| Guarantor Subsidiaries |
Guarantor Subsidiaries Under the terms of the October 2012 Notes, the January 2014 Notes, the November 2014 Revolving Credit Facility and the Commercial Paper Program, the Guarantor Subsidiaries, as defined below, guarantee repayment of the debt. The debt is fully and unconditionally guaranteed on an unsecured, joint and several basis by Staples the Office Superstore, LLC, Staples the Office Superstore, East Inc., Staples Contract & Commercial, Inc. and Staples the Office Superstore Limited Partnership (collectively, the “Guarantor Subsidiaries”). The term of the guarantees is equivalent to the term of the related debt. Upon payment of the October 2012 notes, the Company will take the actions required under the applicable guarantee fall-away provisions to cause the Guarantor Subsidiaries to be legally released from their guarantees of debt related to the January 2014 Notes, the November 2014 Revolving Credit Facility and the Commercial Paper Program.
The following condensed consolidating financial data is presented for the holders of the October 2012 Notes and the January 2014 Notes and illustrates the composition of Staples, Inc. (the “Parent Company”), Guarantor Subsidiaries and non-guarantor subsidiaries as of July 28, 2012 and January 28, 2012 and for the thirteen and twenty-six weeks ended July 28, 2012 and July 30, 2011. The Guarantor Subsidiaries are wholly owned by Staples, Inc. The non-guarantor subsidiaries represent more than an inconsequential portion of the consolidated assets and revenues of Staples. Investments in subsidiaries are accounted for by the Parent Company on the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are, therefore, reflected in the Parent Company’s investment accounts and earnings. The principal elimination entries eliminate the Parent Company’s investment in subsidiaries and intercompany balances and transactions.
Condensed Consolidating Balance Sheet As of July 28, 2012 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Cash and cash equivalents | $ | 78,626 |
| | $ | 76,954 |
| | $ | 829,086 |
| | $ | — |
| | $ | 984,666 |
| Merchandise inventories, net | — |
| | 1,560,551 |
| | 1,069,047 |
| | — |
| | 2,629,598 |
| Other current assets | 663,907 |
| | 813,934 |
| | 1,029,839 |
| | — |
| | 2,507,680 |
| Total current assets | 742,533 |
| | 2,451,439 |
| | 2,927,972 |
| | — |
| | 6,121,944 |
| Net property, equipment and other assets | 652,538 |
| | 1,120,927 |
| | 1,236,090 |
| | — |
| | 3,009,555 |
| Goodwill | 1,636,726 |
| | 153,200 |
| | 2,071,658 |
| | — |
| | 3,861,584 |
| Investment in affiliates and intercompany, net | 5,704,179 |
| | 8,152,766 |
| | 10,676,696 |
| | (24,533,641 | ) | | — |
| Total assets | $ | 8,735,976 |
| | $ | 11,878,332 |
| | $ | 16,912,416 |
| | $ | (24,533,641 | ) | | $ | 12,993,083 |
| Total current liabilities | $ | 237,404 |
| | $ | 2,119,173 |
| | $ | 1,577,227 |
| | $ | — |
| | $ | 3,933,804 |
| Total long-term liabilities | 1,701,819 |
| | 209,225 |
| | 351,482 |
| | — |
| | 2,262,526 |
| Total stockholders' equity | 6,796,753 |
| | 9,549,934 |
| | 14,983,707 |
| | (24,533,641 | ) | | 6,796,753 |
| Total liabilities and stockholders' equity | $ | 8,735,976 |
| | $ | 11,878,332 |
| | $ | 16,912,416 |
| | $ | (24,533,641 | ) | | $ | 12,993,083 |
|
Condensed Consolidating Balance Sheet As of January 28, 2012 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Cash and cash equivalents | $ | 385,279 |
| | $ | 43,323 |
| | $ | 835,547 |
| | $ | — |
| | $ | 1,264,149 |
| Merchandise inventories, net | — |
