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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/x/ Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (Fee required)
For the fiscal year ended December 25, 1993
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No fee required)
for the transition period from to
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)
Registrant's telephone number, including area code: 407/278-4800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -----------------------------
Common Stock, par value $0.01 per share New York Stock Exchange
Liquid Yield Option Notes due 2007 convertible into Common Stock New York Stock Exchange
Liquid Yield Option Notes due 2008 convertible into Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
The aggregate market value of voting stock held by non-affiliates of
the registrant as of March 18, 1994 was approximately $3,150,146,243.
As of March 18, 1994, the Registrant had 96,197,738 shares of Common Stock
outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended December 25, 1993, are incorporated by reference in Part II
and the Proxy Statement to be mailed to stockholders on or about April 14, 1994
for the Annual Meeting to be held on May 18, 1994, are incorporated by
reference in Part III.
Exhibit Index on Sequentially Numbered Page
Page 1 of
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PART I
ITEM 1. BUSINESS.
GENERAL
Office Depot, Inc. (the "Company") operates the largest chain
of high-volume retail office supply stores in the United States, with 344
stores in 33 states and the District of Columbia and 18 stores in 5 Canadian
provinces. The Company sells high-quality, brand-name office products at
significant discounts primarily to small- and medium-sized businesses. The
Company's stores utilize a "warehouse" format and carry a wide selection of
merchandise, including general office supplies, business machines and
computers, office furniture and other business-related products.
The Company also operates five delivery centers and a
full-service contract stationer business serving medium- and large-sized
businesses in the United States through twelve contract stationer warehouses.
The Company is one of the leading full service contract stationers and office
furniture dealers in the western United States and Texas through its contract
stationer division. The Company, through this division, sells its products
primarily to medium- and large-sized businesses (generally, organizations with
over 75 white-collar employees), schools and other educational institutions and
governmental agencies. The Company provides its customers access to a broad
selection of office supplies and office furniture, as well as specialized
resources and services designed to aid its customers in achieving improved
efficiencies and significant reduction in their overall office supplies and
office furniture costs, including electronic ordering, stockless office
procurement and business forms management services (which reduce customer needs
for office supplies storage facilities), desktop delivery programs (which
reduce customer personnel requirements) and comprehensive product utilization
reports.
The Company's business strategy is to enhance the sales and
profitability of its existing stores, to add new stores in locations where the
Company can achieve a significant market presence and to expand its contract
stationer business. Through expansion, the Company seeks to increase
efficiencies in operations, purchasing, marketing and management. During 1993,
the Company added 67 new stores. The Company intends to open approximately 60
to 70 stores and additional delivery centers during 1994.
The Company's merchandising strategy is to offer customers a
wide selection of brand-name office products at everyday low prices. The
Company believes that its prices are significantly lower than those typically
offered to small- and medium-sized businesses by their traditional sources of
supply. The Company is able to maintain its low competitive price policy
primarily as a result of the significant cost efficiencies achieved through its
operating format and purchasing power. The Company buys substantially all of
its inventory directly from manufacturers in large quantities. It does not
utilize a central warehouse and maintains its inventory on the sales floors of
its "no frills" stores. The Company operates in a highly competitive
environment and the Company believes that in the future it will face increased
competition from other high-volume office supply and wholesale club chains as
the Company and these chains expand their operations.
The Company recently has expanded its business into the
full-service contract stationer portion of the office supply industry. On May
17, 1993, the Company acquired the office supply business of Wilson Stationery
& Printing Company ("Wilson") from Steelcase Inc. for approximately $15 million
of Common Stock and the assumption of certain liabilities. The Company and
Steelcase Inc. were not, at the time of the acquisition, and are not currently,
affiliated. Wilson is a full service contract stationer with operations in
Texas and North Carolina.
On September 13, 1993, the Company acquired all of the
outstanding common stock of Eastman Office Products Corporation ("Eastman"), a
full service contract stationer and office furniture dealer headquartered in
California that operates primarily in the western United States. The Company
acquired the Eastman common stock for approximately $80 million of Common Stock
and $20 million in cash. The
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Company also acquired the outstanding preferred stock of Eastman for
approximately $13 million in cash, acquired pursuant to a tender offer
approximately $82 million aggregate principal amount of Eastman, Inc.'s 13%
Series B Subordinated Notes due 2002 for approximately $103 million in cash and
paid approximately $19 million in cash to pay off the outstanding balance of
Eastman, Inc.'s revolving credit facility. No affiliation existed between the
Company and Eastman prior to this transaction.
