-----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, EqT4v370bHUFJyxg3EJ9BT/KWUIi1zBOKCnDkNKa178vKlDaH1dmnHt8+ZQKqZ6O XKS/FBIgbLVxCcwHb7ZIOQ== 0001157523-03-002065.txt : 20030520 0001157523-03-002065.hdr.sgml : 20030520 20030520080028 ACCESSION NUMBER: 0001157523-03-002065 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030520 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030520 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: 0127 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17586 FILM NUMBER: 03711342 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 a4399964.txt STAPLES INC. 8-K 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): May 20, 2003 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 - -------------------------------------------------------------------------------- NOT APPLICABLE (Former name or former address, if changed since last report) Item 9. Regulation FD Disclosure (Information furnished pursuant to Item 12, "Disclosure of Results of Operations and Financial Condition"). On May 20, 2003, Staples announced its financial results for the quarter ended May 3, 2003. 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. In accordance with the procedural guidance in SEC Release No. 33-8216, the information in this Form 8-K and the Exhibit attached hereto is being furnished under "Item 9. Regulation FD Disclosure" rather than under "Item 12. Disclosure of Results of Operations and Financial Condition." The information 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. 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: May 20, 2003 Staples, Inc. By: /s/ Jack Vanwoerkom --------------------------------- Jack Vanwoerkom Executive Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated May 20, 2003 EX-99 3 a4399964ex991.txt EXHIBIT 99.1 Exhibit 99.1 Staples, Inc. Reports First Quarter 2003 Sales and Earnings; Company Posts 15 Percent Sales Growth And Two Percent Increase In North American Retail Comparable Sales FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 20, 2003--Staples, Inc. (Nasdaq: SPLS) announced today the results for its first quarter ended May 3, 2003. Total company sales for the quarter grew to $3.1 billion, an increase of 15 percent versus $2.7 billion reported for the same quarter of the prior year. North American Retail comparable sales increased two percent. The company achieved pro forma net income of $86 million for the quarter, or earnings per share of $0.18, on a diluted basis, exceeding analyst consensus of $0.17. This represents a 29 percent increase over earnings per share of $0.14 reported for the first quarter of 2002, after excluding a $.06 per share one-time tax benefit received in the first quarter of 2002. On a GAAP basis, net income was $25 million or $.05 per share, compared to $.20 per share for the first quarter of 2002, including the one-time tax benefit received in that quarter. Due to the recent change in accounting rules for recording vendor consideration (Emerging Issues Task Force Consensus No. 02-16), the company recorded a one-time, non-cash adjustment, reducing first quarter net income for GAAP purposes by $62 million after taxes. Pro forma net income shows Staples' results as if the company had always been subject to the new accounting method. "Staples delivered another strong quarter, and continues to grow sales profitably while making it easy for our customers to shop for office products," said Ron Sargent, Staples president and CEO. "The bottom line is, execution matters, and Staples' associates are executing better than anyone else in our industry." Highlights of Staples' business units for the first quarter include: North American Retail North American Retail sales for the first quarter were $1.8 billion, up seven percent versus first quarter results a year ago. Business unit income was $76 million, up 28 percent versus last year. Staples added 10 new stores in North America this quarter, with nine in the United States and one in Canada. North American Delivery North American Delivery sales for the first quarter were $920 million, a 13 percent increase versus last year's first quarter. Business unit income of $59 million was up 23 percent versus last year's first quarter. Excluding sales from MAP, organic growth was seven percent, leading the industry. Staples' Contract business successfully launched a new version of StaplesLink.com this quarter, growing Internet penetration to 75 percent of all transactions, and added more than 2,700 new accounts. Europe European revenues of $385 million were up 87 percent versus last year's first quarter, including the benefit of foreign currency translation. Sales from the acquired European catalog business added $137 million to the top line, so organic growth in Europe was 20 percent. Business unit income was $9.6 million, compared to a loss of $1.6 million in last year's first quarter. Staples opened three new stores, with two in the UK and one in the Netherlands. Staples European Catalog entered Sweden, expanding the delivery business to seven countries. Outlook For the second quarter of 2003, Staples anticipates earnings per share will be in line with existing analyst estimates. Second quarter revenues are expected to increase in the low double-digit percentage range, with North American Retail comparable sales in the low single digits. For the full year, Staples anticipates pro forma 20 percent earnings growth versus the $0.88 we reported last year. Sales growth is expected to be in the range of mid to high single-digit organic growth, and two to three percent growth from the two recent acquisitions. Low single digit positive North American Retail comps are expected for the full year. The following table reconciles Staples' results on a GAAP basis with results adjusted for the accounting change and the one-time tax benefit. The company uses the adjusted net income and diluted earnings per share to measure operating performance and believes such information is beneficial to an understanding of its results of operations on a comparative basis. 