Announces Debt Retirement, Initiation of
Quarterly Dividend, Expanded Share Repurchase Plan
Identifies Initiatives for Future Growth
Expands U.S. Retail Optimization and Store of
the Future Plan
Launches $250 Million Cost Savings Program
Office Depot, Inc. (“Office Depot”, or the “company”) (NASDAQ:
ODP), a leading global provider of office products,
services, and solutions, today announced results for the second
quarter ended June 25, 2016.
“We are making good progress rebuilding our sales pipeline and
moving our overall business forward, despite the disruption of the
prolonged Staples acquisition attempt,” said Roland Smith, chairman
and chief executive officer for Office Depot. “The initiatives we
announced today are a result of our comprehensive strategic
business review which is now substantially complete. In the near
term, we remain focused on executing our Critical Priorities,
completing the OfficeMax merger integration, implementing our new
cost saving programs, and returning capital to shareholders. Longer
term, our business review has also identified several attractive
growth initiatives that we intend to aggressively pursue.”
Consolidated Results
Reported (GAAP) Results
Total reported sales for the second quarter of 2016 were $3.2
billion compared to $3.4 billion in the second quarter of 2015, a
decrease of 6%.
In the second quarter of 2016, Office Depot reported operating
income of $253 million and net income of $210 million, or $0.38 per
share. In the second quarter of 2015, the company reported an
operating loss of $51 million and a net loss of $58 million, or
$0.11 loss per share.
Adjusted (non-GAAP) Results (1)
Total adjusted sales in the second quarter of 2016 declined 3%
compared to the prior year period, excluding the impact of U.S.
retail store closures and foreign currency translation.
Adjusted operating income for the second quarter of 2016 was $67
million compared to an adjusted operating income of $73 million in
the second quarter of 2015. For the second quarter of 2016,
adjusted operating income excludes a net credit totaling $187
million, comprised of a $250 million fee paid by Staples in
connection with the termination of the merger agreement, partially
offset by charges including $34 million in Staples acquisition
expenses, $25 million in expenses related to the Office
Depot/OfficeMax integration and $4 million in restructuring
activities.
Adjusted net income for the second quarter of 2016 was $19
million, or $0.03 per share, compared to adjusted net income of $32
million, or $0.06 per share, in the second quarter of 2015.
Adjusted net income in the second quarter of 2016 excludes the
after-tax impact from the special charges and credits and reflects
the negative impact of a higher tax rate due to losses in non-U.S.
jurisdictions with valuation allowances.
Consolidated (in millions, except per share amounts)
2Q16 2Q15 YTD16
YTD15 Selected GAAP measures:
Sales
$3,218
$3,440 $6,762 $7,317 Sales
decline from prior year period
(6)%
(8)% Gross profit
$747
$814 $1,603 $1,751 Gross
profit margin
23.2% 23.7%
23.7% 23.9% Operating income (loss)
$253 $(51) $325
$36 Net income (loss)
$210 $(58)
$256 $(13) Net earnings (loss) per
share (most dilutive)
$0.38 $(0.11)
$0.46 $(0.02) Selected Non-GAAP
measures:(1)
Adjusted sales decline from prior year
period excluding impact from U.S. retail store closures and foreign
currency translation
(3)% (4)%
Adjusted operating income
$67 $73
$181 $208 Adjusted operating income
margin
2.1% 2.1% 2.7%
2.8% Adjusted net income (loss)
$19
$32 $76 $103 Adjusted net
earnings (loss) per share
$0.03 $0.06
$0.14 $0.19
(1) Adjusted results include non-GAAP measures and exclude
charges or credits not indicative of our core operations and the
tax effect of these items, which may include but not be limited to
merger integration, restructuring, Staples acquisition and asset
impairments. Additionally, the adjusted year-over-year rate of
sales decline for the consolidated company excludes the impact from
foreign currency translation and sales attributable to U.S. retail
store closures. Reconciliations from GAAP to non-GAAP financial
measures can be found in this release as well as on our Investor
Relations website at investor.officedepot.com.
Divisional Results
North American Retail Division
Retail Division sales were $1.2 billion in the second quarter of
2016 compared to $1.3 billion in the prior year period. Second
quarter sales declined 7%, primarily due to the impact of planned
store closures in the twelve months through June 25, 2016.
Same-store sales in the quarter declined 1% primarily due to lower
transaction counts, partially offset by higher average order value.