Additionally, in February 1994, the Company acquired all of
the outstanding common stock of L.E. Muran Co., a Boston-based contract
stationer, and Yorkship Press Inc., a New Jersey-based contract stationer
serving Philadelphia and southern New Jersey. No affiliation existed between
the Company and either of L.E. Muran Co. or Yorkship Press Inc. prior to these
transactions.
OFFICE PRODUCTS INDUSTRY
The office products industry is comprised of three broad
categories of merchandise: office supplies, office machines and
microcomputers, and office furniture. These products are distributed through
different and sometimes overlapping channels of distribution, including
manufacturers, distributors, dealers, retailers and catalog companies. The
retail office products industry, through which smaller businesses have
traditionally purchased office products, is highly fragmented with few regional
or national chains and is typified by stores that do not stock a full range of
office products.
Retail sales of office products in the United States are made
primarily through office product dealers, which generally operate one or more
retail stores and utilize a central warehouse facility. Dealers purchase a
significant portion of their merchandise from national or regional office
supply distributors who in turn purchase merchandise from manufacturers.
Dealers often employ a commissioned sales force that utilizes the distributor's
catalog, showing products at retail list prices, for selection and price
negotiation with the customer. Contract bids are typically available to large
businesses that are offered discounts equivalent to or greater than those
offered by the Company. The Company believes that small- and medium-sized
businesses, however, have typically been able to obtain from dealers discounts
on manufacturers' suggested retail list prices of only 20% or less. In
addition, those businesses whose volume usage does not justify a dealer's
one-to-one selling effort generally have been treated as retail customers and
charged prices close to full retail list prices.
In the past few years, high-volume office products retailers
employing various formats have emerged in several geographic markets of the
United States targeting the smaller businesses that traditionally purchased
from dealers by offering significantly lower prices. These price advantages
result primarily from direct, high-volume purchasing from manufacturers and
warehouse retailing, thereby avoiding the distributor's mark-up and eliminating
the need for a commissioned sales force and a central distribution facility.
High-volume office products retailers typically offer substantial price savings
to individuals and small- and medium-sized businesses, which traditionally have
had limited opportunities to buy at significant discounts off the retail list
prices.
Larger customers have been, and continue to be, serviced
primarily by full service contract stationers. These stationers traditionally
serve larger businesses through commissioned sales forces, purchase in large
quantities primarily from manufacturers and offer competitive pricing and
customized services to their customers.
MERCHANDISING AND PRODUCT STRATEGY
The Company's merchandising strategy is to offer a broad
selection of brand-name office products at everyday low prices. Each of the
Company's stores offer a comprehensive selection of paper and paper products,
filing supplies, computer hardware and software, calculators, copiers,
typewriters, telephones, facsimile and other business machines, office
furniture, art and engineering supplies and virtually every other type of
office supply. Each of the Company's stores carries approximately 5,600
stock-keeping units (including variations in color and size). In the Contract
Stationer Division, in order to be able to respond satisfactorily to its
customers' orders, certain of the contract stationer warehouses currently carry
up to 18,000 stock-keeping
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units in inventory. Although the Company has not determined the number of
stock-keeping units in inventory its contract stationer warehouses will carry
in the future, the Company expects such number to be less than 18,000.
The table below shows sales of each major product group as a
percentage of total merchandise sales for the 1993, 1992 and 1991 fiscal years:
1993 1992 1991
Fiscal Fiscal Fiscal
Year Year Year
------ ------ ------
General office supplies(1) . . . . . . . . . . . . . 45.6% 48.5% 50.8%
Business machines and related supplies,
computers and computer accessories(2) . . . . . . . 41.3 38.7 34.8
Office furniture(3) . . . . . . . . . . . . . . . . . 13.1 12.8 14.4
------ ------ ------
100.0% 100.0% 100.0%
- -------------------------
(1) Includes paper, filing supplies, organizers, writing instruments,
mailing supplies, desktop accessories, calendars, business forms,
binders, tape, art supplies, books, engineering and janitorial
supplies and revenues from the business services center located in
each store.
(2) Includes calculators, adding machines, typewriters, telephones, cash
registers, copiers, facsimile machines, safes, tape recorders,
computers, computer diskettes, computer paper and related accessories.
(3) Includes, chairs, desks, tables, partitions and filing and storage
cabinets.
The Company buys approximately 95% of its merchandise directly
from manufacturers and other primary source suppliers. Products are generally
delivered from manufacturers directly to the stores or warehouses. The Company
is currently expanding its cross-dock operations that utilize independent
distributors' facilities to receive bulk deliveries from vendors and sort and
deliver merchandise to the Company's stores. These operations use the
Company's computer system and the distributors' existing facilities and trucks,
which, when fully implemented, should enable the Company to realize savings
from freight and handling charges and reduce store inventory levels. No single
customer accounts for more than one percent of the Company's sales. The
Company has no material long-term contracts or commitments with any vendor or
customer. The Company has not experienced any difficulty in obtaining desired
quantities of merchandise for sale and does not foresee any such difficulty in
the future.
