Staples swings to fiscal Q3 earnings of US$135.2M from loss of US$596.3M a year ago as sales fall 4% to US$6.1B, North American comparable-store sales slip 3%; company expects full-year 2013 sales to decrease in low single digits versus 2012 sales

FRAMINGHAM, Massachusetts , November 20, 2013 (press release) – Staples, Inc. (Nasdaq: SPLS) announced today the results for its third quarter ended November 2, 2013. Total company sales for the third quarter of 2013 were $6.1 billion, a decrease of four percent compared to the third quarter of 2012. Third quarter 2013 total company sales growth was negatively impacted by one percent due to 107 store closures in North America and Europe during the 12 months preceding the third quarter of 2013. The foreign exchange impact from the stronger U.S. dollar also negatively impacted total company sales growth by one percent during the third quarter of 2013. “It’s been a year since we announced our strategic reinvention, and we’re evolving our business to meet the changing needs of customers,” said Ron Sargent, Staples’ chairman and chief executive officer. “We continue to face weak demand for core office supplies, but we’re driving growth online and in new categories, while aggressively managing expenses.”

Third Quarter 2013 Reinvention Highlights

  • Launched the biggest refresh to Staples.com and Staples.ca since 2005
  • Added data science expertise and a Silicon Valley presence with the acquisition of Runa
  • Increased assortment on Staples.com by nearly 50 percent with the addition of 70,000 products
  • Rolled out new collaborative contract selling model in North America
  • Achieved 2013 cost reduction goal of $150 million ahead of schedule
  • Continued to aggressively reduce expenses and streamline organization in Europe

Third Quarter 2013 Financial Summary

                 
                   
      Third Quarter
(dollar amounts in millions)     2013     2012     Change
Total company sales     $6,112     $6,353     (3.8%)
                   
GAAP operating income     $367     ($357)     $724
Non-GAAP operating income*     $431     $500     ($69)
                   
GAAP operating income rate     6.0%     (5.6%)     1,162 basis points
Non-GAAP operating income rate*     7.0%     7.9%     (82 basis points)
                   
GAAP income from continuing operations     $220     ($569)     $789
Non-GAAP income from continuing operations*     $274     $310     ($36)
                   
GAAP earnings per diluted share from continuing operations     $0.34     ($0.85)     NM
Non-GAAP earnings per diluted share from continuing operations*     $0.42     $0.46     (9%)

*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. Non-GAAP operating income, non-GAAP operating income rate, non-GAAP income from continuing operations, and non-GAAP earnings per diluted share from continuing operations exclude the impact of Q3 2013 charges related to employee severance and other associated restructuring activities, as well as the impact of Q3 2012 charges related to the impairment of goodwill and other assets, restructuring charges and accelerated tradename amortization. Non-GAAP income from continuing operations and non-GAAP earnings per diluted share from continuing operations also excludes Q3 2012 tax charges. In total, these charges negatively impacted Q3 2013 GAAP earnings per share from continuing operations by $0.08 and Q3 2012 GAAP earnings per share from continuing operations by $1.31.

On a GAAP basis, the company reported third quarter 2013 income from continuing operations of $220 million, or $0.34 per share, compared to a loss of $569 million, or $0.85 per diluted share, achieved in the third quarter of 2012. Excluding the impact of $64 million of pre-tax charges related to employee severance and other associated restructuring activities during the third quarter of 2013, the company reported non-GAAP income from continuing operations of $274 million, or $0.42 per diluted share, compared to third quarter 2012 non-GAAP income of $310 million, or $0.46 per diluted share.

Total company non-GAAP operating income rate declined 82 basis points to 7.05 percent compared to non-GAAP operating income rate of 7.87 percent achieved during the third quarter of 2012. This decline primarily reflects lower product margins, the negative impact of fixed expenses on lower sales, and investments related to the company’s strategic initiatives, partially offset by savings related to headcount reductions, reduced marketing expense, and lower equity compensation.