13 Weeks Ended ----------------------------- May 3, 2003 May 4, 2002 ------------ --------------- Net income (in thousands): Net income as reported (GAAP) $24,756 $93,869 Adjustments: Impact of accounting change (net of taxes) 61,724 - Tax benefit - (29,000) ------------ --------------- Net income as adjusted $86,480 $64,869 ------------ --------------- Diluted earnings per share: Diluted earnings per share as reported (GAAP) $0.05 $0.20 Adjustments: Impact of accounting change (net of taxes) 0.13 - Tax benefit - (0.06) ------------ --------------- Diluted earnings per share as adjusted $0.18 $0.14 ------------ --------------- About Staples Staples, Inc. is an $11.6 billion retailer of office supplies, business services, furniture and technology to consumers and businesses from home-based businesses to Fortune 500 companies in the United States, Canada, the United Kingdom, France, Italy, Spain, Belgium, Germany, the Netherlands and Portugal. Headquartered outside Boston, Staples invented the office superstore concept and today is the largest operator of office superstores in the world. The company has 58,000 associates serving customers in approximately 1,500 office superstores, mail order catalogs, e-commerce and a contract business. More information about the company is available at http://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. 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 successfully; our Dover format store may not be successful; our growth may continue to strain operations, which could adversely affect our business and financial results; our quarterly operating results are subject to significant fluctuation and are impacted by the extent to which sales in new stores result in the loss of sales in existing stores, the mix of products sold, pricing actions of competitors, the level of advertising and promotional expenses and seasonality; our operating results may be impacted by changes in the economy and international conflict; our stock price may fluctuate based on market expectations; our expanding international operations expose us to the unique risks inherent in foreign operations; our debt level could impact our ability to obtain future financing and continue our growth strategy; the SEC review of certain accounting practices of major New England retailers; a California wage and hour class action lawsuit; and those other factors discussed in our annual report on Form 10-K for the fiscal year ended February 1, 2003, which is on file with the Securities and Exchange Commission, and any subsequent periodic reports filed by us with the Securities and Exchange Commission. 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. Financial information follows. STAPLES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollar Amounts in Thousands, Except Share Data) May 3, 2003 February 1, (Unaudited) 2003 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $226,019 $596,064 Merchandise inventories, net 1,452,633 1,555,205 Receivables, net 396,051 364,419 Deferred income taxes 133,935 96,229 Prepaid expenses and other current assets 95,141 105,559 ----------- ----------- Total current assets 2,303,779 2,717,476 Property and Equipment: Land and buildings 528,676 524,730 Leasehold improvements 644,976 621,713 Equipment 975,474 951,439 Furniture and fixtures 481,257 472,935 ----------- ----------- Total property and equipment 2,630,383 2,570,817 Less accumulated depreciation and amortization 1,190,416 1,123,065 ----------- ----------- Net property and equipment 1,439,967 1,447,752 Lease Acquisition Costs, Net of Accumulated Amortization 50,024 51,450 Intangible Assets, Net of Accumulated Amortization 214,493 216,391 Goodwill 1,207,824 1,207,824 Other Assets 79,956 80,495 ----------- ----------- Total assets $5,296,043 $5,721,388 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $1,008,625 $1,092,172 Accrued expenses and other current liabilities 664,665 755,483 Debt maturing within one year 2,017 327,671 ----------- ----------- Total current liabilities 1,675,307 2,175,326 Long-Term Debt 744,192 732,041 Deferred Income Taxes 53,122 50,267 Other Long-Term Obligations 108,313 104,862 Stockholders' Equity: Preferred stock - authorized 5,000,000 shares of $.01 par value; no shares issued - - Common stock - authorized 2,100,000,000 shares of $.0006 par value; issued 502,504,546 shares at May 3, 2003 and 500,831,408 shares at February 1, 2003 299 299 Additional paid-in capital 1,513,496 1,484,833 Cumulative foreign currency translation adjustments 14,255 11,481 Retained earnings 1,743,847 1,719,091 Treasury stock at cost - 27,717,994 shares at May 3, 2003, and 27,724,578 shares at February 1, 2003 (556,788) (556,812) ----------- ----------- Total stockholders' equity 2,715,109 2,658,892 ----------- ----------- Total liabilities and stockholders' equity $5,296,043 $5,721,388 =========== =========== STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (Unaudited) 13 Weeks Ended ----------------------- May 3, May 4, 2003 2002 ------------ ----------- Sales $3,146,757 $2,744,766 Cost of goods sold and occupancy costs 2,403,924 2,084,848 ----------- ----------- Gross profit 742,833 659,918 Operating and other expenses: Operating and selling 566,912 445,610 Pre-opening 1,237 1,886 General and administrative 126,506 107,084 Amortization of intangibles 1,943 - Interest and other expense, net 6,940 2,372 ----------- ----------- Total operating and other expenses 703,538 556,952 ----------- ----------- Income