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 JULY 17, 2002
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
On July 17, 2002, Office Depot, Inc. issued a press release, with earnings
information for its fiscal second quarter of 2002. A copy of the press release
is attached hereto as Exhibit 99.1.1 and incorporated by reference herein.
In addition, on July 17, 2002, Office Depot, Inc. issued a press release
announcing the redemption of its Series 1993 Liquid Yield Option Notes
(LYONS(R)) as of August 19, 2002 as the redemption date. A copy of the press
release is attached hereto as Exhibit 99.1.2 and incorporated by reference
herein.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Press release dated July 17, 2002, announcing financial results for the
Company's fiscal first quarter for its fiscal year 2002.
99.2 Press release dated July 17, 2002, announcing redemption of the Company's
Series 1993 LYONS(R) as of the redemption date of August 19, 2002.
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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: July 17, 2002 By: /S/ DAVID C. FANNIN
David C. Fannin
Executive Vice President and
General Counsel
Exhibit 99.1
OFFICE DEPOT NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: EILEEN H. DUNN
VICE PRESIDENT, INVESTOR RELATIONS/PUBLIC RELATIONS
561/438-4930
edunn@officedepot.com
---------------------
OFFICE DEPOT ANNOUNCES SECOND QUARTER 2002 RESULTS
o EPS ROSE 29% TO $0.18, OR $0.20 EXCLUDING LITIGATION SETTLEMENT COSTS
o FREE CASH FLOW ON TRACK TO EXCEED $350 MILLION WITH CASH POSITION
APPROACHING $1 BILLION
o COMPANY ANNOUNCES REPURCHASE OF 1992 LYONS(R)
(DELRAY BEACH, FL) JULY 17, 2002 - OFFICE DEPOT, INC. (NYSE: ODP), the world's
largest seller of office products, today announced second quarter results for
the period ended June 29, 2002.
Company sales for the second quarter grew 4% to $2.6 billion compared to the
second quarter of 2001. For the first six months of 2002, sales grew 2% to $5.7
billion compared to the first half of 2001. Worldwide comparable sales in the
847 stores and 39 delivery centers that have been open for more than one year
were flat for the second quarter, and declined 1% for the first half of 2002.
Operating income for the second quarter increased 15% to $92.7 million compared
to the same period in 2001. Earnings per share rose 29% to $0.18 for the second
quarter from $0.14 in comparable period last year. Results for the second
quarter reflect an accrual in accordance with the provisions of FAS 5 of
approximately $12 million (or $0.02 per share) for the anticipated settlement of
class action litigation in the state of California. The litigation alleges that
the Company incorrectly classified its retail store managers and assistant store
managers in the state of California as exempt from the payment of overtime for
hours worked in that state. The California state wage and hour statutes differ
from those in other states, as well as the Federal standard; and numerous other
retailers have resolved similar cases in California. The asserted claims have
not been settled, and negotiations are on going. The Company denies any
liability in this litigation. Earnings per share excluding these estimated legal
costs reached $0.20 per share.
For the first six months of 2002, operating income increased 45% to $256.6
million compared to the same period in 2001. Earnings per share rose 52% to
$0.50 during the first half of 2002 compared to the same period in 2001.
Included in the second quarter and first half results for 2001 were charges
related to the non-cash write-down of investments in certain Office Depot
Internet marketing partners totaling $8.5 million. In addition, goodwill is no
longer being amortized in accordance with the provisions of FAS 142. During
2001, goodwill amortization was $1.8 million for the second quarter and $3.6
million for the first half.
BRUCE NELSON, OFFICE DEPOT'S CHAIRMAN & CEO, commented: "Overall, our second
quarter results were in line with the increased guidance we provided earlier
this year. Key operating metrics were favorable across all business units,
including those for customer service, employee retention and RONA. Despite a
continued soft revenue environment, our balance sheet and free cash flow
remained solid. North American retail traffic comped positively, although the
average retail ticket declined slightly during the period. Total International
revenues increased from first quarter levels, growing 8% in local currencies. We
launched a Viking direct mail operation in Spain, and the early results are very
encouraging. We continued to increase efficiency and lower costs in our North
American warehouses, while at the same time reporting quality metrics at all
time highs. In fact, we believe we have never executed better in the history of
Office Depot. Our more than 45,000 employees around the world are highly
engaged, and focused on making Office Depot the most compelling place to work,
shop and invest.
