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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

For the transition period from ____________ to _____________

Commission file number    1-10948   

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

(561) 438-4800
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

The registrant had 313,140,476 shares of common stock outstanding as of October 20, 2003.

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

OFFICE DEPOT, INC.

The accompanying notes are an integral part of these statements.

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OFFICE DEPOT, INC.

The accompanying notes are an integral part of these statements.

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OFFICE DEPOT, INC.

The accompanying notes are an integral part of these statements.

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OFFICE DEPOT, INC.

Note A – Basis of Presentation

Office Depot, Inc., including consolidated subsidiaries (the “Company”), is a global supplier of office products and services. Fiscal years are based on a 52- or 53-week period ending on the last Saturday in December. The condensed consolidated balance sheet at December 28, 2002 has been derived from audited financial statements at that date. The condensed interim financial statements as of September 27, 2003 and for the 13- and 39-week periods ending September 27, 2003 (also referred to as “the third quarter of 2003” and “year-to-date 2003”) and September 28, 2002 (also referred to as “the third quarter of 2002” and “year-to-date 2002”) are unaudited. However, in our opinion, these financial statements reflect all adjustments (consisting only of normal, recurring items) necessary to provide a fair presentation of our financial position, results of operations and cash flows for the periods presented. Certain prior year amounts have been reclassified to conform to the current year’s presentation.

These interim results are not necessarily indicative of the results that should be expected for the full year. For a better understanding of the Company and its financial statements, we recommend reading these condensed interim financial statements in conjunction with the Company’s audited financial statements for the year ended December 28, 2002, which are included in our 2002 Annual Report on Form 10-K, filed on March 13, 2003.

Note B – Cumulative Effect of Accounting Change

At the beginning of our 2003 fiscal year, we adopted Emerging Issues Task Force (“EITF”) Issue No. 02-16, Accounting by a Reseller for Cash Consideration Received from a Vendor. This guidance primarily affects our accounting for cooperative advertising arrangements. Previously, these arrangements were accounted for as a reduction of advertising expense. After adoption, amounts received from vendors under these arrangements are considered a reduction of product cost, reducing both inventory values and cost of goods sold. This treatment is similar to our accounting for vendor rebate arrangements. The amounts deferred for both arrangements are reviewed quarterly. Changes in the deferral rates and changes in inventory balances may impact quarterly or annual earnings.

To record the initial amount of cooperative advertising deferred in inventory at the beginning of the year, we recorded an after-tax cumulative effect adjustment of $25.9 million, or $0.08 per share. Prior periods have not been restated. Excluding the charge to record the cumulative effect of adoption, the impacts of applying this method in 2003, and the estimated pro forma impacts for 2002 are summarized as follows:

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(in millions, except per share amounts)
Increase (decrease)

Note C – Accounting for Stock-Based Compensation

The Company accounts for its stock-based compensation plans under Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees. The pro forma information below is based on provisions of Statement of Financial Accounting Standard (“FAS”) No. 123, Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for Stock-Based Compensation – Transition and Disclosure, issued in December 2002.

(In thousands, except per share amounts)