Staples 2003 Annual Report Download - page 52

APPENDIX B
STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Our business is comprised of three segments: North American Retail, North American Delivery and European
Operations. Our North American Retail segment consists of the U.S. and Canadian business units that operate office
supply stores. The North American Delivery segment consists of the U.S. and Canadian business units that sell and
deliver office products and services directly to customers, and includes Staples Business Delivery (North American
catalog and internet operations), our contract stationer operations (Staples National Advantage and Staples Business
Advantage) and Quill. The European Operations segment consists of operating units that operate office supply stores in
the United Kingdom, Germany, the Netherlands and Portugal and that sell and deliver office products and services
directly to customers throughout the United Kingdom, Germany, France, Belgium, Spain and Italy. Our fiscal years
ended February 1, 2003 and February 2, 2002 contained 52 weeks, while the fiscal year ended February 3, 2001 contained
53 weeks.
We acquired two businesses during fiscal year 2002. On October 18, 2002, we gained access to the fast growing office
products mail order market in France, Belgium, Spain and Italy and strengthened our position in the United Kingdom
through our acquisition of the European mail order businesses of an office products seller. The acquisition expanded our
European Operations segment to include leading direct mail office products sellers that deliver office products and
services directly to more than 800,000 small business customers under a variety of different brand names, including JPG
and Bernard in France and Belgium, Kalamazoo in Spain, Neat Ideas in the United Kingdom and MondOffice in Italy
(‘‘European mail order acquisition’’). The acquired companies are reported as part of our European Operations segment
for segment reporting. On July 17, 2002, we acquired Medical Arts Press, Inc. (‘‘MAP’’). MAP is a leading direct
marketer of specialized printed office products and practice-related supplies to medical offices. The acquisition of MAP
provides us with an opportunity to sell traditional office products to MAP’s customer base and expand Quill’s and
Staples’ product offerings. MAP is an operating division of Quill and is included in North American Delivery for segment
reporting. The results of operations for the acquired businesses have been included in our consolidated financial
statements since the respective acquisition dates.
From November, 1999 through August, 2001, our certificate of incorporation included two series of common stock,
Staples.com common stock (‘‘Staples.com Stock’’) and Staples Retail and Delivery common stock (‘‘Staples RD Stock’’).
On August 27, 2001, our stockholders approved a proposal to amend our certificate of incorporation to effect a
recapitalization by reclassifying each share of Staples.com Stock into 0.4396 shares of Staples common stock and by
reclassifying each share of Staples RD Stock into one share of Staples common stock (the ‘‘Recapitalization’’). The
Recapitalization had no effect on our overall financial position or results of operations.
Forward Looking Statements
This Annual Report on Form 10-K and, in particular, this management discussion and analysis contain or
incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current expecta-
tions, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs
and assumptions. Any statements contained herein (including without limitation statements to the effect that Staples or
its management ‘‘believes’’, ‘‘expects’’, ‘‘anticipates’’, ‘‘plans’’ and similar expressions) that are not statements of
historical fact should be considered forward-looking statements and should be read in conjunction with our consolidated
financial statements and notes to consolidated financial statements included in this report. These statements are not
guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.
There are a number of important factors that could cause our actual results to differ materially from those indicated by
such forward-looking statements. These factors include, without limitation, those set forth below under the heading
‘‘Cautionary Statements.’’ We do not intend to update publicly any forward-looking statements whether as a result of
new information, future events or otherwise.
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