The company generated operating cash flow of $875 million and invested $204 million in capital expenditures year to date, resulting in year to date free cash flow of $671 million. The company repurchased 6.8 million shares for $104 million during the third quarter of 2013, and has repurchased 18.2 million shares for $269 million year to date. At the end of the third quarter, the company had $2.5 billion in liquidity, including $1.4 billion in cash and cash equivalents.

                   
North American Stores and Online
       
      Third Quarter
(dollar amounts in millions)     2013     2012     Change
Sales     $3,013     $3,181     (5.3%)
Comparable store sales                 (3%)
                   
Operating income     $285     $329     ($44)
Operating income rate     9.5%     10.4%     (88 basis points)

Sales for the third quarter of 2013 were $3.0 billion, a decrease of five percent compared to the third quarter of 2012. Third quarter 2013 sales growth was negatively impacted by approximately one percent due to 59 store closures during the 12 months preceding the third quarter of 2013, net of estimated sales transfers to remaining stores. The sales decline also reflects weakness in office supplies, business machines and technology accessories, as well as computers, partially offset by growth in tablets, facilities and breakroom supplies, and copy and print services. Comparable store sales, which exclude sales in Staples.com, decreased three percent, reflecting a three percent decline in traffic and flat average order size versus the prior year. Staples.com sales grew three percent during the third quarter of 2013. The sales increase reflects increased customer traffic and stable customer conversion, partially offset by lower average order size. Operating income rate decreased 88 basis points to 9.47 percent compared to the third quarter of 2012. This decline primarily reflects increased costs related to growth initiatives in Staples.com, and the negative impact of fixed expenses on lower sales, partially offset by reduced retail store labor expense and marketing expense. During the third quarter of 2013, the company closed 7 stores in the U.S.

                   
North American Commercial
       
      Third Quarter
(dollar amounts in millions)     2013     2012     Change
Sales     $2,089     $2,075     0.7%
                   
Operating income     $159     $184     ($25)
Operating income rate     7.6%     8.9%     (126 basis points)

Sales for the third quarter of 2013 were $2.1 billion, an increase of one percent compared to the third quarter of 2012. This primarily reflects growth in facilities and breakroom supplies, tablets, and furniture, partially offset by declines in office supplies, paper, and ink and toner. Operating income rate decreased 126 basis points to 7.60 percent compared to the third quarter of 2012. This decline primarily reflects investments in sales force and marketing costs to drive growth.

                   
International Operations
       
      Third Quarter
(dollar amounts in millions)     2013     2012     Change
Sales     $1,010     $1,098     (8.0%)
                   
Operating (loss) income     $2     ($2)     $3
Operating (loss) income rate     0.2%     (0.2%)     31 basis points

Sales in International Operations for the third quarter of 2013 were $1.0 billion, a decrease of eight percent in U.S. dollars, as well as on a local currency basis, compared to the third quarter of 2012. The sales decline reflects weakness in European delivery, a negative impact of approximately two percent due to 48 European store closures during the 12 months preceding the third quarter of 2013, and to a lesser extent, weakness in Australia. Comparable store sales in Europe declined two percent with modest declines in both traffic and average order size. Operating income rate increased 31 basis points to 0.16 percent compared to the third quarter of 2012. Excluding $16 million of accelerated Australia tradename amortization during the third quarter of 2012, operating income rate decreased 111 basis points. This decline primarily reflects the negative impact of fixed expenses on lower sales, as well as lower product margins in Australia and European delivery, partially offset by reduced marketing and rent expense.

Discontinued Operations

During the third quarter of 2013, the company recorded an after-tax loss from discontinued operations of $85 million related to its European Printing Systems business. This includes a loss of $81 million related to the completion of the sale of this business during the third quarter of 2013, which was primarily non-cash in nature.

Outlook

The company expects full year 2013 sales to decrease in the low single-digits compared to 2012 sales on a 52 week basis of $23.9 billion. The company expects full year 2013 non-GAAP diluted earnings per share from continuing operations to be in the range of $1.21 to $1.25. The company’s full year non-GAAP diluted earnings per share estimate excludes the charges incurred during the third quarter of 2013 related to severance expense and other associated restructuring activities. The company expects to generate more than $900 million of free cash flow and plans to continue repurchasing its common stock through open-market purchases during 2013.

