-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FuLmoRMC3dghCwYiL3pXA2/sJXGabHKrIcWVJKzBo8qzhofMnGlC/xmoatD+dDO2 v8jiZ3VsSNhS9z7Yf+RmrA== 0001157523-07-011617.txt : 20071127 0001157523-07-011617.hdr.sgml : 20071127 20071127071055 ACCESSION NUMBER: 0001157523-07-011617 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071127 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071127 DATE AS OF CHANGE: 20071127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAPLES INC CENTRAL INDEX KEY: 0000791519 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 042896127 STATE OF INCORPORATION: DE FISCAL YEAR END: 0227 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17586 FILM NUMBER: 071267782 BUSINESS ADDRESS: STREET 1: 500 STAPLES DRIVE STREET 2: P O BOX 9328 CITY: FRAMINGHAM STATE: MA ZIP: 01702 BUSINESS PHONE: 5082535000 MAIL ADDRESS: STREET 1: 500 STAPLES DR CITY: FRAMINGHAM STATE: MA ZIP: 01702 8-K 1 a5554276.txt STAPLES, INC. 8-K 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 27, 2007 STAPLES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 0-17586 04-2896127 - -------------------------------------------------------------------------------- (State or other juris- (Commission (IRS Employer diction of incorporation File Number) Identification No.) Five Hundred Staples Drive, Framingham, MA 01702 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 508-253-5000 - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 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 27, 2007, Staples, Inc. announced its financial results for the quarter ended November 3, 2007. 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 exhibits listed on the Exhibit Index immediately preceding such exhibits are 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: November 27, 2007 Staples, Inc. By: /s/ Kristin A. Campbell ----------------------------------- Kristin A. Campbell Senior Vice President, General Counsel and Secretary ----------------------------------- EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated November 27, 2007 EX-99.1 2 a5554276ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Staples, Inc. Announces Third Quarter Performance FRAMINGHAM, Mass.--(BUSINESS WIRE)--November 27, 2007--Staples, Inc. (Nasdaq: SPLS) announced today the results for its third quarter ended November 3, 2007. Total company sales increased nine percent to $5.2 billion compared to the third quarter of 2006. Net income, on a GAAP basis, declined five percent year over year to $275 million, and net income on a pro forma basis grew 13 percent to $299 million. Diluted earnings per share, on a GAAP basis, decreased three percent to 38 cents, and diluted earnings per share on a pro forma basis were 42 cents, a 17 percent increase versus the third quarter of 2006. Third quarter 2007 earnings results reflect a pre-tax charge of $38 million ($24 million after-tax) related to the previously disclosed settlement of California wage and hour class action litigation. Third quarter 2006 earnings results reflected a lower tax rate due to the previously disclosed favorable resolution of certain tax matters, and a correction for prior years' stock-based compensation. "While the economic environment in North America remains challenging, we are pleased to deliver profitable growth." said Ron Sargent, Staples' chairman and chief executive officer. "We are executing well, doing the right things for our customers, and investing for the future. We have built a balanced portfolio of businesses that continues to deliver solid results." North American Retail sales grew three percent in the third quarter, and comparable store sales decreased three percent versus 2006, reflecting lower sales in business machines, furniture and computers partially offset by strong sales in copy and print centers and positive sales in core office supplies. North American Delivery continued its industry-leading growth, increasing sales 15 percent versus last year's third quarter. Total International sales increased 18 percent in US dollars, benefiting from a $55 million foreign currency impact, and increased eight percent in local currency. International comparable store sales were flat versus 2006. Highlights for the third quarter include: -- Total company operating income rate on a GAAP basis declined 17 basis points year over year to 8.29 