Staples 2015 Annual Report Download - page 115

STAPLES B-12
APPENDIX B
STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
(5) See Note F in the Notes to the Consolidated Financial Statements for information related to our $500 million 2.75% senior
notes due January 2018 (“January 2018 Notes”) and $500 million 4.375% senior notes due January 2023 (“January 2023
Notes”). The amounts shown in the table above represent the par value of the debt obligations. The funds provided by these
issuances were used for general corporate purposes.
(6) As of January 30, 2016, Staples had open standby letters of credit totaling $99 million.
(7) Represents fees incurred during 2015 related to commitments for term loan financing for our proposed acquisition of Office
Depot. See Note R - Proposed Acquisition of Office Depot in the Notes to the Consolidated Financial Statements for additional
information.
There were no instances of default during 2015 under any of our debt agreements.
Off-Balance Sheet Financing Arrangements
We do not have any off-balance sheet financing arrangements as of January 30, 2016, nor did we utilize any during 2015.
Sources of Liquidity
To cover seasonal fluctuations in cash flows and to support
our various initiatives, we use cash generated from operations
and borrowings available under various credit facilities and a
commercial paper program. As of January 30, 2016, we had
$1.9 billion in total cash and funds available through credit
agreements, which consisted of $1.1 billion of available credit
and $825 million of cash and cash equivalents.
Of the $825 million in cash and cash equivalents,
approximately $339 million is held at entities located in
jurisdictions outside the United States and for which there
could be tax consequences if such amounts were moved out
of these jurisdictions or repatriated to the United States. We
currently intend to use most of the cash and cash equivalents
held outside of the United States to finance the obligations
and current operations of our foreign businesses. The
determination of the amount of the unrecognized deferred
tax liability related to the undistributed earnings is not
practicable because of the complexities associated with its
hypothetical calculation.
Our $1.1 billion of available credit includes $1.0 billion of
maximum borrowing capacity available under our revolving
credit facility with Bank of America and other lending institutions.
We also have a commercial paper program that allows us to
issue up to $1.0 billion of unsecured commercial paper notes
from time to time, and for which our $1.0 billion revolving
credit facility serves as a back-up. We did not borrow under
our credit facility or commercial paper program during 2015.
See Note F - Debt and Credit Agreements in the Notes to the
Consolidated Financial Statements for additional information
related to our credit facility and commercial paper program.
We also have various other lines of credit under which we may
currently borrow a maximum of $88 million. At January 30,
2016, we had outstanding borrowings and letters of credit
of $2 million, leaving $86 million of available credit at that
date. During 2015 and 2014 we entered into new capital
lease obligations of $12 million and $40 million, respectively.
In 2015 we also assumed equipment financing obligations
of $4 million in conjunction with our acquisition of a small
business in Europe.
In connection with our proposed acquisition of Office Depot,
during 2015 we obtained commitments for a 5-year $3 billion
asset-based revolving credit facility and a 6-year $2.75 billion
term loan. On February 2, 2016, we entered into an agreement
under which the commitments for the asset-based revolving
credit facility were extended until May 10, 2016 (which may be
further extended until September 10, 2016 if the FTC agrees,
or a court of competent jurisdiction determines, that the
merger is permitted to proceed). The asset-based revolving
credit facility will replace the Company’s existing $1.0 billion
revolving credit facility if the acquisition is completed, and the
existing credit facility will remain in place if the transaction is
not completed. Also on February 2, 2016, we entered into
a definitive term loan agreement with certain lenders under
which we borrowed $2.5 billion, the proceeds for which were
placed into an escrow account. If we successfully complete
the acquisition of Office Depot, the proceeds will be released
to Staples and used to help fund the acquisition. Otherwise,
the proceeds would be repaid to the lenders together with
accrued interest and fees. See Note R - Proposed Acquisition
of Office Depot in the Notes to the Consolidated Financial
Statements for additional information related to these sources
of financing.
Taking into consideration the amount of cash expected to be
required for our planned acquisition of Office Depot as well
as the acquisition financing discussed above, we expect that
our cash generated from operations, together with our current
cash, funds available under our existing credit agreements
and other alternative sources of financing, will be sufficient to
fund our planned capital expenditures, obligations associated
with our restructuring and transformation initiatives, and other
operating cash needs for at least the next twelve months.