OFFICE DEPOT INC, S-3, 1995-07-31

OFFICE DEPOT INC
S-3, 1995-07-31
MISCELLANEOUS SHOPPING GOODS STORES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

OFFICE DEPOT, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 59-2663954
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445
(407) 278-4800
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

BARRY J. GOLDSTEIN
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445
(407) 265-4237
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:

<TABLE>
<S> <C>
WILLARD G. FRAUMANN, P.C. HOWARD G. GODWIN, JR.
KIRKLAND & ELLIS BROWN & WOOD
200 EAST RANDOLPH DRIVE ONE WORLD TRADE CENTER
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10048
(312) 861-2038 (212) 839-5381
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.01 par value per
share........................ 17,825,000 shares $27.5625(1) $491,301,562.50(1) $169,415.52
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated in accordance with Rule 457(c) solely for the purpose of
determining the registration fee.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus, one to be
used in connection with a United States offering (the "U.S. Prospectus") and one
to be used in a concurrent international offering (the "International
Prospectus"). The two prospectuses will be identical in all respects except for
the front cover page, the section entitled "Certain United States Federal Tax
Considerations," the section entitled "Underwriting" and the outside back cover
page.

The form of the U.S. Prospectus is included herein and the form of the
front cover page, "Certain United States Federal Tax Considerations" section,
"Underwriting" section and outside back cover page of the International
Prospectus are included following the back cover page of the U.S. Prospectus.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JULY 31, 1995

PROSPECTUS

15,500,000 SHARES
[OFFICE DEPOT LOGO]
COMMON STOCK
---------------------

Of the 15,500,000 shares of Common Stock of Office Depot, Inc. (the
"Company") offered hereby, 2,000,000 shares are being sold by the Company and
13,500,000 shares are being sold by the Selling Stockholder. The Company will
not receive any of the proceeds from the sale of the shares of Common Stock by
the Selling Stockholder. See "Underwriting" and "Selling Stockholder."

Of the 15,500,000 shares of Common Stock offered, 12,400,000 shares are
being offered initially within the United States and Canada by the U.S.
Underwriters and 3,100,000 shares are being offered in a concurrent offering
outside the United States and Canada by the International Managers. The price to
the public and aggregate underwriting discount per share are identical for both
Offerings. See "Underwriting."

The Common Stock is listed on the New York Stock Exchange under the symbol
"ODP." On July 28, 1995, the closing sale price of the Common Stock on the New
York Stock Exchange was $30 3/4 per share.

---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
- --------------------------------------------------------------------------------------------------
Total(3).......................... $ $ $ $
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) The Company has agreed to pay the expenses of the Offerings, which are
estimated to be approximately $450,000.

(3) The Company has granted the U.S. Underwriters and the International Managers
30-day options to purchase from the Company up to 1,860,000 and 465,000
additional shares of Common Stock, respectively, solely to cover
over-allotments, if any. If such options are exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."

---------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares will be made in New York, New York on or about August ,
1995.

---------------------

MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
PRUDENTIAL SECURITIES INCORPORATED
THE ROBINSON-HUMPHREY COMPANY, INC.
---------------------

The date of this Prospectus is August , 1995.
<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such material may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: 7 World
Trade Center, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Reports, proxy statements and
other information concerning the Company can also be inspected at the offices of
the New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005.

The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Common Stock being offered pursuant
to this Prospectus. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:

1. Annual Report on Form 10-K for the fiscal year ended December 31,
1994.

2. Quarterly Reports on Form 10-Q for the fiscal quarters ended April 1,
1995 and July 1, 1995.

3. Current Report on Form 8-K dated January 16, 1995.

4. The description of Common Stock contained in the Company's
registration statement filed pursuant to the Exchange Act, and any
amendment or report filed for the purpose of updating such description.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the sale of the shares offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents not
specifically described above. Requests for such documents should be directed to
Office Depot, Inc., 2200 Old Germantown Road, Delray Beach, Florida 33445,
telephone (407) 278-4800, attention: Investor Relations.

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 5

PROSPECTUS SUMMARY

The following is qualified by the detailed summary information and
financial statements (including the notes thereto) included elsewhere or
incorporated by reference in this Prospectus. Unless otherwise indicated, all
information in this Prospectus assumes that the Underwriters' over-allotment
options are not exercised.

THE COMPANY

Office Depot, Inc., through its Retail Division, operates the largest chain
of high-volume retail office supply stores in North America. Through its
Business Services Division, the Company provides delivery services to small- and
medium-size businesses and is a full-service contract stationer for medium- and
large-size businesses throughout the United States. In fiscal 1994, the Company
had sales of $4.3 billion and net earnings of $105 million and achieved compound
annual growth rates in sales and net earnings of 41% and 57%, respectively, from
fiscal 1990 through fiscal 1994. This growth has resulted principally from the
opening and acquisition of new stores, comparable store sales increases
averaging 19% per year, growth in the Company's Business Services Division and
operating margin enhancement.

The Company began its operations in 1986 with its first retail store.
Currently, it operates 427 stores in 35 states and the District of Columbia and
23 stores in five Canadian provinces. These stores sell high-quality, brand-name
office products at significant discounts primarily to small- and medium-size
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's strategy for its Business Services Division is to build an
integrated national operation to provide delivery services to small- and
medium-size businesses and to increase its penetration in new and existing
markets for its full service contract stationer business. The Company also seeks
to continue to enhance its operating margins in this Division primarily through
the conversion of businesses acquired by the Company into a national network of
facilities providing high-level customer service. The Company is in the process
of combining the operations of its 24 customer service centers, as well as the
delivery functions at the retail stores. The integration of these operations is
expected to be substantially completed by early 1996. During the first half of
1995, the Company replaced six customer service centers. During the remainder of
1995, the Company plans to replace four of its customer service centers with
larger, more efficient facilities, close three customer service centers, and add
two new customer service centers.

In addition to the Company's core business focus and expansion
opportunities, the Company is also developing and testing new growth concepts
including the following:

- International -- Retail office supply stores operated under the Office
Depot(R) name abroad, either through joint ventures or licensing
arrangements. Beginning in 1994, a total of five such stores have been
opened in Colombia, Israel and Mexico, and the Company expects additional
stores to be opened in Colombia, Israel and Poland by year-end 1995 and in
France by mid-1996.

- Images(TM) -- Retail facilities which provide a range of business
services including graphic design, printing, copying, shipping and
fulfillment services in either a free standing facility or one adjacent to
an Office Depot(R) retail store. One Images(TM) unit is currently open in
south Florida, and two more openings are planned during the remainder of
1995.

3
<PAGE> 6

- Office Depot(R) "Megastores" -- 45,000 - 50,000 square foot Office
Depot(R) retail stores with expanded assortments of furniture, computer
software and accessories and general office supplies. The first megastore
will open in August in Las Vegas. Additional megastore openings are
planned for the fourth quarter of 1995, when the Company enters the New
York metropolitan market.

- Furniture Stores -- 15,000 - 20,000 square foot office furniture stores,
either free standing or adjacent to an Office Depot(R) store, which offer
a broad line of office furniture, office accessories and design services.
The Company plans to open its first store in Texas in the fourth quarter
of 1995.

- Uptime Services -- Providers of a variety of technology support services
which complement the Company's computer and business machine offerings,
including on-site installation (at home or office), computer rentals and
training, software support and product protection. The Company began
offering these services to both United States and Canadian customers in
July 1995.

THE OFFERINGS

Of the Common Stock offered, 12,400,000 shares are initially being offered
hereby in the United States and Canada (the "U.S. Offering") by the U.S.
Underwriters (as defined herein), and 3,100,000 shares are initially being
offered concurrently outside the United States and Canada (the "International
Offering" and, together with the U.S. Offering, the "Offerings") by the
International Managers (as defined herein).

<TABLE>
<S> <C>
Total number of shares of Common Stock offered... 15,500,000 shares
By the Company:
U.S. Offering............................... 1,600,000 shares
International Offering...................... 400,000 shares
-------------------
Total.................................. 2,000,000 shares
By the Selling Stockholder:
U.S. Offering............................... 10,800,000 shares
International Offering...................... 2,700,000 shares
-------------------
Total.................................. 13,500,000 shares
Common Stock outstanding after the
Offerings(1)................................... 152,306,766 shares
NYSE symbol...................................... ODP
Use of Proceeds to the Company................... To reduce borrowings outstanding under the
Company's revolving credit facility and, in
the event the proceeds exceed the amount
outstanding thereunder, to finance new
store openings, the opening of new customer
service centers and related working capital
requirements.
</TABLE>

- ---------------

(1) Excludes 12,662,712 shares reserved for issuance upon the exercise of
outstanding stock options and 16,571,975 shares reserved for issuance under
the Liquid Yield Option Notes issued by the Company.

RELATIONSHIP WITH CARREFOUR

Carrefour S.A. ("Carrefour"), through Fourcar B.V. (the "Selling
Stockholder"), an indirect, wholly-owned subsidiary of Carrefour, owns
22,692,600 shares of Common Stock of the Company (approximately 15% of the
issued and outstanding shares). Following the completion of the Offerings, the
Selling Stockholder will own 9,192,600 shares of the Common Stock of the Company
(approximately 6% of the issued and outstanding shares). Carrefour, through a
wholly-owned subsidiary, initially acquired 8,100,000 shares of the Common Stock
of the Company in June 1989 from the Company and subsequently purchased
6,435,000 additional shares in April 1991 from the Company. Additional shares
have been purchased in the open market. See "Description of Common
Stock -- Registration Rights." The Selling Stockholder has had one
representative on the Board of Directors of the Company since its initial Common
Stock acquisition in 1989.

In June 1995, the Company entered into a joint venture agreement with
Carrefour to own and operate retail office supply stores in France using a
format similar to that utilized by the Company in its U.S. stores. The joint
venture is owned 50% by Carrefour and 50% by the Company. The joint venture
currently plans to open its first store in France in mid-1996.

4
<PAGE> 7

SUMMARY FINANCIAL DATA

Set forth below are summary consolidated financial data for the Company as
of and for the periods indicated. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Company's Consolidated Financial Statements and
Notes thereto, and other financial information appearing elsewhere or
incorporated by reference in this Prospectus.

