Staples 2012 Annual Report Download - page 108

B-12
STAPLES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
In June 2011, a pronouncement was issued that amended the guidance relating to the presentation of comprehensive
income and its components. The pronouncement eliminates the option to present the components of other comprehensive income
as part of the statement of equity and requires an entity to present the total of comprehensive income, the components of net income,
and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. The Company adopted this pronouncement on January 29, 2012. The adoption of this guidance
required changes in presentation only and therefore did not have a significant impact on the Company's consolidated financial
statements.
In September 2011, a pronouncement was issued that amended the guidance for goodwill impairment testing. The
pronouncement allows the entity to perform an initial qualitative assessment to determine whether it is "more likely than not" that
the fair value of the reporting unit is less than its carrying amount. This assessment is used as a basis for determining whether it
is necessary to perform the two step goodwill impairment test that is otherwise required to be performed annually. The methodology
for how goodwill is calculated, assigned to reporting units, and the application of the two step goodwill impairment test have not
been revised. The pronouncement is effective for fiscal years beginning after December 15, 2011, and only applies to the required
annual test for impairment, not to interim testing or reviews for potential impairment indicators. The Company adopted this
pronouncement on January 29, 2012. The adoption of this guidance did not have a significant impact on the Company's consolidated
financial statements.
Liquidity and Capital Resources
Cash Flows
2012 Compared to 2011
Cash provided by operations was $1.22 billion for 2012 compared to $1.58 billion for 2011. The decrease in operating
cash flow from 2011 to 2012 was primarily due to a decrease in net income adjusted for non-cash expenses in 2012, and, to a lesser
extent, from changes in working capital.
Cash used in investing activities was $342.0 million for 2012 compared to $383.7 million for 2011. The $41.7 million
decrease in cash used in investing activities from 2011 to 2012 was primarily due to lower capital spending, driven by reductions
in system-related investments and fewer new store openings.
Cash used in financing activities was $812.3 million for 2012 compared to $1.36 billion for 2011. The decrease in cash
used for financing activities in 2012 compared with 2011 was primarily attributable to the receipt in 2012 of net proceeds of $991.4
million from the issuance of the January 2018 Notes and the January 2023 Notes (each as defined below), which more than offset
an increased use of cash in 2012 to retire debt obligations. In 2012, we completed a tender offer in which we repurchased $632.8
million of the January 2014 Notes and we repaid in full the $325 million October 2012 Notes, whereas in 2011 we used $500
million to repay the April 2011 Notes. During 2012, we repurchased 34.8 million shares for $449.2 million compared to 37.3
million shares for $604.5 million in 2011. In 2012, we paid shareholders cash dividends of $0.44 per share for a total of $294.1
million, an increase from the $0.40 per share for a total of $277.9 million paid in 2011.
2011 Compared to 2010
Cash provided by operations was $1.58 billion for 2011 compared to $1.45 billion for 2010. The increase in operating
cash flow from 2010 to 2011 was primarily due to an increase in net income adjusted for non-cash expenses in 2011, and to a
lesser extent from changes in working capital including the impact of deferred taxes.
Cash used in investing activities was $383.7 million for 2011 compared to $472.0 million for 2010. The decrease in cash
used in investing activities from 2010 to 2011 was primarily due to the 2010 acquisition of Oy Lindell, a Finnish office products
distributor, combined with a small decrease in capital expenditures during 2011, driven by a reduction in spending on new stores
and store remodels activities and lower spending related to facility and system integration.
Cash used in financing activities was $1.36 billion for 2011 compared to $938.4 million for 2010. The increase in cash
used in financing activities from 2010 to 2011 is primarily related to the $500 million repayment of the April 2011 Notes and
increased purchases under our share repurchase program, offset by the prior year purchase of additional shares of Corporate Express
Australia Limited ("Corporate Express Australia"). During 2011, we repurchased 37.3 million shares for $604.5 million compared
to 18.0 million shares for $367.4 million during 2010 under our share repurchase program.
Sources of Liquidity
To cover seasonal fluctuations in cash flows and to support our various growth initiatives, we utilize cash generated from
operations and borrowings available under various credit facilities and a commercial paper program. We have a revolving credit