Initial purchasing decisions are made at the corporate
headquarters level by buyers who are responsible for selecting and pricing
merchandise. Inventory levels are monitored and reorders for products are
prepared by central replenishment buyers or "rebuyers" with the assistance of a
computerized automatic replenishment system. This system allows buyers to
devote more time to selecting products, developing new product lines, analyzing
competitive developments and negotiating with vendors in order to obtain more
favorable prices and product availability. Purchase orders to approximately
250 vendors are currently transmitted by electronic data interchange (EDI),
which expedites orders and promotes accuracy and efficiency. During 1993, the
Company started to receive Advance Ship Notices (ASN) and invoicing via EDI
from selected vendors. The Company plans to expand this program in 1994.
MARKETING AND SALES
Retail. The Company's marketing programs are designed to
attract new customers to visit its stores for the first time and to provide
information to existing customers. The Company places advertisements with the
major local newspapers in each of its markets. These newspaper advertisements
are supplemented with local radio and television advertising and direct
marketing efforts. During 1992, the Company launched a major national
television advertising campaign utilizing the "Taking Care of Business"
theme. The current series of television commercials is running on three
national television networks and on 11 national cable stations. All print
advertisements, as well as catalog layouts, are created by the Company's
in-house
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graphics department. The Company periodically issues catalogs featuring
merchandise offered in its stores. The catalogs compare the manufacturer's
suggested retail list price and the Company's price to illustrate the savings
offered. The catalogs are distributed through direct mail programs and are
available in each store. Upon entering a new market, the Company purchases a
list of businesses for an initial mailing of catalogs. This list is
continually refined and updated by incorporating the names of private label
credit card holders, guarantee card holders and check paying customers and
forms the basis of a highly targeted proprietary mailing list for updated
catalogs and other promotional mailings.
The Company has a low price guarantee policy. Under this
policy, the Company will match any competitor's lower price and give the
customer 50% (up to $50) of the difference towards the customer's purchase.
This program assures customers of always receiving the lowest price from the
Company's stores even during periodic sales promotions by competitors. Monthly
competitive pricing analyses are performed to monitor each market and prices
are adjusted as necessary to adhere to this pricing philosophy and ensure
competitive positioning.
Contract Stationer. The Company acquires and maintains its
customers primarily through its direct sales force. The Company's sales force
is divided between its office supplies and contract furniture divisions. All
members of the Company's sales force are employees of the Company.
SERVICES
Retail. The Company provides three key services to its
customers -- credit, telephone and facsimile ordering and delivery.
The Company offers revolving credit terms to its customers
through the use of private label credit cards. Every business customer can
apply for one of these credit cards, which are issued without charge. Sales
transactions using the private label credit cards are transmitted by computer
to financial services companies, which credit the Company's bank account with
the net proceeds the following day.
The Company's customers nationwide can place orders by
telephone or facsimile using toll-free telephone numbers through the Company's
order departments in south Florida and the San Francisco area. Orders received
by the order departments are transmitted electronically to the store or
delivery center nearest the customer for pick-up or delivery at a nominal
delivery fee or free delivery with a minimum order size. Orders are packaged,
invoiced and shipped for next-day delivery.
The Company opened two regional delivery warehouses in 1990
(in south Florida and northern California) and three regional delivery
facilities in 1992 (in the Atlanta, Baltimore/Washington and Los Angeles
markets). All delivery orders received from customers in these areas, whether
through the Company's telephone centers or at its stores, are handled through
these facilities. The Company believes that these facilities enable it to
provide improved delivery services on a more cost effective basis and intends
to open additional regional delivery warehouses during 1994. No new delivery
centers were opened during 1993 pending the Company's entry into the contract
stationer portion of the business and the determination of the optimal
configuration of a facility which would support deliveries to both retail and
contract customers.
The Company's stores each have a business services center,
which offers self-service and high-volume photocopying as well as facsimile,
printing, binding, typesetting and other business services.
Contract Stationer. The Company provides the office supplies
purchasing departments of its customers with a wide range of services designed
to improve efficiencies and reduce costs, including electronic ordering,
stockless office procurement and business forms management services, desktop
delivery programs and comprehensive product utilization reports. For contract
stationer customers, the Company will typically sell on credit through an open
account.
