UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): November 18, 2015
STAPLES, INC.
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(Exact name of registrant as specified in charter)
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Delaware
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0-17586
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04-2896127
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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Five Hundred Staples Drive, Framingham, MA
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01702
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: 508-253-5000
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(Former name or former address, if changed since last report)
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Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On November 18, 2015, Staples, Inc. announced its financial results for
the third quarter ended October 31, 2015. The full text of the press
release issued in connection with the announcement is attached as
Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K and the exhibit attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the Exchange
Act, except as expressly set forth by specific reference in such a
filing.
Item 9.01 Financial Statements and Exhibits
The exhibit listed on the Exhibit Index immediately preceding such
exhibit is furnished as part of this Current Report on Form 8-K.
SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date:
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November 18, 2015
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Staples, Inc.
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By:
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/s/ Christine T. Komola
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Christine T. Komola
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Executive Vice President,
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Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
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Description
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99.1
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Press release dated November 18, 2015.
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Exhibit 99.1
Staples,
Inc. Announces Third Quarter 2015 Performance
FRAMINGHAM, Mass.--(BUSINESS WIRE)--November 18, 2015--Staples, Inc.
(Nasdaq: SPLS) announced today the results for its third quarter ended
October 31, 2015. Total company sales for the third quarter of 2015 were
$5.6 billion, a decrease of six percent compared to the third quarter of
2014. On a GAAP basis, the company reported net income of $198 million,
or $0.31 per diluted share. Third quarter 2015 results on a GAAP basis
include pre-tax charges of $40 million related to the acquisition of
Office Depot, as well as $28 million primarily related to restructuring
activities.
Total company sales for the third quarter of 2015 were flat compared to
the third quarter of 2014 after excluding the impact of store closures
during the past year and changes in foreign exchange rates. Excluding
the impact of charges taken during the third quarter of 2015, the
company reported non-GAAP net income of $226 million, or $0.35 per
diluted share, compared to third quarter 2014 non-GAAP net income of
$236 million, or $0.37 per diluted share.
“We’re driving solid sales and earnings growth in our North American
Commercial business, and stabilizing results in North American Stores
and Online,” said Ron Sargent, Staples’ chairman and chief executive
officer. “Our strategic reinvention is on track, and we look forward to
accelerating the transformation of Staples with the acquisition of
Office Depot.”
Third Quarter 2015 Highlights
-
Grew sales in North American Commercial one percent in U.S. dollars,
or two percent on a local currency basis.
-
Increased total company gross profit as a percentage of sales by 44
basis points on a GAAP basis, or 29 basis points after excluding
charges related to inventory write-downs of $1 million during the
third quarter of 2015 and $11 million during the third quarter of 2014.
-
Improved total company operating income as a percentage of sales by 18
basis points on a GAAP basis, or 21 basis points after excluding
charges of $40 million during the third quarter of 2015 and $41
million during the third quarter of 2014.
-
Grew operating income by $13 million and improved operating income
rate by 56 basis points during the third quarter of 2015 in North
American Commercial.
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Secured approximately $50 million of annualized cost savings during
the third quarter of 2015.
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Secured more than $450 million of annualized cost savings since the
beginning of 2014, as part of a previously announced plan to eliminate
at least $500 million of annualized costs in 2014 and 2015 combined.
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Closed 18 stores in North America during the third quarter of 2015 and
closed 230 stores in North America since the beginning of 2014.
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Third Quarter 2015 Financial Summary
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Third Quarter
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(dollar amounts in millions, except per share data)
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2015
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2014
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Change
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Total company sales
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$5,593
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$5,962
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-6.2%
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Total company sales growth excluding the impact of store closures
and changes in foreign exchange rates*
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-0.4%
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GAAP operating income
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$318
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$328
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-$10
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Non-GAAP operating income*
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$358
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$369
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-$11
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GAAP operating income rate
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5.7%
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5.5%
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18 basis points
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Non-GAAP operating income rate*
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6.4%
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6.2%
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21 basis points
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GAAP net income
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$198
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$217
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-$19
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Non-GAAP net income*
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$226
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$236
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-$10
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GAAP earnings per diluted share
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$0.31
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$0.34
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-9%
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Non-GAAP earnings per diluted share*
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$0.35
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$0.37
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-5%
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*Indicates a non-GAAP measure. Refer to “Presentation of Non-GAAP
Information” and the accompanying reconciliations for more detailed
information about these non-GAAP measures.
