Staples 2015 Annual Report Download - page 135

APPENDIX C
STAPLES C-18
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Aggregate annual maturities of long-term debt and capital lease obligations are as follows (in millions):
Fiscal Year: Total
2016 $17
2017 514
2018 7
2019 2
2020 1
Thereafter 500
$1,041
Unamortized discounts and debt issuance costs (6)
$1,035
Future minimum lease payments under capital leases of
$35 million are included in aggregate annual maturities shown
above. Staples entered into $12 million and $40 million of
new capital lease obligations in 2015 and 2014, respectively.
In 2015 we also assumed equipment financing obligations
of $4 million in conjunction with our acquisition of a small
business in Europe.
Interest paid by Staples totaled $49 million, $51 million and
$128 million for 2015, 2014 and 2013, respectively. There was
no interest capitalized in 2015, 2014 or 2013.
January 2018 Notes and January 2023 Notes: In January
2013, the Company issued $500 million aggregate principal
amount of 2.75% senior notes due January 2018 (the “January
2018 Notes”) and $500 million aggregate principal amount of
4.375% senior notes due January 2023 (the “January 2023
Notes”, or collectively “the Notes”), for total net proceeds
after the original issue discount and the underwriters’ fees of
$991 million. The Notes were issued with original discounts at
99.727% and 99.808%, respectively. The Notes rank equally
with all of the Company’s other unsecured and unsubordinated
indebtedness. The indenture governing the notes contains
covenants that will limit the Company’s ability to create certain
liens and engage in certain sale and leaseback transactions.
The indenture does not limit the amount of debt that the
Company or any of the Company’s subsidiaries may incur.
Interest on these Notes is payable in cash on a semi-annual
basis on January 12 and July 12 of each year. The interest
rate payable on the Notes will be subject to adjustments from
time to time if Moody’s Investors Service, Inc. or Standard &
Poor’s Ratings Services downgrades (or downgrades and
subsequently upgrades) the rating assigned to the Notes.
The Company may redeem the Notes at any time at certain
redemption prices specified in the indenture governing the
Notes. Upon the occurrence of both (a) a change of control of
Staples, Inc., as defined in the indenture, and (b) a downgrade
of the Notes below an investment grade rating by both
of Moody’s Investors Service, Inc. and Standard & Poor’s
Ratings Services within a specified period, the Company will
be required to make an offer to purchase the Notes at a price
equal to 101% of their principal amount, plus accrued and
unpaid interest to the date of repurchase. The Notes are not
guaranteed by any of the Company’s subsidiaries.
January 2014 Notes: The Company repaid the $867 million
remaining principal amount of its $1.5 billion, 9.75% notes due
January 2014 (the “January 2014 Notes”) on their maturity
date of January 15, 2014. In January and February 2013, the
Company repurchased $633 million of the unhedged portion
of the January 2014 Notes pursuant to a cash tender offer.
Revolving Credit Facility: On May 31, 2013, the Company
entered into a new credit agreement (the “May 2018 Revolving
Credit Facility”) with Bank of America, N.A., as Administrative
Agent and other lending institutions named therein. The
May 2018 Revolving Credit Facility provides for a maximum
borrowing of $1.0 billion, which pursuant to an accordion
feature may be increased to $1.5 billion upon our request and
the agreement of the lenders participating in the increase.
Borrowings may be syndicated loans, swing line loans,
multicurrency loans, or letters of credit, the combined sum
of which may not exceed the maximum borrowing amount.
Amounts borrowed may be repaid and reborrowed from time
to time until May 31, 2018. Borrowings will bear interest at
various interest rates depending on the type of borrowing, and
will reflect a percentage spread based on our credit rating and
fixed charge coverage ratio. The Company will pay a facility
fee at rates that range from 0.08% to 0.225% per annum
depending on its credit rating and fixed charge coverage
ratio. The May 2018 Revolving Credit Facility is unsecured
and ranks pari passu with the Company’s public notes and
other indebtedness and contains customary affirmative
and negative covenants for credit facilities of this type. The
May 2018 Revolving Credit Facility also contains financial
covenants that require the Company to maintain a minimum
fixed charge coverage ratio and a maximum adjusted funded
debt to total capitalization ratio. The Company did not borrow
under the May 2018 Revolving Credit Facility during 2015, and
no amounts were outstanding related to this facility at January
30, 2016. On February 2, 2016, the Company amended the
May 2018 Revolving Credit Facility to permit certain actions in
connection with the term loan agreement and escrow of term
loan proceeds related to the Company’s proposed acquisition
of Office Depot (see Note R — Proposed Acquisition of
Office Depot).
Commercial Paper Program: The Company has a commercial
paper program (“Commercial Paper Program”) that allows it to
issue up to $1.0 billion of unsecured commercial paper notes
(“Commercial Paper Notes”) from time to time. The May 2018
Revolving Credit Facility serves as a back-up to the Commercial
Paper Program. The Company typically uses proceeds
from the Commercial Paper Notes for general purposes,
including working capital, capital expenditures, acquisitions
and share repurchases. Maturities of the Commercial Paper