Q4 2016 GAAP Diluted EPS from Continuing
Operations of $0.10 versus $0.06 in Q4 2015
Realizes $700 Million in OfficeMax Integration
Synergies
Completes Sale of European Business
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 fourth
quarter and full year ended December 31, 2016.
“I am very excited to assume the role of CEO and to inherit a
business with such positive earnings trends. Office Depot delivered
another year of improved profitability in 2016, exceeding the
full-year adjusted operating income guidance, despite experiencing
substantial business disruption related to the Staples acquisition
attempt,” said Gerry Smith, newly appointed chief executive officer
of Office Depot. “The company made significant progress against its
2016 critical priorities and achieved substantial integration
synergies, thanks to the hard work, commitment and dedication of
the management team and associates. I believe we can continue this
momentum in 2017, as we focus on stabilizing the top line,
implementing our cost saving programs and executing on the key
initiatives of the three-year strategic plan.”
Consolidated Results
Reported (GAAP) Results
Total reported sales for the fourth quarter of 2016 were $2.7
billion compared to $2.8 billion in the fourth quarter of 2015, a
decrease of 2%. Sales for the full year 2016 were $11.0 billion, a
decline of 6% compared to the prior year. Fourth quarter and full
year sales benefited from the impact of a 53rd week in fiscal 2016
of approximately $143 million.
In the fourth quarter of 2016, Office Depot reported operating
income of $57 million and net income of $80 million, or $0.15 per
diluted share. Net income from continuing operations was $55
million, or $0.10 per diluted share. The fourth quarter of 2016 was
favorably impacted by approximately $15 million of operating income
from the additional 53rd week, primarily in the North American
Retail Division.
In the fourth quarter of 2015, the company reported operating
income of $42 million and net income of $15 million, or $0.03 per
diluted share. Net income from continuing operations was $31
million, or $0.06 per diluted share.
For the full year 2016, Office Depot reported operating income
of $531 million compared to operating income of $183 million in the
prior year period, and net income from continuing operations of
$679 million, or $1.24 per diluted share in 2016, compared to net
income from continuing operations of $92 million, or $0.16 per
diluted share in the full year 2015.
Adjusted (non-GAAP) Results(1)
Adjusted operating income for the fourth quarter of 2016 was
$111 million compared to an adjusted operating income of $83
million in the fourth quarter of 2015. Adjusted net income from
continuing operations for the fourth quarter of 2016 was $59
million, or $0.11 per diluted share, compared to adjusted net
income from continuing operations of $35 million, or $0.06 per
diluted share, in the fourth quarter of 2015.
- Adjusted operating income for the
fourth quarter of 2016 excludes special charges and credits
totaling $55 million, which were comprised of $30 million in
restructuring charges, $13 million in expenses related to the
Office Depot/OfficeMax merger, $6 million in non-cash asset
impairment charges and $6 million in executive transition
costs.
- Adjusted net income from continuing
operations in the fourth quarter of 2016 excludes the after-tax
impact of these items.
For the full year 2016, adjusted operating income was $471
million, compared to adjusted operating income of $438 million in
the full year 2015. The full year 2016 adjusted net income from
continuing operations was $251 million, or $0.46 per diluted share,
compared to adjusted net income from continuing operations of $222
million, or $0.40 per diluted share in the full year 2015.
