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EX-99.2 - EX-99.2 - ODP Corpd324633dex992.htm
EX-2.2 - EX-2.2 - ODP Corpd324633dex22.htm
EX-2.1 - EX-2.1 - ODP Corpd324633dex21.htm
8-K - 8-K - ODP Corpd324633d8k.htm

Exhibit 99.1

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Sale of European Business Operations

On December 31, 2016, Office Depot, Inc. (the “Company” or “Office Depot”) closed the transaction contemplated by the Sale and Purchase Agreement by and among the Company, Office Depot Foreign Holdings LP, LLC (“Office Depot Foreign Holdings LP”), Office Depot Foreign Holdings GP, LLC (“Office Depot Foreign Holdings GP” and together with Office Depot Foreign Holdings LP, “Office Depot Foreign Holdings”), Aurelius Rho Invest NL DS B.V. (the “LP Purchaser”), and Aurelius Rho Invest NL Two B.V. (the “GP Purchaser”), each subsidiaries of The AURELIUS Group (LP Purchaser and GP Purchaser collectively shall be referred to as, the “Purchasers”), dated November 22, 2016, as amended, to complete the sale of the Company’s European business operations (the “OD European Business”). The transaction was consummated as an equity sale, for nominal consideration, with the Purchasers acquiring the OD European Business with its assets and liabilities.

Unaudited Pro Forma Consolidated Financial Information

The following unaudited pro forma consolidated financial statements were derived from the historical consolidated financial statements of the Company, which were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Beginning in the third quarter of 2016, the Company reclassified substantially all of the operations of its International Division, which include the OD European Business, to discontinued operations, net of tax in the Condensed Consolidated Statements of Operations and also reclassified the related assets and liabilities as current assets and liabilities of discontinued operations on the Condensed Consolidated Balance Sheet as of September 24, 2016 which were included in the Company’s Quarterly Report on Form 10-Q for the period ended September 24, 2016 as filed with the U.S. Securities and Exchange Commission on November 2, 2016 (the “third quarter 2016 Form 10-Q”). Because the operating results of the OD European Business were included as discontinued operations as reported in the Company’s third quarter 2016 Form 10-Q, additional pro forma information for the interim period is not provided herein.

The unaudited pro forma consolidated statements of operations for the fiscal years ended 2015, 2014 and 2013, give effect to the sale of the OD European Business, as if it had occurred on December 30, 2012, the first day of fiscal year 2013.

The Company believes that the adjustments related to the sale of the OD European Business presented in the unaudited pro forma consolidated financial information contained herein are consistent with the guidance for discontinued operations under U.S. GAAP. However, estimates used in preparing this unaudited pro forma information may change as the Company finalizes its discontinued operations accounting to be reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The following unaudited pro forma consolidated financial statements should be read in conjunction with the historical consolidated financial statements of the Company, the accompanying notes to those financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Office Depot’s Annual Report on Form 10-K for the fiscal year ended December 26, 2015 and the third quarter 2016 Form 10-Q. The unaudited pro forma consolidated financial statements have been presented for informational purposes only. The unaudited pro forma consolidated financial statements are not necessarily indicative of what our results of operations or financial condition would have been had the transactions to which the pro forma adjustments relate actually occurred on the dates indicated, and they do not assert to project our results of operations or financial condition for any future period or as of any future date.

FORWARD LOOKING STATEMENT: This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to, among other things, Office Depot, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of Office Depot’s control. There can be no assurances that Office Depot will realize these expectations or that these beliefs will prove correct, and therefore, investors and stockholders should not place undue reliance on such statements.

Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, risks related to the termination of the Staples acquisition; disruption in key business activities or any impact on Office Depot’s relationships with third parties as a result of the announcement of the termination of the Staples Merger Agreement; unanticipated changes in the markets for Office Depot’s business segments; the inability to realize expected benefits from the disposition of the European operations; fluctuations in currency exchange rates, unanticipated downturns in business relationships with customers; competitive pressures on Office Depot’s sales and pricing; increases in the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technology products and services; unexpected technical or marketing difficulties; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; new laws and governmental regulations. The foregoing list of factors is not exhaustive. Investors and stockholders should carefully consider the foregoing factors and the other risks and uncertainties described in Office Depot’s Annual Reports on Form 10-K, as amended, and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. Office Depot does not assume any obligation to update or revise any forward-looking statements.


