Staples 2003 Annual Report Download - page 78

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STAPLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE D Store Closure Charge
In January 2002, Staples committed to a plan to close 31 underperforming stores and recorded a charge of
$50.1 million related to these closings. This charge included $31.5 million for net lease obligations, $12.5 million for asset
write-offs, $5.5 million for fees and other expenses and $0.6 million for severance related to the store closures. All of the
store closures were completed during the first quarter of fiscal 2002. Management believes that the remaining accruals
will be entirely utilized by 2009, however, some payments may be made over the remaining lease terms. The following is a
rollforward of the 2001 store closure charges utilized during fiscal 2002 (in thousands):
Balance at Charges Balance at
February 2, Utilized in February 1,
2002 2002 2003
Lease terminations .............................................. $31,543 $(7,090) $24,453
Severance ..................................................... 621 (621) —
Legal and settlement costs ......................................... 5,484 (879) 4,605
$37,648 $(8,590) $29,058
Asset write-offs ................................................. 12,444
$50,092
In the fourth quarter of 1998, Staples committed to a plan to relocate certain stores which could not be expanded
and upgraded to Staples’ current store model. In connection with this plan, Staples recorded a charge to operating
expense of $49.7 million. During the first quarter of fiscal year 2000, management decided not to close several stores that
were included in the original store closure plan, due to changes in market conditions. As a result, the Company reversed
a portion of the charge in the amount of $7.3 million. As of February 1, 2003, $8.1 million remains accrued for this
charge. Management believes that the remaining accruals will be entirely utilized by 2004, however, some payments may
be made over the remaining lease terms.
NOTE E Accrued Expenses and Other Current Liabilities
The major components of accrued liabilities as of February 1, 2003 and February 2, 2002 are as follows (in
thousands):
February 1, February 2,
2003 2002
Taxes ................................................................. $189,590 $212,457
Employee related ........................................................ 182,451 126,302
Acquisition and store closure reserves ......................................... 85,673 62,665
Advertising and direct marketing ............................................ 48,557 44,120
Other ................................................................ 249,212 209,730
Total ............................................................... $755,483 $655,274
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