Consolidated (in millions,
except per share amounts)
4Q16 4Q15
FY16 FY15 Selected GAAP measures:
Sales
$2,725 $2,767 $11,021
$11,727 Sales decline from prior year period
(2)% (6)% Gross
profit
$653 $656 $2,708
$2,863 Gross profit margin
24.0%
23.7% 24.6% 24.4% Operating
income
$57 $42 $531
$183 Net income from continuing operations
$55 $31 $679 $92
Discontinued operations, net of tax
$25
$(16) $(150) $(84) Net income
$80 $15 $529
$8 Earnings per share (continuing operations)
$0.10 $0.06 $1.24
$0.16 Earnings (loss) per share (discontinued operations)
$0.05 $(0.03) $(0.27)
$(0.15) Net earnings per share (most dilutive)
$0.15 $0.03 $0.96
$0.01 Selected Non-GAAP measures:(1)
Adjusted sales decline from prior
year period
excluding impact from U.S. retail store
closures,
foreign currency translation and the 53rd
week
(4)%
(4)%
Adjusted operating income
$111
$83 $471 $438 Adjusted operating
income margin
4.1% 3.0%
4.3% 3.7% Adjusted net income from continuing
operations
$59 $35 $251
$222 Adjusted net earnings per share continuing
operations (most dilutive)
$0.11 $0.06
$0.46 $0.40
(1) Adjusted results represent
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, asset impairments and executive transition
costs. Additionally, the adjusted year-over-year rate of sales
decline for the consolidated company excludes the impact from
foreign currency translation, sales attributable to U.S. retail
store closures and the sales impact of the 53rd week in 2016.
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.
Fourth Quarter Division Results
North American Retail Division
Retail Division sales were $1.4 billion in the fourth quarter of
2016, slightly lower compared to the prior year period. Sales were
favorably impacted by an increase in the company’s buy online-pick
up in store program and the inclusion of the 53rd week. Excluding
the $87 million of sales in the 53rd week and the impact of store
closures, fourth quarter 2016 total sales declined approximately
3%, with a same-store sales decline of 4% mainly due to lower store
traffic.
North American Retail (in
millions)
4Q16 4Q15 FY16
FY15 Sales
$1,366 $1,405
$5,603 $6,004 Same-store sales change
from prior year
(4)% (2)%
Division operating income
$62
$63 $299 $310 Division operating
income margin
4.5% 4.5%
5.3% 5.2%
Retail Division operating income was $62 million, or 4.5% of
sales, in the fourth quarter of 2016, approximately flat to the
fourth quarter of 2015. Excluding the 53rd week operating income
benefit of approximately $14 million in 2016 and the impact of $17
million in favorable legal settlements in 2015, operating income
for the quarter increased versus the prior year. Lower sales and a
lower gross margin rate in the quarter were offset by a decrease in
selling, general and administrative expenses including payroll,
depreciation and advertising.
During the fourth quarter the company closed 65 stores and ended
2016 with a total of 1,441 retail stores in the North American
Retail Division.
North American Business Solutions
Division
Business Solutions Division sales were $1.4 billion in the
fourth quarter of 2016, relatively flat compared to the prior year
period. Excluding approximately $56 million of sales during the
53rd week, sales declined 5% in constant currency with contract
channel sales down while direct channel sales were up versus the
prior year period. The sales decline in the contract channel was
primarily due to customer attrition and fewer customer additions
during the period of business disruption related to the prolonged
acquisition attempt earlier in the year. The sales improvement in
the direct channel was a result of increased online sales during
the holiday period, partly offset by the ongoing reduction in
catalog sales through our call centers as well as sales from the
company’s buy online-pick up in store program, which are reported
in the North American Retail Division.
Business Solutions (in millions)
4Q16 4Q15 FY16
FY15 Sales
$1,355 $1,360
$5,400 $5,708
Sales decline from prior year (in
constant
currency and excluding 53rd week)
(5)%
(6)%
Division operating income
$75
$39 $265 $226 Division operating
income margin
5.5% 2.9%
4.9% 4.0%
Business Solutions Division operating income was $75 million, or
5.5% of sales, in the fourth quarter of 2016 compared to $39
million, or 2.9% of sales, in the fourth quarter of 2015. Excluding
the 53rd week operating income benefit of approximately $4 million,
the increase in both operating income and margin was primarily
driven by a higher gross margin rate, partially due to the
recognition of certain customer acquisition costs in the prior year
period, and lower selling, general and administrative expenses
including payroll, that more than offset the negative flow-through
impact of lower sales.
Sale of European Business
As previously announced on September 23, 2016, Office Depot
reached a deal to sell its European business and the sale was
successfully completed on December 31, 2016. Following the closing,
the company’s European business is no longer part of the company’s
ongoing operations. See the U.S. Securities and Exchange Commission
(the “SEC”) Current Report on Form 8-K filed on January 5, 2017 for
additional information.
