UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 28, 2006
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.) |
|
| 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
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Attached hereto as Exhibit 99.1.1 and incorporated by reference herein is Office Depot, Inc.’s news
release dated July 28, 2006, announcing its financial results for its fiscal second quarter 2006.
This release also contains forward-looking statements relating to Office Depot’s fiscal year 2006.
This information is furnished pursuant to Item 2.02 of Form 8-K. The information in this report
shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1.1
|
News release of Office Depot, Inc. issued on July 28, 2006. |
2
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 28, 2006 | By: | /S/ DAVID C. FANNIN | ||
| David C. Fannin | ||||
| Executive Vice President and General Counsel |
||||
3
Exhibit
99.1.1
CONTACTS:
Ray Tharpe
Investor Relations
561/438-4540
ray.tharpe@officedepot.com
Investor Relations
561/438-4540
ray.tharpe@officedepot.com
Brian Levine
Public Relations
561/438-2895
brian.levine@officedepot.com
Public Relations
561/438-2895
brian.levine@officedepot.com
OFFICE DEPOT ANNOUNCES RECORD SECOND QUARTER EARNINGS
39% growth in EPS
to 43 cents
non-GAAP1,
32% growth to 41 cents on a GAAP basis
Delray Beach, Fla., July 28, 2006 — Office Depot, Inc. (NYSE: ODP), a leading global provider
of office products and services, today announced second quarter results for the fiscal period ended
July 1, 2006.
SECOND QUARTER RESULTS
Total Company sales for the second quarter grew 4% to $3.5 billion compared to the second quarter
of 2005. Sales in North America were up 5%, while International sales
increased 1% in U.S. dollars
and 2% in local currencies. North American Retail comparable store sales were up 1% for the
quarter.
Net earnings for the quarter were $118 million compared to $100 million in the same quarter of the
prior year, and diluted earnings per share were $0.41 in the second quarter of 2006 versus $0.31 in
the same period a year ago. The second quarter 2006 results included the effects of charges related
to exit costs and other operating items which we had previously announced and are more fully
described in our Form 10-K and 10-Q filings with the Securities and Exchange Commission. Second
quarter charges (the “Second Quarter Charges”) in 2006 had a $0.02 per diluted share negative
impact on results. Without these charges, our second quarter 2006 net earnings were $125
million1 or $0.43 per share,1 up 39% from the second quarter earnings per
share of the prior year.
During the
quarter Office Depot completed the previously announced acquisitions of businesses in North
America and South Korea, and acquired an incremental interest leading
to a majority stake in the Company’s
business in Israel. While each of these businesses provide growth opportunities in the future,
they did not have a significant impact on second quarter performance.
| 1 | This is non-GAAP information. Certain disclosures in this release eliminate the effect of charges recorded during the quarter that relate to projects identified in 2005 and were expected to continue into 2006 and later years. See additional disclosures of these projects in our 2005 Form 10-K filed with the SEC. Except where noted, all references in this news release to financial results are presented in accordance with generally accepted accounting principles, as adopted in the United States (GAAP). Non-GAAP results are presented where that presentation will afford investors an opportunity to make meaningful comparisons to results in prior periods. The presentation of such non-GAAP information is not intended to suggest that such information is superior to the presentation of GAAP information, but only to clarify some information and assist the reader. See reconciliations on our corporate website, www.officedepot.com, under the category Investor Relations. |
For the quarter, gross profit as a percentage of sales was 30.9%, a 10 basis point improvement from
the same period last year. Gross margin in the North American Retail Division increased during the
quarter while the North American Business Solutions Division and the International Division posted
slight decreases in gross margin as compared to the prior year, primarily due to cost pressures in
certain product categories.
Total operating expenses as a percent of sales were 25.9%, an improvement of 70 basis points
compared to the prior year. Second Quarter Charges of $8 million negatively impacted
operating expenses as a percentage of sales by 20 basis points in the quarter.
In the
second quarter, Office Depot repurchased approximately 7 million shares of common stock for $272
million under the repurchase programs previously approved by the Board of Directors.
Return on invested capital for the quarter was 10.5%. Charges taken in the twelve months prior to
June 2006 negatively impacted the calculation of the
Company’s current return on invested capital. Adjusted
to exclude these charges, ROIC improved to 13.9% for the second quarter of 2006 as compared to
11.4% in the prior year.