"In North American Retail, we are reporting our fifth consecutive quarterly
improvement in comparable store sales, albeit still slightly negative because
purchases of big-ticket items remain below expectations. Technology sales in the
quarter declined 12% versus the same period last year, our ninth consecutive
quarterly decline. Core office supplies, paper and filing, copy center and
machine supplies all experienced positive comparable growth during the second
quarter. Retail gross margins continued the positive trends of the past three
quarters, as a result of merchandise mix changes and the impact of last year's
chain-wide re-merchandising program. Customer service metrics reached record
levels, and our hourly employee retention rate more than doubled from last year.
"North American Business Services Group sales rose 4% for the quarter,
reflecting improved trends over the first quarter of this year. The large
customer segment achieved its best results since the third quarter of 2001,
benefiting from our focus on growing market share with our strong operational
and service performance. Our 37% increase in e-commerce sales, where we continue
to expand our domestic leadership position, was offset by softness in our North
American catalog businesses. Lower supplier rebates, because of reduced
purchases from certain key suppliers, negatively impacted gross margins.
However, continued emphasis and improvement in our supply chain resulted in
record inventory turns.
"Internationally, sales in the second quarter reflected an improvement in local
currency growth rates in all European Viking catalog operations except France.
Comparable French retail sales exceeded 5% (or 11% in U.S. dollars), and total
French Office Depot sales in local currencies grew more than 19%, as we continue
to expand our leadership position in that market. During the past twelve months,
we have launched our new European Business Services Division in four countries;
opened Switzerland and Spain with Viking catalog operations; and, at the same
time, continued to achieve operating profits in excess of 13% on a year-to-date
basis. Japan operating losses continue to show some improvement, even on
negative quarter and year-to-date sales results.
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Other second quarter highlights include:
o Worldwide e-commerce sales grew 38% to $498 million during the
quarter, and by 37% to $987 million for the first six months of
2002. We are on track to exceed $2 billion of e-commerce revenue
in 2002.
o We entered Spain at the beginning of the quarter with our Viking
Direct catalog business. There is currently one distribution
center in Madrid and one call center in northwest Spain. Office
Depot now sells office products and services through our wholly
owned delivery operations in 15 countries around the world.
o Our new automated labor-scheduling model is now operational in
550 stores in North America, resulting in better customer service
while saving an average of 40 hours per week in every store.
o Our supply chain continued to demonstrate the highest inventory
turns and the best in stock position in the industry.
o During the quarter, we opened six new stores and relocated two
stores in North America. We also successfully completed the store
closings we announced earlier in the year. Internationally, we
opened two stores in France and two stores in Japan during. At
the end of the quarter, the Company operated 897 wholly owned
stores worldwide.
o We announced earlier today that we plan to redeem all of our 1992
Liquid Yield Option Notes (LYONS(R)) due December 2007. The Notes
will be redeemed at 100 percent of the principal amount, plus
accrued interest, through the August 19, 2002 redemption date.
The redemption will reduce the Company's indebtedness by
approximately $241 million and impact diluted earnings per share
as if 13.8 million shares were repurchased.
2002 SECOND HALF OUTLOOK:
"Given what we know today, we remain comfortable with consensus earnings
expectations of $1.02 for the full year. However, in line with previous
communications, we anticipate smaller EPS growth rates in the back half than in
the first half, as we begin to anniversary the significant improvements made in
the business during 2001 that were evident in our third and fourth quarter 2001
results. Furthermore, our assumptions continue to include some gradual economic
improvement in the back half of the year, and some upturn in small and medium
business technology spending by the end of the year. A domestic economy that
does not improve would result in some downside risk to our projections."