<TABLE>
<CAPTION>
26 WEEKS ENDED FISCAL YEAR ENDED(1)
----------------------- ---------------------------------------------
JULY 1, JUNE 25, DECEMBER 31, DECEMBER 25, DECEMBER 26,
1995 1994 1994 1993 1992
---------- ---------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS DATA:
Sales............................. $2,551,622 $1,966,072 $ 4,266,199 $ 2,836,787 $ 1,962,953
Gross profit...................... 576,633 452,537 982,701 651,642 450,649
Store and warehouse operating and
selling expenses................ 382,405 302,660 642,572 423,272 301,743
Pre-opening expenses.............. 6,164 3,232 11,990 9,073 7,453
General and administrative
expenses........................ 73,264 60,799 129,825 95,034 69,549
Amortization of goodwill.......... 2,592 2,537 5,288 1,617 49
Operating profit.................. 112,208 83,309 193,026 122,646 71,855
Earnings before income taxes and
extraordinary credit(2)......... 100,577 76,075 178,930 115,950 70,590
Net earnings(2)................... 59,892 45,355 104,957 70,832 46,641
Net earnings per share(2)......... .39 .30 .69 .48 .33

STATISTICAL DATA:
Facilities open at end of period:
Stores.......................... 448 368 420 351 284
Customer service centers........ 24 24 24 23 13
Comparable store sales
increases(3).................... 19% 31% 27% 26% 15%
</TABLE>

<TABLE>
<CAPTION>
JULY 1, 1995
---------------------------
ACTUAL AS ADJUSTED(4)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................... $ 674,459 $ 674,459
Total assets........................................................ 2,056,686 2,056,686
Long-term debt(5)................................................... 578,589 519,691
Common stockholders' equity......................................... 788,656 847,554
</TABLE>

- ---------------

(1) Fifty-two week years except for 1994, which was a fifty-three week year.
(2) Net earnings for the fiscal year ended December 26, 1992 includes an
extraordinary credit of $1,396,000 representing the benefit derived from
the utilization of a net operating loss carryforward.
(3) Comparable store sales include the sales of a store beginning on the first
day of the 53rd week of its operation.
(4) The As Adjusted balance sheet data give effect to the issuance of the shares
of Common Stock offered by the Company in the Offerings. See
"Capitalization" and "Use of Proceeds."
(5) Excludes current maturities.

5
<PAGE> 8

USE OF PROCEEDS

The Company will receive approximately $58,897,500 (or, if the
over-allotment options are exercised in full, $127,889,000) from the sale of the
2,000,000 shares (or, if the over-allotment options are exercised in full,
4,325,000 shares) of Common Stock by the Company after deduction of the
underwriting discount and estimated expenses payable by the Company in
connection with the Offerings and assuming an offering price of $30.75 per
share. The proceeds will be used to reduce borrowings outstanding under an
amended and restated credit agreement, dated as of June 30, 1995 (the "Credit
Agreement"), between the Company, its principal bank and a syndicate of
commercial banks, which provides the Company with a $300,000,000 working capital
credit facility. As of July 1, 1995, borrowings of $191,430,000 were outstanding
under the Credit Agreement. Borrowings outstanding under the Credit Agreement
bear interest, at the Company's option, at .3125% over the applicable LIBOR
rate, 1.75% over the Federal Funds rate, at a base rate linked to the prime rate
or at a competitive bid rate. The Company must also pay a fee of .1875% per
annum on the total credit facility. The credit facility expires in June 2000.

The excess (if any) of the net proceeds to the Company from the Offerings
over the balance outstanding under the Credit Agreement, along with funds
anticipated to be generated from operations and funds borrowed under the Credit
Agreement, will be used to finance the Company's new store openings, the opening
of new customer service centers and related working capital requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "The Company -- Expansion
Program."

COMMON STOCK PRICE RANGE AND DIVIDENDS

The Common Stock of the Company is listed on the New York Stock Exchange
under the symbol "ODP." The following table sets forth, as quoted on the New
York Stock Exchange Composite Tape, as adjusted to reflect a three-for-two stock
split in May 1993 and a three-for-two stock split in June 1994, the high and low
sale prices of the Common Stock for the periods indicated.

<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- --------------------------------------------------------------------------- ------- -------
<S> <C> <C>
1993
First Quarter.............................................................. $16.781 $11.885
Second Quarter............................................................. 18.500 13.781
Third Quarter.............................................................. 22.583 16.917
Fourth Quarter............................................................. 23.917 21.083

1994
First Quarter.............................................................. 26.500 22.000
Second Quarter............................................................. 25.750 20.500
Third Quarter.............................................................. 26.500 18.875
Fourth Quarter............................................................. 27.000 21.625

1995
First Quarter.............................................................. 26.250 22.750
Second Quarter............................................................. 29.500 20.875
Third Quarter (through July 28)............................................ 31.750 27.000
</TABLE>

On July 28, 1995, the last sale price of the Common Stock as reported on
the New York Stock Exchange was $30.75 per share. As of July 27, 1995, there
were 3,752 holders of record of Common Stock.

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.

6
<PAGE> 9

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of
the Company as of July 1, 1995 and as adjusted to give effect to the sale of
2,000,000 shares of Common Stock offered by the Company in the Offerings at an
assumed offering price of $30.75 per share and the use of proceeds to reduce
borrowings under the Company's revolving credit facility. This table should be
read in conjunction with the audited and unaudited Consolidated Financial
Statements of the Company and the Notes thereto, incorporated herein by
reference.

<TABLE>
<CAPTION>
JULY 1, 1995
---------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt, consisting of current portion of long-term debt.... $ 778 $ 778
========= ===========

Long-term debt, less current maturities............................. $ 204,233 $ 145,335
Zero coupon, convertible, subordinated notes........................ 374,356 374,356
---------- --------------
Total long-term debt...................................... 578,589 519,691
Common stockholders' equity:
Common stock, authorized 400,000,000 shares of $.01 par value per
share; issued 152,343,395 shares, 154,343,395 shares, as
adjusted(2).................................................... 1,523 1,543
Additional paid-in capital........................................ 465,510 524,388
Foreign currency translation adjustment........................... (2,203) (2,203)
Retained earnings................................................. 325,576 325,576
Less: 2,163,447 shares of treasury stock.......................... (1,750) (1,750)
---------- --------------
Total common stockholders' equity......................... 788,656 847,554
---------- --------------
Total capitalization...................................... $1,367,245 $1,367,245
========= ===========
</TABLE>

- ---------------

(1) The As Adjusted data give effect to the issuance of the shares of Common
Stock offered by the Company in the Offerings. See "Use of Proceeds."
(2) Excludes 12,662,712 shares reserved for issuance upon the exercise of
outstanding stock options and 16,571,975 shares reserved for issuance under
the Liquid Yield Option Notes issued by the Company.

7
<PAGE> 10

SELECTED FINANCIAL DATA

The financial data in the following table are qualified in their entirety
by, and should be read in conjunction with, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the Company's
Consolidated Financial Statements and Notes thereto, and other financial
information appearing elsewhere in this Prospectus or incorporated by reference
herein. The statements of earnings data for the years ended December 1994, 1993,
1992 and 1991 and the balance sheet data as of December 1994, 1993 and 1992 have
been derived from audited financial statements of the Company. The statement of
earnings data for the year ended December 1990 and the balance sheet data as of
December 1991 and 1990 have been derived from audited financial statements of
the Company and adjusted to retroactively include the effects of the poolings of
interests which occurred in 1994. The statements of earnings data for the 26
week periods ended July 1, 1995 and June 25, 1994 and the balance sheet data as
of July 1, 1995 have been derived from unaudited interim financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of results of operations and
financial position have been included in the aforementioned unaudited interim
financial statements. The results of operations for the 26 weeks ended July 1,
1995 are not necessarily indicative of results to be expected for the full year.

<TABLE>
<CAPTION>
26 WEEKS ENDED FISCAL YEAR ENDED(1)
----------------------- ------------------------------------------------------------------------
JULY 1, JUNE 25, DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 28, DECEMBER 29,
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS DATA:
Sales........................ $2,551,622 $1,966,072 $4,266,199 $2,836,787 $1,962,953 $1,497,882 $1,087,455
Cost of goods sold and
occupancy costs............ 1,974,989 1,513,535 3,283,498 2,185,145 1,512,304 1,152,766 836,714
---------- ---------- ------------ ------------ ------------ ------------ ------------
Gross profit............... 576,633 452,537 982,701 651,642 450,649 345,116 250,741
Store and warehouse operating
and selling expenses....... 382,405 302,660 642,572 423,272 301,743 240,572 174,369
Pre-opening expenses......... 6,164 3,232 11,990 9,073 7,453 7,774 8,838
General and administrative
expenses................... 73,264 60,799 129,825 95,034 69,549 52,076 41,286
Amortization of goodwill..... 2,592 2,537 5,288 1,617 49 -- --
---------- ---------- ------------ ------------ ------------ ------------ ------------
Operating profit........... 112,208 83,309 193,026 122,646 71,855 44,694 26,248
Interest income.............. 132 2,311 4,000 4,626 1,393 280 871
Interest expense............. (11,763) (9,545) (18,096) (11,322) (2,658) (3,992) (2,698)
Merger costs................. -- -- -- -- -- (8,950) --
---------- ---------- ------------ ------------ ------------ ------------ ------------
Earnings before income
taxes and extraordinary
credit(2)................ 100,577 76,075 178,930 115,950 70,590 32,032 24,421
Income taxes................. 40,685 30,720 73,973 45,118 25,345 13,246 8,035
---------- ---------- ------------ ------------ ------------ ------------ ------------
Earnings before
extraordinary
credit(2)................ 59,892 45,355 104,957 70,832 45,245 18,786 16,386
Extraordinary credit(3).... -- -- -- -- 1,396 614 1,063
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net earnings(2)............ $ 59,892 $ 45,355 $ 104,957 $ 70,832 $ 46,641 $ 19,400 $ 17,449
========= ========= ========== ========== ========== ========== ==========
PER COMMON SHARE:
Earnings before
extraordinary
credit(2)................ $ .39 $ .30 $ .69 $ .48 $ .32 $ .15 $ .14
Extraordinary credit(3).... -- -- -- -- .01 -- .01
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net earnings(2)............ $ .39 $ .30 $ .69 $ .48 $ .33 $ .15 $ .15
========= ========= ========== ========== ========== ========== ==========
Dividends.................. -- -- -- -- -- -- --
STATISTICAL DATA:
Facilities open at end of
period:
Stores..................... 448 368 420 351 284 228 173
Customer service centers... 24 24 24 23 13 10 10
Comparable store sales
increases(4)............... 19% 31% 27% 26% 15% 7% 13%
</TABLE>