| | 1,437,074 |
| | 994,771 |
| | — |
| | 2,431,845 |
| Other current assets | 68,608 |
| | 1,188,378 |
| | 1,337,840 |
| | — |
| | 2,594,826 |
| Total current assets | 453,887 |
| | 2,668,775 |
| | 3,168,158 |
| | — |
| | 6,290,820 |
| Net property, equipment and other assets | 671,787 |
| | 1,165,840 |
| | 1,320,045 |
| | — |
| | 3,157,672 |
| Goodwill | 1,644,728 |
| | 156,303 |
| | 2,181,099 |
| | — |
| | 3,982,130 |
| Investment in affiliates and intercompany, net | 5,951,426 |
| | 6,935,956 |
| | 10,988,680 |
| | (23,876,062 | ) | | — |
| Total assets | $ | 8,721,828 |
| | $ | 10,926,874 |
| | $ | 17,657,982 |
| | $ | (23,876,062 | ) | | $ | 13,430,622 |
| Total current liabilities | $ | (13,544 | ) | | $ | 2,314,411 |
| | $ | 1,773,411 |
| | $ | — |
| | $ | 4,074,278 |
| Total long-term liabilities | 1,713,159 |
| | 195,852 |
| | 425,120 |
| | — |
| | 2,334,131 |
| Total stockholders' equity | 7,022,213 |
| | 8,416,611 |
| | 15,459,451 |
| | (23,876,062 | ) | | 7,022,213 |
| Total liabilities and stockholders' equity | $ | 8,721,828 |
| | $ | 10,926,874 |
| | $ | 17,657,982 |
| | $ | (23,876,062 | ) | | $ | 13,430,622 |
|
Condensed Consolidating Statement of Comprehensive Income For the thirteen weeks ended July 28, 2012 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Sales | $ | — |
| | $ | 3,433,007 |
| | $ | 2,065,489 |
| | $ | — |
| | $ | 5,498,496 |
| Cost of goods sold and occupancy costs | 2,657 |
| | 2,595,598 |
| | 1,472,956 |
| | — |
| | 4,071,211 |
| Gross (loss) profit | (2,657 | ) | | 837,409 |
| | 592,533 |
| | — |
| | 1,427,285 |
| Operating and other (income) expenses | (123,086 | ) | | 721,656 |
| | 504,772 |
| | 145,581 |
| | 1,248,923 |
| Consolidated income before income taxes | 120,429 |
| | 115,753 |
| | 87,761 |
| | (145,581 | ) | | 178,362 |
| Income tax expense | — |
| | 51,202 |
| | 6,765 |
| | — |
| | 57,967 |
| Consolidated net income | 120,429 |
| | 64,551 |
| | 80,996 |
| | (145,581 | ) | | 120,395 |
| Loss attributed to the noncontrolling interests | — |
| | — |
| | (34 | ) | | — |
| | (34 | ) | Net income attributed to Staples, Inc. | $ | 120,429 |
| | $ | 64,551 |
| | $ | 81,030 |
| | $ | (145,581 | ) | | $ | 120,429 |
| | | | | | | | | | | Consolidated comprehensive income (loss) | $ | (96,414 | ) | | $ | 64,551 |
| | $ | (130,325 | ) | | $ | 65,659 |
| | $ | (96,529 | ) | Comprehensive loss attributed to noncontrolling interests | — |
| | — |
| | (115 | ) | | — |
| | (115 | ) | Comprehensive income (loss) attributed to Staples, Inc. | $ | (96,414 | ) | | $ | 64,551 |
| | $ | (130,210 | ) | | $ | 65,659 |
| | $ | (96,414 | ) |
Condensed Consolidating Statement of Comprehensive Income For the thirteen weeks ended July 30, 2011 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Sales | $ | — |
| | $ | 3,495,872 |
| | $ | 2,323,740 |
| | $ | — |
| | $ | 5,819,612 |
| Cost of goods sold and occupancy costs | 3,413 |
| | 2,635,730 |
| | 1,640,089 |
| | — |
| | 4,279,232 |
| Gross (loss) profit | (3,413 | ) | | 860,142 |
| | 683,651 |
| | — |
| | 1,540,380 |
| Operating and other (income) expenses | (179,851 | ) | | 743,139 |
| | 532,010 |
| | 207,678 |
| | 1,302,976 |
| Consolidated income before income taxes | 176,438 |
| | 117,003 |
| | 151,641 |
| | (207,678 | ) | | 237,404 |
| Income tax expense | — |
| | 53,971 |
| | 7,133 |
| | — |
| | 61,104 |
| Consolidated net income | 176,438 |
| | 63,032 |
| | 144,508 |
| | (207,678 | ) | | 176,300 |
| Loss attributed to the noncontrolling interests | — |
| | — |
| | (138 | ) | | — |