Presentation of Non-GAAP Information

This press release presents certain results with and without the impact of restructuring charges during the third quarter of 2013 and with and without the charges incurred during the third quarter of 2012 related to the impairment of goodwill and other assets, restructuring charges, accelerated tradename amortization, and the establishment of valuation allowances. This press release also presents certain results for 2012 and 2013 both with and without the impact of fluctuations in foreign currency exchange rates. In addition, the company’s outlook for 2013 diluted earnings per share from continuing operations excludes the impact of restructuring charges during the third quarter of 2013, and the outlook for total company sales growth is calculated using 2012 total company sales on a 52 week basis. 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, when first disclosed, management presents the most comparable GAAP measures ahead of non-GAAP measures and provides a reconciliation to the most comparable GAAP financial measure.

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 is the world’s largest office products company and second largest internet retailer. For 27 years, Staples has served the needs of business customers and its vision is to provide every product businesses need to succeed. Through its world-class retail, online and delivery capabilities, Staples offers office supplies, technology products and services, facilities and breakroom supplies, furniture, copy and print services and a wide range of other product categories. With thousands of associates worldwide dedicated to making it easy for businesses of all sizes, Staples operates throughout North and South America, Europe, Asia, Australia and New Zealand. The company is headquartered outside Boston. More information about Staples (Nasdaq: SPLS) is available at www.staples.com/media.

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 risks and uncertainties, including but not limited to: global economic conditions could adversely affect our business and financial performance; we face uncertainties in connection with the implementation of our strategies to transform our business and our inability to successfully implement our strategies could adversely affect our business and financial performance; we have recognized substantial goodwill impairment charges in the past and may be required to recognize additional goodwill impairment charges in the future; our market is highly competitive and we may not be able to continue to compete successfully; if the products and services that we offer fail to meet our customer needs, our performance could be adversely affected; we may be unable to continue to enter new markets successfully; our international operations expose us to risks inherent in foreign operations; our effective tax rate may fluctuate; fluctuations in foreign exchange rates could lead to lower earnings; we may be unable to attract, train, engage and retain qualified associates; our quarterly operating results are subject to significant fluctuation; our indebtedness could adversely affect us by reducing our flexibility to respond to changing business and economic conditions; our expanded offering of proprietary branded products may not improve our financial performance and may expose us to intellectual property liability, product liability, import/export liability, government investigations and claims, and other risks associated with global sourcing; problems in our information systems and technologies may disrupt our operations; compromises of our information systems or unauthorized access to confidential information or our customers’ or associates’ personal information may materially harm our business or damage our reputation; our business may be adversely affected by the actions of and risks associated with third-party vendors and service providers; various legal proceedings may adversely affect our business and financial performance; failure to comply with laws, rules and regulations could negatively affect our business operations and financial performance; and those factors discussed or referenced in our most recent quarterly report on Form 10-Q filed with the SEC, 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.

             

STAPLES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands, Except Share Data)

(Unaudited)

             
     

November 2, 2013

    February 2, 2013

ASSETS

           

Current assets:

           
Cash and cash equivalents     $ 1,391,171       $ 1,334,302  
Receivables, net     1,895,679       1,815,586  
Merchandise inventories, net     2,421,873       2,314,058  
Deferred income tax assets     218,033       218,899  
Prepaid expenses and other current assets     322,611       346,773  
Current assets of discontinued operations           170,819  

Total current assets

    6,249,367       6,200,437  
             

Property and equipment:

           
Land and buildings     996,836       1,015,225  
Leasehold improvements     1,304,437       1,300,258  
Equipment     2,689,063       2,625,949  
Furniture and fixtures     1,084,681       1,088,669  

Total property and equipment

    6,075,017       6,030,101  
Less: Accumulated depreciation     4,248,393       4,066,926  