The company’s international businesses located in Australia, New
Zealand, South Korea and mainland China continue to be actively
marketed for sale and are reported as discontinued operations, with
the expectation that the divestiture process will be completed in
2017. The company currently plans to retain its sourcing and
trading operations in Asia and the results for these operations are
reported as an “Other” segment outside of the North American
segments. These ongoing sourcing and trading businesses contributed
$18 million in sales and $1 million in operating income for the
full year 2016.
Corporate Results
Corporate includes support staff services and certain other
expenses that are not allocated to the company’s operating
divisions. Unallocated expenses increased to $31 million in the
fourth quarter of 2016 compared to $21 million in the fourth
quarter of 2015 driven primarily by executive transition costs and
the impact of the 53rd week of approximately $3 million.
Balance Sheet and Cash Flow
As of December 31, 2016, Office Depot had $0.8 billion in cash
and cash equivalents and approximately $1.0 billion available under
the Amended and Restated Credit Agreement, for total available
liquidity of approximately $1.8 billion. Total debt was $387
million, excluding $798 million of non-recourse debt related to the
credit-enhanced timber installment notes.
For the full year 2016, the company generated $492 million of
cash provided by operating activities of continuing operations,
including the $250 million Staples termination agreement fee,
partially offset by $122 million in acquisition-related expenses,
$113 million in OfficeMax merger–related costs and $47 million in
restructuring costs. Capital expenditures were $111 million in
2016, $27 million of which were related to the merger integration.
Free cash flow(2) from continuing operations for the full year 2016
was $380 million.
Office Depot paid a quarterly cash dividend of $0.025 per share
on December 15, 2016 for approximately $13 million. For the full
year, the company paid approximately $26 million in dividends.
During the fourth quarter, the company repurchased approximately
14 million shares at a total cost of $51 million. As of December
31, 2016, Office Depot had repurchased approximately 37 million
shares in 2016 at a total cost of $132 million, with $118 million
remaining available for repurchase under the current $250 million
buyback authorization.
Outlook(3)
Office Depot expects total company sales in 2017 to be lower
than 2016, primarily due to the impact of store closures, prior
year contract customer losses, one less selling week and continued
challenging market conditions. However, the company expects the
rate of sales decline to improve throughout 2017 based on
improvements in customer retention, implementation of new customer
wins and continued growth in the contract channel sales
pipeline.
The company closed 123 retail stores in 2016, of which 72 stores
were part of the second phase of the retail optimization plan
announced in the third quarter of 2016. The company expects to
close approximately 75 stores in 2017.
Through the end of 2016, Office Depot has achieved over $700
million in annual synergy benefits from the OfficeMax integration.
The company continues to expect total annual run-rate merger
synergy benefits of more than $750 million, with the majority of
the remaining benefits expected to be achieved by the end of 2017.
Merger integration expenses are expected to total approximately $45
million in 2017 with approximately $25 million in capital
expenditures.
As part of the new cost saving program announced last year, the
company expects to deliver over $250 million in annual benefits by
the end of 2018 with about half of those benefits anticipated to be
realized in 2017. In addition, the company estimates it will incur
up to approximately $125 million in one-time costs and capital
expenditures to implement the cost saving programs, with the
majority of these costs incurred through 2017.
The company continues to expect to achieve approximately $500
million in adjusted operating income in fiscal 2017, a comparable
year-over-year increase of about 10%, excluding the $15 million
estimated 53rd week operating income benefit in 2016.
In 2017, capital expenditures are expected to be approximately
$200 million including investments to support the company’s
critical priorities and the Store of the Future test format. The
company anticipates having about 100 stores converted to this new
format by the end of 2017. Depreciation and amortization is
expected to be approximately $150 million in 2017.
Office Depot anticipates free cash flow(2) from continuing
operations to be more than $300 million in 2017.
The company anticipates an estimated cash tax rate of 15% as the
company continues to utilize available tax operating loss carry
forwards and credits and a non-GAAP effective tax rate of
approximately 41% in fiscal 2017, dependent on the mix and timing
of income.
(2) Free cash flow is defined as
net cash provided by operating activities less capital
expenditures.
