may be affected by the news that Office Depot, Inc
., a global provider of office products and services, announced steps to be taken as part of the strategic review announced on October 29, 2008. The company is headquartered in Boca Raton.
The Company plans to close 112 underperforming retail stores in North America over the next three months, reducing the North American store base to 1,163. The stores to be closed are located in various geographic regions, including 45 in the Central U.S., 40 in the Northeast and Canada, 19 in the West and eight in the South. Additionally, 14 stores will be closed through 2009 as their leases expire or other lease arrangements are finalized.
New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores. This will facilitate a reduction in total Company capital spending in 2009 to less than $200 million, significantly lower than projected depreciation and amortization of $275 million.
Office Depot also plans to close six of its 33 distribution facilities in North America. This is consistent with the Company's long term plan to reduce the total number of facilities and combine its separate supply chain systems.
The Company anticipates taking charges in the fourth quarter 2008 and in 2009 for these actions totaling in a range from $270 million to $300 million. The cash component of these charges is projected to be approximately $40 million over the next twelve months and is comprised of continuing lease payments on closed stores; and severance for store, headquarters and field sales staffing; partially offset by cash received for liquidated inventory and assets. The remaining non-cash and future cash charges of approximately $230 million to $260 million are comprised principally of fixed asset write-offs and lease reserves on closed stores.
Office Depot has annual sales of approximately $15.1 billion, and employs about 49,000 associates around the world. The Company provides more office products and services to more customers in more countries than any other company, and currently sells to customers directly or through affiliates in 48 countries.
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