Net property and equipment

    1,826,624       1,963,175  
             

Intangible assets, net of accumulated amortization

    395,997       384,609  

Goodwill

    3,250,560       3,221,162  

Other assets

    456,958       510,622  

Total assets

    $ 12,179,506       $ 12,280,005  
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

           

Current liabilities:

           
Accounts payable     $ 2,114,917       $ 1,896,040  
Accrued expenses and other current liabilities     1,369,186       1,405,752  
Debt maturing within one year     972,969       987,161  
Current liabilities of discontinued operations           129,672  

Total current liabilities

    4,457,072       4,418,625  
             

Long-term debt, net of current maturities

    1,000,516       1,001,943  

Other long-term obligations

    658,534       723,343  
             

Stockholders’ equity:

           
Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued            
Common stock, $.0006 par value, 2,100,000,000 shares authorized; issued and outstanding 937,430,495 and 654,041,037 shares at November 2, 2013 and 932,246,614 shares and 669,182,785 shares at February 2, 2013, respectively     562       559  
Additional paid-in capital     4,823,665       4,711,113  
Accumulated other comprehensive loss     (444,116 )     (388,773 )
Retained earnings     6,866,954       6,694,207  
Less: Treasury stock at cost, 283,389,458 shares at November 2, 2013 and 263,063,829 shares at February 2, 2013     (5,192,207 )     (4,888,953 )

Total Staples, Inc. stockholders’ equity

    6,054,858       6,128,153  
Noncontrolling interests     8,526       7,941  

Total stockholders’ equity

    6,063,384       6,136,094  

Total liabilities and stockholders’ equity

    $ 12,179,506       $ 12,280,005  

 

             

STAPLES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Amounts in Thousands, Except Per Share Data)

(Unaudited)

             
     

13 Weeks Ended

   

39 Weeks Ended

     

November 2,
2013

   

October 27,
2012

   

November 2,
2013

   

October 27,
2012

Sales     $ 6,111,695       $ 6,353,140       $ 17,240,990       $ 17,812,530  
Cost of goods sold and occupancy costs     4,456,969       4,601,286       12,715,758       13,040,678  

Gross profit

    1,654,726       1,751,854       4,525,232       4,771,852  

Operating expenses:

                       
Selling, general and administrative     1,210,251       1,237,196       3,581,206       3,673,598  
Impairment of goodwill and long-lived assets           810,996             810,996  
Restructuring charges     64,085       30,396       64,085       30,396  
Amortization of intangibles     13,794       30,413       40,551       60,466  
Total operating expenses     1,288,130       2,109,001       3,685,842       4,575,456  
                         

Operating income (loss)

    366,596       (357,147 )     839,390       196,396  
                         
Other (expense) income:                        
Interest income     1,319       1,249       4,289       4,251  
Interest expense     (30,446 )     (40,343 )     (91,682 )     (124,195 )
Other income (expense), net     3,975       (1,788 )     (3,834 )     (3,469 )
Income (loss) from continuing operations before income taxes     341,444       (398,029 )     748,163       72,983  
Income tax expense     121,359       170,703       253,542       323,780  
Income (loss) from continuing operations, including the portion attributable to the noncontrolling interests     220,085       (568,732 )     494,621       (250,797 )

Discontinued Operations:

                       
Loss from discontinued operations, net of income taxes     (84,857 )     (27,559 )     (86,935 )     (38,084 )
Consolidated net income (loss)     135,228       (596,291 )     407,686       (288,881 )
Loss attributed to the noncontrolling interests           (39 )           (119 )
Income (loss) attributed to Staples, Inc.     $ 135,228       $ (596,252 )     $ 407,686       $ (288,762 )

Amounts attributable to Staples, Inc.:

                       
Income (loss) from continuing operations     $ 220,085       $ (568,693 )     $ 494,621       $ (250,678 )
Loss from discontinued operations     (84,857 )     (27,559 )     (86,935 )     (38,084 )

Income (loss) attributed to Staples, Inc.