(3) The company’s outlook for
2017 included in this release, excludes charges or credits not
indicative of our core operations, which may include but not be
limited to merger integration expenses, restructuring charges,
asset impairments, and other significant items that currently
cannot be predicted. The exact amount of these charges or credits
are not currently determinable, but may be significant.
Accordingly, the company is unable to provide equivalent
reconciliations from GAAP to non-GAAP for these financial
measures.
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.
The company had annual sales of approximately $11 billion,
employed approximately 38,000 associates, and served consumers and
businesses in North America and abroad with approximately 1,400
retail stores, award-winning e-commerce sites and a dedicated
business-to-business sales organization – with a global network of
wholly owned operations, franchisees, licensees and alliance
partners. The company operates under several banner brands
including Office Depot, OfficeMax and Grand & Toy. 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.”
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, cash flow 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, impacts and 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 or terms with the company’s suppliers; 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, tariffs 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 Report on Form 10-K 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)
14 WeeksEnded
13 WeeksEnded
53 WeeksEnded
52 WeeksEnded
December 31, December 26, December 31,
December 26, 2016 2015 2016 2015
Sales $ 2,725 $ 2,767 $ 11,021 $ 11,727 Cost of goods sold and
occupancy costs 2,072 2,111 8,313 8,864 Gross profit 653 656 2,708
2,863 Selling, general and administrative expenses 547 573 2,242
2,425 Asset impairments 6 3 15 13 Merger, restructuring, and other
operating (income) expenses, net 43 38 (80 ) 242 Operating income
57 42 531 183 Other income (expense): Interest income 5 5 22 22
Interest expense (16) (21) (80 ) (91 ) Loss on extinguishment of
debt — — (15 ) — Other income, net — — 1 1 Income from continuing
operations before income taxes 46 26 459 115 Income tax expense
(benefit) (9) (5) (220 ) 23 Net income from continuing operations
55 31 679 92 Discontinued operations, net of tax 25 (16 ) (150 )
(84 ) Net income $ 80 $ 15 $ 529 $ 8 Basic earnings (loss) per
share Continuing operations $ 0.11 $ 0.06 $ 1.26 $ 0.17
Discontinued operations 0.05 (0.03 ) (0.28 ) (0.15 ) Net earnings
(loss) per share $ 0.15 $ 0.03 $ 0.98 $ 0.01
Diluted earnings (loss) per share
Continuing operations $ 0.10 $ 0.06 $ 1.24 $ 0.16 Discontinued
operations 0.05 (0.03 ) (0.27 ) (0.15 ) Net earnings (loss) per
share $ 0.15 $ 0.03 $ 0.96 $ 0.01 Dividends per common share
$ 0.025 $ — $ 0.05 $ —
OFFICE DEPOT, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except shares and par
value)
December 31,2016
December 26,2015
ASSETS Current assets: Cash and cash equivalents $
763 $ 860 Receivables, net 687 746 Inventories 1,279 1,406 Prepaid
expenses and other current assets 102 92 Current assets of
discontinued operations 142 956 Total current assets
2,973 4,060 Property and equipment, net 601 665 Goodwill 363 363
Other intangible assets, net 33 53 Timber notes receivable 885 905
Deferred income taxes 466 11 Other assets 219 203 Non-current
assets of discontinued operations — 182 Total assets
$ 5,540 $ 6,442
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Trade accounts payable $ 893 $ 987 Accrued expenses
and other current liabilities 1,002 1,074 Income taxes payable 3 9
Short-term borrowings and current maturities of long-term debt 29
51 Current liabilities of discontinued operations 104
622 Total current liabilities 2,031 2,743 Deferred income taxes and
other long-term liabilities 361 421 Pension and postretirement
obligations, net 140 182 Long-term debt, net of current maturities
358 628 Non-recourse debt 798 819 Non-current liabilities of
discontinued operations — 46 Total liabilities
3,688 4,839 Commitments and contingencies Stockholders’
