<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: November 2, 1996
-------------------------------------------------
Commission File Number: 0-17586
---------------------------------------------------------
STAPLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2896127
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Research Drive, Westborough, MA 01581
-----------------------------------------
(Address of principal executive office and zip code)
508-370-8500
-----------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The registrant had 160,996,628 shares of Common Stock, par value $.0006,
outstanding as of December 2, 1996.
<PAGE> 2
FORM 10-Q
STAPLES, INC.
NOVEMBER 2, 1996
TABLE OF CONTENTS
-----------------
Page
Consolidated Balance Sheets .............................................. 3
Consolidated Statements of Income ........................................ 4
Consolidated Statements of Cash Flows .................................... 5
Notes to Consolidated Financial Statements ............................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations .................................... 7-11
Part II .................................................................. 12
Signature ................................................................ 13
Page 2
<PAGE> 3
STAPLES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
November 2,
1996 February 3,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 68,270 $ 98,130
Short-term investments ............................ 8,165 12,685
Merchandise inventories ........................... 817,423 644,514
Receivables, net .................................. 219,452 122,453
Prepaid expenses and other current assets ......... 72,039 48,089
---------- ----------
TOTAL CURRENT ASSETS ......................... 1,185,349 925,871
PROPERTY AND EQUIPMENT:
Land and buildings ................................ 36,987 24,364
Leasehold improvements ............................ 240,364 168,588
Equipment ......................................... 187,548 144,857
Furniture and fixtures ............................ 102,443 75,182
---------- ----------
TOTAL PROPERTY AND EQUIPMENT ................. 567,342 412,991
Less accumulated depreciation and amortization .... 167,886 120,496
---------- ----------
NET PROPERTY AND EQUIPMENT ................... 399,456 292,495
OTHER ASSETS:
Lease acquisition costs, net of amortization ...... 41,622 40,338
Investment in affiliates .......................... 33,518 32,940
Goodwill, net of amortization ..................... 81,884 80,361
Other ............................................. 41,785 30,770
---------- ----------
TOTAL OTHER ASSETS ........................... 198,809 184,409
---------- ----------
$1,783,614 $1,402,775
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................. $ 439,188 $ 273,633
Accrued expenses and other current liabilities .... 171,608 139,641
Debt maturing within one year ..................... 7,520 8,267
---------- ----------
TOTAL CURRENT LIABILITIES .................... 618,316 421,541
LONG-TERM DEBT .......................................... 139,599 43,647
OTHER LONG-TERM OBLIGATIONS ............................. 33,528 26,171
CONVERTIBLE DEBENTURES .................................. 300,000 300,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value-authorized
5,000,000 shares; no shares issued ................ 0 0
Common stock, $.0006 par value-authorized
500,000,000 shares; issued
160,981,721 shares at November 2, 1996 and
158,366,604 shares at February 3, 1996 ............ 97 95
Additional paid-in capital ........................ 483,941 466,684
Cumulative foreign currency translation adjustments 2,156 (2,054)
Unrealized gain on short-term investments ......... 21 32
Retained earnings ................................. 206,302 147,005
Less: 39,433 shares of treasury stock, at cost .... (346) (346)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY ............... 692,171 611,416
---------- ----------
$1,783,614 $1,402,775
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 4
STAPLES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
----------------------------- -------------------------------
November 2, October 28, November 2, October 28,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales ............................................ $1,078,820 $818,756 $2,803,676 $2,092,526
Cost of goods sold and occupancy costs ........... 821,378 627,293 2,146,590 1,611,207
---------- -------- ---------- ----------
GROSS PROFIT ................................. 257,442 191,463 657,086 481,319
Operating expenses:
Operating and selling .......................... 158,663 118,031 430,761 317,037
Pre-opening .................................... 2,700 2,057 7,790 4,113
General and administrative ..................... 34,693 25,648 94,173 72,127
Amortization of goodwill ....................... 577 548 1,713 1,392
---------- -------- ---------- ----------