<TABLE>
<CAPTION>
JULY 1, DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 28, DECEMBER 29,
1995 1994 1993 1992 1991 1990
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 674,459 $ 487,333 $ 471,114 $ 386,426 $ 203,326 $ 95,817
Total assets................. 2,056,686 1,903,983 1,531,092 908,585 607,938 401,135
Long-term debt(5)............ 578,589 393,800 367,602 158,313 9,259 24,889
Common stockholders'
equity..................... 788,656 715,271 590,284 413,907 331,699 167,301
</TABLE>

- ---------------

(1) Fifty-two week years except for 1994, which was a fifty-three week year.
(2) Includes effect of $8,950,000 of merger costs in 1991.
(3) The extraordinary credit represents the benefit derived from the utilization
of a net operating loss carryforward.
(4) Comparable store sales include the sales of a store beginning on the first
day of the 53rd week of its operation. The comparable store sales for 1990
of 13% are not adjusted for the Office Club stores acquired and accounted
for on a pooling of interests basis in 1991. The Office Club stores had 1990
comparable store sales increases of 21%.
(5) Excludes current maturities.

8
<PAGE> 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

The Company operates on a 52 or 53 week fiscal year ending on the last
Saturday in December. The fiscal years for the financial statements discussed
below were comprised of the 53 weeks ended December 31, 1994 and the 52 weeks
ended December 25, 1993 and December 26, 1992.

The Company's results are impacted by the costs incurred in connection with
its aggressive schedule for opening new stores and customer service centers.
Pre-opening expenses are charged to earnings as incurred. Corporate general and
administrative expenses are also incurred in anticipation of store and customer
service center openings. As the Company's store and customer service center base
and sales volume continues to grow, the Company expects that the adverse impact
on profitability from openings will decrease as expenses incurred prior to
openings will represent a declining percentage of total sales.

RESULTS OF OPERATIONS

The following table sets forth certain items expressed as a percentage of
sales for the periods indicated.

<TABLE>
<CAPTION>
26 WEEKS
ENDED FISCAL YEAR ENDED
------------------ ------------------------------
JULY 1, JUNE 25, DEC. 31, DEC. 25, DEC. 26,
1995 1994 1994 1993 1992
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales............................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold and occupancy costs........................... 77.4 77.0 77.0 77.0 77.0
------- -------- -------- -------- --------
Gross profit................................................... 22.6 23.0 23.0 23.0 23.0
Store and warehouse operating and selling expenses............... 15.0 15.4 15.1 14.9 15.4
Pre-opening expenses............................................. 0.2 0.2 0.3 0.3 0.4
General and administrative expenses.............................. 2.9 3.1 3.0 3.4 3.5
Amortization of goodwill......................................... 0.1 0.1 0.1 0.1 0.0
------- -------- -------- -------- --------
Operating profit............................................... 4.4% 4.2% 4.5% 4.3% 3.7%
===== ======= ======= ======= =======
</TABLE>

TWENTY-SIX WEEKS ENDED JULY 1, 1995 COMPARED WITH TWENTY-SIX WEEKS ENDED JUNE
25, 1994

Sales. Sales increased 30% to $1,200,410,000 in the second quarter of 1995
from $924,676,000 in the second quarter of 1994 and to $2,551,622,000 for the
first six months of 1995 from $1,966,072,000 for the first six months of 1994,
an increase of 30%. Comparable store sales increased 18% for the second quarter
and 19% for the first six months of 1995, respectively. The balance of the sales
increase was attributable to the 80 new stores (net of one store closure) opened
subsequent to the end of the second quarter of 1994. The Company opened 29
stores in the first half of 1995, bringing the total number of stores open at
the end of the second quarter to 448 compared with 368 stores at the end of the
second quarter of 1994. The Company operated 24 customer service centers at the
end of the second quarter of both 1995 and 1994. Comparable store sales in the
future may be affected by competition from other stores and contract stationers,
the opening of additional Office Depot stores or the expansion of the Company's
contract stationer business in its existing markets, and general market
conditions.

Gross Profit. Gross profit as a percentage of sales was 22.6% during both
the second quarter and first six months of 1995, compared with 23.3% and 23.0%
during the second quarter and first six months of 1994, respectively. The
decrease was primarily a result of an increase in sales of lower margin business
machines and computers and an increase in paper costs. This decrease was
partially offset by purchasing efficiencies gained through vendor volume
discount programs which increased as purchasing levels continued to increase,
and by leveraging occupancy costs through higher average sales per store. Gross
margins are slightly higher in the contract stationer portion of the business
due to a lower percentage of business machines and computer sales. Gross margins
may fluctuate in both the retail and contract stationer business as a result of
competitive pricing in more market areas, continued change in sales product mix
and increased occupancy costs in certain new markets.

9
<PAGE> 12

Store and Warehouse Operating and Selling Expenses. Store and warehouse
operating and selling expenses as a percentage of sales were 14.9% and 15.0% in
the second quarter and first six months of 1995, respectively, compared with
15.4% in each of the comparable periods in 1994. Store and warehouse operating
and selling expenses consist primarily of payroll and advertising expenses.
Although the majority of these expenses vary proportionately with sales, there
is a fixed cost component to these expenses such that, as sales increase within
a given market area, store and warehouse operating and selling expenses should
decrease as a percentage of sales. This benefit may not be fully realized,
however, during periods when a large number of new stores and customer service
centers are being opened, as new facilities typically generate lower sales than
the average mature location, resulting in higher operating and selling expenses
as a percentage of sales for such new facilities. This percentage is also
affected when the Company enters large metropolitan market areas where the
advertising costs for the full market must be absorbed by the small number of
stores initially opened. As additional stores in these large markets are opened,
advertising costs, which are substantially a fixed expense for a market area,
should decrease as a percentage of sales. The Company has also continued a
strategy of opening additional stores in existing markets. Although increasing
the number of stores increases operating income in absolute dollars, this may
have the effect of increasing expenses as a percentage of sales since the sales
of certain existing stores in the market may initially be adversely affected.
Warehouse expenses in the first six months of 1995 were adversely affected by
additional costs incurred in the integration of the contract stationer
warehouses. The integration is expected to be substantially completed by early
1996.

Pre-Opening Expenses. Pre-opening expenses increased to $2,912,000 in the
second quarter of 1995 from $1,973,000 in the comparable period in 1994, and to
$6,164,000 in the six month period ended July 1, 1995 from $3,232,000 in the
comparable 1994 period. Pre-opening expenses in 1995 include the costs
associated with replacing six existing customer service centers with larger,
more functional facilities. Additionally, the Company added 29 stores in the
first six months of 1995, as compared with 17 stores in the comparable 1994
period. Pre-opening expenses currently are approximately $125,000 per store and
$500,000 for a customer service center, and are predominately incurred during a
six-week period prior to the opening of the store or a twelve-week period prior
to the opening of a customer service center. Pre-opening expenses may vary based
on geographical area and customer base being serviced. These expenses consist
principally of amounts paid for salaries, occupancy costs and supplies. Since
the Company's policy is to expense these items during the period in which they
occur, the amount of pre-opening expenses in each quarter is generally
proportional to the number of new stores or customer service centers opened or
in the process of being opened during the period.

General and Administrative Expenses. General and administrative expenses
have decreased as a percentage of sales to 3.0% in the second quarter of 1995
from 3.4% in the comparable period in 1994, and to 2.9% in the first six months
of 1995 from 3.1% in the comparable 1994 period. General and administrative
expenses have decreased as a percentage of sales, primarily as a result of the
Company's ability to increase sales without a proportionate increase in
corporate expenditures. The Company's continued investment in its information
systems should allow the Company to further reduce general and administrative
expenses as a percentage of sales.

Other Income and Expenses. The Company incurred net interest expense of
$6,812,000 and $11,631,000 in the second quarter and first half of 1995,
respectively, as compared with $3,774,000 and $7,234,000 in the comparable
periods in 1994. This increase in interest expense is primarily due to funds
borrowed under the Company's revolving credit agreement.

FISCAL YEARS 1994, 1993 AND 1992

Sales. Sales increased to $4,266,199,000 in 1994 from $2,836,787,000 in
1993 and $1,962,953,000 in 1992. Sales in 1994 increased 50% from 1993 sales, of
which approximately 3% was applicable to the additional week in the 1994 fiscal
year. The increases in sales were due primarily to the 69 additional stores in
1994, the 67 additional stores in 1993 and the acquisitions of Eastman and
Wilson in 1993. Sales in business machines and related supplies increased as a
percentage of total sales over 1992 and 1993 sales in this category. The
increases also were attributable to same store sales growth. Comparable store
sales in 1994 for the 349 stores open for more than one year at December 31,
1994 increased 27% from 1993. Comparable store

10
<PAGE> 13

sales in 1993 for the 283 stores open for more than one year at December 25,
1993 increased 26% from 1992. Comparable store sales in the future may be
affected by competition from other stores and contract stationers, the opening
of additional Office Depot stores or the expansion of the Company's contract
stationer business in existing markets, and general market conditions.

Gross Profit. Gross profit as a percentage of sales of 23.0% was
consistent during 1994, 1993 and 1992. Purchasing efficiencies gained through
vendor volume discount programs, improved inventory loss experience and
leveraging occupancy costs through higher average sales per store were offset by
somewhat lower gross margins resulting from an increase in sales of lower margin
business machines and computers. The Company's management believes that gross
profit as a percentage of sales may fluctuate as a result of the expansion of
its contract stationer base, the result of competitive pricing in more market
areas, continued change in sales product mix and increased occupancy costs in
certain new markets and in existing markets where the Company desires to add
stores and customer service centers in particular locations to complete its
market plan, and purchasing efficiencies realized as total merchandise purchases
increase.