Same-store sales benefited from the positive impact of transferred
sales from closed stores.
North American Retail (in millions)
2Q16
2Q15 YTD16 YTD15 Sales
$1,249 $1,342 $2,755
$2,995 Same-store sales increase (decline) from prior
year
(1)% (1)%
Division operating income (loss)
$30
$42 $132 $128 Division operating
income (loss) margin
2.4% 3.1%
4.8% 4.3%
Retail Division operating income was $30 million, or 2.4% of
sales, in the second quarter of 2016 compared to $42 million, or
3.1% of sales, in the second quarter of 2015. The decline from the
prior year quarter primarily reflected $15 million in favorable
legal settlements recorded in the second quarter of 2015 and a
lower gross margin rate, partially offset by lower occupancy costs
and selling, general and administrative expenses including
payroll.
Office Depot ended the second quarter of 2016 with a total of
1,513 retail stores in the North American Retail Division. During
the quarter, the company closed 42 stores, completing the
previously announced 400 store closure plan.
North American Business Solutions
Division
Business Solutions Division sales were $1.3 billion in the
second quarter of 2016, a decline of 7% compared to the prior year
period as reported and in constant currency. Sales were lower in
both the contract and direct channels. The contract channel sales
decline was driven primarily by customer attrition and fewer
customer additions during the period of business disruption related
to the prolonged Staples’ acquisition attempt. In the direct
channel, decommissioning of legacy OfficeMax ecommerce sites and
the ongoing reduction in catalog sales also contributed to the
decline in sales.
Business Solutions (in millions)
2Q16
2Q15 YTD16 YTD15 Sales
$1,330 $1,434 $2,698
$2,910 Sales decline in constant currency from prior year
(7)% (7)%
Division operating income
$63 $63
$109 $120 Division operating income
margin
4.7% 4.4% 4.0%
4.1%
Business Solutions Division operating income was $63 million, or
4.7% of sales, in the second quarter of 2016 compared to $63
million, or 4.4% of sales, in the second quarter of 2015. Although
operating income was flat compared to the prior year quarter,
operating margin increased as the flow-through impact from lower
sales was offset by a higher gross margin rate and lower selling,
general and administrative expenses including payroll and
advertising.
International Division
International Division sales were $0.6 billion in the second
quarter of 2016, a decline of 4% compared to the prior year period,
reflecting the negative impact of foreign currency translation.
International sales declined 2% in constant currency primarily due
to the continued business disruption from the prolonged Staples’
acquisition attempt and ongoing European sale process, the exit of
unprofitable business in Asia and ongoing competitive market
pressures.
International (in millions)
2Q16
2Q15 YTD16 YTD15 Sales
$639 $664 $1,309
$1,412 Sales decline in constant currency from prior year
(2)% (4)%
Division operating income (loss)
$(10)
$2 $(19) $15 Division operating
income (loss) margin
(1.6)% 0.3%
(1.5)% 1.1%
The International Division operating loss was $10 million, or
1.6% of sales, in the second quarter of 2016 compared to an
operating income of $2 million, or 0.3% of sales, in the second
quarter of 2015. The decline from the prior year quarter primarily
reflected the negative flow-through impact of lower sales and a
lower gross margin rate, resulting from the initial margin impact
of new contract wins, partially offset by lower selling, general
and administrative expenses including payroll and support
costs.
At the end of the second quarter of 2016, there were a total of
289 retail stores in the International Division, including 149
company-owned stores and 140 stores operated by franchisees and
licensees.
Office Depot is exploring strategic alternatives regarding its
European business and has a process underway to determine if a sale
of this business could be executed on terms acceptable to the
company.
Corporate Results
Corporate includes support staff services and certain other
expenses that are not allocated to the three divisions. Unallocated
operating costs were $17 million in the second quarter of 2016
compared to $34 million in the second quarter of 2015. This
decrease was primarily driven by synergies achieved at the
corporate level as a result of the OfficeMax merger.
Balance Sheet and Cash Flow
As of June 25, 2016, Office Depot had $1.1 billion in cash and
cash equivalents and approximately $1.1 billion available under the
Amended and Restated Credit Agreement, for total available
liquidity of approximately $2.2 billion. Total debt was $654
million, excluding $808 million of non-recourse debt related to the
credit-enhanced timber installment notes.