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The Company services its contract stationer customers from
warehouses located in Arizona, California, Colorado, Massachusetts, New Jersey,
North Carolina, Texas, Utah and Washington.
STORE DESIGN AND OPERATIONS
The Company's stores average approximately 25,000 square feet
of space and conform to a model designed to achieve cost efficiency by
minimizing rent and eliminating the need for a central warehouse. Each store
displays virtually all of its inventory on the sales floor according to a
plan-o-gram that designates the location of each item in the store. The
plan-o-gram is intended to ensure that merchandise is effectively displayed and
to promote economy and efficiency in the use of merchandising space. On the
sales floor, merchandise is displayed on pallets or in bins on 10 to 12 foot
high industrial steel shelving that permits the bulk stacking of inventory and
quick and efficient restocking. The shelving is positioned to form aisles
large enough to comfortably accommodate customer traffic and merchandise
movement. Additional efficiencies are gained by selling merchandise in
multiple quantity packaging, which significantly reduces duplicate handling and
stock costs.
In all of the Company's stores, inventory that has not been
bar coded by the manufacturer is bar coded in the receiving area and moved
directly to the sales floor. Sales are processed through centralized check-out
facilities, which transmit sales and inventory information on a stock-keeping
unit basis to the Company's central computer system where this information is
updated daily. Rather than individually price marking each product,
merchandise is identified by its stock-keeping unit number with a master sign
for each product displaying the product's price. As price changes occur, a new
master sign is automatically generated for the product display and the new
price is reflected in the check-out register, allowing the Company to avoid
labor costs associated with price remarking.
MANAGEMENT INFORMATION SYSTEMS
The Company employs an IBM ES9000 mainframe and multiple IBM
System AS/400 computers to aid in controlling its merchandising and operations.
The system includes advanced software packages that have been customized for
the Company's specific business operations. The Company is currently
implementing a multi-year strategy to upgrade and convert its systems to
operate in an "open system" mainframe environment.
Inventory data is entered into the computer system upon its
receipt by the store and sales data is entered through the use of a
point-of-sale or telemarketing system. The point-of-sale system permits the
entry of sales data through the use of bar code scanning laser guns and also
has a price "look-up" capability that permits immediate price checking and
efficient movement of customers through the check-out process. Information is
centrally processed at the end of each day, permitting a perpetual daily
inventory and the calculation of average unit cost by stock-keeping unit for
each store or warehouse. Daily compilation of sales and margin data permits
the monitoring of sales, gross margin and inventory by item and product line,
as well as the results of sales promotions. For all stock-keeping units,
management has immediate access to on-hand daily unit inventory, units on
order, current and past rates of sale, the number of weeks' sales for which
quantities are on-hand and a recommended unit purchase reorder. Data from all
the Company's stores (other than those in Florida) are transmitted by satellite
to the Company's headquarters, which provides faster response and is more cost
efficient than traditional telephonic transmission.
EXPANSION PROGRAM
The Company's business strategy is to enhance the sales and
profitability of its existing stores, to add new stores in locations where the
Company can achieve a significant market presence and to expand its contract
stationer business. Through expansion, the Company seeks to increase
efficiencies in operations,
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purchasing, marketing and management. The Company added 67 new stores in 1993,
and plans to open approximately 60 to 70 stores and additional delivery centers
during 1994.
Prior to selecting a new store site, the Company obtains
detailed demographic information indicating business concentrations, traffic
counts, population, income levels and future growth prospects. The Company's
existing and scheduled new stores are located primarily in suburban strip
shopping centers on major commercial thoroughfares where the cost of space is
generally lower than at urban locations. Suburban locations are generally more
accessible to the Company's primary customers, have convenient parking and
facilitate delivery to customers and receipt of inventory from manufacturers.
The Company expands by leasing existing space and renovating it according to
its specifications or by constructing new space according to its
specifications.
Accomplishing the Company's expansion goals will depend on a
number of factors, including the Company's ability to locate and obtain
acceptable sites, open new stores in a timely manner, hire and train competent
managers, integrate new stores into its operations, generate funds from
operations and continue to access external sources of capital. No assurances
can be given that these expansion plans will be accomplished.
Through its acquisitions in 1993, the Company is expanding its
presence in the contract stationer portion of the office products industry.
The Company's business strategy includes continued expansion in this portion of
the industry, although no assurances can be given that it will be able to do
so.
EMPLOYEES, STORE MANAGEMENT AND TRAINING
As of March 11, 1994, the Company employed approximately
20,400 persons. Additional personnel will be added as needed to implement the
Company's expansion program. The Company's goal is to promote as many existing
employees into management positions as possible. Due to the rate of its
expansion, however, for the foreseeable future the Company will continue to
hire a portion of its management personnel from outside the Company.