Mr. Nelson went on to comment, "Office Depot began a significant transformation
two years ago in July, with the naming of a new leadership team. We have spent
the last two years building a new executive team, putting the Company in order,
and establishing a solid foundation for growth. Virtually all of our customer
service metrics have shown dramatic improvement, and we are producing
industry-leading statistics. Employee retention is dramatically up across the
entire company. Our financial health has never been stronger, as evidenced by
our free cash flow and a solid balance sheet that reflects increasing cash
balances and low levels of debt. Our decision to call our LYONS reflects our
confidence in the strength of our business and our outlook for the future. We
are operating more efficiently, and with higher quality, than ever before; and
we are poised to accelerate our sales and earning growth when the economy
regains momentum, as it eventually will.
"In the meantime, we remain highly focused on driving shareholder value, and
earning the trust and confidence of our employees, customers and shareholders.
We see numerous opportunities for profitable growth across all of our business
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channels, and are testing multiple new retail formats and selectively adding
vertical product categories and services. In fact, we believe we can target and
reach a number of new domestic market customer/ product segments with both
marketing and merchandising initiatives that should ensure real increases in our
share of the more than $286 billion office supplies market in North America. We
will use technology in new and innovative ways to provide our customers with
what they need, and what they need to know. At the same time, we will continue
to invest in our highly successful and profitable European businesses as we
expand our delivery capabilities and channels into new markets and new
countries."
SEGMENT RESULTS
NORTH AMERICAN RETAIL DIVISION
SECOND QUARTER YEAR-TO-DATE
- ------------------------------------------------ -------------- --------------- -------------- --------------
(IN MILLIONS OF DOLLARS) 2002 2001 2002 2001
- ------------------------------------------------ -------------- --------------- -------------- --------------
Sales $1,293.2 $1,284.3 $2,915.0 $2,895.5
COGS and Occupancy Costs 961.5 978.7 2,190.0 2,249.3
----- ----- ------- -------
Gross Profit 331.7 305.6 725.0 646.2
Operating and Selling Expenses 239.9 237.6 509.6 502.0
----- ----- ----- -----
Segment Operating Profit $91.8 $68.0 $215.4 $144.2
- ------------------------------------------------ -------------- --------------- -------------- --------------
North American Retail sales grew 1%, both in the second quarter and for the
first six months of 2001 compared to the same periods last year. Comparable
sales in the 815 stores open for more than one year declined 1%, driven by a 12%
decline in technology products and 1% decline in furniture. Core office supplies
had positive growth in the quarter. Furthermore, store traffic increased by more
than 3% during the quarter, but was unable to offset a slight decline in the
average ticket value. For the first six months of 2002, comparable store sales
declined by 2%.
Gross margins during the second quarter improved by 185 basis points. This
improvement is primarily attributable to continued product mix changes away from
technology, the Company's improved SKU assortment processes as well as better
clearance merchandise management. The accrual of $12 million (or $.02 EPS) for
the anticipated settlement of potential class action litigation in the state of
California is included in North American Retail store operating costs. Excluding
this accrual, store-operating costs declined slightly compared to second quarter
last year.
During the second quarter, we opened six new office supply superstores,
relocated two stores, and closed 10 stores. Eight of the store closures were
under-performing stores previously announced during the first quarter. The
remaining two store closures occurred at the normal expiration of their lease
agreements. During the quarter, we converted our 12 Office Place stores in the
Canadian Providence of Quebec to Office Depot stores. We now have the ability to
4
use the Office Depot brand name throughout Canada. At the end of the quarter,
Office Depot operated a total of 853 office product superstores throughout the
United States and Canada.
5
BUSINESS SERVICES GROUP
SECOND QUARTER YEAR-TO-DATE
- ------------------------------------------------ -------------- --------------- -------------- --------------
(IN MILLIONS OF DOLLARS) 2002 2001 2002 2001
- ------------------------------------------------ -------------- --------------- -------------- --------------
Sales $953.6 $913.8 $1,946.2 $1,894.8
COGS and Occupancy Costs 668.6 623.2 1,343.2 1,307.3
----- ----- ------- -------
Gross Profit 285.0 290.6 603.0 587.5
Operating and Selling Expenses 207.4 220.0 427.6 459.7
----- ----- ----- -----
Segment Operating Profit $77.6 $70.6 $175.4 $127.8
- ------------------------------------------------ -------------- --------------- -------------- --------------
Sales in our Business Services Group grew 4% during the second quarter and 3%
for the first six months of 2002 compared to the same periods last year. The
contract division had positive growth during the second quarter, while catalog
sales remained soft. The Northeast and Southern markets continued to show the
most growth, while the West Coast region had negative growth, although improved
somewhat over the first quarter 2002. Domestic e-commerce sales grew by 37%
during the quarter, expanding our leadership position in the industry.
