News Release
Staples, Inc. Reports Second Quarter Results |
WESTBOROUGH, Mass.--August 13, 1998-- Staples, Inc. (NASDAQ:SPLS), today announced a 33% increase in earnings per share before merger related charges for the second fiscal quarter ended August 1, 1998 to $0.12 per share as compared with $0.09 per share in the prior year. For the six months in the year to date period, earnings per share before merger related charges rose 26% to
$0.24 per share as compared with $0.19 per share in the prior year
period.
In the fiscal 1998 quarter and year to date periods, merger related charges were recorded for the acquisition of Quill Corporation. In the fiscal 1997 quarter and year to date periods, merger related charges were recorded for the attempted merger with Office Depot, Inc. Historical data has been restated to reflect the acquisition of the Quill Corporation under the pooling of interests method of accounting. Total sales for the second quarter of fiscal 1998 rose 24% to $1.5 billion from $1.2 billion. For the six months in the year to date period, sales rose 27% to $3.1 billion from $2.5 billion in the prior year period. Comparable sales in the 669 stores and delivery hubs that have been open for more than one year increased 14% for the quarter and 13% for the six month period. Thomas G. Stemberg, Chairman and CEO commented, "Staples has again achieved some of the best results in all of the retail industry including our seventeenth consecutive quarter of earnings per share growth of over 30%. These results are truly extraordinary given our continued substantial investments in long-term sales and earnings growth in what is our seasonally slowest quarter." He continued, "During the second quarter we opened 48 new stores which set a new company record. In addition, we completed the acquisition of the Quill Corporation which further strengthens our mail order operations and creates exciting new opportunities both domestically and abroad." The Company ended the quarter with 652 stores in the United States, 114 stores in Canada, 44 stores in the United Kingdom and 20 stores in Germany for a total of 830 stores worldwide. Staples, Inc. is a $5 billion retailer of office supplies, furniture and technology to businesses from home based businesses to Fortune 50 companies in the United States, Canada, the United Kingdom and Germany. Staples, headquartered outside Boston, Mass., invented the office superstore concept and is the largest operator of office superstores in the world today. The Company, which has grown earnings per share at a 38% compounded rate over the last four years, has over 32,000 employees serving the business customer through 830 office superstores, mail order catalogs and a contract business. More information may be obtained from the Company's Investor Relations department by dialing (800) INV-SPL1 or from the Company's website at http://www.staples.com. Certain information presented within this press 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 the Company's most recent filing on Forms 10-K and 10-Q on file with the Securities and Exchange Commission.
STAPLES, INC. AND SUBSIDIARIES Supplemental Consolidated Statements of Income (Dollar Amounts in Thousands, Except Share Data) (Unaudited) (Unaudited) 13 Weeks Ended 26 Weeks Ended August 1, August 2, August 1, August 2, 1998 1997 1998 1997 Sales $1,475,705 $1,192,339 $3,146,316 $2,485,060 Cost of goods sold and occupancy costs 1,120,780 905,718 2,403,376 1,893,773 Gross profit 354,925 286,621 742,940 591,287 Operating and other expenses: Operating and selling 213,969 181,264 469,617 379,862 Pre-opening 4,232 2,316 7,584 5,178 General and administrative 70,694 55,174 138,180 102,205 Amortization of goodwill 927 1,049 1,851 1,621 Merger-related and integration costs 41,000 9,103 41,000 29,665 Interest and other expense, net 5,920 5,892 10,614 9,828 Total operating and other expenses 336,742 254,798 668,846 528,359 Income before equity in loss of affiliates and income taxes 18,183 31,823 74,094 62,928 Equity in gain/(loss) of affiliates -- -- -- (5,953) Income before income taxes 18,183 31,823 74,094 56,975 Income tax expense 9,319 9,120 29,330 14,495 Net income before minority interest 8,864 22,703 44,764 42,480 Minority interest 110 56 160 56 Net income $8,974 $22,759 $44,924 $42,536 Historical net income per common share $0.03 $0.08 $0.16 $0.16 Historical net income per common share assuming dilution $0.03 $0.08 $0.16 $0.15 Pro forma: Historical net income $22,759 $44,924 $42,536 Provision for income taxes on previously untaxed earnings of pooled S-Corporation income 3,182 1,814 7,730 Pro forma net