Store and Warehouse Operating and Selling Expenses. Store and warehouse
operating and selling expenses as a percentage of sales were 15.1% in 1994,
14.9% in 1993 and 15.4% in 1992. Store and warehouse operating and selling
expenses, consisting primarily of payroll and advertising expenses, have
increased in the aggregate due to the Company's expansion program. While the
majority of these expenses vary proportionately with sales, there is a fixed
cost component to these expenses such that, as sales increase within a given
market area, store and warehouse operating and selling expenses should decrease
as a percentage of sales. This benefit may not be fully realized, however,
during periods when a large number of new stores and customer service centers
are being opened, as new facilities typically generate lower sales than the
average mature location, resulting in higher operating and selling expenses as a
percentage of sales for new facilities. This percentage is also affected when
the Company enters large metropolitan market areas where the advertising costs
for the full market must be absorbed by the small number of stores initially
opened. As additional stores in these large markets are opened, advertising
costs, which are substantially a fixed expense for a market area, will be
reduced as a percentage of sales. The Company has also continued a strategy of
opening stores in existing markets. While increasing the number of stores
increases operating income in absolute dollars, this also may have the effect of
increasing expenses as a percentage of sales since the sales of certain existing
stores in the market may initially be adversely affected.

Pre-Opening Expenses. As a result of continued store openings, pre-opening
expenses incurred were $11,990,000 in 1994, $9,073,000 in 1993 and $7,453,000 in
1992. Pre-opening expenses currently are approximately $125,000 per store and
approximately $500,000 per customer service center, and are predominantly
incurred during a six-week period prior to the opening of a store or a
twelve-week period prior to the opening of a customer service center. Since the
Company's policy is to expense these items during the period in which they
occur, the amount of pre-opening expenses in each quarter is generally
proportional to the number of new stores or customer service centers opened or
in the process of being opened during the period.

General and Administrative Expenses. General and administrative expenses
as a percentage of sales were 3.0% in 1994, 3.4% in 1993 and 3.5% in 1992.
General and administrative expenses include, among other costs, site selection
expenses and store management training expenses, and therefore vary with the
number of new store openings. General and administrative expenses have decreased
as a percentage of sales, primarily as a result of the Company's ability to
increase sales without a proportionate increase in corporate expenditures. The
decrease is partially offset by the Company's increased commitment during 1993
and 1994 to improving the efficiency of its systems and significantly increasing
its information systems' programming staff. While this increases general and
administrative expenses in current periods, the Company believes the systems
investment will provide benefits in the future. Additionally, general and
administrative expenses have historically been higher in the contract stationer
business than in the retail stores. The 1992 general and administrative expenses
included expenses incurred in connection with the newly acquired Canadian
operation, expenses related to Hurricane Andrew disaster relief efforts and the
beginning of the significant investment in the ongoing program to upgrade the
Company's information systems.

11
<PAGE> 14

Other Income and Expenses. During 1994, 1993 and 1992, interest expense
was $18,096,000, $11,322,000 and $2,658,000, respectively. The increase in
interest expense is primarily due to the subordinated debt issued in 1992 and
1993. In December 1992 and November 1993, the Company completed public offerings
of zero coupon, convertible, subordinated debt raising net proceeds of
approximately $146,000,000 and $185,000,000, respectively. As the Company has
utilized the funds raised in its public offerings to fund its expansion,
interest income has fluctuated. Interest income during 1994, 1993, and 1992 was
$4,000,000, $4,626,000 and $1,393,000, respectively.

Net Earnings. The Company recorded amortization of goodwill of $5,288,000,
$1,617,000 and $49,000 in 1994, 1993 and 1992, respectively. The increase in
1993 was attributable to goodwill arising from the acquisitions of Wilson and
Eastman. Goodwill amortization was higher in 1994, reflecting a full year of
amortization arising from the Wilson and Eastman acquisitions.

Earnings before income taxes and extraordinary credit were $178,930,000 in
1994, $115,950,000 in 1993 and $70,590,000 in 1992.

The effective income tax rate for 1994 and 1993 was negatively impacted by
nondeductible goodwill amortization. Additionally, the effective income tax rate
for 1993 was negatively impacted by the increase in the Federal statutory rate.
The effective income tax rate for all years was also impacted by the combining
of certain acquired companies which had no provision for income taxes because
they were organized as S corporations (as defined under income tax laws).

Net earnings were $104,957,000 in 1994, $70,832,000 in 1993 and $46,641,000
in 1992. Net earnings for 1992 includes $1,396,000 of extraordinary credit from
the utilization of net operating loss carryforwards. The increases in net
earnings were attributable to the significant increases in sales without
commensurate increases in expenses.

LIQUIDITY AND CAPITAL RESOURCES

Since the Company's inception in March 1986, the Company has relied upon
equity capital, convertible debt and borrowings under its working capital line
of credit as the primary sources of its funds. The Company completed public
offerings of zero coupon, convertible, subordinated debt in 1992 and 1993,
raising net proceeds of approximately $146,000,000 and $185,000,000,
respectively. In the first half of 1994, the Company registered approximately
10.5 million shares of Common Stock to be used for acquisitions, of which
approximately 5.7 million shares were issued in 1994.

Since the Company's store sales are substantially on a cash and carry
basis, cash flow generated from operating stores provides a source of liquidity
to the Company. Working capital requirements are reduced by vendor credit terms,
which allow the Company to finance a portion of its inventory. The Company
utilizes private label credit card programs administered and financed by
financial services companies; this allows the Company to expand its retail sales
without the burden of additional receivables. All credit card receivables sold
to the financial service company under one program were sold on a recourse
basis. Proceeds to the Company for such receivables sold with recourse were
approximately $253,000,000, $185,000,000 and $138,000,000 in 1994, 1993 and
1992, respectively, and approximately $151,000,000 for the first six months of
1995. The outstanding balance of such receivables at July 1, 1995 was
approximately $56,000,000. The Company has also utilized capital equipment
financings to fund capital requirements.

Sales made through the customer service centers are made under regular
commercial credit terms, where the Company carries its own receivables. As the
Company expands into servicing additional large companies in the contract
stationer portion of its business, it is expected that the Company will carry a
greater amount of receivables.

The Company added (net of closures) 69 stores in 1994, 67 stores in 1993,
and 56 stores in 1992. In the first half of 1995, the Company added (net of
closures) 28 stores, as compared with 17 stores in the

12
<PAGE> 15

comparable 1994 period. Net cash provided by (used in) operating activities was
$46,107,000, $86,226,000 and $(10,291,000) for 1994, 1993 and 1992,
respectively, and $(87,280,000) and $10,184,000 in the first six months of 1995
and 1994, respectively. As stores mature and become more profitable, and as the
number of new stores opened in a year becomes a smaller percentage of the
existing store base, cash generated from operations will provide a greater
portion of funds required for new store fixed assets, inventories and other
working capital requirements. Cash generated from operations will be affected by
an increase in receivables carried without outside financing, and an increase in
inventory at the stores and customer service centers as the Company continues to
expand its sales in computers and business machines. The Company's increase in
inventory balances in 1995 and 1994 over 1993 was primarily a result of new
store and customer service center openings, as well as expanded efforts in
computers and business machines. Capital expenditures are also affected by the
number of stores and customer service centers opened or acquired each year and
the increase in computer and other equipment at the corporate office required to
support such expansion. Cash utilized for capital expenditures (including
$22,000,000 for the corporate headquarters in 1994) was $171,810,000 in 1994,
$104,568,000 in 1993 and $62,899,000 in 1992 and $98,100,000 and $70,996,000 for
the first six months of 1995 and 1994, respectively.

The Company plans to open approximately 70 to 80 stores during 1995, of
which 29 had been opened as of the end of the second quarter. The Company
replaced six customer service centers during the first six months of 1995 and
during the remainder of 1995 plans to replace four existing customer service
centers, close three customer service centers, and add two additional customer
service centers. Management estimates that the Company's cash requirements,
exclusive of pre-opening expenses, will be approximately $1,700,000 for each
additional store, which includes an average of approximately $900,000 for
leasehold improvements, fixtures, point-of-sale terminals and other equipment in
the stores, as well as approximately $800,000 for the portion of the store
inventory that is not financed by vendors. The cash requirements, exclusive of
pre-opening expenses, for a customer service center will be approximately
$5,300,000, which includes an average of $3,100,000 for leasehold improvements,
fixtures and other equipment and $2,200,000 for the portion of inventory not
financed by vendors. In addition, management estimates that each new store and
customer service center requires pre-opening expenses of approximately $125,000
and $500,000, respectively.

During 1994, the Company's cash balance decreased by $110,065,000 and long-
and short-term debt increased by $4,882,000. The cash balance at the end of 1993
was primarily attributable to the cash provided in the public debt offering at
the end of 1993 which, together with cash from operations, was used during 1994
to primarily pay for fixed assets and inventories for the new stores. During the
first six months of 1995, the Company's cash balance decreased approximately
$2,129,000 and long- and short-term debt increased by approximately
$173,392,000. The decrease in cash (and increase in long-term debt, reflecting
primarily borrowings under its working capital facility) was primarily
attributable to payments for fixed assets and inventories for new stores as well
as payments for inventory mix changes resulting from an increase in business
machines and computer sales and a build-up of paper inventory to protect against
rising costs and product shortages.

The Company has recently amended its credit agreement with its principal
bank and a syndicate of commercial banks to provide for a working capital line
of $300,000,000. The credit agreement provides that funds borrowed will bear
interest, at the Company's option, at .3125% over the applicable LIBOR rate,
1.75% over the Federal Funds rate, at a base rate linked to the prime rate or
at a competitive bid rate. The Company must also pay a fee of .1875% per annum
on the total credit facility. The credit facility expires in June 2000. As of
July 1, 1995, the Company had borrowed $191,430,000 under the credit facility.
In addition to the credit facility, the bank has provided a lease facility to
the Company under which the bank has agreed to purchase up to $25,000,000 of
equipment from the Company and lease such equipment back to the Company. As of
July 1, 1995, the Company had approximately $2,865,000 outstanding under this
lease facility.