    $ 135,228       $ (596,252 )     $ 407,686       $ (288,762 )
                         

Basic Earnings Per Common Share:

                       
Continuing operations attributed to Staples, Inc.     $ 0.34       $ (0.85 )     $ 0.76       $ (0.37 )
Discontinued operations attributed to Staples, Inc.     (0.13 )     (0.04 )     (0.13 )     (0.06 )
Net income (loss) attributed to Staples, Inc.     $ 0.21       $ (0.89 )     $ 0.63       $ (0.43 )

Diluted Earnings Per Common Share:

                       
Continuing operations attributed to Staples, Inc.     $ 0.34       $ (0.85 )     $ 0.75       $ (0.37 )
Discontinued operations attributed to Staples, Inc.     (0.13 )     (0.04 )     (0.13 )     (0.06 )
Net income (loss) attributed to Staples, Inc.     $ 0.21       $ (0.89 )     $ 0.62       $ (0.43 )
                         

Weighted Average Shares Outstanding:

                       
Basic     650,967       666,989       653,536       673,366  
Diluted     655,038       666,989       660,514       673,366  
                         
Dividends declared per common share     $ 0.12       $ 0.11       $ 0.36       $ 0.33  

 

             

STAPLES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Amounts in Thousands)

             
    13 Weeks Ended       39 Weeks Ended
    November 2,
2013
  October 27,
2012
      November 2,
2013
  October 27,
2012
Comprehensive income (loss) from consolidated operations   $   191,130     $ (461,644 )       $ 352,528     $ (349,218 )
Comprehensive income attributed to noncontrolling interests   52     128         185     114  
Comprehensive income (loss) attributed to Staples, Inc.   $   191,078     $ (461,772 )       $ 352,343     $ (349,332 )

 

       

STAPLES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Dollar Amounts in Thousands)

(Unaudited)

       
      39 Weeks Ended
      November 2,
2013
      October 27,
2012
Operating Activities:              
Consolidated net income (loss)     $ 407,686         $ (288,881 )
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation     301,348         301,840  
Amortization of intangibles     40,551         60,466  
Loss on disposal of business     80,887          
Impairment of goodwill and long-lived assets             810,996  
Stock-based compensation     62,113         90,406  
Excess tax benefits from stock-based compensation arrangements     (2,164 )       (179 )
Deferred income tax expense     41,856         68,915  
Other     (1,481 )       (932 )
Changes in assets and liabilities:              
(Increase) decrease in receivables     (81,505 )       10,622  
Increase in merchandise inventories     (138,399 )       (40,094 )
Decrease (increase) in prepaid expenses and other assets     17,359         (65,109 )
Increase in accounts payable     203,200         31,188  
Increase (decrease) in accrued expenses and other liabilities     52         (40,855 )
Decrease in other long-term obligations     (56,364 )       (42,997 )
Net cash provided by operating activities     875,139         895,386  
               
Investing Activities:              
Acquisition of property and equipment     (204,212 )       (204,163 )
Cash paid for termination of joint venture     (34,298 )        
Proceeds from the sale of property and equipment     12,849         9,500  
Disposition of business, net     (12,736 )        
Acquisition of businesses, net of cash acquired     (74,632 )       (1,941 )
Net cash used in investing activities     (313,029 )       (196,604 )
               
Financing Activities:              
Proceeds from the exercise of stock options and sale of stock under employee stock purchase plans     56,146         26,039  
Proceeds from borrowings     31,614         70,031  
Payments on borrowings     (39,863 )       (423,303 )
Purchase of noncontrolling interest     (96 )       (5,651 )
Cash dividends paid     (234,939 )       (221,682 )
Excess tax benefits from stock-based compensation arrangements     2,164         179  
Repurchase of common stock     (303,254 )       (383,220 )
Net cash used in financing activities     (488,228 )       (937,607 )
Effect of exchange rate changes on cash and cash equivalents     (16,308 )       (4,640 )
Net increase (decrease) in cash and cash equivalents     57,574         (243,465 )
Cash and cash equivalents at beginning of period     1,334,302         1,264,149  
Cash and cash equivalents at end of period     1,391,876         1,020,684  
Less: Net increase in cash and cash equivalents attributed to discontinued operations     (705 )       (641 )
Cash and cash equivalents at the end of the period attributed to continuing operations     $ 1,391,171         $ 1,020,043  

