FRAMINGHAM, Mass.--(BUSINESS WIRE)--Staples, Inc. (Nasdaq: SPLS) announced today the results for its third quarter ended October 29, 2016. Total company sales for the third quarter of 2016 were $5.4 billion, a decrease of four percent compared to the third quarter of 2015. On a GAAP basis, the company reported net income of $179 million, or $0.27 per diluted share. Third quarter 2016 results on a GAAP basis include pre-tax charges of $57 million primarily related to impairment of intangible assets in International Operations.
Excluding the impact of the sale of the Staples Print Solutions business during the second quarter of 2016, store closures, and changes in foreign exchange rates, total company sales for the third quarter of 2016 decreased two percent compared to the third quarter of 2015. Excluding the impact of charges taken during the third quarter of 2016, the company reported non-GAAP net income of $220 million, or $0.34 per diluted share, versus third quarter 2015 non-GAAP net income of $226 million, or $0.35 per diluted share.
“During the third quarter we pivoted from planning to execution of the Staples 20/20 strategic plan while delivering results that were right in-line with our expectations,” said Shira Goodman, Staples’ Chief Executive Officer. “Staples 20/20 is a transformational change of our strategy, our mindset, and our operating model to reshape our company for sustainable long-term growth.”
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Third Quarter 2016 Financial Summary |
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| Third Quarter | ||||||||||||||
| (dollar amounts in millions, except per share data) | 2016 | 2015 | Change | |||||||||||
| Total company sales | $ | 5,355 | $ | 5,593 | -4.3 | % | ||||||||
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Total company sales growth excluding the impact of the sale of
Staples
Print Solutions, store closures, and changes in foreign exchange rates* |
-2 | % | ||||||||||||
| GAAP operating income | $ | 298 | $ | 318 | -$20 | |||||||||
| Non-GAAP operating income* | $ | 355 | $ | 358 | -$3 | |||||||||
| GAAP operating income rate | 5.6 | % | 5.7 | % | -13 basis points | |||||||||
| Non-GAAP operating income rate* | 6.6 | % | 6.4 | % | 22 basis points | |||||||||
| GAAP net income | $ | 179 | $ | 198 | -$19 | |||||||||
| Non-GAAP net income* | $ | 220 | $ | 226 | -$6 | |||||||||
| GAAP earnings per diluted share | $ | 0.27 | $ | 0.31 | -13 | % | ||||||||
| Non-GAAP earnings per diluted share* | $ | 0.34 | $ | 0.35 | -3 | % | ||||||||
*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.
Third Quarter 2016 Highlights
- Staples Business Advantage, the company’s North American contract business, experienced a sales decline of three percent compared to the third quarter of 2015 on a GAAP basis, and a sales increase of two percent after excluding a negative impact of approximately five percent due to the sale of the Staples Print Solutions business.
- Excluding pre-tax charges of $57 million during the third quarter of 2016 and $40 million during the third quarter of 2015, the company improved operating income rate by 22 basis points on a non-GAAP basis.
- Improved operating income rate in each of the company’s business units.
- Ended the third quarter of 2016 with $2.2 billion in liquidity, including $1.1 billion in cash and cash equivalents.
- Closed 16 stores during the third quarter of 2016 and 35 stores year to date in North America as part of a plan to close at least 50 stores in North America during 2016.
- Acquired Capital Office Products, an independent office products dealer that generates more than $100 million of annual revenue early in the fourth quarter of 2016.
- Divested the company’s retail business in the United Kingdom for nominal proceeds early in the fourth quarter of 2016.
| North American Commercial | ||||||||||||||
| Third Quarter | ||||||||||||||
| (dollar amounts in millions) | 2016 | 2015 | Change | |||||||||||
| Sales | $ | 2,110 | $ | 2,173 | -2.9 | % | ||||||||
| Operating income | $ | 171 | $ | 172 | -$1 | |||||||||
| Operating income rate | 8.1 | % | 7.9 | % | 18 basis points | |||||||||
North American Commercial sales for the third quarter of 2016 were $2.1 billion, a decline of three percent compared to the third quarter of 2015. Sales growth was negatively impacted by approximately four percent due to the second quarter 2016 sale of the Staples Print Solutions business and also reflects growth in facilities supplies, breakroom supplies, and technology products, partially offset by declines in ink and toner and office supplies.
