Staples 2002 Annual Report Download - page 22

Independent Auditor Fees
Audit Fees
Ernst & Young LLP billed us an aggregate of $1.6 million and $1.2 million in fees for fiscal years 2002 and 2001,
respectively, for professional services rendered in connection with the audit of our financial statements included in our Annual
Report on Form 10-K, quarterly reviews of the financial statements included in each of our reports on Form 10-Q, filing
of SEC registration statements, debt offerings and issuance of agreed upon procedure reports.
Audit-Related Fees
Ernst & Young LLP billed us an aggregate of $178,000 and $296,000 in fees in fiscal years 2002 and 2001, respectively,
for assurance and related services, including services related to acquisition due diligence, associate benefit plan audits and
information system services.
Tax Fees
Ernst & Young LLP billed us an aggregate of $9.1 million in each of fiscal years 2002 and 2001 for professional services
related to tax compliance, tax planning and tax advice. Tax compliance services consisted of preparation of original and
amended income tax, sales and use tax, property, and all other tax returns; claims for refunds; and tax payment planning
services. Tax advisory services consisted of a wide range of services, including assistance with tax audits and appeals, tax
advice related to mergers and acquisitions, expatriate tax services and requests for rulings or technical advice from taxing
authorities. Tax service fees paid to Ernst & Young LLP reflect our decision in 2000 to use Ernst & Young LLP for the
majority of our tax needs. In 2002, our management adopted a policy of not being committed to any particular tax service
provider and hired a Vice President of Tax to select tax service providers on a case by case basis.
All Other Fees
In fiscal years 2002 and 2001, Ernst & Young LLP did not bill us for any products or services other than as described
above. Ernst & Young LLP did not provide any internal audit services or financial information system design and
implementation services to us during fiscal years 2002 and 2001.
During fiscal years 2002 and 2001, the Audit Committee approved all non-audit services provided to us by our
independent auditor prior to management engaging the auditor for that purpose. The Committee’s current practice is to
consider for approval at its regularly scheduled quarterly meetings all audit and non-audit services proposed to be provided
by our independent auditor. In situations where a matter cannot wait until the next regularly scheduled Committee meeting,
the chairman of the Committee has been delegated authority to consider and, if appropriate, approve audit and non-audit
services or, if in the chairman’s judgment it is considered appropriate, to call a special meeting of the Committee for that
purpose. The Committee determined that Ernst & Young LLP’s provision of audit-related and tax services is compatible
with maintaining Ernst & Young LLP’s independence.
Certain Relationships and Related Transactions
We have retained the services of the law firm Piper Rudnick, of which Senator Mitchell is a partner. The Corporate
Governance Committee of the Board of Directors reviewed and approved this relationship. See “Director Compensation”
regarding Senator Mitchell’s consulting agreement with us.
We have a policy that prohibits personal loans to executive officers and Directors and requires transactions and loans,
if any, between us and our affiliates to be on terms no less favorable to us than could be obtained from unrelated third parties.
We guaranteed loans from Boston Safe Deposit and Trust Company made to certain officers in 1999. The proceeds
of these loans were used to acquire shares of Staples.com stock pursuant to stock options, which shares were reclassified
as Staples common stock effective August 27, 2001. Each officer pledged his or her shares as security for the loan. All loans
accrued interest at a floating annual rate equal to the rate quoted as “Call Money” from time to time in the “Money Rates”
Section of The Wall Street Journal. Originally, thirteen officers borrowed an aggregate of $7.8 million, with three of the
officers arranging to defer payment of interest thereon for two years. All of the officers, other than Mr. Vassalluzzo, repaid
their loans in full by the end of fiscal year 2001. During 2002, Mr. Vassalluzzo, a Vice Chairman of the Company, fully
repaid his loan, which had $582,792 as its largest aggregate outstanding balance during fiscal year 2002.
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