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About OFFICE DEPOT
Office Depot, Inc. is a global supplier of office products and services. The company was incorporated in 1986 with the opening of our first retail store in Fort Lauderdale, Florida. In fiscal year 2006, we sold $15 billion of products and services to consumers and businesses of all sizes through our three business units: North American Retail Division, North American Business Solutions Division and International Division. Sales are processed through multiple channels, consisting of office supply stores, a contract sales force, internet sites, direct marketing catalogs and call centers, all supported by our network of crossdocks, warehouses and delivery operations.
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2200 Old Germantown Road
Delray Beach, FL 33445
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North American Retail
Our North American Retail Division sells a broad assortment of merchandise, including brand name and private brand office supplies, business machines and computers, computer software, office furniture and other business-related products and services through our chain of office supply stores. Most stores also contain a design, print and ship center offering graphic design, printing, reproduction, mailing, shipping, and other services.
In recent years, we have developed a new store format that we call "M2." This design is intended to enhance the overall shopping experience for customers by providing improved lines of sight, more effective product adjacencies, and updated signage and lighting, while lowering overall operating costs. This format is being used for all new store openings and remodels. In 2006, we completed remodeling 176 stores, and we expect to remodel all remaining stores in the next two to three years.
Our North American Retail Division currently operates over 1,200 office supply stores throughout the U.S. and Canada. The largest concentration of our retail stores is in California, Texas and Florida, but we have broad representation across North America. We plan to continue our store expansion by adding 70 new retail stores in 2007 and approximately 75 additional stores in 2008.
North American Business Solutions Division
We have provided office supply products and services directly to businesses through our delivery operations for over twelve years. In 1998, we expanded our catalog business and strengthened our international operations through our merger with Viking Office Products (“Viking”), a company that sold from catalogs and operated customer call centers in the United States and in several European countries. In 2006, we stopped marketing the Viking brand in the United States, although we continue to use it for direct marketing to customers in our International Division.
Also in 2006, we acquired Allied Office Products, an independent dealer of office products and services. This acquisition strengthened our position in the Northeast part of the United States while bringing us expertise and relationships in key vertical markets. Integration of this acquisition was substantially complete as of the end of 2006. Our North American Business Solutions Division sells branded and private brand products and services by means of a dedicated sales force, through catalogs, and electronically through our internet sites. We strive to ensure that our customers’ needs are satisfied through the method of delivery that they want, and continue to develop the systems and processes to enable us to do so efficiently and effectively.
Our Direct business is tailored to serve small- to medium-sized customers. Our direct customers can order products from our catalogs, by phone or through our public web sites (www.officedepot.com), including our public web site for technology purchases (www.techdepot.com). Our Contract business employs a dedicated sales force that services the office supply needs of medium-sized to Fortune 100 customers. These sales representatives build relationships with customers and provide them with information, business tools and problem-solving services. Contract customers can also shop on dedicated web sites and in our retail locations while honoring their contract pricing.
International Division
We sell to customers in 43 countries throughout North America, Europe, Asia and Latin America either through wholly-owned entities, majority-owned entities or other ventures covering 36 countries, and through alliances in an additional eight countries. The International Division sells office products and services through direct mail catalogs, contract sales forces, internet sites and retail stores, using a mix of company owned operations, joint ventures, licensing and franchise agreements, alliances and other arrangements.
The international direct channel was launched in 1990 under the Viking Direct® brand with the start-up of operations in the United Kingdom. We now have catalog offerings in 13 countries outside of North America. In March 1999, we introduced our first international public internet site for consumers and businesses in the United Kingdom. Today, we operate over 30 separate web sites in the International Division.
In June 2003, we further expanded our contract start-up business with the acquisition of Guilbert, S.A. The acquisition of Guilbert added European-wide purchasing power and scale to the International Division. Guilbert operations and customers are now fully integrated into the Office Depot and Viking operations, and as of the end of 2006, we no longer operate under the Guilbert trade name.
We have been selective about opening retail stores internationally. As of September 29, 2007, the International Division operated through wholly-owned or majority-owned entities, 144 stores in France, Japan, Hungary, Israel and South Korea. In addition, 168 retail stores were operated under the Office Depot brand name under various licensing and joint venture agreements in Costa Rica, El Salvador, Guatemala, Honduras, Panama, Mexico, and Thailand. We also participate in 72 franchised stores in South Korea, bringing our total number of stores outside North America to 384.
We are continuously assessing opportunities to expand our geographic footprint around the globe. During the second quarter of 2006, we acquired a controlling interest in Best Office in South Korea and increased our ownership interest to a majority stake in Office Depot Israel. In August 2006, we completed the acquisition of Papirius s.r.o., one of the largest business-to-business suppliers of office products and services in Eastern Europe. In October 2006, we acquired a majority stake in AsiaEC, one of the largest suppliers of office products and services in China. To appropriately support our geographic expansion, the International Division operates regional headquarters for Europe/Middle East and Asia and is developing a regional headquarters for Latin America.
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