September 9, 2008
BY EDGAR SUBMISSION
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
Mail Stop 3561
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Attention:
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John Fieldsend
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Attorney-Advisor
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Re: Staples, Inc.
Annual Report on Form 10-K for the Year Ended February 2,
2008
Filed March 4, 2008
Definitive Proxy Statement on Schedule 14A
Filed April 28, 2008
File No. 0-17586
Ladies and Gentlemen:
Enclosed please find our
responses to the comments regarding the above referenced filings contained in a
letter from H. Christopher Owings of the Staff (the “Staff”) of the Securities
and Exchange Commission (the “Commission”) to Staples, Inc. (the “Company”,
“Staples,”, “we”, or “our”), dated August 12, 2008.
All responses set forth
below are keyed to the sequential numbering of the comments and to the headings
used in your letter. Your comments are
in bold and our responses and supplemental information is in regular type.
Annual Report on Form 10-K
for the Year Ended February 2, 2008
Item 8A. Controls and Procedures,
page 17
1. In your Disclosure Controls and
Procedures subsection, you state that management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their
500 Staples Drive ·
Framingham, MA 01702
Securities and Exchange Commission
September 9, 2008
Page 2
objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Further,
you state that your disclosure controls and procedures “were effective at the
reasonable assurance level.” In future
filings, if true, please state that your disclosure controls and procedures
were designed to be effective at the reasonable assurance level.
Response: In future filings, we will state that the
Company’s disclosure controls and procedures were designed to be effective at
the reasonable assurance level.
We filed our Quarterly
Report on Form 10-Q for the quarter ended August 2, 2008 on September 3,
2008 (the “Quarterly Report”), and included the following as the last sentence
of Item 4. Controls and Procedures, Evaluation of Disclosure Controls and
Procedures, on page 27 of the Quarterly Report:
“Based on the evaluation of
the Company’s disclosure controls and procedures as of August 2, 2008, the
Company’s chief executive officer and chief financial officer concluded, that,
as of such date, the Company’s disclosure controls and procedures were designed
to be effective at the reasonable assurance level.”
Appendix B
Management’s Discussion
and Analysis
of Financial Condition and Results, page B-1
2. In future filings, please expand
this section to discuss known material trends, demands, commitments, events, or
uncertainties that will have, or are reasonably likely to have, a material
impact on your financial condition, operating performance, revenues, or income,
or result in your liquidity decreasing or increasing in any material way. See
Item 303 of Regulation S-K and SEC Release No. 33-8350. For example, you
state on page B-2 that due to the weak economic conditions in North
America and the possibility that the European economy may soften, you
anticipate sales in 2008 to grow in the mid single digits and
earnings per share to grow in the low double digits compared to GAAP earnings
per share in 2007. Please explain this trend further and discuss the reason or
reasons that you believe that your 2008 sales will grow at these rates. As
another example, please discuss the reason or reasons you expect that, assuming
a healthy economic environment, your long term sales and earnings per share
will grow by 10% to 15%.
Response: In future filings, we will expand the
discussion of known material trends, demands, commitments, events, or uncertainties
that will have, or are reasonably likely to have, a material impact on the
Company’s financial condition, operating performance, revenues, or income, or
result in Staples’ liquidity decreasing or increasing in any material way.
Included on page 19 of
our Quarterly Report is the following expanded discussion in response to your
comments:
“While maintaining our focus
on expense control, we are also continuing to invest in new strategic
initiatives and customer service programs to ensure our long term success,
despite
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Securities and Exchange Commission
September 9, 2008
Page 3
the current weak economic
climate. As of the date of this filing, we expect earnings per diluted
share to grow in the low single digits on a GAAP basis, including the results
of Corporate Express which we expect to be slightly accretive, and including
the prior year impact of the California wage and hour class action litigation
settlement. For our pre-acquisition business, excluding Corporate
Express, we anticipate sales in fiscal 2008 to grow in the low single digits
and earnings per diluted share to be flat compared to 2007, excluding the
impact of the California wage and hour class action litigation settlement.”
Results of Operations, page B-1
3. In this subsection, you discuss
the changes in operation and cash flow amounts between the periods. However,
the dollar amounts you disclose mostly repeat information that is available
from the face of the financial statements. Therefore, in future filings, please
expand this information to explain the reasons for period-to-period changes. In
this regard, where you identify intermediate causes of changes in your
operating results, please be sure to fully describe the reasons underlying
these causes. Finally, where changes in items are caused by more than one
factor, please quantify the effect of each factor on the change, if possible.
See Item 303 of Regulation S-K and SEC Release No. 33-8350. For example, on page B-2, you state that your overall sales increased 6.7% in 2007 and 12.9%
in 2006, your comparable sales for your North American Retail locations
decreased 3% in 2007 and increased 3% in 2006, and sales for your International
retail locations increased 2% in 2007 and 3% in 2006. In this regard, we note
that you provide the causes for your sales increase, as you state that your
overall sales growth in
both 2007 and
2006 primarily reflects increases in sales of core office supplies, ink and
toner, paper, and computers, an increase in your copy and print center
business, your continued focus on customer service, and the continued success
of your customer acquisition and retention efforts in your North American
Delivery business. Additionally, please fully describe the reasons underlying these
causes for your overall sales growth in 2007 and 2006. Further, please,
quantify the effect of each additional factor on the change in your sales in
2007 and 2006, if possible. In this regard, we note that the increase in total
sales partially reflects the
positive impacts to you of foreign currency rates of $404 million in 2007 and
$185 million in 2006.