| | (138 | ) | Net income attributed to Staples, Inc. | $ | 176,438 |
| | $ | 63,032 |
| | $ | 144,646 |
| | $ | (207,678 | ) | | $ | 176,438 |
| | | | | | | | | | | Consolidated comprehensive income (loss) | $ | 59,172 |
| | $ | 63,032 |
| | $ | 26,646 |
| | $ | (89,726 | ) | | $ | 59,124 |
| Comprehensive loss attributed to noncontrolling interests | — |
| | — |
| | (48 | ) | | — |
| | (48 | ) | Comprehensive income (loss) attributed to Staples, Inc. | $ | 59,172 |
| | $ | 63,032 |
| | $ | 26,694 |
| | $ | (89,726 | ) | | $ | 59,172 |
|
Condensed Consolidating Statement of Comprehensive Income For the twenty-six weeks ended July 28, 2012 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Sales | $ | — |
| | $ | 7,222,481 |
| | $ | 4,380,840 |
| | $ | — |
| | $ | 11,603,321 |
| Cost of goods sold and occupancy costs | 5,165 |
| | 5,422,362 |
| | 3,138,794 |
| | — |
| | 8,566,321 |
| Gross (loss) profit | (5,165 | ) | | 1,800,119 |
| | 1,242,046 |
| | — |
| | 3,037,000 |
| Operating and other (income) expenses | (312,653 | ) | | 1,478,200 |
| | 1,066,452 |
| | 349,582 |
| | 2,581,581 |
| Consolidated income before income taxes | 307,488 |
| | 321,919 |
| | 175,594 |
| | (349,582 | ) | | 455,419 |
| Income tax expense | — |
| | 138,174 |
| | 9,837 |
| | — |
| | 148,011 |
| Consolidated net income | 307,488 |
| | 183,745 |
| | 165,757 |
| | (349,582 | ) | | 307,408 |
| Loss attributed to the noncontrolling interests | — |
| | — |
| | (80 | ) | | — |
| | (80 | ) | Net income attributed to Staples, Inc. | $ | 307,488 |
| | $ | 183,745 |
| | $ | 165,837 |
| | $ | (349,582 | ) | | $ | 307,488 |
| | | | | | | | | | | Consolidated comprehensive income (loss) | $ | 112,440 |
| | $ | 183,745 |
| | $ | (20,830 | ) | | $ | (162,929 | ) | | $ | 112,426 |
| Comprehensive loss attributed to noncontrolling interests | — |
| | — |
| | (14 | ) | | — |
| | (14 | ) | Comprehensive income (loss) attributed to Staples, Inc. | $ | 112,440 |
| | $ | 183,745 |
| | $ | (20,816 | ) | | $ | (162,929 | ) | | $ | 112,440 |
|
Condensed Consolidating Statement of Comprehensive Income For the twenty-six weeks ended July 30, 2011 (in thousands) | | | | | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Sales | $ | — |
| | $ | 7,254,520 |
| | $ | 4,738,030 |
| | $ | — |
| | $ | 11,992,550 |
| Cost of goods sold and occupancy costs | 5,927 |
| | 5,433,779 |
| | 3,376,071 |
| | — |
| | 8,815,777 |
| Gross (loss) profit | (5,927 | ) | | 1,820,741 |
| | 1,361,959 |
| | — |
| | 3,176,773 |
| Operating and other (income) expenses | (380,610 | ) | | 1,492,499 |
| | 1,086,661 |
| | 439,014 |
| | 2,637,564 |
| Consolidated income before income taxes | 374,683 |
| | 328,242 |
| | 275,298 |
| | (439,014 | ) | | 539,209 |
| Income tax expense | — |
| | 145,180 |
| | 20,047 |
| | — |
| | 165,227 |
| Consolidated net income | 374,683 |
| | 183,062 |
| | 255,251 |
| | (439,014 | ) | | 373,982 |
| Loss attributed to the noncontrolling interests | — |
| | — |
| | (701 | ) | | — |
| | (701 | ) | Net income attributed to Staples, Inc. | $ | 374,683 |
| | $ | 183,062 |
| | $ | 255,952 |
| | $ | (439,014 | ) | | $ | 374,683 |
| | | | | | | | | | | Consolidated comprehensive income (loss) | $ | 561,672 |
| | $ | 183,062 |
| | $ | 503,651 |
| | $ | (687,208 | ) | | $ | 561,177 |
| Comprehensive loss attributed to noncontrolling interests | — |
| | — |
| | (495 | ) | | — |
| | (495 | ) | Comprehensive income (loss) attributed to Staples, Inc. | $ | 561,672 |
| | $ | 183,062 |
| | $ | 504,146 |
| | $ | (687,208 | ) | | $ | 561,672 |
|