TOTAL OPERATING EXPENSES ..................... 196,633 146,284 534,437 394,669
---------- -------- ---------- ----------
OPERATING INCOME ............................. 60,809 45,179 122,649 86,650
Interest and other expense, net ................ (5,384) (3,267) (14,577) (11,942)
---------- -------- ---------- ----------
INCOME BEFORE EQUITY IN LOSS OF
AFFILIATES AND INCOME TAXES ................ 55,425 41,912 108,072 74,708
Equity in loss of affiliates .................... (3,520) (6,230) (11,262) (11,554)
---------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES .................... 51,905 35,682 96,810 63,154
Income tax expense ............................... 19,984 13,738 37,272 24,314
---------- -------- ---------- ----------
NET INCOME .................................... $ 31,921 $ 21,944 $ 59,538 $ 38,840
========== ======== ========== ==========
Net income per common share ...................... $ 0.19 $ 0.13 $ 0.36 $ 0.24
========== ======== ========== ==========
Number of shares used in computing net
income per common share ................... 167,374,906 163,983,941 166,406,912 161,719,365
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 5
STAPLES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
(Unaudited)
39 Weeks Ended
----------------------------
November 2, October 28,
1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................. $ 59,538 $ 38,840
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization ........................... 51,288 36,834
Equity in loss of affiliates ............................ 11,262 11,554
Net increase in deferred tax assets ..................... (21,977) (6,383)
(Increase)/decrease in assets:
Merchandise inventories .............................. (170,394) (234,062)
Receivables .......................................... (96,662) (49,272)
Prepaid expenses and other assets .................... (11,986) 3,449
Increase in accounts payable, accrued
expenses and other current liabilities ............... 191,618 119,956
Increase in other long-term obligations ................. 4,091 871
--------- -----------
(42,760) (117,053)
--------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ........ 16,778 (78,213)
INVESTING ACTIVITIES:
Acquisition of property and equipment ...................... (152,497) (81,381)
Proceeds from sales and maturities of short-term investments 10,144 9,135
Purchase of short-term investments ......................... (4,607) (349)
Investment in affiliates ................................... (10,368) (13,390)
Acquisition of lease rights ................................ (3,734) (959)
Other ...................................................... 4,321 2,384
--------- -----------
NET CASH USED IN INVESTING ACTIVITIES ...................... (156,741) (84,560)
FINANCING ACTIVITIES:
Proceeds from sale of capital stock ........................ 14,227 13,006
Proceeds from convertible debentures, net of deferred costs 0 292,348
Proceeds from borrowings ................................... 316,476 1,174,531
Payments on borrowings ..................................... (221,395) (1,287,064)
--------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES .................. 109,308 192,821
Effect of exchange rate changes on cash .................... 795 (9)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........... (29,860) 30,039
Cash and cash equivalents at beginning of period ............... 98,130 41,810
--------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................... $ 68,270 $ 71,849
========= ===========
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 6
STAPLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- ------------------------------
The accompanying interim unaudited consolidated financial statements include the
accounts of Staples, Inc. and its wholly owned subsidiaries (the "Company"). All
intercompany accounts and transactions are eliminated in consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, such interim statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
The results of operations for the interim periods are not necessarily indicative
of the results to be expected for the full year. These financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes included in the Company's Annual Report on Form 10-K dated April
11, 1996 for the year ended February 3, 1996.
Note 2 - Computation of Earnings Per Share
- ------------------------------------------
On March 5, 1996 the Board of Directors approved a three-for-two stock split of
the Company's common stock to be effected in the form of a 50% dividend. This
distribution was made on March 25, 1996 and was payable to shareholders of
record as of March 15, 1996. The number of shares used in the earnings per share
computation for the three and nine months ended October 28, 1995, as previously
reported, has been retroactively adjusted to reflect the three-for-two split of
the Company's common stock in March, 1996.