before income taxes 39,295 102,966 Income tax expense 14,539 9,097 ----------- ----------- Net income $24,756 $93,869 =========== =========== Basic earnings per common share: $0.05 $0.20 =========== =========== Diluted earnings per common share: $0.05 $0.20 =========== =========== Number of shares used in computing basic earnings per common share: 470,930 463,854 =========== =========== Number of shares used in computing diluted earnings per common share: 477,821 471,828 =========== =========== STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended ------------------- May 3, May 4, 2003 2002 --------- --------- Operating Activities: Net income $24,756 $93,869 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 70,798 63,117 Tax benefit from worthless stock deduction - (29,000) Deferred tax (benefit) expense (37,461) 7,349 Other 13,792 11,551 Change in assets and liabilities Decrease (increase) in merchandise inventories 121,111 (11,472) (Increase) decrease in receivables (28,043) 9,101 Decrease in prepaid expenses and other assets 9,254 5,942 Decrease in accounts payable, accrued expenses and other current liabilities (196,339) (24,158) Increase in other long-term obligations 1,798 3,428 --------- --------- Net cash (used in) provided by operating activities (20,334) 129,727 Investing Activities: Acquisition of property and equipment (43,876) (62,944) Other - (276) --------- --------- Net cash used in investing activities (43,876) (63,220) Financing Activities: Proceeds from sale of capital stock 15,825 24,415 Proceeds from borrowings - 1,425 Payments on borrowings (326,427) (677) Reissuance (purchase) of treasury stock 24 (484) --------- --------- Net cash (used in) provided by financing activities (310,578) 24,679 Effect of exchange rate changes on cash 4,743 1,746 Net (decrease) increase in cash and cash equivalents (370,045) 92,932 Cash and cash equivalents at beginning of period 596,064 394,824 --------- --------- Cash and cash equivalents at end of period $226,019 $487,756 ========= ========= STAPLES, INC. AND SUBSIDIARIES Segment Reporting (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended ----------------------- May 3, May 4, 2003 2002 ----------- ----------- Sales: North American Retail $1,842,721 $1,726,893 North American Delivery 919,520 811,991 European Operations 384,516 205,882 ----------- ----------- Total sales $3,146,757 $2,744,766 =========== =========== Business Unit Income / (Loss): North American Retail $75,703 $59,218 North American Delivery 58,912 47,734 European Operations 9,595 (1,614) ----------- ----------- Total business unit income $144,210 $105,338 Interest and other expense, net (6,940) (2,372) Impact of change in accounting principle (97,975) - ----------- ----------- Income before income taxes $39,295 $102,966 =========== =========== STAPLES, INC. AND SUBSIDIARIES Pro Forma Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (Unaudited) Pro Forma for the 13 Weeks Ended ----------------------- May 3, May 4, 2003 2002 ------------ ----------- Sales $3,146,757 $2,744,766 Cost of goods sold and occupancy costs 2,305,949 2,028,383 ----------- ----------- Gross profit 840,808 716,383 Operating and other expenses: Operating and selling 566,912 502,075 Pre-opening 1,237 1,886 General and administrative 126,506 107,084 Amortization of intangibles 1,943 - Interest and other expense, net 6,940 2,372 ----------- ----------- Total operating and other expenses 703,538 613,417 ----------- ----------- Income before income taxes 137,270 102,966 Income tax expense 50,790 9,097 ----------- ----------- Net income $86,480 $93,869 =========== =========== Basic earnings per common share: $0.18 $0.20 =========== =========== Diluted earnings per common share: $0.18 $0.20 =========== =========== Number of shares used in computing basic earnings per common share: 470,930 463,854 =========== =========== Number of shares used in computing diluted earnings per common share: 477,821 471,828 =========== =========== STAPLES, INC. AND SUBSIDIARIES Pro Forma Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (Unaudited) Pro Forma Pro Forma for the for the 13 Weeks Ended Year Ended ------------------------------------------- May 4, August 3, Nov. 2, Feb. 1, Feb. 1, 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- ----------- Sales $2,744,766 $2,426,475 $3,089,725 $3,335,109 $11,596,075 Cost of goods sold and occupancy costs 2,028,383 1,777,309 2,221,639 2,382,202 8,409,533 ---------- ---------- ---------- ---------- ----------- Gross profit 716,383 649,166 868,086 952,907 3,186,542 Operating and other expenses: Operating and selling 502,075 451,210 537,077 548,126 2,038,488 Pre-opening 1,886 2,346 2,393 2,121 8,746 General and administrative 107,084 98,698 120,006 128,713 454,501 Amortization of intangibles - - - 2,135 2,135 Interest and other expense, net 2,372 2,381 5,406 10,450 20,609 ---------- ---------- ---------- ---------- ----------- Total operating and other expenses 613,417 554,635 664,882 691,545 2,524,479 ---------- ---------- ---------- ---------- ----------- Income before income taxes 102,966 94,531 203,204 261,362 662,063 Income tax expense 9,097 34,976 75,186 96,704 215,963 ---------- ---------- ---------- ---------- ----------- Net income $93,869 $59,555 $128,018 $164,658 $446,100 ========== ========== ========== ========== =========== Basic earnings per common share: $0.20 $0.13 $0.27 $0.35 $0.96 ========== ========== ========== ========== =========== Diluted earnings per common share: $0.20 $0.13 $0.27 $0.35 $0.94 ========== ========== ========== ========== =========== CONTACT: Staples, Inc. Media Contacts: Paul Capelli, 508/253-8530 or Deb Hohler, 508/253-8509 or Investor Contact: Laurel Lefebvre, 508/253-4080 -----END PRIVACY-ENHANCED MESSAGE-----