Total company non-GAAP operating income rate increased 21 basis points
to 6.4 percent from an operating income rate of 6.2 percent achieved
during the third quarter of 2014. This increase reflects improved
product margin rate in North American Stores and Online and North
American Commercial, as well as reduced labor expense in North American
stores. This was partially offset by investments in sales force to drive
growth in categories beyond office supplies in North American
Commercial, increased delivery expense in North American Stores and
Online, as well as lower product margin rate in International Operations.
The company generated operating cash flow of $703 million and invested
$215 million in capital expenditures year to date, resulting in free
cash flow of $488 million. The company ended the quarter with $1.9
billion in liquidity, including $782 million in cash and cash
equivalents.
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North American Stores and Online
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Third Quarter
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(dollar amounts in millions)
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2015
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2014
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Change
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Sales
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$2,613
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$2,834
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-7.8%
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Comparable sales*
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-2%
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Comparable store sales
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-2%
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Staples.com local currency sales growth
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1%
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Operating income
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$201
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$218
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-$17
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Operating income rate
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7.7%
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7.7%
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-1 basis point
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*Comparable sales includes comparable store sales and Staples.com
sales growth excluding the impact of changes in foreign exchange rates.
Sales for the third quarter of 2015 were $2.6 billion, a decrease of
eight percent compared to the third quarter of 2014. Sales growth was
negatively impacted by approximately four percent due to changes in
foreign exchange rates. Store closures also negatively impacted third
quarter 2015 sales growth by approximately three percent. Comparable
sales, which combines comparable store sales and Staples.com sales
growth excluding the impact of changes in foreign exchange rates,
decreased two percent versus the prior year. Sales declines in mobility,
business machines, technology accessories, and ink and toner were
partially offset by growth in office supplies, copy and print, and
furniture. Comparable store sales decreased two percent, reflecting a
one percent decline in average order size and a one percent decline in
traffic versus the prior year. Staples.com sales declined two percent in
U.S. dollars and grew one percent on a local currency basis during the
third quarter of 2015.
Operating income rate decreased 1 basis point to 7.7 percent compared to
the third quarter of 2014. This primarily reflects increased delivery
expense, increased marketing expense as a percentage of sales, and the
negative impact of lower sales on fixed expenses. This was offset by
improved product margin rate and reduced labor and rent expense in
retail stores.
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North American Commercial
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Third Quarter
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(dollar amounts in millions)
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2015
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2014
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Change
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Sales
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$2,173
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$2,158
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0.7%
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Operating income
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$172
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$159
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$13
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Operating income rate
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7.9%
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7.4%
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56 basis points
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Sales for the third quarter of 2015 were $2.2 billion, an increase of
one percent in U.S. dollars or two percent on a local currency basis
compared to the third quarter of 2014. This primarily reflects growth in
facilities supplies, promotional products, breakroom supplies, and
furniture, partially offset by sales declines in ink and toner and paper.
Operating income rate increased 56 basis points to 7.9 percent compared
to the third quarter of 2014. This improvement primarily reflects
increased product margin rate, lower marketing expense and lower
distribution expense. This was partially offset by investments in sales
force to drive growth in categories beyond office supplies.
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International Operations
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Third Quarter
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(dollar amounts in millions)
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2015
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2014
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Change
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Sales
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$807
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$970
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-16.8%
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Operating income
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$0
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$6
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-$6
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Operating income rate
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0.0%
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0.6%
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-64 basis points
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Sales for the third quarter of 2015 were $807 million, a decrease of 17
percent in U.S. dollars and a decrease of three percent on a local
currency basis compared to the third quarter of 2014. This was primarily
driven by sales declines in Europe, partially offset by growth in China.
Operating income rate for International Operations decreased 64 basis
points to 0.0 percent compared to the third quarter of 2014. This
decrease primarily reflects lower product margin rate and the negative
impact of lower sales on fixed expenses in Europe, partially offset by
improved profitability in Australia and China.