percent. Total company operating income rate, excluding previously disclosed adjustments for the third quarters of 2007 and 2006, improved 34 basis points year over year to 9.02 percent. -- North American Retail operating income rate was 11.12 percent, up 23 basis points versus 2006, reflecting favorable mix as well as tight expense controls. -- North American Delivery drove strong sales growth across all major product categories, achieved excellent service and operational execution, and improved supply chain metrics, driving a 21 basis point improvement in operating income rate to 10.85 percent. -- International Operations continued to drive significant profit improvement with operating income rate improving 185 basis points to 3.34 percent. Both retail and delivery contributed to this strong performance. -- Staples reached a significant milestone with the opening of its 2000th store. -- The company opened 37 new stores in the United States, six new stores in Canada, one new store in the Netherlands and closed one store in the UK. Staples opened two new stores and one Staples UPS Express joint venture store in China. Staples now operates 2,008 stores worldwide. -- The company has generated $533 million of free cash flow year-to-date after $316 million of capital expenditures, compared to free cash flow of $277 million for the same period last year. -- Staples repurchased 8.0 million shares of its stock for $181 million during the quarter. Year-to-date the company has repurchased 23.3 million shares for $567 million. Q4 & FY2007 Outlook Staples expects to achieve earnings per share growth of approximately 15 percent for both the fourth quarter and the full year. This guidance excludes the previously disclosed impact to 2007 earnings for the charge related to the litigation settlement as well as the previously disclosed impact to 2006 earnings for the 53rd week benefit, favorable tax events and the charge for prior years' stock-based compensation. Staples anticipates low double-digit sales growth for the total company in the fourth quarter. Staples expects flat to slightly negative same store sales and high single-digit sales growth in North American Retail, mid-teens sales growth in North American Delivery, and high single-digit sales growth in local currency in International for the fourth quarter. FY2008 Outlook The company expects to achieve high single-digit sales growth for the total company and a low single-digit comparable sales increase in North American Retail. The company expects to grow North American Delivery revenues in the low to mid-teens, and in International, Staples expects low double-digit growth in local currency. Based on the company's cautious outlook for 2008 and continued investment in growth initiatives, the company expects to achieve low teens earnings per share growth excluding the previously disclosed impact to 2007 earnings for the charge related to the litigation settlement. Staples maintains its long-term expectation to grow earnings per share 15-20 percent in a stronger economic environment. Presentation of Non-GAAP Information This press release presents net income and earnings per share results both with and without the expense related to the settlement of California wage and hour class action litigation described above for 2007, as well as the tax rate benefit and stock-based compensation correction described above for 2006. The presentation of results that exclude these items 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. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below under the heading "Reconciliation of GAAP to Non-GAAP Financial Measures." Management believes that the non-GAAP financial measures presented in this press release provide a more meaningful comparison of the company's year-over-year performance. Management also uses these non-GAAP financial measures to evaluate the company's core operating results against plan, to compare the company's performance to that of its competitors, and to provide earnings guidance to the investing community. 