Staples 2014 Annual Report Download - page 129

APPENDIX B
STAPLES B-11
STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
We record deferred income tax assets for timing differences
related to tax payments. We record a valuation allowance to
reduce our deferred income tax assets to the amount that
is more likely than not to be realized. We have considered
estimated future taxable income and ongoing tax planning
strategies in assessing the amount needed for the valuation
allowance. If actual results differ unfavorably from those
estimates used, we may not be able to realize all or part of our
net deferred tax assets and additional valuation allowances
may be required.
DEFINITION OF COMPARABLE SALES
Beginning in 2014, we refer to comparable sales in our analysis
of the results of operations of our North American Stores &
Online segment. Comparable sales reflect comparable store
sales (as defined below) for our North American retail stores,
plus growth in Staples.com excluding the impact of foreign
currency translation.
DEFINITION OF COMPARABLE STORE SALES
Comparable store sales represents a comparison of sales for
a particular store in the current period with sales for that same
store in the corresponding period in the prior year. Stores
become comparable as of the beginning of the 13th full fiscal
month in which they are open. For stores that we close, the
stores remain comparable through their last full fiscal monthly
period of sales. For relocations, if the new store location opens
within four days of the closure of the old location, and within
a five mile radius of the old location, then the sales for the
new location are compared with the sales for the old location;
otherwise, the old location is treated as a closure and the new
location is treated as an opening of a new store. For foreign
locations, comparable stores sales exclude the impact of
foreign currency translation. Comparable store sales figures
exclude online sales. Transactions at in-store kiosks are
included in comparable store sales if payment is made through
the Company’s point-of-sale systems.
RECENTLY ADOPTED ACCOUNTING
PRONOUNCEMENTS
See Note A in the Notes to the Consolidated Financial Statements for a summary of recently adopted accounting pronouncements.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
2014 Compared to 2013
Cash provided by operations was $1.04 billion for 2014
compared to $1.11 billion for 2013. The $65.3 million decrease
in operating cash flow from 2013 to 2014 was primarily due
to a decline in net income adjusted for non-cash expenses
compared with 2013.
Cash used in investing activities was $375.3 million for 2014
compared to $479.5 million for 2013, a decline of $104.3
million. The decline was primarily driven by the fact that in 2014
we sold three small business units for $58.6 million in net cash,
whereas in 2013 our disposal of PSD and the termination of
our joint venture in India yielded a combined $47.0 million net
cash outflow.
Cash used in financing activities was $492.7 million for 2014
compared to $1.44 billion for 2013, a decline of $949.4 million.
The decline was primarily attributable to the repayment of
the $866.9 million remaining principal balance of our 9.75%
notes upon their maturity in January 2014 (the “January
2014 Notes”), and a $132.5 million reduction in cash used to
repurchase shares compared with fiscal 2013.
2013 Compared to 2012
Cash provided by operations was $1.11 billion for 2013
compared to $1.22 billion for 2012. The decrease in operating
cash flow from 2012 to 2013 was primarily due to a decline in
net income adjusted for non-cash expenses compared to 2012.
Cash used in investing activities was $479.5 million for
2013 compared to $342.0 million for 2012, an increase
of $137.5 million. The increase was primarily driven by
$74.6 million of net cash used for two business acquisitions,
$34.3 million of cash spent in conjunction with the termination