Staples 2007 Annual Report Download - page 107

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STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
We expect that our cash generated from operations, together with our current cash, short-term investments and
funds available under the Credit Agreement, will be sufficient to fund our planned store openings and other recurring
operating cash needs for at least the next twelve months.
Uses of Capital
As a result of our strong financial position, in addition to investing in our existing business and pursuing strategic
acquisitions, we also expect to continue to return capital to our shareholders through our stock repurchase program and
an annual cash dividend. Based on our credit metrics and our liquidity position, we may also return capital to our
shareholders through our share repurchase program.
We currently plan to spend approximately $500 million to $550 million on capital expenditures during fiscal 2008
related to new store openings and continued investments in information systems and distribution centers to improve
operational efficiencies and customer service. We expect to open approximately 115 new stores in North America,
Europe and Asia during fiscal 2008. We may also expend additional funds to purchase lease rights from tenants
occupying retail space that is suitable for a Staples store. We estimate that our cash requirements, including pre-opening
expenses, net inventory, leasehold improvements and fixtures, will be approximately $1.4 million for each new store.
While we have primarily grown organically, we may use capital to engage in strategic acquisitions or joint ventures in
markets where we currently have a presence and in new geographic markets that could become significant to our
business in future years. We do not expect to rely on acquisitions to achieve our targeted growth plans. We consider many
types of acquisitions for their strategic and other benefits on a case by case basis, such as our recently announced
proposal to acquire all the outstanding shares of Corporate Express NV. However, we have most recently targeted and
expect to continue to target acquisitions that are small, aligned with our existing businesses, focused on both strengthen-
ing our presence in existing markets and expanding our presence into new geographies that could become long-term
meaningful drivers of our business, and financed from our operating cash flows.
In 2005, we announced a repurchase program under which we were authorized to repurchase up to $1.5 billion of
Staples common stock through February 2, 2008. In the second quarter of 2007, we announced that our 2005 repurchase
program would be replaced with a new repurchase program under which we may repurchase up to $1.5 billion of Staples
common stock. The new repurchase program went into effect during the second quarter of 2007 and has no expiration
date. Approximately $1.2 billion of Staples common stock had been repurchased under our 2005 repurchase program
when it was terminated and replaced by the 2007 program.
We paid a cash dividend of $0.29 per share of common stock on April 19, 2007 to shareholders of record on
March 30, 2007, resulting in a total dividend payment of $207.6 million. On March 4, 2008, we announced that we would
pay a cash dividend of $0.33 per share on April 17, 2008 to shareholders of record on March 28, 2008. While it is our
intention to pay annual cash dividends in years following 2008, any decision to pay future cash dividends will be made by
our Board of Directors and will depend upon our earnings, financial condition and other factors.
Proposed Acquisition of Corporate Express
On February 19, 2008, we announced that we had made a proposal to Corporate Express NV, a Dutch office
products distributor with operations in North America, Europe, Australia and New Zealand to acquire all of the
outstanding shares of its ordinary stock for cash consideration of 7.25 Euros per ordinary share, representing a total
enterprise value of approximately 2.5 billion Euros (approximately $3.7 billion). To finance a portion of this proposed
acquisition, we entered into a bridge loan commitment letter with Lehman Brothers on customary terms and conditions.
We may only borrow amounts pursuant to this committed financing in connection with the proposed acquisition of
Corporate Express. We believe that this committed financing together with our cash and available credit under our
revolving credit facility would be sufficient to finance the acquisition. Corporate Express, in a public statement issued the
same day, rejected our proposal.
B-9