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Office Depot Restates Earnings After Review

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The Associated Press

Published: November 10, 2007

DELRAY BEACH - Office Depot said it will revise some past financial statements after an independent review of vendor-program accounting found weakness in its internal controls and led to the firing of four employees.

The review revealed that during the period beginning in the third quarter of 2006 through the second quarter of 2007, funds due or received from vendors were recognized in the current quarter but should have been deferred into later periods.

The company identified weaknesses in its internal controls and has since fired four employees, according to a filing Thursday with the Securities and Exchange Commission.
Office Depot has not set a new date for its third-quarter report, which the company announced Oct. 29 it would delay because of the vendor program review.

The company declined to comment further Friday.

Delray Beach-based Office Depot said in the filing that it plans to reduce fiscal 2006 third-quarter earnings per share by 2 cents and fiscal 2006 fourth-quarter earnings by 3 cents. For its 2007 fiscal year, the company will reduce first-quarter earnings per share by a penny and second-quarter earnings by 2 cents.

As a result, related amounts of about 7 cents a share will be recognized in future periods, beginning in the second half of 2007 and in decreasing amounts in years from 2008 through 2010.
Office Depot said it anticipates making all necessary regulatory filings and releasing its third-quarter results by the end of November.

Analysts noted Friday that the announcement alleviates some uncertainty on Wall Street as to the magnitude of the accounting issues.

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