The Company's management continually reviews its financing options. It is
currently anticipated that the Company has the ability to finance its planned
expansion through 1995 from cash on hand, funds generated from operations and
this offering, equipment leased under the Company's lease facility and funds
borrowed under the Company's amended credit facility. The Company may also
consider alternative financing

13
<PAGE> 16

opportunities including the issuance of additional equity, debt or convertible
debt, if market conditions make such alternatives financially attractive methods
of funding the Company's short-term or long-term expansion. The Company's
financing requirements in the future will be affected by the number of new
stores and customer service centers opened, converted or acquired and additional
receivables carried by the Company.

INFLATION AND SEASONALITY

Although the Company cannot accurately determine the precise effects of
inflation, it does not believe inflation has a material effect on sales or
results of operations. The Company considers its business to be somewhat
seasonal with sales generally higher during the first and fourth quarters of
each year.

14
<PAGE> 17

THE COMPANY

Office Depot, Inc., through its Retail Division, operates the largest chain
of high-volume retail office supply stores in North America. Through its
Business Services Division, the Company provides delivery services to small- and
medium-size businesses and is a full-service contract stationer for medium- and
large-size businesses throughout the United States. In fiscal 1994, the Company
had sales of $4.3 billion and net earnings of $105 million and achieved annual
growth rates in sales and net earnings of 41% and 57%, respectively, from fiscal
1990 through fiscal 1994. This growth has resulted principally from the opening
and acquisition of new stores, comparable store sales increases averaging 19%
per year, growth in the Company's Business Services Division and operating
margin enhancement.

The Company's business strategy for its retail stores is to enhance the
sales and profitability of its existing stores and to add new stores in
locations where the Company can establish a significant market presence. Through
expansion, the Company seeks to increase efficiencies in operations, purchasing,
marketing and management. During 1994, the Company opened 71 new stores and
closed two stores. The Company opened 29 new stores and closed one store during
the first half of 1995 and intends to continue its rapid growth by opening 40 to
50 additional new stores during the remainder of 1995 and opening approximately
80 new stores in 1996. The Company's retail 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-size businesses by their traditional
sources of supply. The Company is able to maintain its competitive pricing
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 most of its
inventory on the sales floors of its "no frills" stores.

The Company's Business Services Division was formed in 1994 and provides
delivery services to small-and medium-size businesses and full-service contract
stationer services to medium- and large-size businesses. The delivery services
are currently provided through 24 customer service centers (delivery centers and
contract stationer warehouses) and certain retail stores. The Company's
nationwide full-service contract stationer business, built primarily through the
acquisition of eight contract stationers since 1993, provides next-day delivery
of office products as well as value-added services to medium- and large-size
businesses. This Division's sales exceeded $950 million in 1994. Through its
contract stationer business, the Company sells its products primarily to medium-
and large-size 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. These efficiencies include 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.

15
<PAGE> 18

1995, the Company plans to replace four of its customer service centers with
larger, more efficient facilities, close three customer service centers, and add
two new customer service centers.

Following is a brief description of the eight contract stationer
acquisitions noted above:

- In May 1993, the Company acquired the office supply business of Wilson
Stationery & Printing Company ("Wilson"), a full service contract
stationer with operations in Texas and North Carolina.

- In September 1993, the Company acquired 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.

- In February 1994, the Company acquired L.E. Muran Co., Inc. ("Muran")
based in Boston and Yorkship Press, Inc. ("Yorkship") servicing customers
in Philadelphia and southern New Jersey.

- In May 1994, the Company acquired Midwest Carbon Company ("Midwest"),
based in Minneapolis, and Silvers, Inc. ("Silvers"), based in Detroit.

- In August 1994, the Company acquired J.A. Kindel Company ("Kindel"),
based in Cincinnati, and Allstate Office Products, Inc. ("Allstate"),
based in Tampa.

Each of the 1994 acquisitions was accounted for on a "pooling of interests"
basis and, accordingly, the financial data, statistical data, financial
statements and discussions of financial and other information included or
incorporated by reference herein for periods prior to the acquisitions have been
restated to reflect the financial position, results of operations, and other
information relating to these companies for all periods presented. No
affiliations existed between the Company and any of the acquired companies prior
to the acquisitions.

Beginning in 1994, the Company has entered into joint ventures and
licensing arrangements for the operation of retail office supply stores under
the Office Depot(R) name in Colombia, Israel, Mexico and Poland. In June 1995,
the Company entered into a joint venture agreement with Carrefour to own and
operate retail office supply stores in France using a format similar to that
utilized by the Company in its U.S. stores. The joint venture is owned 50% by
Carrefour and 50% by the Company. The joint venture currently plans to open its
first store in France in mid-1996.

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, continues to be 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-size
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.

High-volume office supply superstores have emerged throughout the United
States targeting the smaller businesses that traditionally purchased from
dealers by offering selection, service and low prices. These price

16
<PAGE> 19

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-size businesses,
which traditionally have had limited opportunities to buy at significant
discounts from 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. The Company entered the full-service contract
stationer portion of the office supply industry by acquiring eight contract
stationers in 1993 and 1994.

MERCHANDISING AND PRODUCT STRATEGY

The Company's retail merchandising strategy is to offer a broad selection
of brand-name office products at everyday low prices. Each of the Company's
stores offers 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 6,000 stock-keeping units (including
variations in color and size). In the Business Services Division, each customer
service center will carry the base store merchandise assortment plus
approximately 5,000 additional items that the Company believes are required to
meet the needs of its larger customers.

The table below shows sales of each major product group as a percentage of
total merchandise sales year-to-date 1995 and for the 1994, 1993 and 1992 fiscal
years:

<TABLE>
<CAPTION>
26 WEEKS 1994 1993 1992
ENDED FISCAL FISCAL FISCAL
JULY 1, 1995 YEAR YEAR YEAR
------------ ------ ------ ------
<S> <C> <C> <C> <C>
General office supplies(1).................... 46.8% 48.1% 50.9% 53.4%
Business machines and related supplies,
computers and computer accessories(2)....... 41.2 39.0 36.2 33.8
Office furniture(3)........................... 12.0 12.9 12.9 12.8
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
========= ===== ===== =====
</TABLE>

- ---------------

(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 substantially all 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
operates eight cross-dock operations that receive bulk deliveries from certain
vendors and sort and deliver merchandise to the Company's stores. The cross-dock
operations 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 significant difficulties in the future.

Initial purchasing decisions are primarily 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

17
<PAGE> 20

product lines, analyzing competitive developments and negotiating with vendors
in order to obtain more favorable prices and product availability. Purchase
orders to approximately 365 vendors are currently transmitted by electronic data
interchange (EDI), which expedites orders and promotes accuracy and efficiency.
The Company receives Advance Ship Notices (ASN) and invoicing via EDI from
selected vendors and plans to expand this program to other vendors.

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 ten national cable stations. All print advertisements, as well
as catalog layouts, are created by the Company's in-house 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 and guarantee card
holders and forms the basis of a highly targeted proprietary mailing list for
updated catalogs and other promotional mailings.

The Company's stores have 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.

Delivery. The marketing program for the retail division provides the
customer base for the delivery business to small- and medium-size businesses.
For the contract stationer businesses, the Company acquires and maintains its
customers primarily through its direct sales force operating out of
approximately 70 local customer sales offices and the 24 customer service
centers. 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 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 within
two days.

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.

Delivery. The Company's small- to medium-size 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 customer service 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 provides the office supplies purchasing departments of its
medium- to large-size business 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

18
<PAGE> 21

and comprehensive product utilization reports. For contract stationer customers,
the Company will typically sell on credit through an open account, although all
credit options provided at the retail stores are also available to all delivery
customers.

The Company currently operates 24 regional customer service centers in 17
states. All delivery orders received from customers in these areas, whether
through the Company's telephone centers, contract customer orders 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.

EXPANSION PROGRAM

Retail Division. The Company's business strategy for its retail stores is to
enhance the sales and profitability of its existing stores, and to add new
stores in locations where the Company can achieve a significant market presence.
The Company opened 71 new stores and closed two stores in 1994, and plans to
open approximately 70 to 80 stores in 1995, of which 29 were open at the end of
the second quarter. The Company plans to open approximately 80 stores in 1996.

<TABLE>
<CAPTION>
STORES
------------------------------------------------------
OPEN OPEN
BEGINNING END
YEAR OF PERIOD OPENED/ACQUIRED CLOSED OF PERIOD
- ---- --------- --------------- ------ ---------
<S> <C> <C> <C> <C>
1990........................................... 99 75 1 173
1991........................................... 173 57 2 228
1992........................................... 228 58(1) 2 284
1993........................................... 284 68 1 351
1994........................................... 351 71 2 420
1995........................................... 420 29 1 448(2)
</TABLE>

- ---------------

(1) Includes the acquisition of five stores in Canada.
(2) Second quarter 1995.

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.

Business Services Division. The Company's strategy for its Business Services
Division is to build an integrated national operation to provide delivery
services to small- and medium-size businesses and to increase its penetration in
new and existing markets for the Company's full service contract stationer
business. Beginning in 1993, the Company began developing a presence in the
contract stationer portion of the office products industry by acquiring existing
contract stationer businesses in selected markets. The Company is in the process
of combining the operations of its contract stationer warehouses and delivery
centers, as well as the delivery functions at the retail stores. The integration
of these operations is expected to be substantially completed by early 1996.
During the first half of 1995, the Company replaced six customer service
centers. During the remainder of 1995, the Company plans to replace four of its
existing customer service centers with larger, more efficient facilities, close
three customer service centers, and add two additional customer service centers.

19
<PAGE> 22

New Opportunities. In addition to the Company's core business focus and
expansion opportunities, the Company is also developing and testing new growth
concepts including the following:

- Office Depot(R) "Megastores" -- 45,000-50,000 square foot Office Depot(R)
retail stores with expanded assortments of furniture, computer software
and accessories and general office supplies. The first megastore will open
in August in Las Vegas. Additional megastore openings are planned for the
fourth quarter of 1995, when the Company enters the New York metropolitan
market.

- Furniture Stores -- 15,000-20,000 square foot office furniture stores,
either free standing or adjacent to an Office Depot(R) store, which offer
a broad line of office furniture, office accessories and design services.
The Company plans to open its first store in Texas in the fourth quarter
of 1995.