Staples Business Advantage sales declined three percent on a GAAP basis and increased two percent on a non-GAAP basis after excluding a negative impact of approximately five percent due to the sale of the Staples Print Solutions business.
Operating income rate increased 18 basis points to 8.1 percent compared to the third quarter of 2015. This improvement primarily reflects lower compensation expense. This was partially offset by increased supply chain costs and lower product margin rate.
| North American Stores and Online | ||||||||||||||
| Third Quarter | ||||||||||||||
| (dollar amounts in millions) | 2016 | 2015 | Change | |||||||||||
| Sales | $ | 2,496 | $ | 2,613 | -4.5 | % | ||||||||
| Comparable sales* | -3 | % | ||||||||||||
| Comparable store sales | -4 | % | ||||||||||||
| Staples.com local currency sales growth | -1 | % | ||||||||||||
| Operating income | $ | 193 | $ | 201 | -$8 | |||||||||
| Operating income rate | 7.8 | % | 7.7 | % | 7 basis points | |||||||||
*Comparable sales includes comparable store sales and Staples.com sales growth excluding the impact of changes in foreign exchange rates.
North American Stores and Online sales for the third quarter of 2016 were $2.5 billion, a decrease of four percent compared to the third quarter of 2015. Store closures negatively impacted third quarter 2016 sales growth by approximately one percent. Comparable sales, which combines comparable store sales and Staples.com sales growth excluding the impact of changes in foreign exchange rates, decreased three percent versus the prior year. Sales declines in ink and toner, business machines, technology accessories and mobility were partially offset by growth in computers and facilities supplies. Comparable store sales decreased four percent, primarily reflecting a decline in customer traffic versus the prior year. Staples.com sales declined one percent compared to the third quarter of 2015.
Operating income rate increased 7 basis points to 7.8 percent compared to the third quarter of 2015. This primarily reflects improved product margin rate in stores and online. This was partially offset by the negative impact of lower sales on fixed expenses in stores and online.
| International Operations | |||||||||||||||
| Third Quarter | |||||||||||||||
| (dollar amounts in millions) | 2016 | 2015 | Change | ||||||||||||
| Sales | $ | 749 | $ | 807 | -7.2 | % | |||||||||
| Operating income | $ | 6 | $ | 0 | $ | 6 | |||||||||
| Operating income rate | 0.7 | % | 0.0 | % | 76 basis points | ||||||||||
International Operations sales for the third quarter of 2016 were $749 million, a decrease of seven percent in U.S. dollars or five percent on a local currency basis compared to the third quarter of 2015. This was primarily driven by sales declines in Europe, partially offset by double-digit growth in China.
Operating income rate for International Operations improved 76 basis points to an operating profit of 0.7 percent compared to the third quarter of 2015. This primarily reflects improved profitability in Europe.
Outlook
For the fourth quarter of 2016, the company expects
sales to decrease versus the fourth quarter of 2015. The company expects
to achieve fully diluted non-GAAP earnings per share in the range of
$0.23 to $0.26 for the fourth quarter of 2016. The company’s earnings
guidance excludes potential charges related to the company’s strategic
plans, including restructuring and related initiatives as well as the
ongoing exploration of strategic alternatives for the company’s European
operations. For the full year 2016, the company has increased its free
cash flow guidance from approximately $600 million to approximately $700
million excluding the after-tax impact to operating cash flow of
approximately $340 million of charges associated with financing for the
proposed acquisition of Office Depot and costs associated with the
termination of the Office Depot merger agreement. The company plans to
close at least 50 stores in North America in 2016.
Presentation of Non-GAAP Information
This press release
presents certain results with and without the impairment of goodwill,
restructuring and related charges, long-lived asset impairment, gains
and losses related to the sale of businesses and assets, costs related
to the proposed acquisition of Office Depot and costs related to
litigation. This press release also presents certain results both with
and without the impact of fluctuations in foreign currency exchange
rates, with and without the impact of store closures and with and
without the impact of the sale of the Staples Print Solutions business.
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 potential
charges to be incurred related to the company’s strategic plans,
including restructuring and related initiatives as well as the ongoing
exploration of strategic alternatives for the company’s European
operations, and the potential related impact on cash flow cannot be
reasonably estimated.
Today's Conference Call
The company will host a conference
call today at 9:00 a.m. (ET) to review these results and its outlook.