Average common and common equivalent shares used in computing earnings per share
include approximately 6,626,000 and 6,828,000 shares for the quarters ended
November 2, 1996 and October 28, 1995, respectively, as a result of applying the
treasury stock method to outstanding stock options.
Note 3 - Plan of Merger With Office Depot, Inc.
- -----------------------------------------------
On September 4, 1996, the Company entered into an Agreement and Plan of Merger
with Office Depot, Inc. ("Office Depot"). Office Depot operates over 500 retail
office supply stores in the US and Canada, a national delivery and contract
stationer business, and joint ventures or licensed operations in seven
countries, and had revenues of $5.3 billion for the year ended December 30,
1995. The transaction is intended to be a tax-free exchange of shares pursuant
to which the stockholders of Office Depot will receive 1.14 shares of the
Company's common stock for each outstanding share they own. The merger will be
accounted for as a pooling of interests and is subject to various closing
conditions, including the approval of the stockholders of both companies and
required regulatory approvals. In connection with the merger, the Company
granted to Office Depot, and Office Depot granted to the Company, mutual options
to purchase up to 19.9% of the outstanding stock of the other company under
certain conditions.
Page 6
<PAGE> 7
STAPLES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
SALES. Sales increased 32% to $1,078,820,000 in the quarter ended November 2,
1996 from $818,756,000 in the quarter ended October 28, 1995 and increased 34%
to $2,803,676,000 for the nine months ended November 2, 1996 compared to
$2,092,526,000 for the nine months ended October 28, 1995. This growth is
attributable to an increase in the number of open stores, increased sales in
existing stores and increased sales through both internal growth and
acquisitions in the delivery and contract stationer segments. Comparable store
and delivery hub sales (which represent a comparison of sales between
corresponding full months in the periods compared) for the quarter ended
November 2, 1996 increased 12% over the quarter ended October 28, 1995, and
increased 15% for the nine months ended November 2, 1996 versus the nine months
ended October 28, 1995. Comparable sales for the Company's contract stationer
business segment increased 19% for the quarter ended November 2, 1996 versus the
quarter ended October 28, 1995 and increased 19% for the nine months ended
November 2, 1996 versus the nine months ended October 28, 1995. The Company had
550 stores open as of November 2, 1996 compared to 417 stores as of October
28, 1995 and 443 stores open as of February 3, 1996; this total includes 108 new
stores opened and one store closed during the nine months ended November 2,
1996.
GROSS PROFIT. Gross profit as a percentage of sales was 23.9% and 23.4% for the
three and nine months ended November 2, 1996 as compared to 23.4% and 23.0% for
the same periods in the prior year. The increase in gross profit rate for the
three and nine months ended November 2, 1996 was primarily due to the leveraging
of fixed distribution center costs over a larger sales base, improved margins in
the delivery business segment as well as lower product costs from vendors as a
result of increased purchase volume discounts. During the nine months ended
November 2, 1996, this was partially offset by decreases in the merchandise
margin rates in the retail segment, as sales of computer hardware (CPU's and
laptops), which generate a lower margin rate than other categories, increased to
8% of total sales for the nine months ended November 2, 1996 versus 7% in the
prior year. Total computer hardware sales constituted approximately 8% of total
store and delivery hub sales during the three months ended November 2, 1996 and
October 28, 1995.
OPERATING AND SELLING EXPENSES. Operating and selling expenses, which consist of
payroll, advertising and other operating and selling costs, increased as a
percentage of sales in the three and nine months ended November 2, 1996 to 14.7%
and 15.4%, respectively, as compared to 14.4% and 15.2% for the same periods in
the prior year. The increase is primarily due to increased advertising as well
as increases in store labor and costs incurred for the Company's store remodel
program in which significant investments have been made in store layouts and
signing to improve shopability and enhance customer service.