The Company's policy is to hire and train additional personnel
in advance of new store openings. In general, store managers have extensive
experience in retailing, particularly with warehouse store chains or discount
stores that generate high sales volumes. Each new store manager usually spends
two to four months in an apprenticeship position at an existing store prior to
being assigned to a new store. The Company's sales employees are required to
view product knowledge videos and complete written training programs relating
to certain products. The Company creates some of these videos and training
programs while the remainder are supplied by manufacturers. The Company grants
stock options to certain of its employees as an incentive to attract and retain
such employees.
The Company has never experienced a strike or any work
stoppage and management believes that its relations with its employees are
good. There are no collective bargaining agreements covering any of the
Company's employees.
COMPETITION
The Company operates in a highly competitive environment. Its
markets are presently served primarily by traditional office products dealers
that typically operate a central warehouse and one or more retail stores. The
Company believes it competes favorably against these dealers, who purchase
their products from distributors and generally sell their products at prices
higher than those offered by the Company, because they generally offer small-
and medium-sized businesses discounts on manufacturer's suggested retail list
prices of only 20% or less as compared to the Company's 30% to 60% discount to
all customers. The Company also competes with wholesale clubs selling general
merchandise, discount stores, mass merchandisers, conventional retail stores,
catalog showrooms and direct mail companies. While these competitors generally
charge small
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business customers lower prices than traditional office products dealers, they
typically have a more limited in-stock product selection than the Company's
stores and do not provide many of the services provided by the Company.
Several high-volume office supply chains that are similar in
concept to the Company in terms of store format, pricing strategy and product
selection and availability also operate in the United States. The Company
competes with these chains and wholesale club chains in substantially all of
its current and prospective markets. The Company believes that in the future
it will face increased competition from these chains as the Company and these
chains expand their operations. Some of the entities against which the Company
competes, or may compete, are larger and have substantially greater financial
resources than the Company. No assurance can be given that increased
competition will not have an adverse effect on the Company. The Company
believes it competes based on product price, selection, availability and
service.
In the contract stationer portion of the industry, principal
competitors are national and regional full service contract stationers,
national and regional office furniture dealers, independent office product
distributors, discount superstores and to a lesser extent, direct mail order
houses and stationery retail outlets. Certain discount superstores also appear
to be attempting to develop a presence in the contract stationer portion of the
business.
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ITEM 2. PROPERTIES.
As of March 21, 1994, the Company operated 344 stores in 33
states and the District of Columbia and 18 stores in 5 Canadian provinces. The
Company also operates five delivery centers and a full service contract
stationer business through 12 contract stationer warehouses. The following
table sets forth the locations of the Company's facilities.
Number Number
State of Stores State of Stores
----- --------- ----- ---------
Alabama 6 Nevada 4
Arizona 2 New Mexico 2
Arkansas 2 North Carolina 11
California 69 Ohio 2
Colorado 11 Oklahoma 5
District of Columbia 2 Oregon 7
Florida 57 Pennsylvania 5
Georgia 16 South Carolina 5
Hawaii 1 Tennessee 5
Idaho 1 Texas 45
Illinois 10 Virginia 4
Indiana 7 Washington 11
Iowa 1 Wisconsin 6
Kansas 4
Kentucky 3
Louisiana 7 CANADA
Maryland 10 ------
Michigan 9 Alberta 5
Mississippi 1 British Columbia 4
Missouri 10 Manitoba 2
Nebraska 3 Ontario 6
Saskatchewan 1
DELIVERY CENTERS AND
CONTRACT STATIONER
WAREHOUSES
--------------------------
Arizona 1
California 5
Colorado 1
Florida 1
Georgia 1
Maryland 1
Massachusetts 1
New Jersey 1
North Carolina 1
Texas 2
Utah 1
Washington 1
All the Company's facilities are leased or subleased by the
Company with lease terms (excluding renewal options exercisable by the Company
at escalated rents) expiring between 1994 and 2015, except for two Oklahoma
stores, three Florida stores, four Texas stores and one California store that
are owned by the Company. The Company operates its stores under the names
Office Depot and The Office Place in Ontario, Canada. The Company operates its
contract stationer warehouses under the names Eastman Office Products, Wilson
Business Products, L.E. Muran and Yorkship Business Supply.
The Company's corporate offices in Delray Beach, Florida,
containing approximately 350,000 square feet in two adjacent buildings, were
purchased in February 1994 for approximately $16 million. The Company had
previously occupied one of the buildings under a lease covering approximately
150,000 square feet.