STORE DESIGN AND OPERATIONS

Retail. 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. In 1994 the Company began
operating larger stores of approximately 30,000 square feet. The larger stores
accommodate additional merchandising of furniture, business machines, computers,
software and accessories. 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.

Delivery. The Company's customer service centers range from 13,000 to
378,000 square feet of space, while its more recently opened customer service
centers average 150,000 square feet. Inventory is received and stocked in each
center using an automated inventory tracking system. The Company is in the
process of converting its customer service centers to an integrated system.
Customer orders, placed via phone or electronically, are filled by the
appropriate customer service center for next day delivery. The appropriate

20
<PAGE> 23

customer service center is determined by the Company's automated routing system
and the order is filled by using both in-stock and wholesaler inventory.

MANAGEMENT INFORMATION SYSTEMS

The Company employs an IBM ES9000 mainframe and multiple IBM System AS/400
computers and client/server technologies to aid in controlling its merchandising
and operations. The systems include advanced software packages that have been
customized for the Company's specific business operations. By integrating these
environments the Company improved its ability to manage stock status, order
processing, inventory replenishment and advertising maintenance. The Company is
continuing its implementation of 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 is transmitted to the
Company's headquarters on a daily basis.

The Company is in the process of integrating the contract stationer
businesses acquired over the last two years and its commercial delivery business
into a national delivery network. This integration encompasses many systems,
including order entry, warehouse management and routing, and is expected to be
substantially complete by early 1996. This integrated system will allow a
customer to place an order via phone or electronically. When the order is
placed, the system determines the appropriate customer service center for
delivery, looks up stock status of each item ordered and will automatically
reserve the item for the customer or place it on order from the wholesaler. The
wholesaler order is delivered to the customer service center the same day,
enabling the Company to deliver the most complete order possible the next day.
The Company believes that the complete implementation of these systems will
enable it to aggressively grow its delivery business.

EMPLOYEES, STORE AND CUSTOMER SERVICE CENTER MANAGEMENT AND TRAINING

As of July 24, 1995, the Company employed approximately 26,000 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 and customer service center 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 retail sales
associates 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. Typically, customer service center managers have extensive
experience in distribution operations. The Company grants stock options to
certain of its employees as an incentive to attract and retain such employees.

21
<PAGE> 24

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 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-size
businesses discounts on manufacturers' suggested retail list prices of only 20%
or less as compared to the Company's usual 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 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 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.

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 office supply superstores are also developing
a presence in the contract stationer portion of the business. The Company
competes with these businesses in substantially all of its current markets.

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.

22
<PAGE> 25

PROPERTIES

As of July 31, 1995, the Company operated 427 stores in 35 states and the
District of Columbia and 23 stores in five Canadian provinces. The Company also
operates 24 customer service centers. The following table sets forth the
locations of the Company's facilities.

<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER OF
OF OF CUSTOMER SERVICE
STATE STORES STATE STORES STATE DELIVERY CENTERS
- --------------------- --------- ------------------ --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Alabama 8 Nevada 4 Arizona 1
Arizona 2 New Mexico 2 California 5
Arkansas 2 North Carolina 16 Colorado 1
California 84 Ohio 10 Florida 3
Colorado 13 Oklahoma 5 Georgia 1
District of Columbia 2 Oregon 10 Iowa 1
Florida 61 Pennsylvania 5 Maryland 1
Georgia 23 South Carolina 7 Massachusetts 1
Hawaii 2 Tennessee 6 Michigan 1
Idaho 1 Texas 49 Minnesota 1
Illinois 18 Virginia 4 Nebraska 1
Indiana 9 Washington 13 New Jersey 1
Iowa 1 West Virginia 1 North Carolina 1
Kansas 4 Wisconsin 6 Ohio 1
Kentucky 3 Texas 2
Louisiana 11 Utah 1
Maryland 10 CANADA Washington 1
Michigan 13 Alberta 6
Minnesota 4 British Columbia 5
Mississippi 3 Manitoba 2
Missouri 12 Ontario 8
Nebraska 3 Saskatchewan 2
</TABLE>

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 1995 and 2015, except for 29 stores and four customer
service centers that are owned by the Company. The owned facilities are located
in eleven states, primarily Florida, Texas and two Canadian provinces. The
Company operates its stores under the names Office Depot and The Office Place in
Ontario, Canada. The Company currently operates its contract stationer
businesses under the names Eastman Office Products, Wilson Business Products,
L.E. Muran, Yorkship Business Supply, Silvers, Inc., J.A. Kindel Co., Midwest
Business Products and Allstate Office Products.

The Company's corporate offices in Delray Beach, Florida, containing
approximately 350,000 square feet in two adjacent buildings, were purchased in
February 1994.

The Company's principal executive offices are located at 2200 Old
Germantown Road, Delray Beach, Florida 33445; telephone (407) 278-4800.

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 results of operations.

23
<PAGE> 26

SELLING STOCKHOLDER

Prior to the Offerings, Fourcar B.V. (the "Selling Stockholder"), an
indirect, wholly-owned subsidiary of Carrefour, was the beneficial owner of
22,692,600 shares of Common Stock of the Company, constituting approximately 15%
of the shares issued and outstanding. After the sale of its 13,500,000 shares in
the Offerings, the Selling Stockholder will own 9,192,600 shares of Common
Stock, constituting approximately 6% of the shares issued and outstanding.

The shares of Common Stock offered hereby by the Selling Stockholder were
acquired from Carrefour which originally acquired 8,100,000 shares of Common
Stock from the Company through a wholly-owned subsidiary in June 1989 and later
acquired an additional 6,435,000 shares from the Company through a wholly-owned
subsidiary in April 1991. Additional shares have been purchased in the open
market. See "Description of Common Stock -- Registration Rights." The Selling
Stockholder has had one representative on the Board of Directors of the Company
since its initial Common Stock acquisition in 1989.

DESCRIPTION OF COMMON STOCK

The Company's authorized capital stock consists of 400,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock.

COMMON STOCK

At July 27, 1995, there were 150,306,766 shares of Common Stock outstanding
held by approximately 3,752 holders of record. At such date, approximately
12,662,712 shares of Common Stock were reserved for issuance upon the exercise
of outstanding stock options and 16,571,975 shares of Common Stock reserved for
issuance under the Liquid Yield Option Notes issued by the Company.

The holders of Common Stock are entitled to one vote for each share on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights in the election of directors. The holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of legally available funds. Upon liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets of the Company that are legally available for
distribution, after payment of all debts and other liabilities and subject to
the prior rights of any holders of any Preferred Stock then outstanding. The
holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares are fully paid and nonassessable. The
rights, preferences and privileges of holders of Common Stock are subject to any
series of Preferred Stock that the Company may issue in the future.

The transfer agent for the Common Stock is Mellon Securities Trust Company,
Pittsburgh, Pennsylvania.

REGISTRATION RIGHTS

Pursuant to the Stock Purchase Agreement, dated June 21, 1989, between the
Company and Carrefour (the "Carrefour Stock Purchase Agreement"), the Company
has granted Carrefour and its subsidiaries certain registration rights covering
all shares of Common Stock held by Carrefour and its subsidiaries (the
"Carrefour Stock"). Under the Carrefour Stock Purchase Agreement, the Company
can be required to file one registration statement on Form S-1 and three
registration statements on Forms S-2 or S-3 covering the Carrefour Stock having
a public offering price of at least $8,000,000 (or such lesser amount as shall
constitute 100% of the Carrefour Stock). The Company has agreed to pay all
registration expenses in connection therewith. These registration rights may be
exercised at any time, and such registration rights terminate when all of the
Carrefour Stock can be sold within a three-month period pursuant to Rule 144
under the 1933 Act, as amended (the "1933 Act"). Subject to certain limitations,
whenever the Company proposes to register Common Stock under the 1933 Act, the
Company may be required to include all or any portion of the Carrefour Stock in
such registration at the Company's expense until such time as all of the
Carrefour Stock can be sold within a three month period pursuant to Rule 144
under the 1933 Act.

24
<PAGE> 27

UNDERWRITING

Subject to the terms and conditions set forth in the U.S. purchase
agreement (the "U.S. Purchase Agreement"), the Company and the Selling
Stockholder have agreed to sell to each of the underwriters named below (the
"U.S. Underwriters") and each of the U.S. Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Prudential Securities
Incorporated and The Robinson-Humphrey Company, Inc. are acting as the
representatives (the "U.S. Representatives"), severally has agreed to purchase,
the aggregate number of shares of Common Stock set forth opposite its name
below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------ ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................
Goldman, Sachs & Co. .....................................................
Prudential Securities Incorporated........................................
The Robinson-Humphrey Company, Inc. ......................................

----------
Total........................................................... 12,400,000
=========
</TABLE>

The Company and the Selling Stockholder have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, the "Purchase Agreements") with Merrill Lynch International,
Goldman Sachs International, Prudential-Bache Securities (U.K.) Inc. and The
Robinson-Humphrey Company, Inc. acting as lead managers (the "Lead Managers")
and certain other underwriters outside the United States and Canada
(collectively, the "International Managers" and, together with the U.S.
Underwriters, the "Underwriters"). Subject to the terms and conditions set forth
in the International Purchase Agreement, the Company and the Selling Stockholder
have agreed to sell to the International Managers, and the International
Managers severally have agreed to purchase, an aggregate of 3,100,000 shares of
Common Stock.

In each Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth in such Purchase Agreement, to
purchase all of the shares of Common Stock being sold pursuant to such Purchase
Agreement if any of the shares of Common Stock being sold pursuant to such
Purchase Agreement are purchased. Under certain circumstances, under the
Purchase Agreements, the commitments of non-defaulting Underwriters may be
increased. Each Purchase Agreement provides that the Company and the Selling
Stockholder are not obligated to sell, and the Underwriters named therein are
not obligated to purchase, the shares of Common Stock under the terms of the
Purchase Agreement unless all of the shares of Common Stock to be sold pursuant
to the Purchase Agreements are contemporaneously sold.

The U.S. Representatives have advised the Company that the U.S.
Underwriters propose to offer the shares of Common Stock offered hereby to the
public initially at the public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share of Common Stock, and that the U.S. Underwriters may
allow, and such dealers may reallow, a discount not in

25
<PAGE> 28

excess of $ per share of Common Stock on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.

