As reported by GlobeSt.com last week regarding the company'sdismal secondquarter results, CP has defaulted on agreements and deadlinesto remodel Disney stores, reportedly for about $175 million. Thecompany officials said it would not be able to hit targets ofremodeling nine stores by the end of the year, and 67 more storesby January 2009. In total, CP had promised it would remodel 234stores by 2011. The company officials blamed circumstances beyondtheir control, such as store landlord permission disputes, for themissed deadlines.

Now, the new agreement allows CP to only have to remodel sevenstores by the end of the year and 49 more by January 2009, but addstwo more stores that the company must refurbish by 2011. Also,Disney also won concessions such as the relocation of its flagshipstore in Manhattan, and giving the Orlando-based company theability to sell its merchandise to stores that cater to adults,though CP will still have the exclusive children-only store sales.The company owns and operates 883 CP stores and 328 Disney storesin North America.

Two CP executives share at least part or all of the blame forthe delay in filing its Annual Report on Form 10-K for the fiscalyear ended Feb. 3, and its quarterly reports on Form 10-Q forsecond and third quarters of fiscal 2006 and first quarter offiscal 2007. According to a CP statement issued Friday, "the Boardof Directors is still reviewing the circumstances surroundingcertain violations of the company's policies and procedures by twoexecutives of the company and is considering the appropriateactions to take regarding these matters. Although the company doesnot currently expect these violations to result in a materialchange to the company's previously reported results of operations,the Board must determine the actions to take on these matters"before filing the reports.