equity: Common stock — authorized 800,000,000 shares of $.01 par
value; issued shares — 557,892,568 at December 31, 2016 and
554,835,306 at December 26, 2015 6 6 Additional paid-in capital
2,618 2,607 Accumulated other comprehensive income (loss) (129 ) 30
Accumulated deficit (453 ) (982 ) Treasury stock, at cost —
42,802,998 shares at December 31, 2016 and 5,915,268 shares at
December 26, 2015 (190 ) (58 ) Total stockholders’
equity 1,852 1,603 Total liabilities and
stockholders’ equity $ 5,540 $ 6,442
OFFICE DEPOT, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
Year Ended
December 31,2016
December 26,2015
Cash flows from operating activities of continuing
operations: Net income $ 529 $ 8 Loss from discontinued
operations, net of tax (150
)
(84
)
Net income from continuing operations 679 92 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 181 253 Charges for losses on
inventories and receivables 78 53 Asset impairments 15 13
Compensation expense for share-based payments 40 41 Loss on
extinguishment of debt 15 — Deferred income taxes and deferred tax
asset valuation allowances (231 ) 1 Loss (gain) on disposition of
assets (9 ) (36 ) Other 3 24 Changes in assets and liabilities:
Decrease (increase) in receivables 55 55 Decrease (increase) in
inventories 56 (99 ) Net decrease (increase) in prepaid expenses
and other assets (51 ) 20 Net decrease in trade accounts payable,
accrued expenses and other current and other long-term liabilities
(339 ) (279
)
Total adjustments (187
)
46 Net cash provided by operating activities of continuing
operations 492 138
Cash flows from investing activities of
continuing operations: Capital expenditures (111 ) (144 )
Acquisition, net of cash acquired — (9) Proceeds from disposition
of assets and other 27 95 Net cash used in investing activities of
continuing operations (84 ) (58 )
Cash flows from financing
activities of continuing operations: Net proceeds from employee
share-based transactions — 7 Debt retirement (250 ) — Debt related
fees (6 ) (1) Cash used in extinguishment of debt (12 ) — Cash
dividends on common stock (26 ) — Net payments on long and
short-term borrowings (49 ) (32 ) Repurchase of common stock for
treasury (132 ) — Net cash (used in) provided by financing
activities of continuing operations (475 ) (26)
Cash flows from
discontinued operations: Operating activities of discontinued
operations (122 ) (12) Investing activities of discontinued
operations (70 ) (16 ) Financing activities of discontinued
operations 5 1 Net cash used in discontinued operations (187 ) (27
)
Effect of exchange rate changes on cash and cash
equivalents (8 ) (29 )
Net increase (decrease) in cash and
cash equivalents (262 )
(2
)
Cash and cash equivalents at beginning of period 1,069 1,071 Cash
and cash equivalents at end of period 807 1,069 Cash and cash
equivalents of discontinued operations (44 ) (209 ) Cash and cash
equivalents at the end of period – continued operations $ 763 $ 860
Supplemental information on operating, investing, and
financing activities Cash interest paid, net of amounts
capitalized and Timber notes/Non-recourse debt $ 63 $ 67 Cash taxes
paid (refunded) $ 48 $ — Non-cash asset additions under capital
leases $ 9 $ 25
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
believes that the presentation of these non-GAAP financial measures
enhances the ability of its investors to analyze trends in its
business and provides a means to compare periods that may be
affected by various items that might obscure trends or developments
in its business. 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.
The company’s outlook for 2017 adjusted operating income
included in this release, excludes charges or credits not
indicative of our core operations, which may include but not be
limited to merger integration expenses, restructuring charges,
asset impairments, and other significant items that currently
cannot be predicted. The exact amount of these charges or credits
are not currently determinable, but may be significant.
Accordingly, the company is unable to provide a reconciliation to
an equivalent operating income outlook for 2017.