The initial public offering price per share of Common Stock and the
underwriting discount per share of Common Stock will be identical for both
Offerings.

The Company and the Selling Stockholder have been informed that the
Underwriters have entered into an agreement (the "Intersyndicate Agreement")
providing for the coordination of their activities. Pursuant to the
Intersyndicate Agreement, sales may be made between the U.S. Underwriters and
the International Managers of such number of shares of Common Stock as may be
mutually agreed.

The Company has granted options to the U.S. Underwriters and the
International Managers, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to 1,860,000 and 465,000 additional shares of
Common Stock, respectively, at the initial public offering price set forth on
the cover page of this Prospectus, less the underwriting discount. The U.S.
Underwriters may exercise this option only to cover over-allotments, if any,
made on the sale of Common Stock offered hereby. To the extent the U.S.
Underwriters or the International Managers exercise such options, each U.S.
Underwriter or International Manager will be obligated, subject to certain
conditions, to purchase the number of additional shares of Common Stock
proportionate to such U.S. Underwriter's or International Manager's initial
commitment.

The Company, the Selling Stockholder and certain other stockholders of the
Company have agreed not to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock (except for the shares offered hereby) for a period of days after the
date of this Prospectus without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as representative of the U.S. Underwriters.
The foregoing agreements are subject to certain exceptions.

The Company has been informed that, under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and any dealer to whom they sell shares of
Common Stock will not offer to sell or resell shares of Common Stock to persons
who are non-U.S. or non-Canadian persons or to persons they believe intend to
resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any bank, broker or dealer to whom they sell shares
of Common Stock will not offer to sell or resell shares of Common Stock to U.S.
persons or to Canadian persons or to persons they believe intend to resell to
U.S. persons or to Canadian persons, except in the case of transactions pursuant
to the Intersyndicate Agreement which, among other things, permits the
Underwriters to purchase from each other and offer to resell such number of
shares of Common Stock as the selling Underwriter or Underwriters and the
purchasing Underwriter or Underwriters may agree.

The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the 1933
Act, or to contribute to payments the Underwriters may be required to make in
respect thereof.

26
<PAGE> 29

LEGAL MATTERS

Certain legal matters will be passed upon for the Company by Kirkland &
Ellis, a partnership including professional corporations, Chicago, Illinois, for
the Selling Stockholder by Arent Fox Kintner Plotkin & Kahn, New York, New York,
and for the Underwriters by Brown & Wood, New York, New York.

EXPERTS

The consolidated financial statements and related financial statement
schedule incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

27
<PAGE> 30

------------------------------------------------------------
------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATES AS OF WHICH INFORMATION IS
SET FORTH HEREIN.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................... 2
Incorporation of Certain Documents
by Reference.............................. 2
Prospectus Summary.......................... 3
Use of Proceeds............................. 6
Common Stock Price Range and
Dividends................................. 6
Capitalization.............................. 7
Selected Financial Data..................... 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 9
The Company................................. 15
Selling Stockholder......................... 24
Description of Common Stock................. 24
Underwriting................................ 25
Legal Matters............................... 27
Experts..................................... 27
</TABLE>

------------------------------------------------------------
------------------------------------------------------------

------------------------------------------------------------
------------------------------------------------------------
15,500,000 SHARES
[OFFICE DEPOT LOGO]
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.

GOLDMAN, SACHS & CO.

PRUDENTIAL SECURITIES INCORPORATED

THE ROBINSON-HUMPHREY COMPANY, INC.
AUGUST , 1995
------------------------------------------------------------
------------------------------------------------------------
<PAGE> 31

[INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 31, 1995

PROSPECTUS

15,500,000 SHARES
[OFFICE DEPOT LOGO]
COMMON STOCK
---------------------

Of the 15,500,000 shares of Common Stock offered, 3,100,000 shares are
being offered initially outside the United States and Canada by the
International Managers and 12,400,000 shares are being offered in a concurrent
offering in the United States and Canada by the U.S. Underwriters. The price to
the public and aggregate underwriting discount per share are identical for both
Offerings. See "Underwriting."

The Common Stock is listed on the New York Stock Exchange under the symbol
"ODP." On July 28, 1995, the closing sale price of the Common Stock on the New
York Stock Exchange was $30 3/4 per share.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
- --------------------------------------------------------------------------------------------------
Total(3).......................... $ $ $ $
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>

(2) The Company has agreed to pay the expenses of the Offerings, which are
estimated to be approximately $450,000.

(3) The Company has granted the International Managers and the U.S. Underwriters
30-day options to purchase from the Company up to 465,000 and 1,860,000
additional shares of Common Stock, respectively, solely to cover
over-allotments, if any. If such options are exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."

---------------------

The shares of Common Stock are offered by the several International
Managers, subject to prior sale, when, as and if delivered to and accepted by
them, subject to approval of certain legal matters by counsel for the
International Managers and certain other conditions. The International Managers
reserve the right to withdraw, cancel or modify such offer and to reject orders
in whole or in part. It is expected that delivery of the shares will be made in
New York, New York on or about August , 1995.

---------------------

MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES
THE ROBINSON-HUMPHREY COMPANY, INC.
---------------------

The date of this Prospectus is August , 1995.
<PAGE> 32

[INTERNATIONAL PROSPECTUS]

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

The following is a general discussion of certain anticipated United States
federal income and estate tax consequences of the ownership and disposition of
shares of Common Stock by non-U.S. holders. For purposes of this discussion, a
"non-U.S. holder" is any person other than (i) a citizen or resident of the
United States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any State, or (iii)
an estate or trust whose income is includible in gross income for United States
federal income tax purposes regardless of its source. This discussion does not
consider any specific facts or circumstances that may apply to a particular
non-U.S. holder. Furthermore, the following discussion is based on current
provisions of the Code and administrative and judicial interpretations of the
Code as of the date hereof, all of which are subject to change (possibly on a
retroactive basis).

EACH PROSPECTIVE NON-U.S. HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISER
WITH RESPECT TO THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES AND
UNITED STATES STATE AND LOCAL TAX CONSEQUENCES OF OWNING AND DISPOSING OF SHARES
OF COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.

DIVIDENDS

While the Company has not paid dividends to date, in general, any dividends
paid to a non-U.S. holder by the Company will be subject to United States
withholding tax at a 30% rate (or a lower rate prescribed by an applicable tax
treaty) unless the dividends are either (i) effectively connected with a trade
or business carried on by the non-U.S. holder within the United States, or (ii)
if a tax treaty applies, attributable to a United States permanent establishment
maintained by the non-U.S. holder. Dividends effectively connected with such
trade or business or attributable to such permanent establishment generally will
not be subject to withholding (if the non-U.S. holder files certain forms with
the payor of the dividend) and generally will be subject to United States
federal income tax at regular rates. In the case of a non-U.S. holder which is a
corporation, such effectively connected income may also be subject to an
additional "branch profits tax" (which is generally imposed on a foreign
corporation on the repatriation from the United States of effectively connected
earnings and profits). To determine the applicability of a tax treaty providing
for a lower rate of withholding, dividends paid to an address in a foreign
country are presumed under current Treasury regulations to be paid to a resident
of that country. Treasury regulations proposed in 1984, which have not been
finally adopted, however, would require non-U.S. holders to file certain forms
to obtain the benefit of any applicable tax treaty providing for a lower rate of
withholding tax on dividends.

GAIN ON DISPOSITION

A non-U.S. holder generally will not be subject to United States federal
income or withholding tax on any gain recognized on a disposition of a share of
Common Stock unless (i) the Company is or has been a "U.S. real property holding
corporation," as defined in Section 897(c)(2) of the Code, for United States
federal income tax purposes (which the Company does not believe that it is or is
likely to become) and the non-U.S. holder disposing of the share owned, directly
or constructively, at any time during the five-year period preceding the
disposition, more than five percent of the Common Stock; (ii) the gain is
effectively connected with a trade or business carried on by the non-U.S. holder
within the United States or, if a tax treaty applies, attributable to a United
States permanent establishment maintained by the non-U.S. holder; (iii) in the
case of a non-U.S. holder who is an individual, who holds the share as a capital
asset and who is present in the United States for a substantial period of time
in the taxable year of the disposition, either (a) such non-U.S. holder has a
"tax home" (as defined for U.S. federal income tax purposes) in the United
States and the gain from the disposition is not attributable to an office or
other fixed place of business maintained by such non-U.S. holder outside of the
United States or (b) the gain from the disposition is attributable to an office
or other fixed place of business maintained by such non-U.S. holder in the
United States; or (iv) the non-U.S. holder is subject to a tax pursuant to
provisions of the Code applicable to certain United States expatriates.

25
<PAGE> 33

[INTERNATIONAL PROSPECTUS]

FEDERAL ESTATE TAX

Shares of Common Stock owned or treated as owned by an individual who is
not a citizen or resident (as defined for United States federal estate tax
purposes) of the United States at the time of death will be includible in the
individual's gross estate for United States federal estate tax purposes unless
an applicable estate tax treaty provides otherwise.

BACKUP WITHHOLDING AND INFORMATION REPORTING REQUIREMENTS

The Company must report annually to the IRS and to each non-U.S. holder the
amount of dividends paid to, and the tax withheld with respect to, such holder.
These information reporting requirements apply regardless of whether withholding
was reduced or eliminated by an applicable tax treaty. Copies of these
information returns may also be made available under the provisions of a
specific treaty or agreement to the tax authorities in the country in which the
non-U.S. holder resides. United States backup withholding tax (which generally
is a withholding tax imposed at the rate of 31% on certain payments to persons
that fail to furnish the information required under the United States
information reporting requirements) will generally not apply to dividends paid
on Common Stock to a non-U.S. holder at an address outside the United States.