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ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in litigation arising in the normal
course of its business. The Company believes that these matters will not
materially affect its financial position or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.
The Common Stock of the Company is listed on the New York
Stock Exchange ("NYSE") under the symbol "ODP." At March 18, 1994, there were
3,354 holders of record of Common Stock. The last reported sales price of the
Common Stock on the NYSE on March 18, 1994 was $39-1/4.
The following table sets forth, for the periods indicated, the
high and low sale prices of the Common Stock quoted on the NYSE Composite Tape.
These prices do not include retail mark-ups, mark-downs or commissions, and
have been adjusted to reflect a two-for-one stock split in May 1992 and a
three-for-two stock split in May 1993.
High Low
---- ---
1992
First Quarter . . . . . . . . . . . . . . . . $ 19 $ 15-1/4
Second Quarter . . . . . . . . . . . . . . . . 17-3/64 12-1/2
Third Quarter . . . . . . . . . . . . . . . . 20-43/64 15-59/64
Fourth Quarter . . . . . . . . . . . . . . . . 23-1/4 16-27/64
1993
First Quarter . . . . . . . . . . . . . . . . $ 25-11/64 $ 17-53/64
Second Quarter . . . . . . . . . . . . . . . . 27-3/4 20-43/64
Third Quarter . . . . . . . . . . . . . . . . 33-7/8 25-3/8
Fourth Quarter . . . . . . . . . . . . . . . . 35-7/8 31-5/8
The Company has never declared or paid cash dividends on its
Common Stock and does not currently intend to pay cash dividends in the
foreseeable future. Earnings and other cash resources of the Company will be
used to continue the expansion of the Company's business. In addition, the
Company is limited in the amount of cash dividends it can pay under the terms
of its credit facility.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data as of and for the 52 weeks ended
December 28, 1991, December 26, 1992 and December 25, 1993 set forth in the
Company's Annual Report to Stockholders for the fiscal year ended December 25,
1993 (on the inside front cover) is incorporated herein by reference and made a
part of this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition
and Results of Operations set forth in the Company's Annual Report to
Stockholders for the fiscal year ended December 25, 1993 (on pages 17-20) is
incorporated herein by reference and made a part of this report.
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ITEM 8. FINANCIAL STATEMENTS.
The financial statements of the Company for the 52 weeks ended
December 28, 1991, December 26, 1992 and December 25, 1993 set forth in the
Company's Annual Report to Stockholders for the fiscal year ended December 25,
1993 (on pages 21- 36) are incorporated herein by reference and made a part of
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors and executive officers
of the Company is incorporated herein by reference to the information under the
caption "Management--Directors and Executive Officers" in the Company's Proxy
Statement for the 1994 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is
incorporated herein by reference to the information under the caption
"Management--Compensation" in the Company's Proxy Statement for the 1994 Annual
Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information with respect to security ownership of certain
beneficial owners and management is incorporated herein by reference to the
tabulation under the caption "Security Ownership" in the Company's Proxy
Statement for the 1994 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information with respect to certain relationships and related
transactions is incorporated herein by reference to the information under the
caption "Certain Transactions" in the Company's Proxy Statement for the 1994
Annual Meeting of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) The following documents are filed as a part of this report:
1. The financial statements listed in the "Index to
Financial Statements."
2. The financial statement schedules listed in "Index to
Financial Statement Schedules."
3. The exhibits listed in the "Index to Exhibits."
- 10 -
12
(b) Reports on Form 8-K.
None.
- 11 -
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on
March 23, 1994.
OFFICE DEPOT, INC.
By /s/ David I. Fuente
David I. Fuente, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant in the capacities indicated on March 23, 1994.
Signature Capacity
--------- --------
/s/ David I. Fuente Chairman of the Board and Chief Executive Officer
David I. Fuente (Principal Executive Officer)David I. Fuente
/s/ Mark D. Begelman Director, President and Chief Operating Officer
Mark D. Begelman
/s/ Barry J. Goldstein Executive Vice President -- Finance, Chief
Barry J. Goldstein Financial Officer and Secretary (Principal
Financial and Accounting Officer)
Director
Denis Defforey
/s/ W. Scott Hedrick Director
W. Scott Hedrick
/s/ John B. Mumford Director
John B. Mumford
/s/ Michael J. Myers Director
Michael J. Myers
/s/ Peter J. Solomon Director
Peter J. Solomon
/s/ Alan L. Wurtzel Director
Alan L. Wurtzel
14
INDEX TO FINANCIAL STATEMENTS
Page
----
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Report of Deloitte & Touche on Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Report of Deloitte & Touche on Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
All other statements have been omitted because they are
inapplicable, not required or the information is included elsewhere herein.