Outlook
For the fourth quarter of 2015, the company expects sales to decrease
versus the fourth quarter of 2014. The company expects to achieve fully
diluted non-GAAP earnings per share in the range of $0.26 to $0.30 for
the fourth quarter of 2015. The company’s guidance reflects the
unfavorable impact of the stronger U.S. dollar on sales and earnings.
The company’s earnings guidance excludes any potential impact related to
restructuring and other related activities or costs related to the
company’s planned acquisition of Office Depot. For the full year 2015,
the company expects to generate more than $600 million of free cash flow.
Presentation of Non-GAAP Information
This press release presents certain results with and without
restructuring and related charges, long-lived asset impairment,
inventory write-downs, costs related to the acquisition of Office Depot,
as well as costs related to the PNI data security incident. This press
release also presents certain results both with and without the impact
of fluctuations in foreign currency exchange rates and with and without
the impact of store closures. The presentation of these results, as well
as the presentation of free cash flow, are non-GAAP financial measures
that should be considered in addition to, and should not be considered
superior to, or as a substitute for, the presentation of results
determined in accordance with GAAP. Management believes that the
non-GAAP financial measures enable management and investors to
understand and analyze the company’s performance by providing meaningful
information that facilitates the comparability of underlying business
results from period to period. Management uses these non-GAAP financial
measures to evaluate the operating results of the company’s business
against prior year results and its operating plan, and to forecast and
analyze future periods. Management recognizes there are limitations
associated with the use of non-GAAP financial measures as they may
reduce comparability with other companies that use different methods to
calculate similar non-GAAP measures. Management generally compensates
for these limitations by considering GAAP as well as non-GAAP results.
In addition, management provides a reconciliation to the most comparable
GAAP financial measure. With respect to earnings per share and free cash
flow, financial guidance on a GAAP basis has not been provided given
that current estimates for charges to be incurred related to
restructuring initiatives, the planned acquisition of Office Depot, and
the potential related impact on cash flow represent broad ranges which
are based on preliminary analysis and are subject to change as plans
become finalized.
Today's Conference Call
The company will host a conference call today at 8:00 a.m. (ET) to
review these results and its outlook. Investors may listen to the call
at http://investor.staples.com.
About Staples
Staples makes it easy to make more happen with more products and more
ways to shop. Through its world-class retail, online and delivery
capabilities, Staples lets customers shop however and whenever they
want, whether it’s in-store, online or on mobile devices. Staples offers
more products than ever, such as technology, facilities and breakroom
supplies, furniture, safety supplies, medical supplies, and Copy and
Print services. Headquartered outside of Boston, Staples operates
throughout North and South America, Europe, Asia, Australia and New
Zealand. More information about Staples (SPLS) is available at www.staples.com.
Certain information contained in this news release constitutes
forward-looking statements for purposes of the safe harbor provisions of
The Private Securities Litigation Reform Act of 1995 including, but not
limited to, the information set forth under “Outlook” and other
statements regarding our future business and financial performance. Any
statements contained in this news release that are not statements of
historical fact should be considered forward-looking statements. You can
identify forward-looking statements by the use of the words “believes”,
“expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”,
“estimates”, and other similar expressions, whether in the negative or
affirmative, although not all forward-looking statements include such
words. Forward-looking statements are based on a series of expectations,
assumptions, estimates and projections which involve substantial
uncertainty and risk, including the review of our assessments by our
outside auditor and changes in management’s assumptions and projections.
Actual results may differ materially from those indicated by such
forward-looking statements as a result of the risks and uncertainties,
including but not limited to those factors discussed or referenced in
our Annual Report on Form 10-K filed on March 6, 2015, as well as our
quarterly reports on Form 10-Q filed with the SEC since the 10-K, under
the heading “Risk Factors” and elsewhere, and any subsequent periodic or
current reports filed by us with the SEC. In addition, any
forward-looking statements represent our estimates only as of the date
such statements are made (unless another date is indicated) and should
not be relied upon as representing our estimates as of any subsequent
date. While we may elect to update forward-looking statements at some
point in the future, we specifically disclaim any obligation to do so,
even if our estimates change.