The webcast of the conference call and accompanying slides can be
accessed on the company’s investor relations website at http://investor.staples.com.
A replay will also be available on the company’s investor relations
website after the call.
About Staples, Inc.
Staples helps small business customers
make more happen by providing a broad assortment of products, expanded
business services and easy ways to shop – in stores, online, via mobile
or through social apps. Staples Business Advantage, the
business-to-business division, caters to mid-market, commercial and
enterprise-sized customers by offering a one-source solution for the
products and services they need, combined with best-in-class customer
service, competitive pricing and a state-of-the-art ecommerce site.
Headquartered outside of Boston, Staples, Inc. operates throughout North
and South America, Europe, Asia, Australia and New Zealand. More
information about Staples (NASDAQ: SPLS) is available at www.staples.com.
Safe Harbor for Forward-looking Statements
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 our ability to meet the changing needs of
our customers; our ability to successfully transform our business;
industry, operating and competitive pressures and global economic
conditions, including their impact on prices and demand for our products
and services, our financial condition and our results of operations;
risks related to international operations and fluctuations in foreign
exchange rates, including as a result of the uncertainty related to
Britain’s decision in 2016 to exit the European Union; compromises of
our information security; changes in our effective tax rate; our ability
to retain qualified employees; the impact of regulation and regulatory,
investigative and legal proceedings and legal compliance risks; and
factors discussed or referenced in our Annual Report on Form 10-K filed
on March 4, 2016, 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. 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 |
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Condensed Consolidated Balance Sheets |
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(Dollar Amounts in Millions, Except Share Data) |
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(Unaudited) |
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| October 29, 2016 | January 30, 2016 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 1,076 | $ | 825 | ||||||
| Receivables, net | 1,865 | 1,899 | ||||||||
| Merchandise inventories, net | 2,019 | 2,078 | ||||||||
| Prepaid expenses and other current assets | 374 | 310 | ||||||||
| Total current assets | 5,334 | 5,112 | ||||||||
| Net property and equipment | 1,412 | 1,586 | ||||||||
| Intangible assets, net of accumulated amortization | 202 | 274 | ||||||||
| Goodwill | 2,010 | 2,653 | ||||||||
| Other assets | 429 | 547 | ||||||||
| Total assets | $ | 9,387 | $ | 10,172 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
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Accounts payable |
$ | 2,025 | $ | 1,894 | ||||||
| Accrued expenses and other current liabilities | 1,193 | 1,353 | ||||||||
| Debt maturing within one year | 23 | 17 | ||||||||
| Total current liabilities | 3,241 | 3,264 | ||||||||
| Long-term debt | 1,024 | 1,018 | ||||||||
| Other long-term obligations | 467 | 506 | ||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued | — | — | ||||||||
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Common stock, $.0006 par value, 2,100,000,000 shares authorized;
issued and |
1 | 1 | ||||||||
| Additional paid-in capital | 5,039 | 5,010 | ||||||||
| Accumulated other comprehensive loss | (1,096 | ) | (1,116 | ) | ||||||
| Retained earnings | 6,122 | 6,900 | ||||||||
| Less: Treasury stock at cost, 301,241,189 shares at October 29, 2016 and January 30, 2016 | (5,419 | ) | (5,419 | ) | ||||||
| Total Staples, Inc. stockholders’ equity | 4,647 | 5,376 | ||||||||
| Noncontrolling interests | 8 | 8 | ||||||||
| Total stockholders’ equity | 4,655 | 5,384 | ||||||||
| Total liabilities and stockholders’ equity | $ | 9,387 | $ | 10,172 | ||||||
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STAPLES, INC. AND SUBSIDIARIES |
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Condensed Consolidated Statements of Comprehensive Income |