OFFICE DEPOT, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 26, 2015

(In millions, except per share amounts)

 

           Pro Forma Adjustments  
     As Reported     Disposal of OD
European Business
    Pro Forma  

Sales

   $ 14,485      $ (2,136   $ 12,349   

Cost of goods sold and occupancy costs

     10,983        (1,605     9,378   
  

 

 

   

 

 

   

 

 

 

Gross profit

     3,502        (531     2,971   

Selling, general and administrative expenses

     3,042        (507     2,535   

Asset impairments

     13        —          13   

Merger, restructuring, and other operating expenses, net

     332        (82     250   
  

 

 

   

 

 

   

 

 

 

Operating income

     115        58        173   

Other income (expense):

      

Interest income

     24        —          24   

Interest expense

     (93     2        (91

Other income (expense), net

     1        (2     (1
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     47        58        105   

Income tax expense

     39        (10     29   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 8      $ 68      $ 76   
  

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per share

   $ 0.01        $ 0.14   
  

 

 

     

 

 

 

Weighted average shares outstanding:

      

Basic

     547          547   
  

 

 

     

 

 

 

Diluted

     555          555   
  

 

 

     

 

 

 


OFFICE DEPOT, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 27, 2014

(In millions, except per share amounts)

 

           Pro Forma Adjustments  
     As Reported     Disposal of OD
European Business
    Pro Forma  

Sales

   $ 16,096      $ (2,641   $ 13,455   

Cost of goods sold and occupancy costs

     12,320        (1,980     10,340   
  

 

 

   

 

 

   

 

 

 

Gross profit

     3,776        (661     3,115   

Selling, general and administrative expenses

     3,479        (623     2,856   

Asset impairments

     88        (32     56   

Merger, restructuring, and other operating expenses, net

     403        (61     342   

Legal Accrual

     81        —          81   
  

 

 

   

 

 

   

 

 

 

Operating loss

     (275     55        (220

Other income (expense):

      

Interest income

     24        —          24   

Interest expense

     (89     2        (87

Other income (expense), net

     —          2        2   
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (340     59        (281

Income tax expense

     12        (6     6   
  

 

 

   

 

 

   

 

 

 

Net loss

     (352     65        (287

Less: Results attributable to the noncontrolling interests

     2        —          2   
  

 

 

   

 

 

   

 

 

 

Net loss attributable to Office Depot, Inc.

   $ (354   $ 65      $ (289
  

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share

   $ (0.66     $ (0.54
  

 

 

     

 

 

 

Weighted average shares outstanding:

      

Basic and diluted

     535          535   
  

 

 

     

 

 

 


OFFICE DEPOT, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 28, 2013

(In millions, except per share amounts)

 

           Pro Forma Adjustments  
     As Reported     Disposal of OD
European Business
    Pro Forma  

Sales

   $ 11,242      $ (2,717   $ 8,525   

Cost of goods sold and occupancy costs

     8,616        (2,043     6,573   
  

 

 

   

 

 

   

 

 

 

Gross profit

     2,626        (674     1,952   

Selling, general and administrative expenses

     2,560        (638     1,922   

Asset impairments

     70        (44     26   

Merger, restructuring, and other operating expenses, net

     201        (12     189   
  

 

 

   

 

 

   

 

 

 

Operating loss

     (205     20        (185

Other income (expense):

      

Interest income

     5        —          5   

Interest expense

     (69     2        (67

Gain on disposition of joint venture

     382        (382     —     

Other income, net

     14        (15     (1
  

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     127        (375     (248

Income tax expense

     147        (130     17   
  

 

 

   

 

 

   

 

 

 

Net loss

     (20     (245     (265

Preferred stock dividends

     73        —          73   
  

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (93   $ (245   $ (338
  

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share

   $ (0.29     $ (1.06
  

 

 

     

 

 

 

Weighted average shares outstanding:

      

Basic and diluted

     318          318