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APPENDIX C
STAPLES C-36
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Staples’ North American Stores & Online and North American
Commercial segments are managed separately because the
way they sell and market products is different and the classes
of customers they service are different. International Operations
is considered a separate reportable segment because of the
significant differences in the operating environment from the
North American operations.
Staples evaluates performance and allocates resources
based on profit or loss from operations before goodwill and
long-lived asset impairment charges, restructuring charges,
accelerated depreciation and amortization and inventory
write-downs associated with exit or disposal activities,
merger-related costs, stock-based compensation, interest
and other expense, costs related to the previously announced
PNI data security incident and non-recurring items (“business
unit income”). Intersegment sales and transfers are recorded
at Staples’ cost; therefore, there is no intercompany profit or
loss recognized on these transactions.
Asset information by reportable segment has not been
presented, since this information is not regularly reviewed by
the Company’s chief operating decision maker.
The following is a summary of sales, business unit income, and
depreciation and amortization expense by reportable segment
(in millions):
2015 2014 2013
Sales:
North American Stores & Online $9,538 $10,449 $11,103
North American Commercial 8,361 8,270 8,042
International Operations 3,160 3,773 3,969
Total segment sales $21,059 $22,492 $23,114
Business Unit Income (Loss):
North American Stores & Online $429 $473 $733
North American Commercial 599 571 604
International Operations (41) (21) (15)
Total business unit income $987 $1,023 $1,322
Depreciation & Amortization:
North American Stores & Online $222 $225 $225
North American Commercial 147 140 124
International Operations 81 93 109
Total segment depreciation & amortization $450 $458 $458
Accelerated depreciation related to restructuring activities 5 9 —
Consolidated depreciation & amortization $455 $467 $458
The following is a reconciliation of total business unit income to consolidated income before income taxes (in millions):
2015 2014 2013
Total business unit income $987 $1,023 $1,322
Stock-based compensation (63) (64) (81)
Impairment of goodwill and long-lived assets (50) (470) —
(Loss) gain on sale of businesses and assets, net (5) 27 —
Restructuring charges (151) (171) (64)
Inventory write-downs related to restructuring activities (1) (26) —
Accelerated depreciation related to restructuring activities (5) (9) —
Interest and other expense, net (149) (42) (114)
Merger-related costs (53) — —
PNI data security incident costs (18) — —
Income from continuing operations before income taxes $492 $268 $1,063