“We are pleased with our overall performance in the second quarter with each of our Divisions
contributing to the increase we achieved in earnings per share,” said Steve Odland, Office Depot’s
Chairman and Chief Executive Officer. “We achieved sales growth in each of our Divisions, lowered
total operating expenses, and expanded our operating margin. The North American Retail Division
recorded its tenth consecutive quarter of positive comparable sales, our North American
Business Solutions Division increased its sales by 6% and the
International Division increased its sales in local currency by 2%. We also leave the quarter with continued
improvement in working capital management and another increase in ROIC.1”
SECOND QUARTER DIVISION RESULTS
North American Retail Division
Second quarter sales in the North American Retail Division increased 4% compared to the same period last year. Comparable store sales in the 986 stores in the U.S. and Canada that have been open for more than one year increased 1% in the second quarter. This represents the tenth consecutive quarter of positive comparable sales led by strength in the technology product category.
Second quarter sales in the North American Retail Division increased 4% compared to the same period last year. Comparable store sales in the 986 stores in the U.S. and Canada that have been open for more than one year increased 1% in the second quarter. This represents the tenth consecutive quarter of positive comparable sales led by strength in the technology product category.
The North
American Retail Division had an operating profit of $96 million for the quarter, up 26%
from the same period in the prior year, and as a percentage of sales was 6.4%, up 110 basis points
from the prior year. Second Quarter Charges negatively impacted operating results for the period
by $1 million. Division operating profit margins expanded due to both a continuation of gross
margin expansion and a reduction in the Division’s cost structure. Gross margins improved over
last year, in part reflecting an expansion in product margins driven by category management and an
increase in private brand sales. Cost management initiatives have resulted in reduced operating
costs. These improvements in gross margin and savings from cost management initiatives continue to
more than offset incremental expenses associated with new store openings and store remodel
activities now underway.
Inventory
per store was $995,000 as of the end of the second quarter, down from $1.06
million per store in the prior year.
During the second quarter, the Company opened 22 new stores and completed the remodel efforts for
49 stores. At the end of the second quarter, Office Depot operated a total of 1,071 stores
throughout the U.S. and Canada.
2
North American Business Solutions Division
North American Business Solutions Division sales increased by 6% in the second quarter compared to the same period last year. The Business Solutions Division experienced growth in key product categories, and average order values increased compared to the second quarter of 2005. In the second quarter the Company also completed the acquisition of Allied Office Products, a contract stationer, whose results have been consolidated into Office Depot’s results for part of the second quarter.
North American Business Solutions Division sales increased by 6% in the second quarter compared to the same period last year. The Business Solutions Division experienced growth in key product categories, and average order values increased compared to the second quarter of 2005. In the second quarter the Company also completed the acquisition of Allied Office Products, a contract stationer, whose results have been consolidated into Office Depot’s results for part of the second quarter.
Division operating profit was $101 million for the quarter, up 16% from the prior year, and as a
percentage of sales was 8.9%, up 80 basis points from the same period in 2005. 2006 Second Quarter
Charges negatively impacted operating profit by $4 million.
Division
operating profit margins expanded due to improvements in costs, which were slightly offset
by a modest decline in gross margin. Overall gross margin for the Division was negatively impacted
by cost pressures in certain product categories and a shift in the mix of sales. Expense leverage
was achieved from call center optimization efforts initiated in past quarters and from current
period advertising efficiencies. Office Depot continued to invest in
the expansion of the Company’s sales force in the
quarter.
International Division
International Division second quarter sales increased 1% in U.S. dollars, and increased 2% in local currencies compared to the same period in 2005. The change in exchange rates from the corresponding prior year period decreased sales reported in U.S. dollars by approximately $8 million for the quarter. This quarter Office Depot completed the previously announced acquisition of Best Office, an office supply company located in South Korea and increased the Company’s ownership interest to a majority stake in Office Depot Israel. Their results have been consolidated into our results for part of the second quarter.
International Division second quarter sales increased 1% in U.S. dollars, and increased 2% in local currencies compared to the same period in 2005. The change in exchange rates from the corresponding prior year period decreased sales reported in U.S. dollars by approximately $8 million for the quarter. This quarter Office Depot completed the previously announced acquisition of Best Office, an office supply company located in South Korea and increased the Company’s ownership interest to a majority stake in Office Depot Israel. Their results have been consolidated into our results for part of the second quarter.
