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Kids R Us closing stores

From: ASAP

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Closing of Freestanding Kids "R" Us and Imaginarium Stores

The company plans to close the 146 freestanding Kids "R" Us and the 36 freestanding Imaginarium stores as well as 3 distribution centers that support these stores. The majority of these facilities are expected to close on or before January 31, 2004. These actions are expected to generate significant cash flow in 2003 and to increase free cash flow in 2004 and beyond. In addition, these actions are expected to yield improvements in operating earnings of approximately $8 million in 2004 and approximately $20 million annually thereafter.

In conjunction with these actions, the company currently estimates it will incur restructuring and other charges totaling $280 million pre-tax. A portion of these charges is associated with inventory markdowns and will be recorded in costs of goods sold. The amount of this charge is preliminary and remains subject to change, pending the outcome of negotiations with landlords and other third parties. The company intends to record most of these charges in the fourth quarter of the fiscal year ending January 31, 2004.

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