Staples 2014 Annual Report Download - page 170

APPENDIX C
C-38 STAPLES Form 10-K
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
For 2014 and 2013 approximately 29.8 million and
35.7 million, respectively, potentially dilutive equity instruments
were excluded from the calculation of diluted earnings per
share as their inclusion would have been anti-dilutive. For
2012, approximately 58.6 million potentially dilutive equity
instruments were excluded from the calculation of diluted
earnings per share as the Company recorded a net loss for
that period.
NOTE P — SEGMENT REPORTING
Staples has three reportable segments: North American
Stores & Online, North American Commercial and International
Operations. North American Stores and Online sells products
and services to customers in the United States and Canada.
North American Commercial consists of the U.S. and Canadian
businesses that sell and deliver products and services
directly to businesses and includes Staples Advantage and
Quill.com. The International Operations segment consists of
businesses that sell and deliver products and services directly
to consumers and businesses in 23 countries in Europe,
Australia, South America and Asia.
Staples’ North American Stores & Online and North American
Commercial segments are managed separately because the
way they sell and market products is different and the classes
of customers they service are different. The International
Operations are considered a separate reportable segment
because of the significant differences in the operating
environment from the North American operations.
Staples evaluates performance and allocates resources
based on profit or loss from operations before goodwill and
long-lived asset impairment charges, restructuring costs,
stock-based compensation, interest and other expense, other
non-recurring items and the impact of changes in accounting
principles (“business unit income”). Beginning in 2014,
business unit income also excludes accelerated depreciation
and amortization and inventory write-downs associated with
restructuring activities. Segment information for 2012 and
2013 has been restated to reflect this change. The accounting
policies of the reportable segments are the same as those
described in the summary of significant accounting policies
in Note A - Summary of Significant Accounting Policies.
Intersegment sales and transfers are recorded at Staples’ cost;
therefore, there is no intercompany profit or loss recognized on
these transactions.
Asset information by reportable segment has not been
presented, since this information is not regularly reviewed by
the Company’s chief operating decision maker.
The following is a summary of sales, business unit income, and depreciation and amortization expense by reportable segment
(in thousands):
2014 2013 2012
Sales:
North American Stores & Online $10,448,603 $11,103,160 $11,827,906
North American Commercial 8,270,682 8,041,613 8,108,402
International Operations 3,773,075 3,969,490 4,444,202
Total segment sales $22,492,360 $23,114,263 $24,380,510
Business Unit Income (Loss):
North American Stores & Online $473,068 $733,465 $987,025
North American Commercial 570,831 603,972 680,011
International Operations (21,181) (15,219) (1,097)
Total business unit income $1,022,718 $1,322,218 $1,665,939
Depreciation & Amortization:
North American Stores & Online $224,054 $225,506 $222,381
North American Commercial 140,196 123,625 123,890
International Operations 93,246 109,087 120,993
Total segment depreciation & amortization $457,496 $458,218 $467,264
Accelerated depreciation & amortization related to restructuring activities 9,376 — 20,049
Consolidated depreciation & amortization $466,872 $458,218 $487,313