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, Inc. invented the office superstore concept in 1986 and today is the world's largest office products company. With 74,000 talented associates, the company is committed to making it easy to buy a wide range of office products, including supplies, technology, furniture, and business services. With 2006 sales of $18.2 billion, Staples serves consumers and businesses ranging from home-based businesses to Fortune 500 companies in 22 countries throughout North and South America, Europe and Asia. Headquartered outside of Boston, Staples operates more than 2,000 office superstores and also serves its customers through mail order catalog, e-commerce and contract businesses. More information 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 the headings "Q4 & FY2007 Outlook" and "FY2008 Outlook" and other statements regarding our future business and financial performance. 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: our market is highly competitive and we may not continue to compete successfully; we may be unable to continue to open new stores and enter new markets successfully; our growth may continue to strain operations, which could adversely affect our business and financial performance; our operating results may be impacted by changes in the economy that impact business and consumer spending; our business and financial performance is dependent upon our ability to attract and retain qualified associates; our stock price may fluctuate based on market expectations; our quarterly operating results are subject to significant fluctuation; our expanding international operations expose us to the unique risks inherent in foreign operations; our business may be adversely affected by the actions of and risks associated with our third party vendors; our expanded offering of proprietary branded products may not improve our financial performance and may expose us to product liability claims; our debt level and operating lease commitments could impact our ability to obtain future financing and continue our growth strategy; fluctuations in our effective tax rate may adversely affect our business and results of operations; compromises of our information security may adversely affect our business; wage and hour class action lawsuits may adversely affect our business and financial performance; and those other factors discussed or referenced in our most recent annual report on Form 10-K 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 today 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 Consolidated Balance Sheets (Dollar Amounts in Thousands, Except Share Data) (Unaudited) November 3, February 3, 2007 2007 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 910,721 $ 1,017,671 Short-term investments 121,491 457,759 Receivables, net 873,457 720,797 Merchandise inventories, net 2,142,494 1,919,714 Deferred income tax asset 142,869 141,108 Prepaid expenses and other current assets 197,715 174,314 ------------ ------------ Total current assets 4,388,747 4,431,363 Property and equipment: Land and buildings 849,093 791,264 Leasehold improvements 1,118,708 996,434 Equipment 1,736,694 1,539,617 Furniture and fixtures 857,847 757,408 ------------ ------------ Total property and equipment 4,562,342 4,084,723 Less accumulated depreciation and amortization 2,448,566 2,110,602 ------------ ------------ Net property and equipment 2,113,776 1,974,121 Lease acquisition costs, net of accumulated amortization 32,242 33,579 Intangible assets, net of accumulated amortization 246,155 232,383 Goodwill 1,725,489 1,455,113 Other assets 289,912 270,706 ------------ ------------ Total assets $ 8,796,321 $ 8,397,265 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,687,235 $ 1,486,188 Accrued expenses and other current liabilities 973,496 1,101,018 Debt maturing within one year 3,113 201,177 ------------ ------------ Total current liabilities 2,663,844 2,788,383 Long-term debt 327,127 316,465 Deferred income tax liability 9,640 8,986 Other long-term obligations 361,009 252,657 Minority interest 2,925 9,109 - 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 864,055,587 shares at November 3, 2007 and 849,338,568 shares at February 3, 2007 518 510 Additional paid-in capital 3,625,745 3,338,412 Cumulative foreign currency translation adjustments 435,107 189,115 Retained earnings 4,460,361 4,005,424 Less: Treasury stock at cost - 154,361,734 shares at November 3, 2007, and 130,605,591 shares at February 3, 2007 (3,089,955) (2,511,796) ------------ ------------ Total stockholders' equity 5,431,776 5,021,665 ------------ ------------ Total liabilities and stockholders' equity $ 8,796,321 $ 8,397,265 ============ ============ STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Dollar Amounts in Thousands, Except Per Share Data) (Unaudited) 13 Weeks Ended 39 Weeks Ended --------------------------- --------------------------- November 3, October 28, November 3, October 28, 2007 2006 2007 2006 ------------- ------------- ------------- ------------- Sales $ 5,168,351 $ 4,756,550 $ 14,048,240 $ 12,874,870 Cost of goods sold and occupancy costs 3,662,677 3,394,092 10,047,260 9,226,811 ------------- ------------- ------------- ------------- Gross profit 1,505,674 1,362,458 4,000,980 3,648,059 Operating and other expenses: Operating and selling 823,903 757,790 2,307,233 2,138,922 General and admini- strative 249,095 199,066 650,676 559,113 Amort- ization of intan- gibles 4,371 3,421 11,681 9,667 ------------- ------------- ------------- ------------- Total operating expenses 1,077,369 960,277 2,969,590 2,707,702 ------------- ------------- ------------- ------------- Operating income 428,305 402,181 1,031,390 940,357 Other income (expense): Interest income 8,715 12,317 34,895 42,929 Interest expense (8,466) (10,934) (30,667) (36,678) Misc- ellaneous income (expense) 15 (62) (1,472) (921) -------------- ------------- ------------- ------------- Income before income taxes and minority interest 428,569 403,502 1,034,146 945,687 Income tax expense 154,285 113,555 372,293 308,742 ------------- ------------- ------------- ------------- Income before minority interest 274,284 289,947 661,853 636,945 Minority interest (234) 19 (636) (234) ------------- ------------- ------------- ------------- Net income $ 274,518 $ 289,928 $ 662,489 $ 637,179 ============= ============= ============= ============= Earnings Per Share: Basic earnings per common share $ 0.39 $ 0.40 $ 0.94 $ 0.88 ============= ============= ============= ============= Diluted earnings per common share $ 0.38 $ 0.39 $ 0.92 $ 0.86 ============= ============= ============= ============= Dividends declared per common share $ - $ - $ 0.29 $ 0.22 ============= ============= ============= ============= Weighted average shares outstanding: Basic 702,258,662 718,172,288 707,301,022 722,468,584 Diluted 715,257,576 736,235,167 723,415,325 741,535,481 Reconciliation of GAAP to Non-GAAP Financial Measures STAPLES, INC. AND SUBSIDIARIES Proforma Consolidated Statements of Income (Dollar Amounts in Thousands, Except Per Share Data) (Unaudited) 13 Weeks Ended - ---------------------------------------------------------------------- November 3, 2007 ---------------------------------------------- Wage and hour Pro As reported settlement Pro forma $ forma % ------------- ----------------------- -------- Sales $ 5,168,351 $ - $5,168,351 100.00% Cost of goods sold and occupancy costs 3,662,677 - 3,662,677 70.87% ------------- ----------- ----------- Gross profit 1,505,674 - 1,505,674 29.13% Operating and other expenses: Operating and selling 823,903 - 823,903 15.94% General and admini- strative 249,095 (38,000) 211,095 4.08% Amort- ization of intan- gibles 4,371 - 4,371 0.08% ------------- ----------- ----------- Total oper- ating expenses 1,077,369 (38,000) 1,039,369 20.11% ------------- ----------- ----------- Operating income 428,305 38,000 466,305 9.02% Interest and other income, net (264) - (264) (0.01%) ------------- ----------- ----------- Income before income taxes and minority interest 428,569 38,000 466,569 9.03% Income tax expense 154,285 13,680 167,965 3.25% ------------- ----------- ----------- Income before minority interest 274,284 24,320 298,604 5.78% Minority interest (234) (234) (0.00%) ------------- ----------- ----------- Net income $ 274,518 $ 24,320 $ 298,838 5.78% ============= =========== =========== Earnings Per Share: Basic earnings per common share $ 0.39 $ 0.04 $ 0.43 ============= =========== =========== Diluted earnings per common share $ 0.38 $ 0.04 $ 0.42 ============= =========== =========== Weighted average shares outst- anding: Basic 702,258,662 Diluted 715,257,576 October 28, 2006 --------------------------------------------------------- Correction for prior years' Tax stock-based Pro As reported benefit compensation Pro forma $ forma % ---------------------- ------------------------- -------- Sales $ 4,756,550 $ - $ - $4,756,550 100.00% Cost of goods sold and occupancy costs 3,394,092 - (343) 3,393,749 