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(Amounts in Millions, Except Per Share Data) |
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(Unaudited) |
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| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
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October 29, 2016 |
October 31, 2015 |
October 29, 2016 |
October 31, 2015 |
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| Sales | $ | 5,355 | $ | 5,593 | $ | 15,208 | $ | 15,791 | ||||||||||||
| Cost of goods sold and occupancy costs | 3,912 | 4,071 | 11,285 | 11,659 | ||||||||||||||||
| Gross profit | 1,443 | 1,522 | 3,923 | 4,132 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 1,078 | 1,163 | 3,277 | 3,466 | ||||||||||||||||
| Merger termination fee | — | — | 250 | — | ||||||||||||||||
| Impairment of goodwill and long-lived assets | 44 | 2 | 704 | 25 | ||||||||||||||||
| Restructuring charges | 7 | 22 | 17 | 85 | ||||||||||||||||
| Amortization of intangibles | 14 | 17 | 44 | 51 | ||||||||||||||||
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Total operating expenses |
1,143 | 1,204 | 4,292 | 3,627 | ||||||||||||||||
| (Loss) gain on sale of businesses and assets, net | (2 | ) | — | (50 | ) | 3 | ||||||||||||||
| Operating income (loss) | 298 | 318 | (419 | ) | 508 | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 1 | 1 | 5 | 2 | ||||||||||||||||
| Interest expense | (11 | ) | (40 | ) | (71 | ) | (90 | ) | ||||||||||||
| Loss on early extinguishment of debt | — | — | (26 | ) | — | |||||||||||||||
| Other (expense) income, net | (4 | ) | (8 | ) | 3 | (9 | ) | |||||||||||||
| Income (loss) before income taxes | 284 | 271 | (508 | ) | 411 | |||||||||||||||
| Income tax expense | 105 | 73 | 37 | 118 | ||||||||||||||||
| Net income (loss) | $ | 179 | $ | 198 | $ | (545 | ) | $ | 293 | |||||||||||
| Earnings Per Common Share: | ||||||||||||||||||||
| Basic Earnings Per Common Share | $ | 0.28 | $ | 0.31 | $ | (0.84 | ) | $ | 0.46 | |||||||||||
| Diluted Earnings Per Common Share | $ | 0.27 | $ | 0.31 | $ | (0.84 | ) | $ | 0.45 | |||||||||||
| Dividends declared per common share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | ||||||||||||
| Comprehensive income (loss) | $ | 152 | $ | 188 | $ | (525 | ) | $ | 221 | |||||||||||
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STAPLES, INC. AND SUBSIDIARIES |
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Condensed Consolidated Statements of Cash Flows |
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(Amounts in Millions) |
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(Unaudited) |
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| 39 Weeks Ended | ||||||||||
| October 29, 2016 | October 31, 2015 | |||||||||
| Operating Activities: | ||||||||||
| Net (loss) income | $ | (545 | ) | $ | 293 | |||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||
| Depreciation | 288 | 292 | ||||||||
| Amortization of intangibles | 44 | 51 | ||||||||
| Loss (gain) on sale of businesses and assets, net | 50 | (3 | ) | |||||||
| Interest and fees paid from restricted cash account, net | 66 | — | ||||||||
| Impairment of goodwill and long-lived assets | 704 | 25 | ||||||||
| Inventory write-downs related to restructuring activities | — | 1 | ||||||||
| Stock-based compensation | 47 | 49 | ||||||||
| Excess tax benefits from stock-based compensation arrangements | — | (5 | ) | |||||||
| Deferred income tax expense | 78 | 43 | ||||||||
| Other | 4 | 9 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Increase in receivables | (12 | ) | (66 | ) | ||||||
| Decrease (increase) in merchandise inventories | 7 | (36 | ) | |||||||
| Increase in prepaid expenses and other assets | (50 | ) | (43 | ) | ||||||
| Increase in accounts payable | 141 | 175 | ||||||||
| Decrease in accrued expenses and other liabilities | (157 | ) | (23 | ) | ||||||
| Decrease in other long-term obligations | (35 | ) | (59 | ) | ||||||
| Net cash provided by operating activities | 630 | 703 | ||||||||
| Investing Activities: | ||||||||||
| Acquisition of property and equipment | (158 | ) | (215 | ) | ||||||
| Proceeds from the sale of property and equipment | — | 9 | ||||||||