Segment operating profit improved 42 basis points during the second quarter and
227 basis points for the first six months of 2002 compared to the same periods
last year. Gross margins were 192 basis points less than in second quarter 2001,
reflecting the inclusion of lower margin 4Sure.com sales that were not in last
year's numbers. In addition, there is some short-term pressure on our vendor
rebate programs because of reduced purchases from certain key suppliers,
although our inventory turns are at record levels. Operating costs decreased by
234 basis points during the second quarter, and reflect the ongoing operating
and efficiency improvements we are making in our call centers and warehouses.
During the quarter, we moved into our new Atlanta warehouse, and did so
flawlessly. This move adds much needed capacity in a vitally important and
growing region for our delivery businesses.
INTERNATIONAL DIVISION
SECOND QUARTER YEAR-TO-DATE
- ------------------------------------------------ -------------- --------------- -------------- --------------
(IN MILLIONS OF DOLLARS) 2002 2001 2002 2001
- ------------------------------------------------ -------------- --------------- -------------- --------------
Sales $398.4 $356.0 $825.1 $782.7
COGS and Occupancy Costs 242.5 213.4 497.1 470.2
----- ----- ----- -----
Gross Profit 155.9 142.6 328.0 312.5
Operating and Selling Expenses 106.0 92.9 218.3 199.6
----- ---- ----- -----
Segment Operating Profit $49.9 $49.7 $109.7 $112.9
- ------------------------------------------------ -------------- --------------- -------------- --------------
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Our International Division grew 8% in local currencies and 12% in U.S. dollars
during the second quarter. For the first six months of 2002, our International
growth was 6% in local currencies and 5% in U.S. dollars. During the second
quarter, comparable sales for our International Division grew 4% in local
currencies and 9% in U.S. dollars. Comparable sales for the first half of 2002
grew 4% in local currencies and 4% in U.S. dollars. International sales were
positively impacted by foreign exchange rates in the second quarter by $14.6
million, although year-to-date, the negative impact was $4.9 million.
International Division operating profit also benefited from foreign exchange
rates by $2.2 million during the second quarter, which essentially offset the
negative impact from the first quarter of 2002 in our year-to-date results.
Segment gross margins declined during the second quarter by 91 basis points,
primarily attributable to the increased prospecting efforts in our catalog
business and an increase in the proportion of lower margin contract business.
Operating costs increased by 51 basis points for the second quarter. This
increase resulted from start-up operations in Spain and Switzerland, both opened
during the first six months of 2002, and the introduction of our contract
business into Ireland, the Netherlands and France during the second half of
2001. Despite funding these growth initiatives, we continued to generate over
13% operating profit for the first half of 2002. We operate the most successful
International business segment in our industry, and we plan to continue to
expand and grow our leadership position.
Office Depot retail stores operate in the following countries, through a
combination of wholly-owned operations, joint ventures and international
licensing agreements:
SECOND QUARTER ACTIVITY OPEN AT QUARTER END
- --------------------------------------------------- ------------ ----------------- ----------- --------------
Number of Stores Opened Closed 2002 2001
- --------------------------------------------------- ------------ ----------------- ----------- --------------
Mexico (Joint Venture) 3 - 65 55
France * 2 - 32 27
Israel (Joint Venture & License) 1 - 24 22
Poland (License) - - 15 16
Japan * 2 1 12 7
Hungary (License) - - 3 3
Thailand (License) - - 2 2
Guatemala (Joint Venture) 1 - 1 -
------------ ----------------- ----------- --------------
Total 9 1 154 132
- --------------------------------------------------- ------------ ----------------- ----------- --------------
* Office Depot wholly owned stores
Along with its retail stores, the Company also has delivery and catalog
operations in 16 countries outside of the United States and Canada.
