Staples 2004 Annual Report Download - page 103

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STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
NOTE B Change in Accounting Principle (Continued)
The following summarizes the as reported results for 2004, with the as reported and pro-forma results for 2003 and
2002, assuming the retroactive application of these accounting principles as of February 2, 2002 (in thousands, except per
share data):
As Reported 52 Weeks Ended
January 29, 2005 January 31, 2004 February 1, 2003
Sales .............................................. $14,448,378 $12,967,022 $11,596,075
Cost of goods sold and occupancy costs ..................... 10,343,643 9,468,890 8,652,593
Gross profit ...................................... 4,104,735 3,498,132 2,943,482
Operating and other expenses:
Operating and selling ................................. 2,348,878 2,158,125 1,795,428
Other expenses ..................................... 640,285 561,895 485,991
Total operating and other expenses ..................... 2,989,163 2,720,020 2,281,419
Income before income taxes .............................. 1,115,572 778,112 662,063
Income tax expense .................................... 407,184 287,901 215,963
Net income ...................................... $ 708,388 $ 490,211 $ 446,100
Earnings per common share:
Basic ............................................. $ 1.43 $ 1.01 $ 0.96
Diluted ........................................... $ 1.40 $ .99 $ 0.94
Pro Forma 52 Weeks Ended
January 29, 2005 January 31, 2004 February 1, 2003
Sales .............................................. $14,448,378 $12,967,022 $11,405,873
Cost of goods sold and occupancy costs ..................... 10,343,643 9,370,915 8,342,376
Gross profit ...................................... 4,104,735 3,596,107 3,063,497
Operating and other expenses:
Operating and selling ................................. 2,348,878 2,158,125 1,915,443
Other expenses ..................................... 640,285 561,895 485,991
Total operating and other expenses ..................... 2,989,163 2,720,020 2,401,434
Income before income taxes .......................... 1,115,572 876,087 662,063
Income tax expense .................................... 407,184 324,152 215,963
Pro forma net income ............................... $ 708,388 $ 551,935 $ 446,100
Pro forma earnings per common share:
Basic ............................................. $ 1.43 $ 1.14 $ 0.96
Diluted ........................................... $ 1.40 $ 1.12 $ 0.94
NOTE C Business Acquisitions and Equity Method Investments
In accordance with SFAS No. 141 ‘‘Business Combinations,’’ Staples records acquisitions under the purchase
method of accounting. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible
assets acquired, based on their estimated fair values. The excess purchase price over the fair value is recorded as
goodwill. Under SFAS No. 142, goodwill and purchased intangibles with indefinite lives are not amortized but are
reviewed for impairment annually, or more frequently, if impairment indicators arise. Purchased intangibles with definite
lives are amortized over their respective useful lives.
C-12