Notes to Consolidated Financial Statements

Note 16:
Industry and Geographic Area Segment Information

In fiscal 1998, the Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information." Adoption of this Statement required the Company to change the disclosure of product information but did not require significant changes in the way segments were disclosed. The Company is organized primarily on the basis of business segments and geographic locations. The Company operates in four reportable business segments, excluding discontinued operations-

(1) North America Office Products,
(2) International Office Products,
(3) Desktop Software Distribution, and
(4) Other Products & Services; and two geographic segments-
(1) U.S. and (2) International. The Company's reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. The accounting policies of the segments are the same as those described in Note 1-Operations and Summary of Significant Accounting Policies.

Segment data includes intersegment revenues. The Company does not allocate its corporate headquarters' expenses to its segments.

Included in the North America Office Products' segment are general office supplies, office furniture, computer and imaging supplies, manufactured forms and labels. The International Office Products' segment primarily includes general office supplies, office furniture, and computer supplies. The Desktop Software Distribution segment primarily includes the sale of shrink-wrapped product and the sale of licenses for the use of software produced by major software publishers. The Other category primarily includes advertising specialties, promotional products, and cleaning and service supplies. Included in the International segment are operations throughout Canada, Europe and the Southern Pacific.

The following tables set forth information as to the Company's reportable segments:

Business Segments

(a)Includes unallocated corporate headquarter expenses and assets, as well as elimination of intersegment revenue. Intersegment sales are generally made at cost plus a nominal handling fee.

(b)The North America Office Products Net sales are shown net of intrasegment sales of $37,654,000, $18,030,000 and $8,811,000 for fiscal 1998, eleven-months ended January 31, 1998 and fiscal 1997, respectively. There are no intrasegment sales within the other business segments.

(c)Includes restructuring related inventory provisions of $1,919,000 in North America Office Products and $1,211,000 in the Other Segment.

(d)EBITDA for segment reporting purposes excludes restructuring and other non-recurring charges.

(e)Includes a gain on the sale of marketable securities of $6,273,000.

Geographic Segments

(a)Includes unallocated corporate headquarter assets. There are no intersegment revenues.