71.35% ---------------------- ------------- ----------- Gross profit 1,362,458 - 343 1,362,801 28.65% Operating and other expenses: Operating and selling 757,790 - (3,887) 753,903 15.85% General and admini- strative 199,066 - (6,599) 192,467 4.05% Amort- ization of intan- gibles 3,421 - - 3,421 0.07% ---------------------- ------------- ----------- Total oper- ating expenses 960,277 - (10,486) 949,791 19.97% ---------------------- ------------- ----------- Operating income 402,181 - 10,829 413,010 8.68% Interest and other income, net (1,321) - - (1,321) (0.03%) ------------------------------------ ----------- Income before income taxes and minority interest 403,502 - 10,829 414,331 8.71% Income tax expense 113,555 33,343 2,262 149,160 3.14% ---------------------- ------------- ----------- Income before minority interest 289,947 (33,343) 8,567 265,171 5.57% Minority interest 19 - - 19 0.00% ---------------------- ------------- ----------- Net income $ 289,928 $(33,343) $ 8,567 $ 265,152 5.57% ====================== ============= =========== Earnings Per Share: Basic earnings per common share $ 0.40 $ (0.04) $ 0.01 $ 0.37 ====================== ============= =========== Diluted earnings per common share $ 0.39 $ (0.04) $ 0.01 $ 0.36 ====================== ============= =========== Weighted average shares outst- anding: Basic 718,172,288 Diluted 736,235,167 Reconciliation of GAAP to Non-GAAP Financial Measures STAPLES, INC. AND SUBSIDIARIES Proforma Consolidated Statements of Income (Dollar Amounts in Thousands, Except Per Share Data) (Unaudited) 39 Weeks Ended - ---------------------------------------------------------------------- November 3, 2007 ------------------------------------------------ Wage and hour Pro As reported settlement Pro forma $ forma % ------------- ------------------------- -------- Sales $ 14,048,240 $ - $14,048,240 100.00% Cost of goods sold and occupancy costs 10,047,260 - 10,047,260 71.52% ------------- ------------ ------------ Gross profit 4,000,980 - 4,000,980 28.48% Operating and other expenses: Operating and selling 2,307,233 - 2,307,233 16.42% General and admin- istrative 650,676 (38,000) 612,676 4.36% Amort- ization of intang- ibles 11,681 - 11,681 0.08% ------------- ------------ ------------ Total oper- ating expenses 2,969,590 (38,000) 2,931,590 20.87% ------------- ------------ ------------ Operating income 1,031,390 38,000 1,069,390 7.61% Interest and other income, net (2,756) - (2,756) (0.02%) ------------- ------------ ------------ Income before income taxes and minority interest 1,034,146 38,000 1,072,146 7.63% Income tax expense 372,293 13,680 385,973 2.75% ------------- ------------ ------------ Income before minority interest 661,853 24,320 686,173 4.88% Minority interest (636) (636) (0.00%) ------------- ------------ ------------ Net income $ 662,489 $ 24,320 $ 686,809 4.89% ============= ============ ============ Earnings Per Share: Basic earnings per common share $ 0.94 $ 0.03 $ 0.97 ============= ============ ============ Diluted earnings per common share $ 0.92 $ 0.03 $ 0.95 ============= ============ ============ Weighted average shares outsta- nding: Basic 707,301,022 Diluted 723,415,325 October 28, 2006 ---------------------------------------------------------- Correction for prior years' stock- Tax based Pro forma As reported benefit compensation Pro forma $ % ---------------------------------------------------------- Sales $ 12,874,870 $ - $ - $12,874,870 100.00% Cost of goods sold and occupancy costs 9,226,811 - (343) 9,226,468 71.66% ------------------------------------ ------------ Gross profit 3,648,059 - 343 3,648,402 28.34% Operating and other expenses: Operating and selling 2,138,922 - (3,887) 2,135,035 16.58% General and admin- istrative 559,113 - (6,599) 552,514 4.29% Amort- ization of intang- ibles 9,667 - - 9,667 0.08% ------------------------------------ ------------ Total oper- ating expenses 2,707,702 - (10,486) 2,697,216 20.95% ------------------------------------ ------------ Operating income 940,357 - 10,829 951,186 7.39% Interest and other income, net (5,330) - - (5,330) (0.04%) ------------------------------------ ------------ Income before income taxes and minority interest 945,687 - 10,829 956,516 7.43% Income tax expense 308,742 33,343 2,262 344,347 2.67% ------------------------------------ ------------ Income before minority