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STAPLES, INC. AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (Dollar Amounts in Millions,
Except Share Data) (Unaudited)
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October 31, 2015
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January 31, 2015
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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782
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$
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627
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Receivables, net
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1,967
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1,928
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Merchandise inventories, net
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2,156
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2,144
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Deferred income tax assets
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199
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224
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Prepaid expenses and other current assets
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335
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252
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Total current assets
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5,439
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5,175
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Property and equipment:
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Land and buildings
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916
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948
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Leasehold improvements
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1,182
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1,231
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Equipment
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2,843
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2,825
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Furniture and fixtures
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977
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1,016
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Total property and equipment
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5,918
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6,020
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Less: Accumulated depreciation
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4,348
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4,314
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Net property and equipment
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1,570
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1,706
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Intangible assets, net of accumulated amortization
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292
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335
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Goodwill
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2,663
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2,680
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Other assets
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354
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412
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Total assets
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$
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10,318
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$
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10,308
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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2,022
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$
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1,867
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Accrued expenses and other current liabilities
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1,284
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1,332
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Debt maturing within one year
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19
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|
92
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Total current liabilities
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3,325
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|
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3,291
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Long-term debt, net of current maturities
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1,016
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|
|
1,018
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Other long-term obligations
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|
630
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686
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Stockholders’ equity:
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Preferred stock, $.01 par value, 5,000,000 shares authorized; no
shares issued
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—
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—
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Common stock, $.0006 par value, 2,100,000,000 shares authorized;
issued and outstanding 944,842,977 and 643,601,788 shares at October
31, 2015 and 941,561,541 shares and 640,320,352 shares at January
31, 2015, respectively
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1
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1
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Additional paid-in capital
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4,978
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|
|
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4,935
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Accumulated other comprehensive loss
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|
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(1,113
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)
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|
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(1,041
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)
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Retained earnings
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|
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6,892
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|
|
|
6,829
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Less: Treasury stock at cost, 301,241,189 shares at October 31, 2015
and January 31, 2015
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(5,419
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)
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(5,419
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)
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Total Staples, Inc. stockholders’ equity
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|
|
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5,339
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|
|
|
5,305
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Noncontrolling interests
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|
|
8
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|
|
|
8
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Total stockholders’ equity
|
|
|
|
5,347
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|
|
|
5,313
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Total liabilities and stockholders’ equity
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|
|
$
|
10,318
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|
|
$
|
10,308
|
|
|
|
|
|
|
|
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STAPLES, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Income (Amounts in Millions,
Except Per Share Data) (Unaudited)
|
|
|
|
|
|
|
|
|
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13 Weeks Ended
|
|
39 Weeks Ended
|
|
|
|
October 31, 2015
|
|
November 1, 2014
|
|
October 31, 2015
|
|
November 1, 2014
|
Sales
|
|
|
$
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5,593
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|
|
$
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5,962
|
|
|
$
|
15,791
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|
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$
|
16,836
|
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Cost of goods sold and occupancy costs
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|
|
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4,071
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|
|
|
4,366
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|
|
|
11,659
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|
|
|
12,521
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Gross profit
|
|
|
|
1,522
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|
|
|
1,596
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|
|
|
4,132
|
|
|
|
4,315
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|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
1,163
|
|
|
|
1,224
|
|
|
|
3,466
|
|
|
|
3,627
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|
Impairment of long-lived assets
|
|
|
|
2
|
|
|
|
9
|
|
|
|
25
|
|
|
|
36
|
|
Restructuring charges
|
|
|
|
22
|
|
|
|
25
|
|
|
|
85
|
|
|
|
126
|
|
Amortization of intangibles
|
|
|
|
17
|
|
|
|
16
|
|
|
|
51
|
|
|
|
46
|
|
Total operating expenses
|
|
|
|
1,204
|
|
|
|
1,274
|
|
|
|
3,627
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of businesses and assets, net
|
|
|
|
—
|
|
|
|
6
|
|
|
|
3
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
318
|
|
|
|
328
|
|
|
|
508
