selling expenses have continued to improve both on a year-over-year and a
sequential basis as a result of the Group's focus on productivity and
efficiency, and tight control over discretionary spending. On a year-over-year
basis, expenses in the third quarter declined 172 basis points as a percentage
of sales and 136 basis points as compared to the second quarter of 2001. While
some of the improvement has been masked by the loss of leverage from slowing
sales, operating and selling expenses as a percentage of sales reached their
lowest level in over five years.
Nelson noted, "I am extremely proud of our BSG organization for their ability to
dramatically improve all aspects of customer service and at the same time
consistently lower operating costs. Year-to-date operating profit in this
business segment has grown by 22% while revenues have grown by 7%."
INTERNATIONAL DIVISION
THIRD QUARTER YEAR-TO-DATE
-------------------------------------------------- --------------- ---------------- --------------- ----------------
(IN MILLIONS OF DOLLARS) 2001 2000 2001 2000
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales $366.7 $337.6 $1,149.3 $1,071.6
COGS and Occupancy Costs 219.9 203.6 690.1 645.9
----- ----- ----- -----
Gross Profit 146.8 134.0 459.2 425.7
Operating and Selling Expenses 87.4 89.0 286.9 287.7
---- ---- ----- -----
Segment Operating Profit 59.4 45.0 172.3 138.0
-------------------------------------------------- --------------- ---------------- --------------- ----------------
Sales in the International Division increased 9% (12% excluding the foreign
currency effect) in the third quarter and 7% (15% excluding the foreign currency
effect) for the first nine months of 2001 over the comparable periods last year.
The economic difficulties which followed the tragedies of September 11 did
impact sales somewhat in our larger European countries, which resulted in an
estimated $8 million sales impact for the quarter.
Gross margins in the International Division have improved despite the
introduction of our lower margin contract sales in the U.K., Ireland and The
Netherlands. Operating profit improved 32% in the third quarter (35% excluding
the foreign currency effect) and 25% for the first nine months of 2001 (33%
excluding the foreign currency effect), as compared to the third quarter and
first nine months of 2000, respectively.
Unfavorable exchange rates earlier in the quarter impacted reported sales by
approximately $12.5 million for the quarter. For the first nine months of the
year, unfavorable exchange rates impacted U.S. dollar sales by approximately
$81.1 million. Operating profit continues to be negatively impacted by
unfavorable exchange rates by approximately $0.9 million in the third quarter
and $10.2 million in the first nine months of 2001.
Included in segment operating profit was an after tax gain of $6.7 million
related to the planned sale of the Company's London warehouse. In August, the
Company relocated its operations to a new 320,000 sq. ft. facility designed to
better serve its growing multi-channel business in the U.K. Excluding the
one-time gain, store and warehouse operating profit was $49.2 million or 13% of
sales, consistent with the Company's previous guidance.
Nelson commented, "Our International business continues to be the most
consistent and best overall performing segment of our business. Our
profitability and growth is unmatched by any worldwide industry competitor. It
remains our fastest growing business segment (in local currencies) and has the
largest potential for future growth. While others struggle to achieve acceptable
international profitability levels, we continue to invest for an even better
future."
Office Depot retail stores operate in the following countries, through a
combination of wholly owned operations, joint ventures and international
licensing agreements:
THIRD QUARTER ACTIVITY OPEN AT QUARTER END
--------------------------------------------------- ------------ ----------------- -------------- -------------
Number of Stores Opened Closed 2001 2000
--------------------------------------------------- ------------ ----------------- -------------- -------------
Mexico (Joint Venture) 2 - 57 46
France * 2 1 28 28
Israel (Joint Venture & License) 1 - 23 22
Poland (License) - - 16 16
Japan * - - 7 7
Hungary (License) - - 3 3
Thailand (License) - - 2 2
Colombia (Operations have been terminated) - - - 2
------------ ----------------- -------------- -------------
Total 5 1 136 126
--------------------------------------------------- ------------ ----------------- -------------- -------------
* Office Depot wholly owned stores
Along with its retail stores, the Company also has delivery and catalog
operations in 14 countries outside of the United States and Canada.