Division operating profit was $46 million or 5.3% of sales as compared to $51 million or 6% of
sales in the prior year’s second quarter. Second Quarter Charges negatively impacted operating
profit by $3 million, or 30 basis points as a percentage of sales. The comparison for the second quarter is impacted by the allocation of certain
one-time credits realized in 2005 that increased the prior year operating margin by as much as 70
basis points.
The operating
profit margin for 2006 was impacted by a slight decline in gross
margin which was due to the
effect of mix of sales, and continued pricing and cost pressures in
key product categories. This decline was offset by broad based expense savings resulting from consolidation and cost management
efforts.
Non-GAAP Reconciliation
A reconciliation of GAAP results to results excluding Second Quarter Charges may be accessed on our corporate website, www.officedepot.com, under the category Company Info.
A reconciliation of GAAP results to results excluding Second Quarter Charges may be accessed on our corporate website, www.officedepot.com, under the category Company Info.
Conference Call Information
Office Depot will hold a conference call for investors and analysts at 9:00 a.m. (Eastern Daylight Time) on July 28. The conference call will be available to all investors via Web cast at http://investor.officedepot.com. Interested parties may contact Investor Relations at 561-438-7893 for further information.
Office Depot will hold a conference call for investors and analysts at 9:00 a.m. (Eastern Daylight Time) on July 28. The conference call will be available to all investors via Web cast at http://investor.officedepot.com. Interested parties may contact Investor Relations at 561-438-7893 for further information.
3
About Office Depot
Office Depot provides more office products and services to more customers in more countries than any other company.
Office Depot provides more office products and services to more customers in more countries than any other company.
Incorporated in 1986 and headquartered in Delray Beach, Fla., Office Depot has annual sales of
nearly $15 billion, and employs approximately 50,000 associates around the world. Currently, the
Company sells to customers in 33 countries, and has affiliates in another five.
Office Depot is a leader in every distribution channel — from retail stores and contract delivery
to catalogs and e-commerce. As of July 1, 2006, Office Depot had 1,071 retail stores in North
America and another 322 stores, either company-owned, licensed or franchised, in other parts of the
world. Office Depot serves a wide range of customers through a dedicated sales force, telephone
account managers, direct mail offerings, and multiple web sites. With over $3.8 billion in online
sales, the Company is also one of the world’s largest e-commerce retailers.
Office Depot’s common stock is listed on the New York Stock Exchange under the symbol ODP and is
included in the S&P 500 Index. Additional press information can be found at:
http://mediarelations.officedepot.com.
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 February 15, 2006 and its 10-Q and 8-K
filings made from time to time. 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.
4
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
| As of | As of | As of | ||||||||||
| July 1, | December 31, | June 25, | ||||||||||
| 2006 | 2005 | 2005 | ||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 341,350 | $ | 703,197 | $ | 628,059 | ||||||
Short-term investments |
¯ | 200 | 217,000 | |||||||||
Receivables, net |
1,314,333 | 1,232,107 | 1,276,096 | |||||||||
Inventories, net |
1,450,440 | 1,360,274 | 1,366,547 | |||||||||
Deferred income taxes |
121,750 | 136,998 | 139,885 | |||||||||
Prepaid expenses and other current assets |
116,749 | 97,286 | 67,364 | |||||||||
Total current assets |
3,344,622 | 3,530,062 | 3,694,951 | |||||||||
Property and equipment, net |
1,326,128 | 1,311,737 | 1,420,234 | |||||||||
Goodwill |
1,091,427 | 881,182 | 975,681 | |||||||||
Other assets |
445,508 | 375,544 | 353,521 | |||||||||
Total assets |
$ | 6,207,685 | $ | 6,098,525 | $ | 6,444,387 | ||||||
Liabilities and stockholders’ equity |
||||||||||||
Current liabilities: |
||||||||||||
Trade accounts payable |
$ | 1,477,506 | $ | 1,324,198 | $ | 1,215,486 | ||||||
Accrued expenses and other current liabilities |
1,068,020 | 979,796 | 907,471 | |||||||||
Income taxes payable |
117,774 | 117,487 | 134,141 | |||||||||
