Office Depot, Inc.

has made several big strides over the past couple years, and they have

fallen in comparison to their net income high in 2016. It is critical for them to continue to grow

and develop as a company. Office Depot has a significant amount of equity available to them,

and it is time that the equity is used to fund new ideas. The balance sheet for Office Depot

shows that in 2017, under property, plant and equipment, Office Depot has $512 million

invested in computer software (MarketWatch.com). It would be good to see an increase of 15%,

with half of that going towards research and development of the product. See the table below

to see the 2018 projected timeline of the roll out of Office Depot, Inc’s Office Efficiency

Software.

May 2018 – July 2018 Continue in research and development

August 2018- October Beta version of the Office Efficiency Software
2018
September 2018 Marketing campaign begins
November 2018 Sales of Office Efficiency Software to the public

The Office Depot’s Office Efficiency Software, is a database software that can be used for

any business. It allows companies to put all their work, past and present, into one software. It

will provide logs for people to create to keep tasks and projects organized. It will have 100s of

reports to help employees get a quick snapshot of information. It allows employees to log time,

create invoices, organize contracts, and generate purchase orders. This makes it very simple for

auditing purposes, because it has checks and balances installed, as there are phases of

approvers in the software. The Office Efficiency Software is a company database of the future.

The program allows Office Depot, Inc. to generate revenue, while boasting their go green

standards. One thing to note with the Beta version, this is a test of the software that will be

distributed to a select few companies that have a variety of different fields. While these select
companies are testing the software, Office Depot will provide technicians to work along side the

businesses to fix and improve the Office Efficiency Software.

Another point of emphasize would be for Office Depot, Inc. to continue to expand

globally. The goal would be to open 1 new warehouse and 3 stores in a new country each year.

The focus would to move down toward South America and Africa, as mentioned in the SWOT

Matrix. These are good areas to try and break into as they have been untapped by other office

supply companies. Office Depot would budget $10 million each year to buy the land and build

the warehouse and stores.

In order to finance the proposed $86.8 million that will be needed to put this plan into

action, it would be best to use the equity method. This method will provide shareholders with

the highest earnings per share.

 Tax Rate – 40%

 Interest Rate Estimated at 12%

OFFICE DEPOT 2018 PROJECTED INCOME

STATEMENT
VALUES IN MILLIONS Dec- Dec- Dec- Dec-
18 17 16 15
SALES $ $ $ $
10,752.00 10,240.00 11,021.00 11,727.00
COST OF GOODS SOLD $ $ $ $
8,012.37 7,779.00 8,313.00 8,864.00
GROSS PROFIT $ $ $ $
2,739.63 2,461.00 2,708.00 2,863.00
SELLING, GENERAL AND $ $ $ $
ADMIN EXPENSE 2,300.00 2,022.00 2,242.00 2,425.00
RESEARCH & $ $ $ $
DEVELOPMENT 38.40 - - -
OPERATING EXPENSES $ $ $ $
2,338.40 2,120.00 2,177.00 2,680.00
EBIT $ $ $ $
401.23 341.00 531.00 183.00
INTEREST EXPENSE $ $ $ $
 (48.15) (42.00) (72.00) (68.00)
PRE-TAX INCOME $ $ $ $
353.08 299.00 459.00 115.00
INCOME TAXES $ $ $ $
141.23 119.60 183.60 46.00
NET INCOME $ $ $ $
211.85 179.40 275.40 69.00
DIVIDENDS PER SHARE $ $ $ $
0.15 0.10 0.05 -
BASIC EPS $ $ $ $
0.41 0.34 0.51 0.13