--------------------------------------------------------------------------------
CONFERENCE CALL INFORMATION
Office Depot will hold a conference call for investors and analysts at 8:00 a.m.
(Eastern Time) on today's date. The conference call will be available to all
investors via Webcast at www.officedepot.com/companyinfo under Investor
Relations. Interested parties may contact Investor Relations at 561-438-1680 for
further information on the conference call.
--------------------------------------------------------------------------------
As of September 29, 2001 Office Depot operated 846 office supply superstores in
the United States and Canada, in addition to a national business-to-business
delivery network supported by 25 delivery centers, more than 60 local sales
offices and 12 regional call centers. Furthermore, the Company had operations in
16 countries outside of the United States and Canada, including 28 office supply
stores in France and seven in Japan that are owned and operated by the Company;
and 101 additional office supply stores under joint venture and licensing
agreements operating under the Office Depot(R) name in five foreign countries.
The Company also operates an award-winning U.S. Office Depot(R) brand Web site
at www.officedepot.com where customers can access Office Depot's low competitive
prices seven days a week, twenty-four hours a day, and it operates
www.officedepot.co.jp in Japan and www.officedepot.fr in France as well as
Viking(R) brand Web sites at www.vikingop.com in the United States,
www.viking-direct.co.uk in the United Kingdom, www.viking.de in Germany,
www.vikingdirect.nl in The Netherlands, www.vikingop.it in Italy,
www.vikingop.com.au in Australia, www.vikingop.co.jp in Japan,
www.vikingdirect.fr in France and www.vikingdirekt.at in Austria. Office Depot's
common stock is traded on the New York Stock Exchange under the symbol ODP and
is included in the S&P 500 Index.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: EXCEPT FOR HISTORICAL
INFORMATION, THE MATTERS DISCUSSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, AS AMENDED. FORWARD-LOOKING STATEMENTS, INCLUDING WITHOUT LIMITATION ALL
OF THE PROJECTIONS AND ANTICIPATED LEVELS OF FUTURE PERFORMANCE, INVOLVE RISKS
AND UNCERTAINTIES WHICH MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN. THESE RISKS AND UNCERTAINTIES ARE DETAILED FROM TIME TO TIME
BY OFFICE DEPOT IN ITS FILINGS WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION ("SEC"), INCLUDING WITHOUT LIMITATION ITS MOST RECENT FILING ON FORM
10-K, FILED ON MARCH 27, 2001 AND ALL SUBSEQUENT FILINGS WITH THE SEC. YOU ARE
STRONGLY URGED TO REVIEW ALL SUCH FILINGS FOR A MORE DETAILED DISCUSSION OF SUCH
RISKS AND UNCERTAINTIES. THE COMPANY'S SEC FILINGS ARE READILY OBTAINABLE AT NO
CHARGE AT WWW.SEC.GOV AND AT WWW.FREEEDGAR.COM, AS WELL AS ON A NUMBER OF OTHER
COMMERCIAL WEB SITES.