|
|
|
|
506
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
Interest expense
|
|
|
|
(40
|
)
|
|
|
(13
|
)
|
|
|
(90
|
)
|
|
|
(37
|
)
|
Other income (expense), net
|
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
3
|
|
Income before income taxes
|
|
|
|
271
|
|
|
|
314
|
|
|
|
411
|
|
|
|
474
|
|
Income tax expense
|
|
|
|
73
|
|
|
|
97
|
|
|
|
118
|
|
|
|
79
|
|
Net income
|
|
|
$
|
198
|
|
|
$
|
217
|
|
|
$
|
293
|
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Common Share
|
|
|
$
|
0.31
|
|
|
$
|
0.34
|
|
|
$
|
0.46
|
|
|
$
|
0.62
|
|
Diluted Earnings Per Common Share
|
|
|
$
|
0.31
|
|
|
$
|
0.34
|
|
|
$
|
0.45
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
|
$
|
188
|
|
|
$
|
80
|
|
|
$
|
221
|
|
|
$
|
258
|
|
|
|
|
|
|
|
|
|
|
|
|
STAPLES, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Cash Flows (Amounts in
Millions) (Unaudited)
|
|
|
|
|
|
|
|
39 Weeks Ended
|
|
|
|
October 31, 2015
|
|
November 1, 2014
|
Operating Activities:
|
|
|
|
|
|
Net income
|
|
|
$
|
293
|
|
|
$
|
395
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation
|
|
|
|
292
|
|
|
|
300
|
|
Amortization of intangibles
|
|
|
|
51
|
|
|
|
46
|
|
Gain on sale of businesses and assets, net
|
|
|
|
(3
|
)
|
|
|
(27
|
)
|
Impairment of long-lived assets
|
|
|
|
25
|
|
|
|
36
|
|
Inventory write-downs related to restructuring activities
|
|
|
|
1
|
|
|
|
26
|
|
Stock-based compensation
|
|
|
|
49
|
|
|
|
51
|
|
Excess tax benefits from stock-based compensation arrangements
|
|
|
|
(5
|
)
|
|
|
—
|
|
Deferred income tax expense (benefit)
|
|
|
|
43
|
|
|
|
(21
|
)
|
Other
|
|
|
|
9
|
|
|
|
16
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Increase in receivables
|
|
|
|
(66
|
)
|
|
|
(151
|
)
|
Increase in merchandise inventories
|
|
|
|
(36
|
)
|
|
|
(72
|
)
|
(Increase) decrease in prepaid expenses and other assets
|
|
|
|
(43
|
)
|
|
|
48
|
|
Increase in accounts payable
|
|
|
|
175
|
|
|
|
221
|
|
(Decrease) increase in accrued expenses and other liabilities
|
|
|
|
(23
|
)
|
|
|
71
|
|
Decrease in other long-term obligations
|
|
|
|
(59
|
)
|
|
|
(31
|
)
|
Net cash provided by operating activities
|
|
|
|
703
|
|
|
|
908
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
|
(215
|
)
|
|
|
(201
|
)
|
Proceeds from the sale of property and equipment
|
|
|
|
9
|
|
|
|
3
|
|
Sale of businesses, net
|
|
|
|
2
|
|
|
|
59
|
|
Acquisition of businesses, net of cash acquired
|
|
|
|
(23
|
)
|
|
|
(68
|
)
|
Net cash used in investing activities
|
|
|
|
(227
|
)
|
|
|
(207
|
)
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
Proceeds from the exercise of stock options and sale of stock under
employee stock purchase plans
|
|
|
|
24
|
|
|
|
20
|
|
Proceeds from borrowings
|
|
|
|
4
|
|
|
|
19
|
|
Payments on borrowings, including payment of deferred financing fees
|
|
|
|
(89
|
)
|
|
|
(45
|
)
|
Cash dividends paid
|
|
|
|
(231
|
)
|
|
|
(230
|
)
|
Excess tax benefits from stock-based compensation arrangements
|
|
|
|
5
|
|
|
|
—
|
|
Repurchase of common stock
|
|
|
|
(23
|
)
|
|
|
(183
|
)
|
Net cash used in financing activities
|
|
|
|
(310
|
)
|
|
|
(419
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(11
|
)
|
|
|
(13
|
)
|
Net increase in cash and cash equivalents
|
|
|
|
155
|
|
|
|
269
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
627
|
|
|
|
493
|
|
Cash and cash equivalents at end of period
|
|
|
|
782
|
|
|
|
762
|
|
Add: Cash and cash equivalents attributed to disposal group held for
sale at February 1, 2014
|
|
|
|
—
|
|
|
|
8
|
|
Cash and cash equivalents at the end of the period
|
|
|
$
|
782
|
|
|
$
|
770
|
|
|
|
|
|
|
|
|
STAPLES, INC. AND SUBSIDIARIES Segment Reporting (Amounts
in Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
|
|
|
October 31, 2015
|
|
November 1, 2014
|
|
October 31, 2015
|
|
November 1, 2014
|
|
|
|
Sales
|
North American Stores & Online
|
|
|
$
|
2,613
|
|
|
$
|
2,834
|
|
|
$
|
7,092
|
|
|
$
|
7,750
|
|
North American Commercial
|
|
|
|
2,173
|
|
|
|
2,158
|
|
|
|
6,330
|
|
|
|
6,211
|
|
International Operations
|
|
|
|
807
|
|
|
|
970
|
|
|
|
2,369
|
|
|
|
2,875
|
|
Total segment sales
|
|
|
$
|
5,593
|
|
|
$
|
5,962
|
|
|
$
|
15,791
|
|
|
$
|
16,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Unit Income (Loss)
|
North American Stores & Online
|
|
|
$
|
201
|
|
|
$
|
218
|
|
|
$
|
304
|
|
|
$
|
338
|
|
North American Commercial
|
|
|
|
172
|
|
|
|
159
|
|
|
|
444
|
|
|
|
425
|
|
International Operations
|
|
|
|
—
|
|
|
|
6
|
|
|
|
(42
|
)
|
|
|
(41
|
)
|
Business unit income
|
|
|
|
373
|
|
|
|
383
|
|
|
|
706
|
|
|
|
723
|
|
Stock-based compensation
|
|
|
|
(15
|
)
|
|
|
(14
|
)
|
|
|
(49
|
)
|
|
|
(51
|
)
|
Impairment of long-lived assets
|
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
(25
|
)
|
|
|
(36
|
)
|
Restructuring charges
|
|
|
|
(22
|
)
|
|
|
(25
|
)
|
|
|
(85
|
)
|
|
|
(126
|
)
|
Inventory write-downs related to restructuring activities
|
|
|
|
(1
|
)
|
|
|
(11
|
)
|
|
|
(1
|
)
|
|
|
(26
|
)
|
Accelerated depreciation related to restructuring activities