The payment of the proceeds from the disposition of Common Stock to or
through the United States office of a broker will be subject to information
reporting and backup withholding at a rate of 31% unless the owner, under
penalties or perjury, certifies, among other things, its status as a non-U.S.
holder, or otherwise establishes an exemption. The payment of the proceeds from
the disposition of Common Stock to or through a non-U.S. office of a broker
generally will, except as noted below, not be subject to backup withholding and
information reporting. In the case of proceeds from a disposition of Common
Stock paid to or through a non-U.S. office of a U.S. broker or paid to or
through a non-U.S. office of a non-U.S. broker that is (i) a "controlled foreign
corporation" within the meaning of Section 957(a) of the Code for United States
federal income tax purposes or (ii) a person 50% or more of whose gross income
from all sources for a certain three-year period was effectively connected with
a United States trade or business, (a) backup withholding will not apply unless
the broker has actual knowledge that the owner is not a non-U.S. holder, and (b)
information reporting will not apply if the broker has documentary evidence in
its files that the owner is a non-U.S. holder (unless the broker has actual
knowledge to the contrary).

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a non-U.S. holder will be refunded
(or credited against the non-U.S. holder's United States federal income tax
liability, if any), provided that the required information is furnished to the
IRS.

The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.

26
<PAGE> 34

[INTERNATIONAL PROSPECTUS]

UNDERWRITING

Subject to the terms and conditions set forth in the international purchase
agreement (the "International Purchase Agreement"), the Company and the Selling
Stockholder have agreed to sell to each of the underwriters named below (the
"International Managers") and each of the International Managers, for whom
Merrill Lynch International Limited, Goldman Sachs International,
Prudential-Bache Securities (U.K.) Inc. and The Robinson-Humphrey Company, Inc.
are acting as the lead managers (the "Lead Managers"), severally has agreed to
purchase, the aggregate number of shares of Common Stock set forth opposite its
name below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International Limited.......................................
Goldman Sachs International...............................................
Prudential-Bache Securities (U.K.) Inc. ..................................
The Robinson-Humphrey Company, Inc. ......................................

---------
Total........................................................... 3,100,000
========
</TABLE>

The Company and the Selling Stockholder have also entered into a purchase
agreement (the "U.S. Purchase Agreement" and, together with the International
Purchase Agreement, the "Purchase Agreements") with Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Goldman, Sachs & Co., Prudential Securities
Incorporated and The Robinson-Humphrey Company, Inc. acting as representatives
(the "U.S. Representatives") and certain other underwriters in the United States
and Canada (collectively, the "U.S. Underwriters" and, together with the
International Managers, the "Underwriters"). Subject to the terms and conditions
set forth in the U.S. Purchase Agreement, the Company and the Selling
Stockholder have agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters severally have agreed to purchase, an aggregate of 12,400,000
shares of Common Stock.

The Lead Managers have advised the Company that the International Managers
propose to offer the shares of Common Stock offered hereby to the public
initially at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock, and that the International Managers may
allow, and such dealers may reallow, a discount not

27
<PAGE> 35

[INTERNATIONAL PROSPECTUS]

in excess of $ per share of Common Stock on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.

The initial public offering price per share of Common Stock and the
underwriting discount per share of Common Stock will be identical for both
Offerings.

The Company and the Selling Stockholder have been informed that the
Underwriters have entered into an agreement (the "Intersyndicate Agreement")
providing for the coordination of their activities. Pursuant to the
Intersyndicate Agreement, sales may be made between the International Managers
and the U.S. Underwriters of such number of shares of Common Stock as may be
mutually agreed.

The Company has granted options to the International Managers and the U.S.
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an aggregate of 465,000 and 1,860,000 additional
shares of Common Stock, respectively, at the initial public offering price set
forth on the cover page of this Prospectus, less the underwriting discount. The
International Managers may exercise this option only to cover over-allotments,
if any, made on the sale of Common Stock offered hereby. To the extent the
International Managers or the U.S. Underwriters exercise such options, each
International Manager or U.S. Underwriter will be obligated, subject to certain
conditions, to purchase the number of additional shares of Common Stock
proportionate to such International Manager's or U.S. Underwriter's initial
commitment.

The Company, the Selling Stockholder and certain other stockholders of the
Company have agreed not to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock (except for the shares offered hereby) for a period of days after the
date of this Prospectus without the prior written consent of Merrill Lynch
International Limited. The foregoing agreements are subject to certain
exceptions.

Each International Manager has agreed that (i) it has not offered or sold,
and it will not offer or sell, directly or indirectly, any shares of Common
Stock offered hereby in the United Kingdom by means of any document except in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act of 1985, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act of 1986 with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on and will
only issue and pass on to any person in the United Kingdom any document received
by it in connection with the issuance of Common Stock if that person is of a
kind who falls within Article 9(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1988.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase, in addition to the offering price set forth on the cover page hereof.

28
<PAGE> 36

[INTERNATIONAL PROSPECTUS]

LEGAL MATTERS

EXPERTS

29
<PAGE> 37

[INTERNATIONAL PROSPECTUS]

------------------------------------------------------------
------------------------------------------------------------

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................... 2
Incorporation of Certain Documents
by Reference.............................. 2
Prospectus Summary.......................... 3
Use of Proceeds............................. 6
Common Stock Price Range and
Dividends................................. 6
Capitalization.............................. 7
Selected Financial Data..................... 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 9
The Company................................. 15
Selling Stockholder......................... 24
Description of Common Stock................. 24
Certain United States Federal Tax
Considerations............................ 25
Underwriting................................ 27
Legal Matters............................... 29
Experts..................................... 29
</TABLE>

------------------------------------------------------------
------------------------------------------------------------

GOLDMAN SACHS INTERNATIONAL

PRUDENTIAL-BACHE SECURITIES

THE ROBINSON-HUMPHREY
COMPANY, INC.
AUGUST , 1995
------------------------------------------------------------
------------------------------------------------------------
<PAGE> 38

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a statement of estimated expenses of the issuance and
distribution of the securities being registered (other than underwriting
discounts and commissions), all of which are being paid by the registrant:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $169,416
NASD Filing Fee........................................................... 30,500
NYSE Listing Fees......................................................... 17,500
Blue Sky Fees and Expenses (including attorneys' fees and expenses)....... 10,000
Printing and Engraving Expenses........................................... 110,000
Transfer Agent and Registrar Fees and Expenses............................ 2,000
Accounting Fees and Expenses.............................................. 35,000
Legal Fees and Expenses................................................... 50,000
Miscellaneous Expenses.................................................... 25,584
--------
Total........................................................... $450,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The General Corporation law of the State of Delaware (the "Delaware Law")
permits indemnification of directors, employees and agents of corporations under
certain conditions and subject to certain limitations. Pursuant to the Delaware
Law, the Company has included in its Restated Certificate of Incorporation and
bylaws a provision to eliminate the personal liability of its directors for
monetary damages for breach or alleged breach of their duty of care to the
fullest extent permitted by Delaware Law and to provide that the Company shall
indemnify its directors and officers to the fullest extent permitted by the
Delaware Law. The Company believes that its charter and bylaw provisions are
necessary to attract and retain qualified persons as directors and officers.

The Company has obtained insurance policies under which the Company's
directors and officers are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of certain actions, suits or proceedings, and certain liabilities which
might be imposed as a result of certain actions, suits or proceedings, to which
they are parties by reason of being or having been such directors or officers.

ITEM 16. EXHIBITS.

See Index to Exhibits.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses

II-1
<PAGE> 39

incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE> 40

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Delray Beach, State of Florida, on July 28, 1995.

OFFICE DEPOT, INC.

By: /s/ DAVID I. FUENTE
------------------------------------
David I. Fuente
Chairman and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David I. Fuente and Barry J. Goldstein, and each
of them, as true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all amendments (including
pre-effective and post-effective amendments) to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

* * * *

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed on July 28, 1995,
by the following persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- --------------------------------------------- ----------------------------------------------

<C> <S>

/s/ DAVID I. FUENTE Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
David I. Fuente

/s/ BARRY J. GOLDSTEIN Executive Vice President -- Finance, Chief
- --------------------------------------------- Financial Officer and Secretary
Barry J. Goldstein

- --------------------------------------------- Director
Mark D. Begelman

/s/ DENIS DEFFOREY Director
- ---------------------------------------------
Dennis Defforey

/s/ W. SCOTT HEDRICK Director
- ---------------------------------------------
W. Scott Hedrick

/s/ JOHN B. MUMFORD Director
- ---------------------------------------------
John B. Mumford
</TABLE>

II-3
<PAGE> 41

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- --------------------------------------------- ----------------------------------------------

<C> <S>
/s/ MICHAEL J. MYERS Director
- ---------------------------------------------
Michael J. Myers

/s/ PETER J. SOLOMON Director
- ---------------------------------------------
Peter J. Solomon

/s/ CYNTHIA COHEN TURK Director
- ---------------------------------------------
Cynthia Cohen Turk

/s/ ALAN L. WURTZEL Director
- ---------------------------------------------
Alan L. Wurtzel
</TABLE>

II-4
<PAGE> 42

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ----------------------------------------------------------------------- ------------
<C> <S> <C> <C>
*1.1 -- Form of U.S. Purchase Agreement........................................
*1.2 -- Form of International Purchase Agreement...............................
Restated Certificate of Incorporation of the Company, as amended to
4.1 -- date................................................................... (1)
4.2 -- Bylaws of the Company.................................................. (2)
4.3 -- Form of certificate representing shares of Common Stock................ (2)
*5.1 -- Opinion of Kirkland & Ellis............................................
*23.1 -- Consent of Kirkland & Ellis (included in Exhibit 5.1)..................
23.2 -- Consent of Deloitte & Touche LLP.......................................
24.1 -- Power of Attorney (included as pages II-3 and II-4)....................
</TABLE>

- ---------------

* To be filed by amendment.
(1) Incorporated by reference to the respective exhibit to the Company's Proxy
Statement for its 1995 Annual Meeting of Stockholders.
(2) Incorporated by reference to the respective exhibit to the Company's
Registration Statement No. 33-39473.

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement
of Office Depot, Inc. on Form S-3 of our reports dated February 14, 1995,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Office Depot, Inc. for the year ended December 31, 1994 and our report dated
February 8, 1994 (January 10, 1995 as to the effects of the business
combinations and stock split described in Note L) appearing in the Current
Report on Form 8-K dated January 16, 1995 of Office Depot, Inc. and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.

DELOITTE & TOUCHE LLP

July 28, 1995