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- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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No one sells more office products to more customers in more countries through
more channels than Office Depot. As the largest seller of office products around
the world, the Company operates under the Office Depot(R), Office Place(R),
Viking Office Products(R), Viking Direct(R) and 4Sure.com(R) brand names. As of
June 29, 2002, Office Depot operated 853 office supply superstores in the United
States and Canada, in addition to a national business-to-business delivery
network supported by 24 delivery centers, more than 60 local sales offices and
13 regional call centers. Furthermore, the Company sells products and services
in 19 countries outside of the United States and Canada, including 32 office
supply stores in France and 12 in Japan that are owned and operated by the
Company; and 110 additional office supply stores under joint venture and
licensing agreements operating under the Office Depot name in five foreign
countries.
The Company operates an award-winning U.S. Office Depot 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. The Company also operates
seventeen additional Web sites, under the Office Depot and Viking Office
Products names, in the U.S. and ten international countries including: Austria,
Australia, Belgium, France, Japan, Germany, Ireland, Italy, the Netherlands and
the United Kingdom.
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 19, 2002. 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.
9
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
13 WEEKS 13 WEEKS 26 WEEKS 26 WEEKS
ENDED ENDED ENDED ENDED
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2002 2001 2002 2001
----------------- ----------------- ----------------- ----------------
Sales $2,644,314 $2,553,503 $5,684,929 $5,571,417
Cost of goods sold and occupancy costs 1,872,270 1,814,933 4,029,694 4,025,996
----------------- ----------------- ----------------- ----------------
Gross profit 772,044 738,570 1,655,235 1,545,421
Store and warehouse operating
and selling expenses 552,894 550,375 1,154,950 1,160,677
General and administrative expenses 124,793 108,802 240,904 206,863
Other operating expenses 1,646 (1,119) 2,762 450
----------------- ----------------- ----------------- ----------------
679,333 658,058 1,398,616 1,367,990
Operating profit 92,711 80,512 256,619 177,431
Other income (expense):
Interest income 5,494 2,217 8,390 3,824
Interest expense (12,126) (8,515) (23,393) (18,796)
Miscellaneous income (expense), net 1,528 (7,588) 4,005 (6,426)
----------------- ----------------- ----------------- ----------------
Earnings before income taxes 87,607 66,626 245,621 156,033
Income taxes 30,662 24,652 85,967 57,730
----------------- ----------------- ----------------- ----------------
Net earnings $ 56,945 $ 41,974 $ 159,654 $ 98,303
================= ================= ================= ================
Earnings per common share:
Basic $ 0.19 $ 0.14 $ 0.52 $ 0.33
Diluted 0.18 0.14 0.50 0.33
Weighted average number of common shares outstanding:
Basic 307,665 297,085 305,585 296,590
Diluted 329,886 313,480 328,057 313,010
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OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
AS OF AS OF
JUNE 29, DECEMBER 29,
2002 2001
------------------ -------------------
Assets
Current assets:
Cash and cash equivalents $ 967,401 $ 563,410
Receivables, net 756,004 781,476
Merchandise inventories, net 1,096,333 1,259,522
Deferred income taxes and other assets 136,717 148,490
Prepaid expenses 72,629 53,292
------------------ -------------------
Total current assets 3,029,084 2,806,190
Property and equipment, net 1,109,624 1,110,011
Goodwill, net 264,519 249,560
Other assets 182,586 165,882
------------------ -------------------
$ 4,585,813 $ 4,331,643
================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,015,726 $ 1,060,968
Accrued expenses and other liabilities 578,764 612,999
Income taxes payable 131,848 109,026
Current maturities of long-term debt 254,659 318,521
------------------ -------------------
Total current liabilities 1,980,997 2,101,514
Deferred income taxes and other credits 63,453 64,139
Long-term debt, net of current maturities 402,083 315,331
Zero coupon, convertible subordinated notes 2,265 2,221
Commitments and Contingencies
Stockholders' Equity
Common stock - authorized 800,000,000 shares
of $.01 par value; issued 392,943,992 in
2002 and 385,538,340 in 2001 3,929 3,855