| Sale of businesses, net | 83 | 2 | ||||||||
| Increase in restricted cash | (66 | ) | — | |||||||
| Acquisition of businesses, net of cash acquired | — | (23 | ) | |||||||
| Net cash used in investing activities | (141 | ) | (227 | ) | ||||||
| Financing Activities: | ||||||||||
| Proceeds from the exercise of stock options and sale of stock under employee stock purchase plans | 15 | 24 | ||||||||
| Proceeds from borrowings | 187 | 4 | ||||||||
| Payments on borrowings, including payment of deferred financing fees and capital lease obligations | (200 | ) | (89 | ) | ||||||
| Cash dividends paid | (233 | ) | (231 | ) | ||||||
| Excess tax benefits from stock-based compensation arrangements | — | 5 | ||||||||
| Repurchase of common stock | (13 | ) | (23 | ) | ||||||
| Net cash used in financing activities | (244 | ) | (310 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 6 | (11 | ) | |||||||
| Net increase in cash and cash equivalents | 251 | 155 | ||||||||
| Cash and cash equivalents at beginning of period | 825 | 627 | ||||||||
| Cash and cash equivalents at the end of the period | $ | 1,076 | $ | 782 | ||||||
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STAPLES, INC. AND SUBSIDIARIES |
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Segment Reporting |
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(Amounts in Millions) |
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(Unaudited) |
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| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
| October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | |||||||||||||||||
| Sales | ||||||||||||||||||||
| North American Commercial | $ | 2,110 | $ | 2,173 | $ | 6,270 | $ | 6,330 | ||||||||||||
| North American Stores & Online | 2,496 | 2,613 | 6,730 | 7,092 | ||||||||||||||||
| International Operations | 749 | 807 | 2,208 | 2,369 | ||||||||||||||||
| Total segment sales | $ | 5,355 | $ | 5,593 | $ | 15,208 | $ | 15,791 | ||||||||||||
| Business Unit Income (Loss) | ||||||||||||||||||||
| North American Commercial | $ | 171 | $ | 172 | $ | 465 | $ | 444 | ||||||||||||
| North American Stores & Online | 193 | 201 | 267 | 304 | ||||||||||||||||
| International Operations | 6 | — | (26 | ) | (42 | ) | ||||||||||||||
| Business unit income | 370 | 373 | 706 | 706 | ||||||||||||||||
| Merger termination fee | — | — | (250 | ) | — | |||||||||||||||
| Stock-based compensation and retention | (15 | ) | (15 | ) | (48 | ) | (49 | ) | ||||||||||||
| Impairment of goodwill and long-lived assets | (44 | ) | (2 | ) | (704 | ) | (25 | ) | ||||||||||||
| Litigation costs | — | — | (17 | ) | — | |||||||||||||||
| Restructuring charges and costs related to strategic plans | (11 | ) | (23 | ) | (32 | ) | (91 | ) | ||||||||||||
| (Loss) gain related to sale of businesses and assets, net | (2 | ) | — | (50 | ) | 3 | ||||||||||||||
| Interest and other expense, net | (14 | ) | (47 | ) | (63 | ) | (97 | ) | ||||||||||||
| Loss on early extinguishment of debt | — | — | (26 | ) | — | |||||||||||||||
| Merger-related costs | — | (12 | ) | (24 | ) | (33 | ) | |||||||||||||
| PNI data security incident costs | — | (3 | ) | — | (3 | ) | ||||||||||||||
| Income (loss) before income taxes | $ | 284 | $ | 271 | $ | (508 | ) | $ | 411 | |||||||||||
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STAPLES, INC. AND SUBSIDIARIES |
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Reconciliation of GAAP to Non-GAAP Income Statement Disclosures |
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(Dollar Amounts in Millions, Except Per Share Data) |
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(Unaudited) |
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For the non-GAAP measures related to results of operations, reconciliations to the most directly comparable GAAP measures are shown below: |
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| 13 Weeks Ended | |||||||||||||||||||||||||
| October 29, 2016 | |||||||||||||||||||||||||
| GAAP |
Impairment of |
Loss on sale of |
Costs related to |
Non-GAAP | |||||||||||||||||||||
| Operating income | $ | 298 | $ | 44 | $ | 2 | $ | 11 | $ | 355 | |||||||||||||||
| Interest and other expense, net | 14 | — | — | — | 14 | ||||||||||||||||||||