(In millions, except per share amounts)
Q4 2016
Reported(GAAP)
% ofSales
Less:Charges
&Credits
Adjusted(Non-GAAP)
% ofSales
Selling, general and administrative expenses $ 547
20.1 % $ 6 $ 541 19.9 % Assets
impairments $ 6 0.2 % $ 6 $ — — % Merger, restructuring, and other
operating (income) expenses, net $ 43 1.6 % $ 43 $ — — % Operating
income $ 57 2.1 % $ (55) $ 111 4.1 % Income tax expense (benefit) $
(9) (0.3) % $ (50) $ 41 1.5 % Net income from continuing operations
$ 55 2.0 % $ (5) $ 59 2.2 % Earnings per share continuing
operations (most dilutive) $ 0.10 $
(0.01)
$ 0.11
Q4 2015
Reported(GAAP)
% ofSales
Less:Charges
&Credits
Adjusted(Non-GAAP)
% ofSales
Selling, general and administrative expenses $ 573 20.7 % $ — $ 573
20.7 % Assets impairments $ 3 0.1 % $ 3 $ — — % Merger,
restructuring, and other operating (income) expenses, net $ 38 1.4
% $ 38 $ — — % Operating income $ 42 1.5 % $ (41) $ 83 3.0 % Income
tax expense (benefit) $ (5) (0.2) % $ (37) $ 32 1.2 % Net income
from continuing operations $ 31 1.1 % $ (4) $ 35 1.3 %
Earnings per share continuing operations (most dilutive) $ 0.06 $
(0.01) $ 0.06
OFFICE DEPOT, INC.
GAAP to Non-GAAP
Reconciliations
(Unaudited) (continued)
2016
Reported(GAAP)
% ofSales
Less:Charges
&Credits
Adjusted(Non-GAAP)
% ofSales
Selling, general and administrative expenses $ 2,242 20.3 %
$ 6 $ 2,236 20.3 % Assets impairments $ 15 0.1 % $ 15 $ — — %
Merger, restructuring, and other operating (income) expenses, net $
(80) (0.7) % $ (80) $ — — % Operating income $ 531 4.8 % $ 59 $ 471
4.3 % Income tax expense (benefit) $ (220) (2.0) % $ (383) $ 163
1.5 % Net income from continuing operations $ 679 6.2 % $ 427 $ 251
2.3 % Earnings per share continuing operations (most
dilutive) $ 1.24 $ 0.78 $ 0.46
2015
Reported(GAAP)
% ofSales
Less:Charges
&Credits
Adjusted(Non-GAAP)
% ofSales
Selling, general and administrative expenses $ 2,425 20.7 %
$ — $ 2,425 20.7 % Assets impairments $ 13 0.1 % $ 13 $ — — %
Merger, restructuring, and other operating (income) expenses, net $
242 2.1 % $ 242 $ — — % Operating income $ 183 1.6 % $
(255)
$ 438 3.7 % Income tax expense (benefit) $ 23 0.2 % $ (124) $ 147
1.3 % Net income from continuing operations $ 92 0.8 % $
(131)
$ 222 1.9 % Earnings per share continuing operations (most
dilutive) $ 0.16 $
(0.24)
$ 0.40
Note: The company has released a majority of its deferred tax
asset valuation allowances in the U.S. for GAAP purposes. The
non-GAAP tax calculation removed the U.S. valuation allowances in
the first quarter of 2015 because of the cumulative income on a
non-GAAP basis.
Sales Decline Reconciliation:
14 Weeks EndedDecember
31,2016
53 Weeks EndedDecember
31,2016
Reported (GAAP) sales decline (2)% (6)% Add: Sales impact of
foreign currency translation 0% 0% Add: Sales impact associated
with U.S. store closures 3% 3% Less: Sales benefit from 53rd week
(5)% (1)% Adjusted sales decline (excluding impact from foreign
currency
translation, U.S. retail store closures
and 53rd week)
(4)% (4)%
Amounts may not foot due to rounding
OFFICE DEPOT, INC.
Store Statistics
(Unaudited)
Q4 2016
Full Year2016
North American Retail (NAR): Stores opened — — Stores
closed 65 123 Total NAR (U.S.) stores 1,441 Total NAR square
footage (in millions) 32.4 Average square footage per store (in
thousands) 22.5
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170301005420/en/
Office Depot, Inc.Richard Leland, 561-438-3796Investor
RelationsRichard.Leland@officedepot.comorKaren Denning,
630-438-7445Media RelationsKaren.Denning@officedepot.com
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