Condensed Consolidating Statement of Cash Flows For the twenty-six weeks ended July 28, 2012 (in thousands) | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidated | Net cash provided by operating activities | $ | 56,770 |
| | $ | 103,197 |
| | $ | 96,813 |
| | $ | 256,780 |
| Investing Activities: | |
| | |
| | |
| | |
| Acquisition of property and equipment | (17,208 | ) | | (69,648 | ) | | (39,364 | ) | | (126,220 | ) | Cash used in investing activities | (17,208 | ) | | (69,648 | ) | | (39,364 | ) | | (126,220 | ) | Financing Activities: | |
| | |
| | |
| | |
| Proceeds from issuance of commercial paper, net of repayments | 49,998 |
| | — |
| | — |
| | 49,998 |
| Proceeds from the exercise of stock options | 24,259 |
| | — |
| | — |
| | 24,259 |
| Proceeds from borrowings | 13,267 |
| | — |
| | 33,976 |
| | 47,243 |
| Payments on borrowings | (13,245 | ) | | — |
| | (61,838 | ) | | (75,083 | ) | Purchase of noncontrolling interest | — |
| | — |
| | (4,649 | ) | | (4,649 | ) | Cash dividends paid | (148,545 | ) | | — |
| | — |
| | (148,545 | ) | Excess tax benefits from stock-based compensation arrangements | 44 |
| | 82 |
| | 53 |
| | 179 |
| Purchase of treasury stock, net | (271,993 | ) | | — |
| | — |
| | (271,993 | ) | Cash used in financing activities | (346,215 | ) | | 82 |
| | (32,458 | ) | | (378,591 | ) | Effect of exchange rate changes on cash and cash equivalents | — |
| | — |
| | (31,452 | ) | | (31,452 | ) | Net (decrease) increase in cash and cash equivalents | (306,653 | ) | | 33,631 |
| | (6,461 | ) | | (279,483 | ) | Cash and cash equivalents at beginning of period | 385,279 |
| | 43,323 |
| | 835,547 |
| | 1,264,149 |
| Cash and cash equivalents at end of period | $ | 78,626 |
| | $ | 76,954 |
| | $ | 829,086 |
| | $ | 984,666 |
|
Condensed Consolidating Statement of Cash Flows For the twenty-six weeks ended July 30, 2011 (in thousands) | | | | | | | | | | | | | | | | | | Staples, Inc.
(Parent Co.) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidated | Net cash provided by (used in) operating activities | $ | 460,425 |
| | $ | 87,077 |
| | $ | (245,338 | ) | | $ | 302,164 |
| Investing Activities: | |
| | |
| | |
| | |
| Acquisition of property and equipment | (16,962 | ) | | (78,979 | ) | | (68,208 | ) | | (164,149 | ) | Cash used in investing activities | (16,962 | ) | | (78,979 | ) | | (68,208 | ) | | (164,149 | ) | Financing activities: | |
| | |
| | |
| |
|
| Proceeds from issuance of commercial paper, net of repayments | 254,926 |
| | — |
| | — |
| | 254,926 |
| Proceeds from the exercise of stock options | 31,559 |
| | — |
| | — |
| | 31,559 |
| Proceeds from borrowings | 21,544 |
| | — |
| | 96,630 |
| | 118,174 |
| Payments on borrowings | (517,641 | ) | | — |
| | (180,990 | ) | | (698,631 | ) | Cash dividends paid | (140,643 | ) | | — |
| | — |
| | (140,643 | ) | Excess tax benefits from stock-based compensation arrangements | 571 |
| | 324 |
| | 47 |
| | 942 |
| Purchase of treasury stock, net | (365,203 | ) | | — |
| | — |
| | (365,203 | ) | Cash (used in) provided by financing activities | (714,887 | ) | | 324 |
| | (84,313 | ) | | (798,876 | ) | Effect of exchange rate changes on cash and cash equivalents | — |
| | — |
| | 22,728 |
| | 22,728 |
| Net (decrease) increase in cash and cash equivalents | (271,424 | ) | | 8,422 |
| | (375,131 | ) | | (638,133 | ) | Cash and cash equivalents at beginning of period | 406,821 |
| | 38,298 |
| | 1,016,138 |
| | 1,461,257 |
| Cash and cash equivalents at end of period | $ | 135,397 |
| | $ | 46,720 |
| | $ | 641,007 |
| | $ | 823,124 |
|
|