Page 7
<PAGE> 8
While most store expenses vary proportionately with sales, there is a fixed cost
component. Because new stores typically generate lower sales than the Company
average, the fixed cost component results in higher store operating and selling
expenses as a percentage of sales in these stores. During periods when new store
openings as a percentage of the base are higher, store operating and selling
expenses as a percentage of sales may increase. In addition, as the store base
matures, the fixed cost component of operating expenses is leveraged over an
increased level of sales, resulting in a decrease in store operating and selling
expenses as a percentage of sales. The Company's strategy of saturating markets
results in some new stores attracting sales away from existing stores. This also
has the effect of detracting from the expected leveraging of the fixed cost
component.
PRE-OPENING EXPENSES. Pre-opening expenses relating to new store openings, which
consist primarily of salaries, supplies, marketing and occupancy costs, are
expensed by the Company as incurred and, therefore, fluctuate from period to
period depending on the timing and number of new store openings. Pre-opening
expenses averaged $69,000 and $72,000 for the three and nine months ended
November 2, 1996, respectively, as compared to $51,000 and $53,000 per store for
the same periods in the prior year. The increase is due primarily to increased
marketing expenses as well as higher costs incurred in the initial shipment of
product from the distribution centers to new stores.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the
three months ended November 2, 1996 increased as a percentage of sales to 3.2%
from 3.1% in the prior year. For the nine month periods ended November 2, 1996
and October 28, 1995, general and administrative expenses were 3.4% of sales.
The increase for the three months ended November 2, 1996 is primarily due to
significant investments in the Company's information systems staffing and
infrastructure, which the Company believes will reduce costs in future years.
This is partially offset by the Company's ability to increase sales without
proportionately increasing overhead expenses in its core retail business.
INTEREST AND OTHER EXPENSE, NET. Net interest and other expense for the three
and nine months ended November 2, 1996 was $5,384,000 and $14,577,000,
respectively, as compared to $3,267,000 and $11,942,000 for the same periods in
the prior year. The increase in net interest expense is primarily due to
increased borrowings which funded the increase in store inventories related to
new store openings, expanded product assortments, and improvements in in-stock
levels; the acquisition of fixed assets for new stores opened and remodeled; and
additional investments in joint venture affiliates.
EQUITY IN LOSS OF AFFILIATES. The Company's equity in loss of affiliates
decreased to $3,520,000 and $11,262,000 for the three and nine months ended
November 2, 1996 as compared to $6,230,000 and $11,554,000 for the same periods
in the prior year. The three and nine months ended October 28,1995 include a
store closure charge of approximately $2,500,000 taken by the Company's German
affiliate, MAXI-Papier-Markt GmbH. The increase (excluding the store closure
charge) in the equity in loss of affiliates for the nine months ended November
2, 1996 is primarily due to the increased losses generated by Staples UK, the
Company's joint venture in England, as sales and profitability have been lower
than projected. The Company's joint ventures in Europe are at an early stage of
development and there can be no assurance that they will become profitable.
On December 11, 1996, the Company signed a definitive agreement to acquire from
Kingfisher PLC its interests in the two European joint ventures. As a result
of the acquisition, the Company's ownership interest of Staples UK will
increase to 100% and its ownership of MAXI-Papier-Markt-GmbH will increase to
approximately 90%. The transactions will be accounted for as purchases and are
expected to close in the second quarter of fiscal 1997. Subsequent to the
acquisition, the Company's financial statements will reflect the consolidated
results of these entities.
Page 8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the nine months ended November 2, 1996, cash and cash equivalents
decreased by $29,860,000. This decrease was attributable to cash used in
investing activities of $156,741,000, which includes capital expenditures of
$152,497,000 primarily incurred in connection with the opening of 108 new
stores. This was partially offset by cash provided by operating activities of
$16,778,000, which primarily reflects net income and increases in accounts
payable and accrued liabilities partially offset by increases in merchandise
inventories and accounts receivable, and cash flow from financing activities of
$109,308,000 which primarily represents borrowing under the existing revolving
credit and term loan facility.