______________________________
* Incorporated herein by reference to the respective
information in the Company's Annual Report to
Stockholders for the fiscal year ended December 25,
1993.
F - 1
15
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Board of Directors of Office Depot, Inc.:
We have audited the consolidated financial statements of Office Depot, Inc. and
subsidiaries as of December 25, 1993 and December 26, 1992 and for each of the
three years in the period ended December 25, 1993, and have issued our report
thereon dated February 8, 1994; such consolidated financial statements and
report are included in your 1994 Annual Report to Stockholders and are
incorporated herein by reference. Our audits also included the financial
statement schedules of Office Depot, Inc. and subsidiaries referred to in Item
14(a)(2) and listed in the Index to Financial Statement Schedules. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
DELOITTE & TOUCHE
Certified Public Accountants
Fort Lauderdale, Florida
February 8, 1994
F - 2
16
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
----
Schedule V - Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . F-5
Schedule VIII - Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . . . . . . . . . . F-6
Schedule X - Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . . . . . . F-7
F - 3
17
SCHEDULE V
OFFICE DEPOT, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
Column A Column B Column C Column D Column E Column F
--------------- ---------- --------- ----------- -------- ----------
Balance at Balance at
Beginning Additions Other End of
Classifications of Period at Cost Retirements Changes Period
--------------- ---------- --------- ----------- -------- ----------
Period Ended December 25, 1993
Land and buildings . . . . $ 16,442 $ 21,098 $(2,138) $ 35,402
Furniture, fixtures and
equipment . . . . . . . 82,080 50,866 (2,035) 130,911
Automotive equipment . . . 8,179 6,977 (488) 14,668
Leasehold improvements . . 100,339 43,312 (1,085) 142,566
Equipment under capital
lease. . . . . . . . . . . 12,899 3,436 (57) 16,278
-------- -------- -------- --------- --------
$219,939 $125,689 $(5,803) $ -- $339,825
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
Period Ended December 26, 1992
Land and buildings . . . . $ 5,842 $ 12,327 $ (1,727) $ 16,442
Furniture, fixtures and
equipment 62,552 20,309 (781) 82,080
Automotive equipment . . . 6,181 2,088 (90) 8,179
Leasehold improvements . . 74,395 26,596 (652) 100,339
Equipment under capital
lease. . . . . . . . . . . 12,899 12,899
-------- -------- -------- --------- --------
$161,869 $61,320 $(3,250) $ --- $219,939
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
Period Ended December 28, 1991
Land and buildings . . . . $ 4,010 $ 2,272 $ (440) $ 5,842
Furniture, fixtures and
equipment . . . . . . . . 38,635 25,259 (227) $(1,115) 62,552
Automotive equipment . . . 3,918 1,166 (18) 1,115 6,181
Leasehold improvements . . 47,680 27,139 (424) 74,395
Equipment under capital
lease . . . . . . . . . 12,552 347 12,899
-------- -------- -------- --------- --------
$106,795 $56,183 $(1,109) $ --- $161,869
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
F - 4
18
SCHEDULE VI
OFFICE DEPOT, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
Column A Column B Column C Column D Column E Column F
--------------- --------- --------- ----------- ------- ----------
Additions
Balance at Charged to Balance at
Beginning Costs and Other End of
Classifications of Period Expenses Retirements Changes Period
--------------- --------- --------- ----------- ------- ----------
Period Ended December 25, 1993
Land and buildings . . . . $ 245 $ 291 $ (5) $ 531
Furniture, fixtures and
equipment . . . . . . . 24,294 15,481 (883) 38,892
Automotive equipment . . . 4,470 2,292 (425) 6,337
Leasehold improvements . . 14,004 7,262 (450) 20,816
Equipment under capital
lease . . . . . . . . . 8,458 2,704 (57) 11,105
------- ------- ------- ------- -------
$51,471 $28,030 $(1,820) $ -- $77,681
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Period Ended December 26, 1992
Land and buildings . . . . $ 118 $ 148 $(21) $ 245
Furniture, fixtures and
equipment . . . . . . . 13,906 10,749 (361) 24,294
Automotive equipment . . . 3,009 1,530 (69) 4,470
Leasehold improvements . . 8,590 5,600 (186) 14,004
Equipment under capital
lease . . . . . . . . . 6,047 2,411 8,458
------- ------- ------- ------- -------
$31,670 $20,438 $(637) $ --- $51,471
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Period Ended December 28, 1991
Land and buildings . . . . $ 48 $ 70 $ 118
Furniture, fixtures and
equipment . . . . . . . 7,034 7,278 $ (75) $(331) 13,906
Automotive equipment . . . 1,352 1,327 (1) 331 3,009
Leasehold improvements . . 4,453 4,288 (151) 8,590
Equipment under capital
lease . . . . . . . . . 3,616 2,431 6,047
------- ------- ------- ------- -------
$16,503 $15,394 $(227) $ --- $31,670
------- ------- ------- ------- -------
------- ------- ------- ------- -------
F - 5
19
SCHEDULE VIII
OFFICE DEPOT, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
Column A Column B Column C Column D
----------- --------- ---------- -------- ------------ ---------
Additions
--------------------------
Balance at Charged to Charged to Balance at
beginning Costs and Other Deductions- End of
Description of Period Expenses Accounts Write-offs Period
----------- --------- ---------- -------- ------------ ---------
Allowances for Doubtful
Accounts:
1993 . . . . . . . . $389 $675 $1,909(1) $182 $2,791
1992 . . . . . . . . 269 302 - 182 389
1991 . . . . . . . . 247 158 - 136 269
(1) Allowance for doubtful accounts of Eastman and Wilson at the respective
dates of acquisition.