| Income before income taxes | 284 | 341 | |||||||||||||||||||||||
| Income tax expense | 105 | 105 | |||||||||||||||||||||||
| Adjustments | — | 16 | |||||||||||||||||||||||
| Adjusted income tax expense | 105 | 121 | |||||||||||||||||||||||
| Net income | $ | 179 | $ | 220 | |||||||||||||||||||||
| Effective tax rate | 36.9 | % | 35.5 | % | |||||||||||||||||||||
| Income per common share: | |||||||||||||||||||||||||
| Diluted earnings per common share | $ | 0.27 | $ | 0.34 | |||||||||||||||||||||
| 39 Weeks Ended | |||||||||||||||||||||||||||||||||||
| October 29, 2016 | |||||||||||||||||||||||||||||||||||
| GAAP | Impairment of goodwill and long-lived assets | Merger-related costs | Loss on sale of businesses and assets, net | Litigation | Costs related to restructuring and strategic plans | Non-GAAP | |||||||||||||||||||||||||||||
| Gross profit | $ | 3,923 | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | 3,927 | |||||||||||||||||||||
| Operating (loss) income | (419 | ) | 704 | 274 | 50 | 17 | 32 | 658 | |||||||||||||||||||||||||||
| Interest and other expense, net | 63 | — | (37 | ) | — | — | — | 26 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | 26 | — | (26 | ) | — | — | — | — | |||||||||||||||||||||||||||
| (Loss) income before income taxes | (508 | ) | 632 | ||||||||||||||||||||||||||||||||
| Income tax expense | 37 | 37 | |||||||||||||||||||||||||||||||||
| Adjustments | — | 188 | |||||||||||||||||||||||||||||||||
| Adjusted income tax expense | 37 | 225 | |||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (545 | ) | $ | 407 | ||||||||||||||||||||||||||||||
| Effective tax rate | (7.3 | )% | 35.5 | % | |||||||||||||||||||||||||||||||
| (Loss) income per common share: | |||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $ | (0.84 | ) | $ | 0.63 | ||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | (0.84 | ) | $ | 0.63 | ||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | 648 | 648 | |||||||||||||||||||||||||||||||||
| Effect of dilutive securities | — | 4 | |||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding assuming dilution. | 648 | 652 | |||||||||||||||||||||||||||||||||
| 13 Weeks Ended | ||||||||||||||||||||||||||||||
| October 31, 2015 | ||||||||||||||||||||||||||||||
| GAAP |
Restructuring |
Impairment of long |
Merger- |
PNI data |
Non-GAAP | |||||||||||||||||||||||||
| Operating income | $ | 318 | $ | 23 | $ | 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 | Restructuring charges |
Impairment of |
Gain on |
Merger- |
PNI data |
Non-GAAP | |||||||||||||||||||||||||||||
| Operating income | $ | 508 | $ | 86 | $ | 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 |
$ | 0.45 | $ | 0.63 | |||||||||||||||||||||||||||||||
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 Business Advantage Sales Growth | |||||
|
Third quarter of |
|||||
| GAAP sales growth | $ | (48 | ) | ||
| GAAP sales growth | (2.6 | )% | |||
| Impact of divestiture of Staples Print Solutions | $ | 86 | |||
| Non-GAAP sales growth | $ | 38 | |||
| Non-GAAP sales growth | 2.1 | % | |||
| 13 Weeks Ended October 29, 2016 | ||||||||||||
| Sales Growth GAAP |
Impact of |
Sales Growth on a |
||||||||||
| Sales: | ||||||||||||
| North American Commercial | (2.9 | )% |
— |
% |
(2.9 | )% | ||||||
| North American Stores & Online | (4.5 | )% | 0.1 | % | (4.6 | )% | ||||||
| International Operations | (7.2 | )% | (2.4 | )% | (4.8 | )% | ||||||
| Total sales | (4.2 | )% | (0.3 | )% | (3.9 | )% | ||||||
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.
|
13 Weeks Ended |
||||
| GAAP sales growth | (4.2 | )% | ||
| Impact of change in exchange rates | (0.3 | )% | ||
| Impact of store closures | (0.6 | )% | ||
| Impact of divestitures | (1.5 | )% | ||
| Non-GAAP sales growth | (1.8 | )% | ||
|
STAPLES, INC. AND SUBSIDIARIES |
||||||||||
|
Reconciliation of Free Cash Flow Disclosures |
||||||||||
|
(Amounts in Millions) |
||||||||||
|
(Unaudited) |
||||||||||
| 39 Weeks Ended | ||||||||||
| October 29, 2016 | October 31, 2015 | |||||||||
| Net cash provided by operating activities | $ | 630 | $ | 703 | ||||||
| Acquisition of property and equipment | (158 | ) | (215 | ) | ||||||
| Free cash flow | $ | 472 | $ | 488 | ||||||
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.