For the second quarter of 2016, cash provided by operating
activities was $287 million, including a $250 million fee paid by
Staples in connection with the termination of the merger agreement,
partially offset by $37 million in acquisition-related expenses,
$31 million in OfficeMax merger-related costs and $16 million in
International and other restructuring costs. Capital expenditures
were $23 million in the second quarter of 2016, $6 million of which
were related to the merger integration. The company repurchased a
total of 7 million shares of its outstanding common stock during
the quarter for a total cost of $26 million.
Update on Comprehensive Business Review and Strategy
In conjunction with the announcement of the Staples merger
termination on May 16, 2016, Office Depot announced that it had
engaged Bain & Company to assist with finalizing a
comprehensive strategic review of its business. This review
included a detailed analysis of the company’s current operating
model, growth opportunities and cost structure to support the
company’s overall Framework for Growth. The result is a three-year
strategic plan to grow profitability and provide shareholder value
that contains four key elements: accelerating opportunities in the
contract channel, optimizing and reinventing the North American
Retail model, implementing multi-year cost reductions across the
company and returning capital to shareholders. This review is
substantially complete and a number of initiatives are underway
across the business.
Identifies Initiatives for Future
Growth
Office Depot has identified a number of opportunities to grow
sales in the contract channel by improving penetration into
adjacent categories and increasing share of wallet with existing
customers. One attractive opportunity is in the facilities space
where the company can leverage its relationships with current
customers by offering an expanded assortment of products. The
market for these products remains large and fragmented, with
attractive growth potential for Office Depot. The company intends
to aggressively compete in this space by adding additional core
products, leveraging its supply chain capabilities and increasing
selling efforts to drive penetration.
Expanding U.S. Retail Optimization and
Store of the Future Plan
During the second quarter of 2016, Office Depot completed the
first phase of the U.S. Retail Store Optimization that was launched
in 2014. This plan resulted in the closure of 400 stores, with
sales transfer rates in excess of the company’s 30% stated target,
leading to over $100 million in ongoing benefits. Based on the
success of this initiative, Office Depot is expanding this plan to
include approximately 300 additional store closures over the next
three years.
The company intends to build on the early success of its store
of the future format by expanding the pilot program to a total of
24 stores by the end of 2016 with 100 stores targeted for 2017.
This format features a smaller 15,000 sq. ft. footprint and is
designed to provide customers with an enhanced shopping experience
including a curated assortment of products and expanded services.
Office Depot expects that many of these elements will be
incorporated across the retail portfolio in the coming years which
will create a more consistent and efficient retail operating model
with enhanced sales per square foot.
Launching Additional Cost Savings
Program
As part of the comprehensive business review process, several
opportunities were identified to increase efficiencies and optimize
the organization. Accordingly, the company is launching a number of
initiatives across key business areas to capture these savings
including the implementation of a more effective customer coverage
model, a reduction in indirect procurement costs, lower overall
general and administrative costs as well as realizing the benefits
from the expanded U.S. retail store optimization program. In total,
these initiatives are expected to deliver over $250 million in
annual benefits by the end of 2018.
These savings are in addition to the expected merger synergy
benefits of more than $750 million from the OfficeMax integration
and will bring the total of annual savings benefits realized since
2014 to more than $1 billion by the end of 2018.
Optimizing Capital Structure
In conjunction with the comprehensive business review, Office
Depot also completed an analysis of its capital structure during
the second quarter. The company recently announced the extension of
its $1.2 billion asset-based credit facility for an additional five
years to provide for long term liquidity and had approximately $2.2
billion in total liquidity at the end of the second quarter of
2016. Based on this liquidity position, Office Depot announced
today that it is calling its outstanding 9.75% senior secured notes
due 2019 for redemption on September 15, 2016. The notes are
currently callable at a price equal to 104.875% of the principal
amount for a total consideration of approximately $262 million. The
company will realize annual cash interest savings of approximately
$24 million as a result of this debt retirement.
Initiating a Quarterly Dividend
In recognition of the company’s strong liquidity position and
confidence in the ability to generate future cash flow, the Office
Depot Board of Directors has approved the initiation of a quarterly
cash dividend. The company has declared an initial dividend of
$0.025 per share ($0.10 per share on an annualized basis) on the
common stock of the company payable on September 15, 2016, to
shareholders of record at the close of business August 25,
2016.