F - 6
20
SCHEDULE X
OFFICE DEPOT, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In thousands)
Column B - Charged to
Column A - Item Costs and Expenses
----------------------- ---------------------
Advertising costs, net:
1993 $28,617
1992 24,290
1991 29,147
F - 7
21
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page +
------ ------- ---------
3.1 Restated Certificate of Incorporation, as amended to date (1)
3.2 Bylaws (2)
4.1 Form of certificate representing shares of Common Stock (2)
4.2 Form of Indenture (including form of LYON) between the Company and (3)
The Bank of New York, as Trustee
4.3 Form of Indenture (including form of LYON) between the Company and (4)
Bankers Trust Company, as Trustee
10.1 Form of Subscription Agreement entered into between the Company and (2)
each of the purchasers of units of the Company's Class A Preferred
Stock and Common Stock
10.2 Registration Agreement, dated as of July 24, 1987, among the Company (2)
and certain purchasers of the Company's Convertible Preferred Stock
10.3 Stock Purchase Agreement, dated as of June 21, 1989, between the (2)
Company and Carrefour S.A.
10.4 Agreement and Plan of Reorganization, dated December 19, 1990, among (2)
the Company, The Office Club, Inc. and OD Sub Corp.
10.5 Stock Purchase Agreement, dated as of April 24, 1991, between the (5)
Company, Carrefour S.A. and Carrefour Nederland B. V.
10.6 Revolving Credit and Line of Credit Agreement dated as of September (6)
30, 1993 by and among the Company and Sun Bank, National
Association, individually and as Agent, NationsBank of Florida,
N.A., PNC Bank, Kentucky, Inc., Bank of America National Trust and
Savings Association and Royal Bank of Canada
10.7 Office Depot, Inc. Stock Option and Stock Appreciation Rights Plan* (7)
10.8 Directors' Stock Option Plan* (8)
10.9 Amended and Restated Agreement and Plan of Merger dated as of (9)
July 12, 1993 and amended and restated as of August 30, 1993 by and
among the Company, Eastman Office Products Corporation, EOPC
Acquisition Corp. and certain investors
13.1 Annual Report to Stockholders
21.1 List of the Company's subsidiaries
23.1 Consent of Deloitte & Touche
- ----------------
+ This information appears only in the manually signed
original copies of this report.
* Management contract or compensatory plan or
arrangement.
(1) Incorporated by reference to the respective exhibit
to the Company's Registration Statement No. 33-66642.
(2) Incorporated by reference to the respective exhibit
to the Company's Registration Statement No. 33-39473.
(3) Incorporated by reference to the respective exhibit
to the Company's Registration Statement No. 33-54574.
(4) Incorporated by reference to the respective exhibit
to the Company's Registration Statement No. 33-70378.
(5) Incorporated by reference to the respective exhibit
to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended June 29, 1991.
(6) Incorporated by reference to the respective exhibit
to the Company's Current Report on Form 8-K filed
October 14, 1993.
(7) Incorporated by reference to the respective exhibit
to the Company's Proxy Statement for the 1993 Annual
Meeting of Stockholders
22
(8) Incorporated by reference to the respective exhibit
to the Company's Annual Report on Form 10-K for the
year ended December 26, 1992.
(9) Incorporated by reference to the respective exhibit
to the Company's Registration Statement No. 33-51409.
Upon request, the Company will furnish a copy of any
exhibit to this report upon the payment of reasonable copying and mailing
expenses.