interest 636,945 (33,343) 8,567 612,169 4.75% Minority interest (234) - - (234) (0.00%) ------------------------------------ ------------ Net income $ 637,179 $(33,343)$ 8,567 $ 612,403 4.76% ==================================== ============ Earnings Per Share: Basic earnings per common share $ 0.88 $ (0.04)$ 0.01 $ 0.85 ==================================== ============ Diluted earnings per common share $ 0.86 $ (0.04)$ 0.01 $ 0.83 ==================================== ============ Weighted average shares outsta- nding: Basic 722,468,584 Diluted 741,535,481 STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 39 Weeks Ended ------------------------- November 3, October 28, 2007 2006 ------------ ------------ Operating Activities: Net income $ 662,489 $ 637,179 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 285,940 247,832 Stock-based compensation 133,196 130,912 Deferred tax benefit 25,272 (62,484) Excess tax benefits from stock-based compensation arrangements (17,395) (25,523) Other 1,679 5,139 Changes in assets and liabilities: Increase in receivables (113,711) (134,543) Increase in merchandise inventories (99,489) (184,154) Increase in prepaid expenses and other assets (51,323) (22,721) Increase in accounts payable 114,724 76,694 Decrease in accrued expenses and other liabilities (182,968) (54,075) Increase in other long-term obligations 90,161 14,549 ------------ ------------ Net cash provided by operating activities 848,575 628,805 Investing Activities: Acquisition of property and equipment (315,905) (352,186) Acquisition of businesses and investment in joint ventures, net of cash acquired (178,295) (2,596) Purchase of short-term investments (3,440,117) (5,820,743) Proceeds from the sale of short-term investments 3,776,385 5,897,590 ------------ ------------ Net cash used in investing activities (157,932) (277,935) Financing Activities: Proceeds from the exercise of stock options and the sale of stock under employee stock purchase plans 125,703 135,323 Payments on borrowings (204,889) (3,104) Proceeds from borrowings 3,949 - Excess tax benefits from stock-based compensation arrangements 17,395 25,523 Cash dividends paid (207,552) (160,883) Purchase of treasury stock (578,159) (529,685) ------------ ------------ Net cash used in financing activities (843,553) (532,826) Effect of exchange rate changes on cash and cash equivalents 45,960 8,878 Net decrease in cash and cash equivalents (106,950) (173,078) Cash and cash equivalents at beginning of period 1,017,671 977,822 ------------ ------------ Cash and cash equivalents at end of period $ 910,721 $ 804,744 ============ ============ STAPLES, INC. AND SUBSIDIARIES Segment Reporting (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended 39 Weeks Ended ----------------------- ------------------------- November October November 3, October 28, 3, 28, 2007 2006 2007 2006 ----------- ----------- ------------ ------------ Sales: North American Retail $2,750,884 $2,665,031 $ 7,225,679 $ 6,983,439 North American Delivery 1,727,141 1,505,572 4,896,999 4,251,176 International Operations 690,326 585,947 1,925,562 1,640,255 ----------- ----------- ------------ ------------ Total sales $5,168,351 $4,756,550 $14,048,240 $12,874,870 =========== =========== ============ ============ Business Unit Income: North American Retail $ 305,869 $ 290,076 $ 652,252 $ 626,587 North American Delivery 187,450 160,294 507,380 433,147 International Operations 23,064 8,736 42,954 11,535 ----------- ----------- ------------ ------------ Total business unit income $ 516,383 $ 459,106 $ 1,202,586 $ 1,071,269 Stock-based compensation (50,078) (46,096) (133,196) (120,083) ----------- ----------- ------------ ------------ Total reportable segments $ 466,305 $ 413,010 $ 1,069,390 $ 951,186 Interest and other income, net 264 1,321 2,756 5,330 Impact of correction of prior years' stock-based compensation - (10,829) - (10,829) Impact of wage and hour settlement (38,000) - (38,000) - ----------- ----------- ------------ ------------ Income before income taxes and minority interest $ 428,569 $ 403,502 $ 1,034,146 $ 945,687 =========== =========== ============ ============ CONTACT: Staples, Inc. Media Contact: Paul Capelli, 508-253-8530 or Owen Davis, 508-253-8468 or Investor Contact: Laurel Lefebvre, 508-253-4080 or Chris Powers, 508-253-4632 -----END PRIVACY-ENHANCED MESSAGE-----