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
Gain on sale of businesses and assets, net
|
|
|
|
—
|
|
|
|
6
|
|
|
|
3
|
|
|
|
27
|
|
Interest and other expense, net
|
|
|
|
(47
|
)
|
|
|
(15
|
)
|
|
|
(97
|
)
|
|
|
(32
|
)
|
Merger-related costs
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
—
|
|
PNI data security incident costs
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
Income before income taxes
|
|
|
$
|
271
|
|
|
$
|
314
|
|
|
$
|
411
|
|
|
$
|
474
|
|
|
|
|
|
|
|
|
|
|
|
STAPLES, INC. AND SUBSIDIARIES Reconciliation of
GAAP to Non-GAAP Income Statement Disclosures (Dollar
Amounts in Millions, Except Per Share Data) (Unaudited) For
the non-GAAP measures related to results of operations,
reconciliations to the most directly comparable GAAP measures
are shown below (amounts in millions, except per share data):
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
October 31, 2015
|
|
|
|
GAAP
|
|
Inventory write-downs related to restructuring activities
|
|
Restructuring charges
|
|
Impairment of long-lived assets
|
|
Merger- related costs
|
|
PNI data security incident costs
|
|
Non-GAAP
|
Operating income
|
|
|
$
|
318
|
|
|
$
|
1
|
|
$
|
22
|
|
$
|
2
|
|
$
|
12
|
|
$
|
3
|
|
$
|
358
|
|
Interest and other expense, net
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
19
|
|
Income before income taxes
|
|
|
|
271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
|
|
Adjustments
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
Adjusted income tax expense
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
27.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.35
|
|
|
|
|
39 Weeks Ended
|
|
|
|
October 31, 2015
|
|
|
|
GAAP
|
|
Inventory write-downs related to restructuring activities
|
|
Restructuring charges
|
|
Impairment of long-lived assets & accelerated depreciation
|
|
Gain on sale of assets, net
|
|
Merger- related costs
|
|
PNI data security incident costs
|
|
Non-GAAP
|
Operating income
|
|
|
$
|
508
|
|
|
$
|
1
|
|
$
|
85
|
|
$
|
30
|
|
$
|
(3
|
)
|
|
$
|
33
|
|
$
|
3
|
|
$
|
657
|
|
Interest and other expense, net
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
41
|
|
Income before income taxes
|
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118
|
|
Adjustments
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
|
|
Adjusted income tax expense
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
28.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.63
|
|
|
|
|
13 Weeks Ended
|
|
|
|
November 1, 2014
|
|
|
|
GAAP
|
|
Inventory write-downs
|
|
Restructuring charges
|
|
Impairment of long lived assets & accelerated depreciation
|
|
Gain on sale of business
|
|
Non-GAAP
|
Sales
|
|
|
$
|
5,962
|
|
|
|
|
|
|
|
|
|
|
$
|
5,962
|
|
Gross profit
|
|
|
|
1,596
|
|
|
$
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
1,607
|
|
Gross profit rate
|
|
|
|
26.8
|
%
|
|
|
|
|
|
|
|
|
|
|
27.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
328
|
|
|
|
11
|
|
$
|
25
|
|
$
|
11
|
|
$
|
(6
|
)
|
|
|
369
|
|
Interest and other expense, net
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
Income before income taxes
|
|
|
|
314
|
|
|
|
|
|
|
|
|
|
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
97
|
|
Reduction of liability for unrecognized tax benefits
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Tax benefit on charges related to restructuring activities
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
Adjusted income tax expense
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
217
|
|
|
|
|
|
|
|
|
|
|
$
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
30.9
|
%
|
|
|
|
|
|
|
|
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
$
|
0.37
|
|
|
|
|
39 Weeks Ended
|
|
|
|
November 1, 2014
|
|
|
|
GAAP
|
|
Inventory write-downs
|
|
Restructuring charges
|
|
Impairment of long lived assets & accelerated depreciation
|
|
Gain on sale of businesses, net
|
|
Non-GAAP
|
Sales
|
|
|
$
|
16,836
|
|
|
|
|
|
|
|
|
|
|
$
|
16,836
|
|
Gross profit
|
|
|
|
4,315
|
|
|
$
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
4,341
|
|
Gross profit rate
|
|
|
|
25.6
|
%
|
|
|
|
|
|
|
|
|
|
|
25.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
506
|
|
|
|
26
|
|
$
|
126
|
|
$
|
40
|
|
$
|
(27
|
)
|
|
|
672
|
|
Interest and other expense, net
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
Income before income taxes
|
|
|
|
474
|
|
|
|
|
|
|
|
|
|
|
|
640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
79
|
|
Reduction of liability for unrecognized tax benefits & other
discrete tax items
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
Tax benefit on charges related to restructuring activities
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
72
|
|
Adjusted income tax expense
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
395
|
|
|
|
|
|
|
|
|
|
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
$
|
0.66
|
|
Note that certain percentage figures shown in the tables above may not
recalculate due to rounding.