 

             

STAPLES, INC. AND SUBSIDIARIES

Segment Reporting

(Dollar Amounts in Thousands)

(Unaudited)

             
      13 Weeks Ended     39 Weeks Ended
      November 2, 2013     October 27, 2012     November 2, 2013     October 27, 2012
      Sales
North American Stores & Online     $ 3,012,860       $ 3,180,989       $ 8,203,638       $ 8,530,352  
North American Commercial     2,088,955       2,074,599       6,078,232       6,006,032  
International Operations     1,009,880       1,097,552       2,959,120       3,276,146  
Total segment sales     $ 6,111,695       $ 6,353,140       $ 17,240,990       $ 17,812,530  
                         
      Business Unit Income (Loss)
North American Stores & Online     $ 285,435       $ 329,431       $ 557,541       $ 669,996  
North American Commercial     158,709       183,782       436,803       485,312  
International Operations     1,617       (1,692 )     (28,756 )     (27,114 )
Business unit income     445,761       511,521       965,588       1,128,194  
Stock-based compensation     (15,080 )     (27,276 )     (62,113 )     (90,406 )
Impairment of goodwill and long-lived assets           (810,996 )           (810,996 )
Restructuring charges     (64,085 )     (30,396 )     (64,085 )     (30,396 )
Interest and other expense, net     (25,152 )     (40,882 )     (91,227 )     (123,413 )
Income (loss) from continuing operations before income taxes     $ 341,444       $ (398,029 )     $ 748,163       $ 72,983  

 

       

STAPLES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Income Statement Disclosures

(Dollar Amounts in Thousands, Except Per Share Data)

(Unaudited)

       
      13 Weeks Ended
      November 2, 2013
      As Reported     Restructuring Charges     Non-GAAP
                   
Operating income     $ 366,596       $ 64,085       $ 430,681  
Interest and other expense, net     (25,152 )           (25,152 )
Income from continuing operations before income taxes     341,444       64,085       405,529  
                   
Income tax expense     121,359       10,481       131,840  
                   
Income from continuing operations attributed to Staples, Inc.     $ 220,085       $ 53,604       $ 273,689  
                   
Diluted per share income from continuing operations attributed to Staples, Inc     $ 0.34       $ 0.08       $ 0.42  
                   
Effective tax rate     35.5 %           32.5 %
   

39 Weeks Ended

   

November 2, 2013

    As Reported     Restructuring Charges     Non-GAAP
                 
Operating income   $ 839,390       $ 64,085       $ 903,475  
Interest and other expense, net   (91,227 )           (91,227 )
Income from continuing operations before income taxes   748,163       64,085       812,248  
                 
Income tax expense   253,542       10,481       264,023  
                 
Income from continuing operations attributed to Staples, Inc.   $ 494,621       $ 53,604       $ 548,225  
                 
Diluted per share income from continuing operations attributed to Staples, Inc   $ 0.75       $ 0.08       $ 0.83  
                 
Effective tax rate   33.9 %           32.5 %

 

       
      13 Weeks Ended
      October 27, 2012
            Adjustments      
      As Reported    

Impairment of
Goodwill and
Long-Lived Assets

   

Restructuring
Charges

   

Accelerated
trade-name
amortization

    Non-GAAP
Operating (loss) income     $ (357,147 )     $ 810,996       $ 30,396       $ 15,599       $ 499,844  
Interest and other expense, net     (40,882 )                       (40,882 )
(Loss) income from continuing operations before income taxes    

$

(398,029 )                       $ 458,962  
                               
Income tax expense     $ 170,703                         $ 170,703  
Adjustments                             (21,541 )
Adjusted income tax     $ 170,703                         $ 149,162  
                               