Short-term borrowings and current maturities
of long-term debt |
34,114 | 47,270 | 16,026 | |||||||||
Total current liabilities |
2,697,414 | 2,468,751 | 2,273,124 | |||||||||
Deferred income taxes and other long-term liabilities |
368,170 | 321,455 | 337,176 | |||||||||
Long-term debt, net of current maturities |
581,761 | 569,098 | 557,549 | |||||||||
Minority interest |
10,270 | ¯ | ¯ | |||||||||
Commitments and contingencies |
||||||||||||
Stockholders’ equity: |
||||||||||||
Common stock — authorized 800,000,000 shares
of $.01 par value; issued and outstanding shares —
Q2 2006: 425,075,847, Q4 2005: 419,812,671,
and Q2 2005: 414,190,717 |
4,251 | 4,198 | 4,142 | |||||||||
Additional paid-in capital |
1,652,554 | 1,517,373 | 1,355,076 | |||||||||
Accumulated other comprehensive income |
249,752 | 140,745 | 171,150 | |||||||||
Retained earnings |
3,114,903 | 2,867,067 | 2,808,682 | |||||||||
Treasury stock, at cost — Q2 2006: 141,798,878,
Q4 2005: 122,787,210, and Q2 2005: 97,410,684 |
(2,471,390 | ) | (1,790,162 | ) | (1,062,512 | ) | ||||||
Total stockholders’ equity |
2,550,070 | 2,739,221 | 3,276,538 | |||||||||
Total liabilities and stockholders’ equity |
$ | 6,207,685 | $ | 6,098,525 | $ | 6,444,387 | ||||||
5
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
| July 1, | June 25, | July 1, | June 25, | |||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Sales |
$ | 3,494,907 | $ | 3,364,052 | $ | 7,310,607 | $ | 7,066,943 | ||||||||
Cost of goods sold and
occupancy costs |
2,416,665 | 2,327,805 | 5,030,459 | 4,879,041 | ||||||||||||
Gross profit |
1,078,242 | 1,036,247 | 2,280,148 | 2,187,902 | ||||||||||||
Store and warehouse operating
and selling expenses |
756,505 | 740,345 | 1,600,026 | 1,568,152 | ||||||||||||
General and administrative expenses |
150,324 | 153,390 | 316,877 | 312,298 | ||||||||||||
Operating profit |
171,413 | 142,512 | 363,245 | 307,452 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
1,086 | 5,761 | 7,345 | 11,230 | ||||||||||||
Interest expense |
(11,347 | ) | (15,179 | ) | (22,413 | ) | (25,562 | ) | ||||||||
Miscellaneous income, net |
6,625 | 7,691 | 14,089 | 12,391 | ||||||||||||
Earnings before income taxes |
167,777 | 140,785 | 362,266 | 305,511 | ||||||||||||
Income taxes |
49,471 | 40,686 | 114,430 | 90,104 | ||||||||||||
Net earnings |
$ | 118,306 | $ | 100,099 | $ | 247,836 | $ | 215,407 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.42 | $ | 0.32 | $ | 0.87 | $ | 0.69 | ||||||||
Diluted |
0.41 | 0.31 | 0.85 | 0.68 | ||||||||||||
Weighted average number of
common shares outstanding: |
||||||||||||||||
Basic |
280,726 | 314,216 | 286,139 | 313,078 | ||||||||||||
Diluted |
287,326 | 318,938 | 292,832 | 317,232 | ||||||||||||
6
OFFICE DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| 26 Weeks Ended | ||||||||
| July 1, | June 25, | |||||||
| 2006 | 2005 | |||||||
Cash flow from operating activities: |
||||||||
Net earnings |
$ | 247,836 | $ | 215,407 | ||||
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
||||||||
Depreciation and amortization |
137,373 | 135,483 | ||||||
Charges for losses on inventories and receivables |
42,716 | 39,411 | ||||||
Changes in working capital and other |
55,863 | (303,919 | ) | |||||
Net cash provided by operating activities |
483,788 | 86,382 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(121,489 | ) | (155,081 | ) | ||||
Acquisitions, net of cash acquired |
(176,022 | ) | ¯ | |||||
Proceeds from disposition of assets |
21,042 | 36,920 | ||||||
Purchase of short-term investments |
(961,450 | ) | (590,675 | ) | ||||
Sale of short-term investments |
961,650 | 533,822 | ||||||
Net cash used in investing activities |
(276,269 | ) | (175,014 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from exercise of stock options and sale of
stock under employee stock purchase plans |
82,111 | 79,607 | ||||||
Tax benefits from employee share-based payments |
32,502 | ¯ | ||||||
Acquisition of treasury stock |
(670,222 | ) | (90,574 | ) | ||||
Net payments on long- and short-term borrowings |
(22,651 | ) | (32,813 | ) | ||||
Net cash used in financing activities |
(578,260 | ) | (43,780 | ) | ||||
Effect of exchange rate changes on cash
and cash equivalents |
8,894 | (33,256 | ) | |||||
Net (decrease) in cash and cash equivalents |
(361,847 | ) | (165,668 | ) | ||||
Cash and cash equivalents at beginning of period |
703,197 | 793,727 | ||||||
Cash and cash equivalents at end of period |
$ | 341,350 | $ | 628,059 | ||||
7
Office Depot, Inc.
