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STAPLES, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
C-12
NOTE B Change in Accounting Principle (Continued)
In November 2003, the EITF reached consensus on Issue No. 03-10 “Application of Issue No. 02-16 by Resellers to
Sales Incentives Offered to Consumers by Manufacturers” (“Issue 03-10”), which addresses the accounting for
consideration received by a reseller from a vendor that is a reimbursement by the vendor for honoring the vendor’s sales
incentives offered directly to consumers (e.g., coupons). Beginning with the first quarter of fiscal 2004, vendor
consideration received in the form of sales incentives is now recorded as a reduction of cost of goods sold when
recognized, rather than as a component of sales. In addition, the Company has reclassified certain other coupons
previously classified as operating and selling expenses to a reduction of sales. In accordance with Issue No. 03-10, the
Company’s fiscal 2003 results have been reclassified, however no change has been made to the fiscal 2002 results
reported. These reclassifications had no impact on net income.
The following summarizes the as reported results for 2005 and 2004, with the as reported and pro-forma results for
2003, assuming the retroactive application of these accounting principles as of February 1, 2003 (in thousands, except per
share data):
As Reported 52 Weeks Ended
January 28, 2006 January 29, 2005 January 31, 2004
Sales......................................................... $ 16,078,852 $ 14,448,378 $ 12,967,022
Cost of goodssold and occupancy costs .......................... 11,493,310 10,343,643 9,468,890
Gross profit .............................................. 4,585,542 4,104,735 3,498,132
Operating and other expenses:
Operating and selling ........................................ 2,617,958 2,359,551 2,167,764
Other expenses ............................................. 653,085 629,612 552,256
Total operating andotherexpenses.......................... 3,271,043 2,989,163 2,720,020
Incomebefore income taxes andminority interest............. 1,314,499 1,115,572 778,112
Income tax expense............................................ 479,792 407,184 287,901
Incomebefore minority interest............................. 834,707 708,388 490,211
Minority interest .............................................. 298 — —
Netincome............................................... $ 834,409 $ 708,388 $ 490,211
Earnings per common share:
Basic ...................................................... $ 1.14 $ 0.95 $ 0.68
Diluted .................................................... $ 1.12 $ 0.93 $ 0.66
Pro Forma 52 Weeks Ended
January 28, 2006 January 29, 2005 January 31, 2004
Sales......................................................... $ 16,078,852 $ 14,448,378 $ 12,967,022
Cost of goodssold and occupancy costs .......................... 11,493,310 10,343,643 9,370,915
Gross profit .............................................. 4,585,542 4,104,735 3,596,107
Operating and other expenses:
Operating and selling ........................................ 2,617,958 2,359,551 2,167,764
Other expenses ............................................. 653,085 629,612 552,256
Total operating andotherexpenses.......................... 3,271,043 2,989,163 2,720,020
Incomebefore income taxes andminority interest............. 1,314,499 1,115,572 876,087
Income tax expense............................................ 479,792 407,184 324,152
Pro forma income before minority interest ................... 834,707 708,388 551,935
Minority interest .............................................. 298 — —
Pro formanet income...................................... $ 834,409 $ 708,388 $ 551,935
Pro forma earnings per common share:
Basic ...................................................... $ 1.14 $ 0.95 $ 0.76
Diluted .................................................... $ 1.12 $ 0.93 $ 0.75