Staples 2006 Annual Report Download - page 95

B-1
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 International
Operations. Our North American Retail segment consists of the U.S. and Canadian business units that operate office
products 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, Quill, and our Contract
operations (Staples National Advantage and Staples Business Advantage). The International Operations segment
consists of operating units that operate office products stores and that sell and deliver office products and services
directly to customers in 19 countries in Europe, South America and Asia. Our fiscal year ended February 3, 2007 (“fiscal
2006” or “2006”) contained 53 weeks (one week more than a normal fiscal year), while our fiscal years ended January 28,
2006 (“fiscal 2005” or “2005”) and January 29, 2005 (“fiscal 2004” or “2004”) contained 52 weeks. In order to enhance
comparability between fiscal 2006 and prior fiscal years, certain operational measures for fiscal 2006 are accompanied by
a presentation of such measure after removing the estimated effect of the 53rd week in fiscal 2006. All share and per
share amounts reflect, or have been restated to reflect, the three-for-two common stock split that was effected in the
form of a common stock dividend distributed on April 15, 2005.
Beginning in fiscal 2006, we adopted Financial Accounting Standards Board Statement No. 123 (revised 2004)
(“SFAS No. 123R”) on a modified retrospective basis. Our results for 2006 reflect and our results for 2005 and 2004 have
been restated to reflect the impact of adopting SFAS No. 123R.
During 2006 we paid an aggregate of $52.7 million to acquire all or a majority interest in certain delivery businesses
headquartered in the United States and Taiwan and to increase our previous investment in a delivery business in the
People’s Republic of China. Results of these entities have been consolidated in our financial statements since the dates
of acquisition.
During 2004 we acquired the United Kingdom office products company Globus Office World plc (“Office World”),
Pressel Versand International GmbH, a mail order company based in Austria and operating in nine European countries,
Malling Beck A/S, a mail order company operating in Denmark, and Officenet SA, a mail order and internet business
operating in Brazil and Argentina. We paid an aggregate of $114.7 million to acquire these businesses. The results of the
acquired businesses have been included in the consolidated financial statements since the dates of acquisition and are
reported as part of our International Operations segment for segment reporting. Additionally, in 2004, we entered the
Asian market by investing in a mail order and internet company in the People’s Republic of China.
Forward Looking Statements
This Annual Report on Form 10-K and, in particular, this management’s 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. Any statements contained in or incorporated by reference into this
report that are not statements of historical fact should be considered forward-looking statements. You can identify these
forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”,
“intends”, “estimates” and other similar expressions, whether in the negative or affirmative. These forward-looking
statements are based on current expectations, estimates, forecasts and projections about the industry and markets in
which we operate and management’s beliefs and assumptions, and should be read in conjunction with our consolidated
financial statements and notes to consolidated financial statements included in this report. We cannot guarantee that we
actually will achieve the plans, intentions or expectations disclosed in the forward-looking statements made. There are a
number of important risks and uncertainties that could cause our actual results to differ materially from those indicated
by such forward-looking statements. These factors include, without limitation, those included in this Annual Report on
Form 10-K in Item 1A—Risk Factors. We do not intend to update publicly any forward-looking statements whether as a
result of new information, future events or otherwise.