Response: Consistent with Item 303 of Regulation S-K
and Commission Release No. 33-8350, we have disclosed the “relative
significance” of the various business reasons that have contributed to a
material change in a financial statement line between periods in total and by
segment. As required by Release No. 33-8350,
we have provided the “material and determinable” reasons for the changes. Moreover, as the Commission noted in Release No. 33-8350,
in its example of and explanation for the material reasons for a decline in
sales, the explanation for a change can be qualitative: “[t]he analysis should
reveal underlying material causes of the matters described including for
example, if applicable, difficulties in the manufacturing process, a decline in
the quality of a product, loss in competitive position and market share, or a
combination of conditions.”
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Securities and Exchange Commission
September 9, 2008
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To the extent possible in future filings, we
will expand our discussion to provide more information and better explain
period-to-period changes. On pages 19
through 23 of our Quarterly Report, we have used qualitative phrases such as “primarily,”
“to a lesser extent,” and “comparable
impact” where appropriate to convey the “relative significance” of the business
reasons for a change. To the extent
possible, we have also presented the reasons in order of magnitude. We believe that providing qualitative factors
in a manner that conveys their relative size and order of magnitude provides
investors with the information necessary to understand the main drivers of our
results of operations. In response to
this comment, we have also provided more quantitative information in instances
when both quantification adds meaningfully to the discussion and we are also
able to present accurate and precise numbers.
Definitive Proxy Statement on Schedule 14A
Certain Relationships and
Transactions, page 3
4. Please confirm to us that you
have no related party transactions or agreements to disclose pursuant to Item
404 of Regulation S-K. We remind you that, in future filings, if you have
related party transactions that are required to be disclosed, please state
whether the transactions and agreements with related parties were comparable to
terms you could have obtained from unaffiliated third parties. Also, please file
all related party contracts as exhibits, if material.
Response: We confirm that Staples has no related party
transactions or agreements to disclose pursuant to Item 404 of Regulation S-K.
5. We note that your Nominating and
Corporate Governance Committee reviews and approves all related party
transactions required to be disclosed pursuant to our rules. Also, we note that
you have written Corporate Governance Guidelines that apply to all of your directors,
executive officers, and other associates. In future filings, please file this policy or provide the Internet address
of this policy
and advise readers that you have posted this at your web-site. Additionally, in
future filings, please describe in greater detail this policy and any other
policies and procedures for the review, approval, or ratification of related
party transactions. See Item 404(b) of Regulation S-K. The policy required
by Item 404(b) should be specific to transactions subject to Item 404(a) of
Regulation
S-K.
Response: In future filings, we will provide the
Internet address of the Corporate Governance Guidelines and advise readers that
it is posted on our website.
Additionally, we will describe this policy in greater detail in future
filings. Currently, we do not have any
other policies for review, approval or ratification of related party
transactions. We will review our policy
with our Board of Directors and determine if additional policies and procedures
should be implemented. If such policies
or procedures are adopted, we will describe them in greater detail.
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Securities and Exchange Commission
September 9, 2008
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Executive Compensation, page 32
Benchmarking, page 43
6. On the bottom of page 43,
you state that the compensation committee considers data from a general
industry group comprised of 70 to 79 companies with executives with comparable
positions and responsibilities and annual revenues between $15 billion and $30
billion. In future filings, please elaborate upon what you “consider” in this
data and disclose those companies or tell us why it is not appropriate for you
to do so. In this regard, we refer you to Compliance and Disclosure
Interpretation 118.05 under Regulation S-K, located at our web-site at
http://www.sec.gov/divisions/corpfin/cfguidance.html.
Response:
We no longer consider data from a general industry group comprised of 70 to 79
companies. In June 2008, the
Compensation Committee increased the size of our peer group companies from
eight companies in our core retail peer group and five companies in our
expanded retail peer group to 20 peer companies. In future filings, we will disclose all 20
companies comprising the peer group and elaborate on the type of data we
consider when we evaluate the competitiveness of our compensation relative to
those companies.
Grants of Plan-Based Awards for
2007 Fiscal Year, page 50
7. In future filings, please
disclose in a footnote to your table the fair value of the share awards when
they were granted on February 5, 2007.
Response: In future filings, we will disclose in a
footnote to the Grants of Plan-Based Awards Table the fair value of all share
awards on the date when they were granted.
Company Acknowledgment
As requested by the Commission, the Company
acknowledges that:
· the
Company is responsible for the adequacy and accuracy of the disclosure in the
filing;
· Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
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Securities and Exchange Commission
September 9, 2008
Page 6
· the Company may not
assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.
If you have any questions with regard to
these responses, need further information or would like to discuss any of the
information covered in this letter, please contact me at (508) 253-8321.
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Sincerely,
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/s/Kristin A. Campbell
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Kristin A. Campbell
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Senior Vice President, General Counsel
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and Secretary
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cc:
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Ronald L. Sargent
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John J. Mahoney
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Christine T. Komola
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Mark G. Borden, Esq.
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