The Company opened 39 and 108 stores in North America during the three and nine
months ended November 2, 1996, and expects to open approximately 6 additional
stores in the last quarter of fiscal 1996. Management estimates that the
Company's cash requirements, including pre-opening expenses, will be
approximately $1,400,000 for each new store (excluding the cost of any
acquisitions of lease rights). Accordingly, the Company expects to use
approximately $8,400,000 for store openings during this period. In addition,
the Company will continue to make investments in information systems,
distribution centers and store remodels to improve operational efficiencies and
customer service, and may expend additional funds to acquire businesses or lease
rights from tenants occupying retail space that is suitable for a Staples store.
On July 10, 1996, the Company amended and restated its five-year revolving
credit facility with a syndicate of banks, originally established on May 25,
1994, which increased available borrowings from $225,000,000 to $350,000,000.
Borrowings made pursuant to this facility bear interest at either the lead
bank's prime rate, the federal funds rate plus 0.50%, the LIBOR rate plus a
percentage spread based on certain defined ratios, or a competitive bid rate.
This agreement, among other conditions, contains certain restrictive covenants
including net worth maintenance, minimum interest coverage and limitations on
indebtedness, sales of assets, and dividends. As of November 2, 1996, borrowing
availability under the revolving credit facility totaled $246,000,000; total
cash, short-term investments and available revolving credit amounts totaled
$322,435,000.
The Company expects that its current cash and cash equivalents, funds
anticipated to be generated from operations, and funds available under its
revolving credit and term loan facility will be sufficient to fund its planned
store openings and other recurring operational cash needs for at least the next
twelve months. The Company is continually evaluating financing possibilities,
and it may seek to raise additional funds through one or a combination of
public or private debt offerings, dependent upon market conditions, or through
additional commercial bank debt arrangements.
Page 9
<PAGE> 10
FUTURE OPERATING RESULTS
- ------------------------
This quarterly report on Form 10-Q contains a number of forward-looking
statements. Any statements contained herein (including without limitation
statements to the effect that the Company or its management "believes",
"expects", "anticipates", "plans" and similar expressions) that are not
statements of historical fact should be considered forward-looking statements.
There are a number of important factors that could cause the Company's results
to differ materially from those indicated by such forward-looking statements.
These factors include, without limitation, the following:
The Company operates in a highly competitive marketplace, in which it competes
with a variety of retailers, dealers and distributors. The Company competes in
most of its geographic markets with other high-volume office supply chains that
are similar in concept to the Company in terms of store format, pricing strategy
and product selection, such as Office Depot and OfficeMax. The Company also
competes with independent dealers, contract stationers, mail order stationers,
wholesale clubs, mass merchandisers, consumer electronics retailers, computer
superstores and manufacturers. Some of the Company's current and potential
competitors in the office products industry are larger than the Company and have
substantially greater financial resources. No assurance can be given that
competition will not have an adverse effect on the Company's business. In
addition, if any of the Company's major competitors were to seek to gain or
retain market share by reducing prices, the Company may be compelled to reduce
its prices and thereby reduce its gross margin and profitability.
An important part of the Company's business plan is an aggressive store growth
strategy. The Company opened 94 stores in the United States and Canada in fiscal
1995 and plans to open approximately 114 new stores in fiscal 1996. There can be
no assurance that the Company will be able to identify and lease favorable store
sites, hire, train and integrate employees, and adapt its management and
operational systems to the extent necessary to fulfill its expansion plans. The
failure to open new stores in accordance with its growth plans could have a
material adverse impact on the Company's future sales and profits. Moreover, the
Company's expansion strategy is based in part on the continued addition of new
stores to its suburban store network in existing markets to take advantage of
economies of scale in marketing, distribution and supervision costs; however,
this can result in the "cannibalization" of sales of existing stores. In
addition, there can be no assurance that the new stores opened by the Company
will achieve sales or profit levels commensurate with those of the Company's
existing stores, particularly as the Company enters new markets in which it has
less experience or faces more competition.