STAPLES, INC. AND SUBSIDIARIES Reconciliation of
GAAP to Non-GAAP Sales Growth (Dollar amounts in
Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
Staples.com Sales Growth
|
|
|
|
|
|
|
|
|
|
|
Third quarter of fiscal 2015
|
|
Third quarter of fiscal 2014
|
|
Change
|
GAAP sales
|
|
|
$
|
584
|
|
|
$
|
595
|
|
$
|
(11
|
)
|
GAAP sales growth
|
|
|
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of changes in exchange rates
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP sales
|
|
|
$
|
601
|
|
|
$
|
595
|
|
$
|
6
|
|
Non-GAAP sales growth
|
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-date fiscal 2015
|
|
Year-to-date fiscal 2014
|
|
Change
|
GAAP sales
|
|
|
$
|
1,720
|
|
|
|
1,730
|
|
$
|
(10
|
)
|
GAAP sales growth
|
|
|
|
(0.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of changes in exchange rates
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP sales
|
|
|
$
|
1,762
|
|
|
$
|
1,730
|
|
$
|
32
|
|
Non-GAAP sales growth
|
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
13 Weeks Ended October 31, 2015
|
|
|
|
Sales Growth GAAP
|
|
Impact of Local Currency
|
|
Sales Growth on a Local Currency Basis
|
Sales:
|
|
|
|
|
|
|
|
North American Stores & Online
|
|
|
(7.8
|
)%
|
|
3.6
|
%
|
|
(4.2
|
)%
|
North American Commercial
|
|
|
0.7
|
%
|
|
1.0
|
%
|
|
1.7
|
%
|
International Operations
|
|
|
(16.8
|
)%
|
|
14.0
|
%
|
|
(2.8
|
)%
|
Total sales
|
|
|
(6.2
|
)%
|
|
4.4
|
%
|
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks Ended October 31, 2015
|
|
|
|
Sales Growth GAAP
|
|
Impact of Local Currency
|
|
Sales Growth on a Local Currency Basis
|
Sales:
|
|
|
|
|
|
|
|
North American Stores & Online
|
|
|
(8.5
|
)%
|
|
2.9
|
%
|
|
(5.6
|
)%
|
North American Commercial
|
|
|
1.9
|
%
|
|
0.9
|
%
|
|
2.8
|
%
|
International Operations
|
|
|
(17.6
|
)%
|
|
15.6
|
%
|
|
(2.0
|
)%
|
Total sales
|
|
|
(6.2
|
)%
|
|
4.3
|
%
|
|
(1.9
|
)%
|
This presentation refers to growth rates in local currency so that
business results can be viewed without the impact of fluctuations in
foreign currency exchange rates, thereby facilitating period-to-period
comparisons of Staples' business performance. To present this
information, current period results for entities reporting in currencies
other than U.S. dollars are converted into U.S. dollars at the prior
year average monthly exchange rates.
|
STAPLES, INC. AND SUBSIDIARIES Reconciliation of
GAAP to Non-GAAP Sales Growth (continued) (Unaudited)
|
|
|
|
|
|
|
|
13 Weeks Ended October 31, 2015
|
GAAP sales growth
|
|
|
(6.2
|
)%
|
Impact of change in exchange rates
|
|
|
(4.4
|
)%
|
Impact of store closures
|
|
|
(1.4
|
)%
|
Non-GAAP sales growth
|
|
|
(0.4
|
)%
|
|
STAPLES, INC. AND SUBSIDIARIES Reconciliation of
Free Cash Flow Disclosures (Amounts in Millions) (Unaudited)
|
|
|
|
|
|
|
|
39 Weeks Ended
|
|
|
|
October 31, 2015
|
|
November 1, 2014
|
Net cash provided by operating activities
|
|
|
$
|
703
|
|
|
$
|
908
|
|
Acquisition of property and equipment
|
|
|
|
(215
|
)
|
|
|
(201
|
)
|
Free cash flow
|
|
|
$
|
488
|
|
|
$
|
707
|
|
|
|
|
|
|
|
Free cash flow is not defined under U.S. GAAP. Therefore, it should not
be considered a substitute for income or cash flow data prepared in
accordance with GAAP and may not be comparable to similarly titled
measures used by other companies. The company defines free cash flow as
net cash provided by operating activities less capital expenditures. It
should not be inferred that the entire free cash flow amount is
available for discretionary expenditures. The company believes free cash
flow is a useful measure of performance and uses this measure as an
indication of the company's ability to generate cash and invest in its
business.
CONTACT:
Staples, Inc.
Media Contact:
Kirk Saville,
508-253-8530
or
Investor Contact:
Chris Powers,
508-253-4632
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