Increasing Share Repurchase
Authorization
On May 31, 2016, the company announced that its Board of
Directors had authorized a stock repurchase program of up to $100
million of its outstanding common stock. As of July 29, 2016, the
company has repurchased approximately 16 million shares for an
aggregate cost of $55 million. Office Depot remains committed to
enhancing shareholder return and the Board has approved an increase
in the stock repurchase authorization from the previously
authorized $100 million to a total of $250 million.
Outlook
Office Depot continues to expect total company sales in 2016 to
be lower than 2015, primarily due to the impact of store closures,
the business disruption from the protracted regulatory process
related to the Staples’ acquisition attempt and continued
challenging market conditions. The company expects this disruption
to continue throughout the year but at a decelerated rate as the
company focuses on winning new business.
As a result of the adverse impact on the company’s sales
resulting from the prolonged Staples’ acquisition attempt, Office
Depot now expects to generate between $450 million and $470 million
in adjusted operating income in fiscal 2016.
Office Depot closed 42 stores in the second quarter of 2016 as
part of its previously announced U.S. retail store optimization
plan. The company expects to close approximately 25 additional
stores in 2016 as part of the second phase of this plan.
Total capital expenditures in 2016 are now expected to be
approximately $175 million, a reduction of $75 million from the
previous target. This estimate includes approximately $50 million
in capital spend related to the merger integration. Depreciation
and amortization is expected to be approximately $215 million in
2016.
Office Depot continues to expect total annual run-rate merger
synergy benefits of more than $750 million from the OfficeMax
integration and expects the integration to be substantially
complete by the end of 2017. The company expects to incur
approximately $70 million of merger integration expenses in 2016
and the remaining $30 million in 2017.
Office Depot anticipates a non-GAAP effective tax rate of
approximately 45% in fiscal 2016, dependent on the mix and timing
of income across jurisdictions, and an estimated cash tax rate of
between 10% and 15% as the company utilizes available tax operating
loss carry forwards and credits.
The company expects free cash flow to be in excess of $200
million in 2016 and more than $300 million in 2017 as one-time
merger and integration spending abates.
About Office Depot, Inc.
Office Depot, Inc. is a leading global provider of products,
services, and solutions for every workplace – whether your
workplace is an office, home, school or car.
Office Depot, Inc. is a resource and a catalyst to help
customers work better. We are a single source for everything
customers need to be more productive, including the latest
technology, core office supplies, print and document services,
business services, facilities products, furniture, and school
essentials.
The company has annual sales of approximately $14 billion,
employs approximately 49,000 associates, and serves consumers and
businesses in 59 countries with approximately 1,800 retail stores,
award-winning e-commerce sites and a dedicated business-to-business
sales organization – all delivered through a global network of
wholly owned operations, franchisees, licensees and alliance
partners. The company operates under several banner brands
including Office Depot, OfficeMax, Grand & Toy, and Viking. The
company’s portfolio of exclusive product brands include TUL, Foray,
Brenton Studio, Ativa, WorkPro, Realspace and HighMark.
Office Depot, Inc.’s common stock is listed on the NASDAQ Global
Select Market under the symbol “ODP”. Additional press information
can be found at: http://news.officedepot.com.
All trademarks, service marks and trade names of Office Depot,
Inc. and OfficeMax Incorporated used herein are trademarks or
registered trademarks of Office Depot, Inc. and OfficeMax
Incorporated, respectively. Any other product or company names
mentioned herein are the trademarks of their respective owners.
FORWARD LOOKING STATEMENTS
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 Office Depot’s pending
acquisition by Staples, 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
Office Depot’s European restructuring plan; 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. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In millions, except per share amounts)
(Unaudited)
13 Weeks Ended 26 Weeks Ended June
25, June 27, June 25, June 27, 2016
2015 2016 2015 Sales $ 3,218 $ 3,440 $ 6,762 $
7,317 Cost of goods sold and occupancy costs 2,471 2,626 5,159
5,566 Gross profit 747 814 1,603 1,751 Selling, general and
administrative expenses 681 741 1,421 1,543 Asset impairments — 4 —
9 Merger, restructuring, and other operating (income) expenses, net
(187 ) 120 (143 ) 163 Operating income (loss) 253 (51 ) 325 36
Other income (expense): Interest income 6 6 12 12 Interest expense
(25 ) (23 ) (48 ) (48 ) Other income (expense), net — 1 — 2 Income
(loss) before income taxes 234 (67 ) 289 2 Income tax expense
(benefit) 24 (9 ) 33 15 Net income (loss) $ 210 $ (58 ) $ 256 $ (13
) Net earnings (loss) per share Basic $ 0.38 $ (0.11 ) $ 0.47 $
(0.02 ) Diluted $ 0.38 $ (0.11 ) $ 0.46 $ (0.02 )
This report should be read in conjunction with the Notes to
Condensed Consolidated Financial Statements herein and the Notes to
Consolidated Financial Statements in the Office Depot, Inc. Form
10-K filed February 23, 2016 (the “2015 Form 10-K”).
