Office Depot 2012 Annual Report Download - page 18

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We have incurred significant impairment charges and we continue to incur significant impairment charges.
During 2012, we recognized non-cash asset impairment charges in our North American Retail Division of approximately $123.4
million. These charges reflect greater than anticipated downturns in sales at certain lower performing stores. We recognized store
asset impairment charges in the North American Retail Division of $11 million during 2011. We assess past performance and make
estimates and projections of future performance quarterly at an individual store level. Reduced sales, our shift in strategy to be less
promotional, as well as competitive factors and changes in consumer spending habits resulted in a downward adjustment o
f
anticipated future cash flows for the individual stores that resulted in the impairment. We foresee challenges in the market and
economy that could adversely impact our operations. To the extent that forward-looking sales and operating assumptions are not
achieved and are subsequently reduced, or if we commit to a more aggressive store downsizing strategy, including allocating capital
to further modify store formats, additional impairment charges may result. Additionally, the Company has $64.3 million of goodwill
at December 29, 2012, with $44.9 million in the International Division. We measure goodwill for impairment annually in the fourth
quarter or earlier if indicators of possible impairment are identified. Changes in the numerous variables associated with the
j
udgments, assumptions and estimates we make, in assessing the appropriate valuation of our goodwill, including changes resulting
from macroeconomic challenges in international markets, or disposition of components within reporting units, could in the future
require a reduction of goodwill and recognition of related non-cash impairment charges. If we were required to further impair ou
r
store assets or our goodwill, it could have a material adverse effect on our business and results of operations.
P
rovisions in our stockholder rights plan may make it more difficult for a third party to acquire us.
We have adopted a stockholder rights plan that could make it more difficult for a third party to acquire, or could discourage a third
party from acquiring, our Company or a large block of our common stock. A third party that acquires 15% or more of our common
stock could suffer substantial dilution of its ownership interest under the terms of the stockholder rights plan through the issuance o
f
common stock or common stock equivalents to all stockholders other than the acquiring person.
Disclaimer of Obligation to Update
We assume no obligation (and specifically disclaim any such obligation) to update these Risk Factors or any other forward-looking
statements contained in this Annual Report to reflect actual results, changes in assumptions or other factors affecting such forward-
looking statements.
Item 1B. Unresolved Staff Comments.
None.
16