Office Depot Restatement of Financial Results Essay

Office Depot Restatement of Financial Results - Essay Example Office Depot (NYSE: ODP) is a major supplier of office products like computers, business machines, software and office furniture and also does a range of business operations like shipping, printing, copying and computer repair (Turner, 2012). When the Internal Revenue Service denied the company’s claim to carry back some tax losses, it had to reassess and restate its financial results in order to revise the original tax position. The restatement covered the financial statements of the periods ending in December and the quarters ending in June and September. The company further projected that restated financial statements would be filed in April 2011. The Internal Revenue service had effectively stated that Office Depot would not carry back certain tax losses from the prior years. It was certainly felt that this restatement would have considerable consequences on the operations of the company. Indeed, the company realized several changes and had to adjust effectively in order to normalize operations in the course of this period. One of the expected effects of correcting the financial statements was the reduction of the full-tax benefits by nearly $80 million. At the time of the restatement, the company hoped that its first-quarter sales would be much consistent with the prior position and that the EBIT would also be of 50 percent (Mohr, 2012). Similarly, the restatement resulted in a change from profit to loss due to the reduced tax benefits. In this case, the net profit of $33 million was translated to a net loss of $46 million due to a tax benefit reduction by over $ 80 million (Office Depot, 2010). The resulting loss meant that the common shareholders had to get $30 cents per share from the previous $1 per share. Following the removal of the tax receivable, the operating cash flows of the 2011 financial statements were adversely affected.