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
13 WEEKS 13 WEEKS 39 WEEKS 39 WEEKS
ENDED ENDED ENDED ENDED
SEPTEMBER 29, SEPTEMBER 23, SEPTEMBER 29, SEPTEMBER 23,
2001 2000 2001 2000
------------------- ------------------ ------------------ -------------------
Sales $ 2,782,493 $ 2,822,991 $ 8,353,910 $ 8,521,498
Cost of goods sold and occupancy costs 1,973,965 2,087,769 5,999,813 6,197,117
------------------- ------------------ ------------------ -------------------
Gross profit 808,528 735,222 2,354,097 2,324,381
Store and warehouse operating
and selling expenses 569,507 549,200 1,708,291 1,654,940
General and administrative expenses 133,052 137,243 361,957 358,645
Other operating expenses 4,444 (354) 4,893 9,834
------------------- ------------------ ------------------ -------------------
Operating profit 101,525 49,133 278,956 300,962
Other income (expense):
Interest income 4,155 2,666 7,979 9,551
Interest expense (12,153) (9,318) (30,949) (23,584)
Miscellaneous income (expense), net 2,565 39,310 (3,861) 59,899
------------------- ------------------ ------------------ -------------------
Earnings before income taxes 96,092 81,791 252,125 346,828
Income taxes 33,632 31,169 91,362 129,233
------------------- ------------------ ------------------ -------------------
Net earnings $ 62,460 $ 50,622 $ 160,763 $ 217,595
=================== ================== ================== ===================
Earnings per common share:
Basic $ 0.21 $ 0.17 $ 0.54 $ 0.69
Diluted 0.20 0.16 0.53 0.67
Weighted average number of common shares outstanding:
Basic 298,375 304,111 297,185 313,804
Diluted 317,594 330,215 314,538 340,709
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
AS OF AS OF
SEPTEMBER 29, DECEMBER 30,
2001 2000
-------------------- -------------------
Assets
Current assets:
Cash and cash equivalents $ 539,876 $ 151,482
Receivables, net 821,527 896,333
Merchandise inventories, net 1,100,398 1,420,825
Deferred income taxes and other assets 174,812 230,449
-------------------- -------------------
Total current assets 2,636,613 2,699,089
Property and equipment, net 1,098,578 1,119,306
Goodwill, net 268,923 219,971
Other assets 177,751 157,968
-------------------- -------------------
$ 4,181,865 $ 4,196,334
==================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,028,719 $ 1,136,994
Accrued expenses and other liabilities 589,717 580,966
Income taxes payable 73,803 37,118
Current maturities of long-term debt 92,741 153,259
-------------------- -------------------
Total current liabilities 1,784,980 1,908,337
Deferred income taxes and other credits 66,335 88,247
Long-term debt, net of current maturities 318,755 374,061
Zero coupon, convertible subordinated notes 232,878 224,438
Commitments and Contingencies
Stockholders' Equity
Common stock - authorized 800,000,000 shares
of $.01 par value; issued 381,903,126 in
2001 and 378,688,359 in 2000 3,819 3,787
Additional paid-in capital 967,227 939,214
Unamortized value of long-term incentive stock grant (2,547) (2,793)
Accumulated other comprehensive income (64,894) (53,490)
Retained earnings 1,677,454 1,516,691
Treasury stock, at cost - 82,190,548 shares in 2001
and 2000 (802,142) (802,158)
-------------------- -------------------
1,778,917 1,601,251
-------------------- -------------------
$ 4,181,865 $ 4,196,334
==================== ===================
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
39 WEEKS 39 WEEKS
ENDED ENDED
SEPTEMBER 29, SEPTEMBER 23,
2001 2000
------------------ -------------------
Cash flows from operating activities:
Net earnings $ 160,763 $ 217,595
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 146,879 144,634
Provision for losses on inventories and receivables 88,815 75,850
Changes in working capital 210,300 28,731
Loss (gain) on investment securities 7,950 (57,950)
Write-down of impaired assets 26,079 ---
Other operating activities, net 28,347 26,369
------------------ -------------------
Net cash provided by operating activities 669,133 435,229
------------------ -------------------
Cash flows from investing activities:
Proceeds from maturities or sales of investment securities --- 54,006
Acquisitions and asset purchases (52,481) (24,612)
Capital expenditures (143,927) (185,473)
Proceeds from sale of property and equipment 22,837 4,270
------------------ -------------------
Net cash used in investing activities (173,571) (151,809)
------------------ -------------------
Cash flows from financing activities:
Proceeds from exercise of stock options and sale of stock
under stock purchase plans 20,681 9,713
Acquisition of treasury stock --- (280,378)
Proceeds from issuance of long-term debt 255,094 ---
Payments on long- and short-term borrowings (373,700) ---
Other financing activities --- 6,688
------------------ -------------------
Net cash used in financing activities (97,925) (263,977)
------------------ -------------------
Effect of exchange rate changes on cash and cash equivalents (9,243) (12,544)
------------------ -------------------
Net increase in cash and cash equivalents 388,394 6,899
Cash and cash equivalents at beginning of period 151,482 218,784
------------------ -------------------
Cash and cash equivalents at end of period $ 539,876 $ 225,683
================== ===================
OFFICE
DEPOT (R)
NEWS RELEASE
--------------------------------------------------------------------------------
CONTACT: Eileen H. Dunn
Vice President, Investor Relations/public Relations
561/438-4930
edunn@officedepot.com
OFFICE DEPOT NAMES CHARLES BROWN CHIEF FINANCIAL OFFICER
(DELRAY BEACH, FL) OCTOBER 16, 2001 -- OFFICE DEPOT, INC. (NYSE: ODP), the
world's largest seller of office products, today announced that Charles E.