DIVISION INFORMATION
(Unaudited)
DIVISION INFORMATION
(Unaudited)
Beginning with the first quarter of 2006, we now include in our Division operating profit those
general and administrative (“G&A”) costs that have been identified as directly or closely
attributable to those units. Division operating profit for the second quarter and first half of
2006 and 2005, which reflects this allocation of G&A as well as certain other minor
reclassifications is provided below.
North American Retail Division
| Second Quarter | First Half | |||||||||||||||
| (Dollars in millions) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Sales |
$ | 1,507.6 | $ | 1,451.1 | $ | 3,298.3 | $ | 3,149.4 | ||||||||
% change |
4 | % | 8 | % | 5 | % | 7 | % | ||||||||
Division operating profit |
$ | 95.9 | $ | 76.2 | $ | 229.7 | $ | 183.1 | ||||||||
% of sales |
6.4 | % | 5.3 | % | 7.0 | % | 5.8 | % | ||||||||
North American Retail Division operating profit includes $1 million of Second Quarter Charges and
$2 million of First Half Charges for the related 2006 periods.
North American Business Solutions Division
| Second Quarter | First Half | |||||||||||||||
| (Dollars in millions) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Sales |
$ | 1,128.7 | $ | 1,065.9 | $ | 2,258.7 | $ | 2,116.9 | ||||||||
% change |
6 | % | 7 | % | 7 | % | 5 | % | ||||||||
Division operating profit |
$ | 100.8 | $ | 86.8 | $ | 193.3 | $ | 161.0 | ||||||||
% of sales |
8.9 | % | 8.1 | % | 8.6 | % | 7.6 | % | ||||||||
North American Business Solutions Division operating profit includes $4 million of Second Quarter
Charges and $5 million of First Half Charges for the related 2006 periods.
International Division
| Second Quarter | First Half | |||||||||||||||
| (Dollars in millions) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Sales |
$ | 858.6 | $ | 847.8 | $ | 1,753.6 | $ | 1,802.1 | ||||||||
% change |
1 | % | 3 | % | (3 | %) | — | % | ||||||||
Division operating profit |
$ | 45.5 | $ | 51.1 | $ | 98.5 | $ | 108.8 | ||||||||
% of sales |
5.3 | % | 6.0 | % | 5.6 | % | 6.0 | % | ||||||||
International Division operating profit includes $3 million of Second Quarter Charges and $19
million of First Half Charges for the related 2006 periods. The comparison for the second quarter
and the first half is impacted by the allocation of certain one-time credits realized in
the second quarter of 2005 that increased the prior
year operating margin by as much as 70 basis points.
Percentage of Sales by Division
| Second Quarter | First Half | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
North American Retail |
43.1 | % | 43.1 | % | 45.1 | % | 44.6 | % | ||||||||
North American Business
Solutions Division |
32.3 | % | 31.7 | % | 30.9 | % | 29.9 | % | ||||||||
International Division |
24.6 | % | 25.2 | % | 24.0 | % | 25.5 | % | ||||||||
8
Office Depot, Inc.
SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
Other Selected Financial Information
(In thousands, except operational data)
(In thousands, except operational data)
| 26 Weeks Ended | ||||||||
| July 1, 2006 | June 25, 2005 | |||||||
Cumulative share repurchases ($): |
$ | 670,222 | $ | 90,574 | ||||
Cumulative share repurchases (shares): |
19,013 | 4,629 | ||||||
Shares outstanding, end of quarter |
283,277 | 316,780 | ||||||
Selected Operating Highlights
| 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||||
| July 1, 2006 | June 25, 2005 | July 1, 2006 | June 25, 2005 | ||||||||||||||
Store
Statistics |
|||||||||||||||||
United States and Canada: |
|||||||||||||||||
Store count: |
|||||||||||||||||
Stores opened |
22 | 17 | 26 | 46 | |||||||||||||
Stores closed |
— | 1 | 2 | 4 | |||||||||||||
Stores relocated |
2 | 4 | 4 | 5 | |||||||||||||
Total U.S. and Canada stores |
1,071 | 1,011 | 1,071 | 1,011 | |||||||||||||
North American Retail Division
square footage: |
26,722,772 | 25,553,663 | |||||||||||||||
Average square footage per NAR
store |
24,951 | 25,276 | |||||||||||||||
Average sales per square foot |
$ | 229 | $ | 229 | $ | 251 | $ | 250 | |||||||||
Inventory
per store (end of period) |
$ | 995,000 | $ | 1,062,000 | |||||||||||||
International Division
company-owned: |
|||||||||||||||||
Store count: |
|||||||||||||||||
Stores opened |
8 | 1 | 8 | 1 | |||||||||||||
Stores closed |
— | 2 | — | 3 | |||||||||||||
Stores acquired |
42 | — | 42 | — | |||||||||||||
Total International
company-owned stores |
120 | 76 | 120 | 76 | |||||||||||||
9
OFFICE DEPOT, INC.
Comparative Trailing Four Quarters Data
(Unaudited)
Comparative Trailing Four Quarters Data
(Unaudited)
The following data has been compiled from the trailing four quarters ended with the second
quarter of 2006 and 2005. THIS INFORMATION IS COMPRISED PRIMARILY OF NON-GAAP INFORMATION.
Therefore, most line items exclude amounts that are determined in accordance with accounting
principles generally accepted in the United States of America. This non-GAAP presentation is not
intended to suggest that such information is superior to the presentation of GAAP information, but
only to clarify some information and assist the reader. We review non-GAAP data, as well as GAAP
data, when assessing our business performance and believe it can provide insight into current
operational aspects of the business.
Material asset impairments, exit cost and other charges recorded during the past year can result in
financial indicators that do not fully reflect the impacts of current business transactions. For
additional information on these charges, please review our Form 10-K for the year 2005 and
subsequent Form 10-Q filings with the Securities and Exchange Commission. We have also provided
the same or most closely related financial measure on a GAAP basis for comparison. In addition to
adjusting for certain items, we have compiled the data on a trailing four quarters basis.
The inclusion of this data is not intended to suggest that we believe our company to be
highly-seasonal, but to provide perspective on the results of events that have transpired during
the course of a year. Our management reviews this information to assess growth initiatives,
streamlining and cost control measures and other operational activities put in place during the
period. A reconciliation of non-GAAP to GAAP financial measures can be found on our web site at
www.officedepot.com under the Investor Relations category.
| Total Company | Trailing 4 Quarters | |||||||||||
| (Dollars in millions) | July 1, | June 25, | ||||||||||
| 2006 | 2005 | Change | ||||||||||
Sales |
$ | 14,522.6 | $ | 13,864.2 | 5% | |||||||
EBIT — adjusted1 |
$ | 738.1 | $ | 599.2 | 23% | |||||||
% of sales |
5.1% | 4.3% | 80 bps | |||||||||
EBIT |
$ | 429.1 | $ | 565.8 | -24% | |||||||
% of sales |
3.0% | 4.1% | -110 bps | |||||||||
Net earnings — adjusted1 |
$ | 496.6 | $ | 397.1 | 25% | |||||||
Net earnings |
$ | 306.2 | $ | 356.8 | -14% | |||||||
Diluted Earnings Per Share — adjusted1 |
$ | 1.64 | $ | 1.26 | 30% | |||||||
Diluted Earnings Per Share |
$ | 1.01 | $ | 1.13 | -11% | |||||||
EBITDA — adjusted1 |
$ | 1,008.1 | $ | 873.8 | 15% | |||||||
% of sales |
6.9% | 6.3% | 60 bps | |||||||||
EBITDA 1 |
$ | 699.1 | $ | 840.4 | -17% | |||||||
% of sales |
4.8% | 6.1% | -130 bps | |||||||||
Return on Equity (ROE) — adjusted1 |
17.6% | 12.6% | 500 bps | |||||||||
ROE |
10.9% | 11.3% | -40 bps | |||||||||
Return on Invested Capital (ROIC) -
adjusted 1 |
13.9% | 11.4% | 250 bps | |||||||||
ROE |
10.5% | 10.7% | -20 bps | |||||||||
Average shares |
303.0 | 316.3 | -4% | |||||||||
1 Non-GAAP financial measure. (bps = basis points)
10