(Loss) income from continuing operations     $ (568,732 )                       $ 309,800  
Loss attributed to the noncontrolling interests     (39 )                       (39 )
(Loss) income from continuing operations attributed to Staples, Inc.     $ (568,693 )                       $ 309,839  
                               
Effective Tax Rate     (42.9 )%                       32.5 %
                               
Per share (loss) income from continuing operations attributed to Staples, Inc:      
Basic and diluted earnings per common share     $ (0.85 )                       $ 0.46  
                               
Weighted average common shares outstanding     666,989                         666,989  
Effect of dilutive securities                             4,354  
Weighted average common shares outstanding assuming dilution     666,989                         671,343  
       
   

13 Weeks Ended

 
   

November 2, 2013

    October 27, 2012    

Change

International Operations Business Unit Income (Loss) Rate

                 
Sales   $ 1,009,880     100 %  

$

1,097,552     100.00 %   (7.99 )%
                     
As reported business unit income (loss)   $ 1,617     0.16 %   $ (1,692 )   (0.15 )%   0.31  
Accelerated trade-name amortization       %   15,599     1.42 %   (1.42 )
Non-GAAP business unit income   $ 1,617     0.16 %   $ 13,907     1.27 %   (1.11 )

 

       
      39 Weeks Ended
      October 27, 2012
            Adjustments      
      As Reported    

Impairment of
Goodwill and
Long-Lived Assets

   

Restructuring
Charges

   

Accelerated trade
-name amortization

    Non-GAAP
Operating income     $ 196,396       $ 810,996       $ 30,396       $ 15,599       $ 1,053,387  
Interest and other expense, net     (123,413 )                       (123,413 )
Income from continuing operations before income taxes     $ 72,983                         $ 929,974  
                               
Income tax expense     $ 323,780                         $ 323,780  
Adjustments                             (21,541 )
Adjusted income tax     $ 323,780                         $ 302,239  
                               
(Loss) income from continuing operations     $ (250,797 )                       $ 627,735  
Loss attributed to the noncontrolling interests     (119 )                       (119 )
(Loss) income from continuing operations attributed to Staples, Inc.     $ (250,678 )                       $ 627,854  
                               
Effective Tax Rate     443.6 %                       32.5 %
                               
Per share (loss) income from continuing operations attributed to Staples, Inc:      
Basic earnings per common share     $ (0.37 )                       $ 0.93  
Diluted earnings per common share     $ (0.37 )                       $ 0.92  
                               
Weighted average common shares outstanding     673,366                         673,366  
Effect of dilutive securities                             6,602  
Weighted average common shares outstanding assuming dilution     673,366                         679,968  

 

         

STAPLES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Sales Growth

(Unaudited)

         
      13 Weeks Ended November 2, 2013  
      Sales Growth GAAP    

Impact of Local
Currency

   

Sales Growth on a
Local Currency Basis

Sales:                  
North American Stores & Online     (5.3 )%     1.1 %     (4.2 )%
North American Commercial     0.7 %     0.3 %     1.0 %
International Operations     (8.0 )%     0.4 %     (7.6 )%
Total sales     (3.8 )%     0.7 %     (3.1 )%
         
      39 Weeks Ended November 2, 2013  
                   
      Sales Growth GAAP    

Impact of Local
Currency

   

Sales Growth on a
Local Currency Basis

Sales:                  
North American Stores & Online     (3.8 )%     0.6 %     (3.2 )%
North American Commercial     1.2 %     0.2 %     1.4 %
International Operations     (9.7 )%     0.6 %     (9.1 )%
Total sales     (3.2 )%     0.5 %     (2.7 )%

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 Free Cash Flow Disclosures

(Dollar Amounts in Thousands)

(Unaudited)

     
    39 Weeks Ended
         
    November 2, 2013   October 27, 2012
Net cash provided by operating activities   $ 875,139     $ 895,386  
Acquisition of property and equipment   (204,212 )   (204,163 )
Free cash flow   $ 670,927     $ 691,223  

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.

© 2017 Business Wire, Inc., All rights reserved.