Office Depot outed over accounting issues

DELRAY BEACH, Fla. Office Depot said it fired four merchandising executives and will restate earnings from previous quarters in connection with a review of a vendor funded program that stemmed from a whistleblower complaint.

A review by the board of directors audit committee, independent legal counsel and forensic accountants concluded that merchandising executives failed to provide information to Office Depot accountants that resulted in revenue being incorrectly recognize in four previous quarters.

“The investigation revealed errors in timing of vendor program recognition and included evidence that some individual within the company’s merchandising organization failed to provide Office Depot’s accounting staff with complete or accurate documentation of future purchase or performance conditions in certain vendor program that would have required recognition of the related vendor funds to be deferred into future periods.”

Office Depot withheld the names of the fired merchandising executives from its press release and a company spokesman was not immediately available for comment.

Office Depot currently estimates that it will reduce diluted earnings per share by 2 cents in the third quarter of 2006 and by 3 cents in the fourth quarter. Earnings per share in the first quarter of 20007 will be reduced by 1 cent and by 2 cents in the second quarter of 2007. The diluted earnings per share impact of approximately 7 cents per share will be recognized beginning in the second half of 2007 and in decreasing amounts in years from 2008 through 2010, the company said.