OFFICE DEPOT, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In millions, except share and per share amounts)
(Unaudited) June 25, December
26, 2016 2015 Assets Current assets: Cash
and cash equivalents $ 1,118 $ 1,069 Receivables, net 1,055 1,166
Inventories 1,560 1,698 Prepaid expenses and other current assets
112 127 Total current assets 3,845 4,060 Property and equipment,
net 750 785 Goodwill 378 378 Other intangible assets, net 47 54
Timber notes receivable 895 905 Deferred income taxes 22 24 Other
assets 236 236 Total assets $ 6,173 $ 6,442
Liabilities and
stockholders’ equity Current liabilities: Trade accounts
payable $ 1,145 $ 1,319 Accrued expenses and other current
liabilities 1,100 1,355 Income taxes payable 7 13 Short-term
borrowings and current maturities of long-term debt 37 56 Total
current liabilities 2,289 2,743 Deferred income taxes and other
long-term liabilities 417 459 Pension and postretirement
obligations, net 182 184 Long-term debt, net of current maturities
617 634 Non-recourse debt 808 819 Total liabilities 4,313 4,839
Commitments and contingencies Stockholders’ equity: Common
stock—authorized 800,000,000 shares of $.01 par value; issued
shares – 557,203,768 in June 2016 and 554,835,306 in December 2015
6 6 Additional paid-in capital 2,624 2,607 Accumulated other
comprehensive income 41 30 Accumulated deficit (727 ) (982 )
Treasury stock, at cost – 13,274,064 shares in 2016 and 5,915,268
shares in 2015 (84 ) (58 ) Total equity 1,860 1,603 Total
liabilities and stockholders’ equity $ 6,173 $ 6,442
This report should be read in conjunction with the Notes to
Condensed Consolidated Financial Statements herein and the Notes to
Consolidated Financial Statements in the 2015 Form 10-K.
OFFICE DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In millions) (Unaudited)
26 Weeks Ended June 25, June 27,
2016 2015 Cash flows from operating
activities: Net income (loss) $ 256 $ (13 ) Adjustments to
reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 110 150 Charges for losses on
inventories and receivables 36 30 Asset impairments — 9 Changes in
working capital and other (254 ) (311 ) Net cash provided by (used
in) operating activities 148 (135 )
Cash flows from investing
activities: Capital expenditures (49 ) (71 ) Acquisition, net
of cash acquired — (10 ) Proceeds from disposition of assets and
other 12 42 Net cash used in investing activities (37 ) (39 )
Cash flows from financing activities: Net proceeds on
employee share-based transactions 1 4 Net payments on long and
short-term borrowings (32 ) (12 ) Debt related fees (6 ) (1 )
Repurchase of common stock for treasury (26 ) — Net cash used in
financing activities (63 ) (9 )
Effect of exchange rate changes
on cash and cash equivalents 1 (21 ) Net increase (decrease) in
cash and cash equivalents 49 (204 ) Cash and cash equivalents at
beginning of period 1,069 1,071 Cash and cash equivalents at end of
period $ 1,118 $ 867
This report should be read in conjunction with the Notes to
Condensed Consolidated Financial Statements herein and the Notes to
Consolidated Financial Statements in the 2015 Form 10-K.
OFFICE DEPOT, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited)
We report our results in accordance with accounting principles
generally accepted in the United States (“GAAP”). We also review
certain financial measures excluding impacts of transactions that
are not related to our core operations (“non-GAAP”). Management
uses both GAAP and non-GAAP measures to assist in making business
decisions and assessing overall performance. Non-GAAP measures help
to evaluate programs and activities that are intended to attract
and satisfy customers, separate from expenses and credits directly
associated with Merger, restructuring, and certain similar items.
Certain non-GAAP measures are also used for short- and long-term
incentive programs.
