|Staples Inc. Reports 24 Percent Increase in First Quarter Revenue|
|..Net Income Jumps 47 Percent; Earnings Per Share Increase 38 Percent...
FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 18, 1999-- ..Same-Store Sales Grow 10 Percent for North America, 9 Percent
Staples Inc. (NASDAQ:SPLS - news), the pioneer of the office superstore industry, today announced net income of $50.3 million, or $.11 per common share on a diluted basis, for the first quarter which ended May 1, 1999, compared with $34.1 million, or $.08 per common share, on a diluted basis, for the prior year.
Historical data has been restated to reflect the merger with Quill Corporation under the pooling of interests method of accounting.
Total sales for the quarter rose 24 percent to $2.1 billion from $1.7 billion reported for the same period last year. Comparable sales in the 763 stores that have been open for more than one year and delivery hubs, increased 9 percent for the first quarter company-wide, and increased 10 percent for the first quarter in North America.
''We delivered another quarter of outstanding financial performance with double-digit same-store sales growth in our North American superstores business,'' said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. ''With the launch of the Quill brand in Europe, aggressive store opening plans and continued investments in e-commerce and service opportunities, we are preparing for future growth opportunities while achieving best-in-class results.''
In separate press releases issued today, Staples announced two strategic Internet partnerships and investments formed to spearhead the company's position as a leader in the e-commerce arena. Staples invested $7 million in register.com, one of the largest single domain name registration services on the Internet. The company also invested $3.5 million in Point.com, formerly known as Nth Dimension Corporation, the leading web retailer of wireless phones, service plans and acceseries. Both agreements include extensive marketing initiatives that will drive sales across nearly all Staples sales channels, including its e-commerce, retail stores and catalog operations.
''These partnerships are designed to make Staples.com the one-stop e-commerce shop for small businesses,'' said Stemberg. ''Internet applications have tremendous potential across all of our businesses and will help us improve customer service while driving down our costs of doing business. By teaming with leaders in this space, we're able to add incredible value to our Web site.''
In addition, this quarter Staples: -- Opened 47 new retail stores, ending the quarter with 960 stores worldwide; 752 stores in the United States, 132 stores in Canada, 51 stores in the United Kingdom, and 25 stores in Germany; -- Continued to strengthen its e-commerce efforts through strategic marketing agreements with GeoCities and CNN.com; -- Launched its Quill catalog business in the United Kingdom; -- Expanded store hours with the emergence of the first 24-hour office superstores; -- Enhanced service offerings through a partnership with Sprint telecommunications services; -- Launched an aggressive store opening plan for the Atlanta market; -- Broke ground for its fourth major retail distribution center in Terre Haute, Ind; and -- Added Margaret C. Whitman, the president and chief executive officer of eBay, to its Board of Directors.
Staples Inc. is a $7 billion retailer of office supplies, furniture and technology to consumers and businesses from home-based businesses to Fortune 50 companies in the United States, Canada, the United Kingdom and Germany. Headquartered outside Boston, Staples invented the office superstore concept and today is the largest operator of office superstores in the world. The company has over 44,000 employees serving customers through more than 960 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 presented within this news release may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which are discussed in our most recent 10-K on file with the Securities and Exchange Commission.
STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Dollar Amounts in Thousands, Except Share Data) (Unaudited) 13 Weeks Ended May 1, May 2, 1999 1998 Sales $ 2,072,066 $ 1,670,611 Cost of goods sold and occupancy costs 1,577,313 1,289,833 Gross profit 494,753 380,778 Operating and other expenses: Operating and selling 315,320 248,411 Pre-opening 4,508 3,352 General and administrative 88,740 67,486 Amortization of goodwill 2,287 924 Interest and other expense, net 1,416 4,694 Total operating and other expenses 412,271 324,867 Income before income taxes 82,482 55,911 Income tax expense 32,168 20,011 Net income before minority interest 50,314 35,900 Minority interest -- 50 Net income $ 50,314 $ 35,950 Basic earnings per common share Historical net income per common share $ 0.11 $ 0.09 Diluted earnings per common share Historical net income per common share $ 0.11 $ 0.08 Pro forma: Historical net income $ 50,314 $ 35,950 Provision for income taxes on previously untaxed earnings of pooled S-Corporation income -- 1,814 Pro forma net income $ 50,314 $ 34,136 Basic earnings per common share Pro forma net income per common share $ 0.11 $ 0.08 Diluted earnings per common share Pro forma net income per common share $ 0.11 $ 0.08 Number of shares used in computing historical and pro forma basic net income per common share 462,832,475 419,027,328 Number of shares used in computing historical and pro forma diluted net income per common share 476,801,013 461,616,368 STAPLES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollar Amounts in Thousands, Except Share Data) May 1, 1999 January 30, (Unaudited) 1999 ASSETS Current Assets: Cash and cash equivalents $ 151,670 $ 357,993 Short-term investments 23,498 17,428 Merchandise inventories 1,305,170 1,340,432 Receivables, net 342,675 221,836 Deferred income taxes 77,221 75,261 Prepaid expenses and other current assets 37,855 51,150 Total current assets 1,938,089 2,064,100 Property and Equipment: Land and buildings 239,336 231,378 Leasehold improvements 387,839 372,451 Equipment 438,210 400,225 Furniture and fixtures 254,073 239,755 Total property and equipment 1,319,458 1,243,809 Less accumulated depreciation and amortization 435,352 403,520 Net property and equipment 884,106 840,289 Other Assets: Lease acquisition costs, net of amortization 73,017 75,127 Goodwill, net of amortization 300,981 148,201 Deferred income taxes 29,704 28,735 Other 22,350 22,814 Total other assets 426,052 274,877 $ 3,248,247 $ 3,179,266 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 778,251 $ 794,427 Accrued expenses and other current liabilities 471,454 438,311 Debt maturing within one year 35,782 32,594 Total current liabilities 1,285,487 1,265,332 Long-Term Debt 204,270 205,015 Other Long-Term Obligations 53,913 52,033 Stockholders' Equity: Preferred stock, $.01 par value-authorized 5,000,000 shares; no shares issued -- -- Common stock, $.0006 par value-authorized 1,000,000,000 shares; issued 463,163,798 at May 2, 1999 and 461,538,061 shares at January 30, 1999 279 277 Additional paid-in capital 1,065,137 1,043,194 Cumulative foreign currency translation adjustments (8,513) (11,675) Unrealized gain on investments 1 7 Retained earnings 683,635 633,321 Less: treasury stock at cost, 1,344,768 shares at May 1, 1999 and 488,922 shares at January 30, 1999 (35,962) (8,238) Total stockholders' equity 1,704,577 1,656,886 $ 3,248,247 $ 3,179,266 STAPLES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended May 1, May 2, 1999 1998 Operating Activities: Net income $ 50,314 $ 35,950 Adjustments to reconcile net income to net cash used in operating activities: Minority interest -- (50) Depreciation and amortization 34,456 28,652 Expense from 401K and PARS stock contribution 4,625 1,622 Deferred income taxes (benefit)/expense (2,800) 2,795 Change in assets and liabilities, net of companies acquired using purchase accounting: (Decrease)/Increase in merchandise inventories 47,238 (3,704) Increase in receivables (100,995) (37,841) (Decrease)/Increase in prepaid expenses and other assets 11,278 (8,167) Decrease in accounts payable, accrued expenses and other current liabilities (41,760) (50,787) Increase in other long-term obligations 526 6,009 (47,432) (61,471) Net cash provided by/(used in) operating activities 2,882 (25,521) Investing Activities: Acquisition of property and equipment (60,623) (50,925) Acquisition of businesses, net of cash acquired (137,625) -- Proceeds from sales and maturities of short-term investments 10,572 11,389 Purchase of short-term investments (16,651) (6,854) Proceeds from sales and maturities of long-term investments -- 3,430 Purchase of long-term investments -- (2,545) Acquisition of lease rights 656 (36,826) Other 2,553 (5,596) Net cash used in investing activities (201,118) (87,927) Financing Activities: Proceeds from sale of capital stock 9,973 13,467 Proceeds from borrowings 13,150 (334) Payments on borrowings (11,914) (24,575) Purchase of treasury stock (19,779) -- Net cash used in financing activities (8,570) (11,442) Effect of exchange rate changes on cash 483 454 Net decrease in cash and cash equivalents (206,323) (124,436) Cash and cash equivalents at beginning of period 357,993 381,088 Cash and cash equivalents at end of period $ 151,670 $ 256,652
Staples Inc. Shannon Lapierre Manager, Public Relations 508/253-8468 firstname.lastname@example.org or Diane Basile Director, Investor Relations 508/253-7963 email@example.com