Brown, formerly Senior Vice President, Finance & Controller has been promoted to
the position of Executive Vice President and Chief Financial Officer.
Mr. Brown, who joined Office Depot in 1998 as Controller, was previously
responsible, for the entire finance area, including financial planning and
analysis, external reporting, accounting and financial processes. In his newly
expanded role as Office Depot's CFO, Mr. Brown will now assume additional
responsibilities, including tax, treasury, investor relations and corporate
communications.
Bruce Nelson, CEO of Office Depot, said, "I am extremely pleased to announce
Charlie's promotion to the position of CFO. Throughout the Company's lengthy and
comprehensive external search process, I interviewed many highly qualified
candidates, each with strong skills sets and solid financial experience.
However, it became increasingly clear to me that Charlie's performance over the
past year had placed him at the top of my list of candidates. He has led the
Company's efforts in transforming work processes to the Intranet, which has
resulted in better business tools and more timely and insightful management
information at significantly lower costs. His strong financial background and
experience, his disciplined approach to capital spending and his knowledge of
Office Depot have made him an invaluable member of our leadership organization.
His value to the Company has grown immensely over the past year and all of that
makes him the 'right' partner as I continue to develop new ways to grow our
Company."
Mr. Brown commented, "I am thrilled with the opportunity to serve as Office
Depot's CFO. Bruce and I have developed a strong partnership since his
appointment as CEO and we share a common passion for growing shareholder value.
I believe we've only scratched the surface of Office Depot's potential as a
compelling place to invest."
Before joining Office Depot, Mr. Brown spent two years as SVP, Chief Financial
Officer of Denny's, Inc. Prior to his work at Denny's, Mr. Brown spent over two
decades at KPMG, PepsiCo and Aramark Corporation, where he held positions of
increasing responsibility.
Mr. Brown, age 48, is a graduate of Duke University and a CPA. He is married
with two children and lives in Parkland, Florida.
Succeeding Mr. Brown as Senior Vice President, Finance & Controller is James
Walker, age 44. For the past three years, Mr. Walker has been Vice President,
Stores Finance. In that role, Mr. Walker has provided the financial leadership
and oversight for our North America Retail Division. His retailing knowledge and
business insights have contributed substantially to the continued performance
improvement at Office Depot. He will now assume day-to-day responsibility for
the Company's financial planning and analysis, external reporting, and all
accounting and financial processes.
ABOUT OFFICE DEPOT
As of September 29, 2001, Office Depot operated 846 office supply superstores in
the United States and Canada, in addition to a national business-to-business
delivery network supported by 25 delivery centers, more than 60 local sales
offices and eight regional call centers. Furthermore, the Company had operations
in 15 countries outside of the United States and Canada, including 28 office
supply stores in France and seven in Japan that are owned and operated by the
Company; and 101 additional office supply stores under joint venture and
licensing agreements operating under the Office Depot(R) name in five foreign
countries. The Company also operates an award-winning U.S. Office Depot(R) brand
Web site at www.officedepot.com where customers can access Office Depot's low
competitive prices seven days a week, twenty-four hours a day, and it operates
www.officedepot.co.jp in Japan and www.officedepot.fr in France as well as
Viking(R) brand Web sites at www.vikingop.com in the United States,
www.viking-direct.co.uk in the United Kingdom, www.viking.de in Germany,
www.vikingdirect.nl in The Netherlands, www.vikingop.it in Italy,
www.vikingop.com.au in Australia, www.vikingop.co.jp in Japan,
www.vikingdirect.fr in France and www.vikingdirekt.at in Austria. Office Depot's
common stock is traded on the New York Stock Exchange under the symbol ODP and
is included in the S&P 500 Index.
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