Our measurement of these non-GAAP financial measures may be
different from similarly titled financial measures used by others
and therefore may not be comparable. These non-GAAP financial
measures should not be considered superior to the GAAP measures,
but only to clarify some information and assist the reader. We have
included reconciliations of this information to the most comparable
GAAP measures in the tables included within this material.
(In millions, except per share
amounts)
Less: Reported % of
Charges &
Adjusted
% of
Q2 2016 (GAAP) Sales
Credits
(Non-GAAP)
Sales Merger, restructuring, and other operating
(income) expenses, net $ (187) 5.8 % $ (187) $ — — %
Operating income (loss) $ 253 7.9 % $ 187 $ 67 2.1 % Net income
(loss) $ 210 7.0 % $ 191 $ 19 0.6 % Earnings (loss) per
share (most dilutive) $ 0.38 $ 0.35 $ 0.03
Less:
Reported % of
Charges &
Adjusted
% of
Q2 2015 (GAAP) Sales
Credits
(Non-GAAP)
Sales Assets impairments $ 4 0.1 % $ 4 $ — — %
Merger, restructuring, and other operating (income) expenses, net $
120 3.5 % $ 120 $ — — % Operating income (loss) $ (51) (1.5) % $
(124) $ 73 2.1 % Net income (loss) $ (58) (1.7) % $ (90) $ 32 0.9 %
Earnings (loss) per share (most dilutive) $ (0.11 ) $ (0.17)
$ 0.06
OFFICE DEPOT, INC. GAAP to Non-GAAP
Reconciliations (Unaudited) (continued)
Less:
Reported % of
Charges &
Adjusted
% of
YTD Q2 2016 (GAAP) Sales
Credits
(Non-GAAP)
Sales Merger, restructuring, and other operating
(income) expenses, net $ (143) 2.1 % $ (143) $ — — % Operating
income (loss) $ 325 4.8 % $ 143 $ 181 2.7 % Net income (loss) $ 256
3.8 % $ 179 $ 76 1.1 % Earnings (loss) per share (most
dilutive) $ 0.46 $ 0.32 $ 0.14
Less:
Reported % of
Charges &
Adjusted
% of
YTD Q2 2015 (GAAP) Sales
Credits
(Non-GAAP)
Sales Assets impairments $ 9 0.1 % $ 9 $ — — %
Merger, restructuring, and other operating (income) expenses, net $
163 2.2 % $ 163 $ — — % Operating income (loss) $ 36 0.5 % $ (172 )
$ 208 2.8 % Net income (loss) $ (13) 0.2 % $ (116 ) $ 103 1.4 %
Earnings (loss) per share (most dilutive) $ (0.02) $ (0.21 )
$ 0.19
Amounts may not foot due to rounding
Note: The company has deferred tax asset valuation allowances in
the US and certain foreign jurisdictions for GAAP purposes. The
non-GAAP tax calculation removes the US valuation allowances
because of cumulative income on a non-GAAP basis. The foreign
valuation allowances remain for the non-GAAP calculations. The
effective tax rate for both GAAP and non-GAAP continues to be
affected by losses in jurisdictions with valuation allowances.
Additionally, the 2016 GAAP effective tax rate reflects benefits
from utilization of deferred tax assets because of existing
valuation allowances.
13 Weeks Ended
26 Weeks Ended
Sales Decline Reconciliation:
June 25, 2016
June 25, 2016
Reported (GAAP) sales decline (6)% (8)% Exclusion of foreign
currency translation impact (0)% (0)% Exclusion of sales associated
with U.S. store closure impacts (3)% (4)% Adjusted Sales decline
(excluding impact from foreign currency translation and U.S. retail
store closures) (3)% (4)%
Amounts may not foot due to rounding
OFFICE DEPOT, INC. Store Statistics
(Unaudited)
YTD
Q2 2016
Q2 2016 North American Retail (NAR):
Stores opened — — Stores closed 42 51 Total NAR (U.S.) stores 1,513
Total NAR square footage (in millions) 34.1 Average square footage
per store (in thousands) 22.5
Total International
Company-Owned 149 Total International
Franchisees & Licensees 140
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160803005412/en/
Office Depot, Inc.Investor RelationsRichard Leland,
561-438-3796Richard.Leland@officedepot.comorMedia RelationsKaren
Denning, 630-438-7445Karen.Denning@officedepot.com
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