Staples 2007 Annual Report Download - page 129

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STAPLES, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
NOTE K Segment Reporting (Continued)
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, Quill and Contract.
The International Operations segment consists of operating units that operate office supply stores and that sell and
deliver office products and services directly to customers in 20 countries in Europe, Asia and South America.
Staples evaluates performance and allocates resources based on profit or loss from operations before stock-based
compensation, interest and income taxes, the impact of changes in accounting principles and non-recurring items
(‘‘business unit income’’). The accounting policies of the reportable segments are the same as those described in the
summary of significant accounting policies in Note A. Intersegment sales and transfers are recorded at Staples’ cost;
therefore, there is no intercompany profit or loss recognized on these transactions.
Staples’ North American Retail and North American Delivery segments are managed separately because the way
they market products is different, the classes of customers they service may be different, and the distribution methods
used to deliver products to customers is different. The International Operations are considered a separate reportable
segment because of the significant difference in the operating environment from the North American operations.
The following is a summary of significant accounts and balances by reportable segment for fiscal years 2007, 2006
and 2005 (in thousands):
2007 2006 2005
Sales:
North American Retail .................................... $10,020,941 $ 9,893,107 $ 9,015,851
North American Delivery ................................... 6,614,202 5,908,872 4,967,323
International Operations ................................... 2,737,539 2,358,810 2,095,678
Total segment sales ..................................... $19,372,682 $18,160,789 $16,078,852
Business Unit Income:
North American Retail .................................... $ 949,038 $ 957,386 $ 842,995
North American Delivery ................................... 712,558 623,908 507,276
International Operations ................................... 97,996 50,511 13,616
Business unit income .................................... 1,759,592 1,631,805 1,363,887
Stock-based compensation .................................. (173,343) (157,907) (129,806)
Total segment income .................................... $ 1,586,249 $ 1,473,898 $ 1,234,081
Depreciation & Amortization:
North American Retail .................................... $ 248,329 $ 210,698 $ 192,112
North American Delivery ................................... 83,996 74,027 60,103
International Operations ................................... 56,570 54,574 51,685
Consolidated .......................................... $ 388,895 $ 339,299 $ 303,900
Capital Expenditures:
North American Retail .................................... $ 274,054 $ 319,793 $ 284,173
North American Delivery ................................... 106,962 141,957 87,992
International Operations ................................... 89,361 66,725 83,938
Consolidated .......................................... $ 470,377 $ 528,475 $ 456,103
C-21