income $19,577 $43,110 $34,806 Pro forma net income per common share $0.07 $0.15 $0.13 Pro forma net income per common share assuming dilution $0.07 $0.15 $0.13 Number of shares used in computing historical and pro forma net income per common share 282,639,460 270,155,123 282,639,460 269,600,845 Number of shares used in computing historical and pro forma net income per common share assuming dilution 291,033,327 279,191,526 289,161,513 278,271,092 STAPLES, INC. AND SUBSIDIARIES Supplemental Consolidated Balance Sheets (Dollar Amounts in Thousands, Except Share Data) August 1, January 31, 1998 1998 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 93,762 $ 381,088 Short-term investments 1,443 5,902 Merchandise inventories 1,293,654 1,124,642 Receivables, net 254,641 203,143 Prepaid expenses and other current assets 80,825 71,365 Total current assets 1,724,325 1,786,140 Property and Equipment: Land and buildings 195,378 150,947 Leasehold improvements 327,476 292,128 Equipment 334,041 304,177 Furniture and fixtures 197,821 173,711 Total property and equipment 1,054,716 920,963 Less accumulated depreciation and amortization 352,915 310,701 Net property and equipment 701,801 610,262 Other Assets: Lease acquisition costs, net of amortization 77,695 43,244 Investments -- 16,450 Goodwill, net of amortization 135,818 139,753 Other 35,229 43,013 Total other assets 248,742 242,460 $ 2,674,868 $ 2,638,862 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 701,198 $ 672,956 Accrued expenses and other current liabilities 310,523 266,023 Debt maturing within one year 4,443 43,501 Total current liabilities 1,016,164 982,480 Long-Term Debt 205,935 218,959 Other Long-Term Obligations 48,708 42,803 Convertible Debentures 300,000 300,000 Minority Interest (25) 135 Stockholders' Equity: Preferred stock, $.01 par value-authorized 5,000,000 shares; no shares issued Common stock, $.0006 par value-authorized 500,000,000 shares; issued 284,483,644 shares at August 1, 1998 and 278,159,308 shares at January 31, 1998 170 167 Additional paid-in capital 631,967 593,883 Cumulative foreign currency translation adjustments (12,792) (10,315) Unrealized gain/(loss) on short-term investments 2 1,056 Retained earnings 492,977 510,040 Less: treasury stock, at cost, 352,948 shares at August 1, 1998 and 59,149 shares at January 31, 1998 (8,238) (346) Total stockholders' equity 1,104,086 1,094,485 $ 2,674,868 $ 2,638,862 STAPLES, INC. AND SUBSIDIARIES Supplemental Consolidated Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 26 Weeks Ended August 1, August 2, 1998 1997 Operating Activities: Net income $ 44,924 $ 42,536 Adjustments to reconcile net income to net cash provided by/(used in) operating activities: Minority interest (160) (56) Depreciation and amortization 45,725 45,943 Equity in loss of affiliates -- 5,953 Net decrease in deferred tax assets (7,098) (10,665) (Increase)/decrease in assets: Merchandise inventories (169,012) (134,318) Receivables (56,419) (2,655) Prepaid expenses and other assets 8,616 (5,390) Increase in accounts payable, accrued expenses and other current liabilities 78,706 128,442 Increase in other long-term obligations 6,242 3,234 (93,400) 30,488 Net cash (used in)/provided by operating activities (48,476) 73,024 Investing Activities: Acquisition of property and equipment (136,713) (78,820) Proceeds from sales and maturities of short-term investments 11,313 10,061 Purchase of short-term investments (6,854) -- Proceeds from sales and maturities of long-term investments 18,995 3,430 Purchase of long-term investments (2,545) (3,505) Acquisition of businesses, net of cash acquired -- (77,808) Investment in affiliates (1,075) (1,606) Acquisition of lease rights (36,690) (2,402) Other (544) 2,059 Net cash used in investing activities (154,113) (148,591) Financing Activities: Proceeds from sale of capital stock 38,654 11,500 Proceeds from borrowings 38 762,914 Payments on borrowings (52,082) (677,375) Purchase and retirement of S-Corporation stock (48,102) -- Dividends to shareholders of acquired S-Corporation (15,601) (14,257) Other (7,892) -- Net cash (used in)/provided by financing activities (84,985) 82,782 Effect of exchange rate changes on cash 248 (727) Net (decrease)/increase in cash and cash equivalents (287,326) 6,488 Cash and cash equivalents at beginning of period 381,088 117,035 Cash and cash equivalents at end of period $ 93,762 $ 123,523 CONTACT: Media Contact: Jean Papagni Manager of Public Relations (508) 370-8468 jean.papagni@staples.com or Investor Contact: Samuel J. Levenson, CPA Vice President of Investor Relations (508) 370-7963 sam.levenson@staples.com |