The Company has experienced and may experience in the future fluctuations in its
quarterly operating results. Factors such as the number of new store openings
(pre-opening expenses are expensed as incurred, and newer stores are less
profitable than mature stores), the extent to which new stores "cannibalize"
sales of existing stores, the mix of products sold, pricing actions of
competitors, the level of advertising and promotional expenses, seasonality, and
one-time charges associated with acquisitions or other events could contribute
to this quarterly variability. In addition, the Company's expense levels are
based in part on expectations of future sales levels, and a shortfall in
expected sales could therefore result in a disproportionate decrease in the
Company's net income.
Page 10
<PAGE> 11
The Company's business, including sales, number of stores and number of
employees, has grown dramatically over the past several years. In addition, the
Company has consummated a number of significant acquisitions in the last few
years, and may make additional acquisitions in the future. This internal growth,
together with the acquisitions made by the Company, have placed significant
demand on the management and operational systems of the Company. To manage its
growth effectively, the Company will be required to continue to upgrade its
operational and financial systems, expand its management team and increase and
manage its employee base.
The Company has a presence in international markets through joint ventures with
locally-based companies in Germany and the United Kingdom, and may seek to
expand into other international markets in the future. The Company's operations
in foreign markets are subject to risks similar to those affecting its North
American stores in addition to a number of risks inherent to these joint
ventures, including lack of complete operating control, local customs,
competitive conditions and foreign currency fluctuations.
The Company currently expects that its current cash and cash equivalents and
funds available under its revolving credit and term loan facility will be
sufficient to fund its planned store openings and other operating cash needs for
at least the next twelve months. However, there can be no assurance that the
Company will not require additional sources of financing prior to such time, as
a result of unanticipated cash needs or opportunities, an expanded growth
strategy or disappointing operating results. There also can be no assurance that
the additional funds required by the Company, whether within the next twelve
months or thereafter, will be available to the Company on satisfactory terms.
Page 11
<PAGE> 12
PART II -- OTHER INFORMATION
Items 1-5 - Not applicable.
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K.
- ------------------------------------------
A. Exhibits
10.1 Agreement and Plan of Merger dated as of September 4, 1996 among
Staples, Inc., Marlin Acquisition Corp. and Office Depot, Inc. (incorporated
by reference from the Company's current report on Form 8-K dated September 4,
1996).
B. Reports on Form 8-K.
The Company filed the following report on Form 8-K during the fiscal quarter
ended November 2, 1996:
1. Report on Form 8-K dated September 4, 1996, reporting the Agreement and
Plan of Merger among Staples, Inc., Marlin Acquisition Corp. and Office
Depot, Inc.
Page 12
<PAGE> 13
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 thereunto duly authorized.
Date: December 13, 1996 /s/ John Mahoney
----------------- ----------------------------
John Mahoney
Executive Vice President and
Chief Financial Officer
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STAPLES, INC. FOR THE NINE MONTHS ENDED NOVEMBER 2,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> NOV-02-1996
<CASH> 68,270
<SECURITIES> 8,165
<RECEIVABLES> 220,899
<ALLOWANCES> 1,447
<INVENTORY> 817,423
<CURRENT-ASSETS> 1,185,349
<PP&E> 567,342
<DEPRECIATION> 167,886
<TOTAL-ASSETS> 1,783,614
<CURRENT-LIABILITIES> 618,316
<BONDS> 439,599
<COMMON> 97
0
0
<OTHER-SE> 692,074
<TOTAL-LIABILITY-AND-EQUITY> 1,783,614
<SALES> 2,803,676
<TOTAL-REVENUES> 2,803,676
<CGS> 2,146,590
<TOTAL-COSTS> 2,577,351
<OTHER-EXPENSES> 114,938
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,577
<INCOME-PRETAX> 96,810
<INCOME-TAX> 37,272
<INCOME-CONTINUING> 59,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,538
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