Additional paid-in capital 1,110,323 1,007,088
Unamortized value of long-term incentive stock grant (1,935) (2,578)
Accumulated other comprehensive income (22,317) (71,273)
Retained earnings 1,877,388 1,717,734
Treasury stock, at cost - 83,744,948 shares in 2002 and
82,443,170 shares in 2001 (830,373) (806,388)
------------------
2,137,015 1,848,438
------------------ -------------------
$ 4,585,813 $ 4,331,643
================== ===================
11
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
26 WEEKS 26 WEEKS
ENDED ENDED
JUNE 29, JUNE 30,
2002 2001
----------------- -------------------
Cash flows from operating activities:
Net earnings $ 159,654 $ 98,303
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 99,317 97,744
Provision for losses on inventories and receivables 49,296 61,085
Changes in working capital 78,030 135,532
Loss on investment securities -- 8,500
Other operating activities, net 1,922 22,028
----------------- -------------------
Net cash provided by operating activities 388,219 423,192
-----------------
Cash flows from investing activities:
Purchases of investments and other assets -- (6,842)
Capital expenditures, net of proceeds from sales (76,441) (71,546)
----------------- -------------------
Net cash (used in) investing activities (76,441) (78,388)
----------------- -------------------
Cash flows from financing activities:
Proceeds from exercise of stock options and sale of stock
Under employee stock purchase plans 81,733 8,851
Acquisition of treasury stock (23,848) --
Payments on long- and short-term borrowings, net (5,688) (292,565)
----------------- -------------------
Net cash provided by (used in) financing activities 52,197 (283,714)
----------------- -------------------
Effect of exchange rate changes on cash and cash equivalents 40,016 (22,963)
----------------- -------------------
Net increase in cash and cash equivalents 403,991 38,127
Cash and cash equivalents at beginning of period 563,410 151,482
----------------- -------------------
Cash and cash equivalents at end of period $ 967,401 $ 189,609
================= ===================
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OFFICE DEPOT NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: EILEEN H. DUNN
VICE PRESIDENT, INVESTOR RELATIONS/PUBLIC RELATIONS
561/438-4930
edunn@officedepot.com
---------------------
OFFICE DEPOT ANNOUNCES REDEMPTION OF LYONS(R);
COMPANY CASH USED TO REDUCE DEBT BY $241 MILLION
(DELRAY BEACH, FL) JULY 17, 2002 - OFFICE DEPOT, INC. (NYSE: ODP), the world's
largest seller of office products, today announced it plans to redeem its 1992
Liquid Yield Option Notes (LYONS(R)) due December 2007(collectively, the
"Notes"). This early redemption of the notes is in accordance with redemption
provisions contained in the Trust Indenture. The redemption will reduce the
Company's indebtedness by approximately $241 million.
The Notes will be redeemed at 100 percent of the principal amount, plus accrued
interest, through the August 19, 2002 redemption date. The redemption agent for
the Notes is the Trustee, Bank of New York:
P.O. Box 11249
Church Street Station
Bond Redemption Unit
New York, NY 10286
1-800-548-5075
No one sells more office products to more customers in more countries through
more channels than Office Depot. As the largest seller of office products around
the world, the Company operates under the Office Depot(R), Office Place(R),
Viking Office Products(R), Viking Direct(R) and 4Sure.com(R) brand names. As of
June 29, 2002, Office Depot operated 853 office supply superstores in the United
States and Canada, in addition to a national business-to-business delivery
network supported by 24 delivery centers, more than 60 local sales offices and
13 regional call centers. Furthermore, the Company sells products and services
in 19 countries outside of the United States and Canada, including 32 office
supply stores in France and 12 in Japan that are owned and operated by the
Company; and 110 additional office supply stores under joint venture and
licensing agreements operating under the Office Depot name in five foreign
countries.
The Company operates an award-winning U.S. Office Depot 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. The Company also operates
seventeen additional Web sites, under the Office Depot and Viking Office
Products names, in the U.S. and ten international countries including: Austria,
Australia, Belgium, France, Japan, Germany, Ireland, Italy, the Netherlands and
the United Kingdom.
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.
2