Notes to Condensed Consolidated Financial Statements (Unaudited)
Note A
—
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements include the accounts of Staples, Inc. and its subsidiaries (“Staples” or “the Company”). All intercompany accounts and transactions have been eliminated in consolidation. These financial statements are for the period covering the
13
and
26
weeks ended
July 29, 2017
(also referred to as the “
second quarter of
2017
" and "
first half of
2017
") and the period covering the
13
and
26
weeks ended
July 30, 2016
(also referred to as the “
second quarter of
2016
” and "
first half of
2016
").
These financial statements have been prepared based upon Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. In the opinion of management, these financial statements reflect all normal recurring adjustments considered necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. For a more complete discussion of significant accounting policies and certain other information, these financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
("Annual Report").
Beginning in the first quarter of 2017, the Company has presented its operations in Australia, New Zealand, Asia, and South America as discontinued operations in the Company’s condensed consolidated financial statements. Beginning in the fourth quarter of 2016, the Company presented its European operations as discontinued operations. See
Note F
-
Discontinued Operations
for further information.
The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. Our business is somewhat seasonal, with sales and profitability historically higher during the second half of our fiscal year due to the back-to-school, holiday and January back-to-business seasons.
Note B
—
Recent Accounting Pronouncements
In the first quarter of 2017, the Company adopted a pronouncement that aims to simplify several aspects of accounting and reporting for share-based payment transactions. One provision within this pronouncement requires that excess income tax benefits and tax deficiencies related to share-based payments be recognized within income tax expense in the statement of income, rather than within additional paid-in capital on the balance sheet. This adoption of this provision is to be applied prospectively. The impact to the Company's results of operations related to this provision in the second quarter and first half of 2017 was an increase in the provision for income taxes of
$5 million
and
$8 million
, respectively. The impact of this provision on the Company's future results of operations will depend in part on the market prices for the Company's shares on the dates there are taxable events related to share awards, and therefore the impact is difficult to predict. In connection with another provision within this pronouncement, the Company has elected to account for forfeitures as they occur rather than estimate expected forfeitures, with the change being applied on a modified retrospective basis that resulted in a cumulative effect reduction to retained earnings of approximately
$2 million
as of January 28, 2017. The Company does not expect that the other provisions within the pronouncement will have a material impact on its financial statements.
In the first quarter of 2017, the Company adopted a pronouncement that aims to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This pronouncement stipulates that an entity should perform a goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the loss recognized not exceeding the total amount of goodwill allocated to that reporting unit. The amendments in this pronouncement are to be applied on a prospective basis. The Company does not expect this pronouncement will have a material impact on its financial statements.
In May 2014, a pronouncement was issued that creates common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards. The new guidance supersedes most preexisting revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with an option to adopt the standard one year earlier. Staples intends to adopt the new guidance in the first quarter of fiscal 2018. The new standard is to be applied either retrospectively to each period presented or using a modified retrospective approach that incorporates a cumulative-effect adjustment as of the date of adoption. The Company plans to adopt the pronouncement using the modified retrospective approach, which will be applied to all contracts except those which have been
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
completed at the time of adoption. The Company’s current analysis indicates that the most significant effects of the new standard include:
|
|
•
|
For certain arrangements the Company may change from being considered the principal party in the transaction to being considered an agent, in which case it would recognize revenue on a net rather than gross basis.
|
|
|
•
|
For certain arrangements the timing of revenue recognition may change, including arrangements for which the Company may shift from point in time to overtime revenue recognition. Examples of arrangements where such changes may occur include the sale of promotional products and furniture installation projects.
|
|
|
•
|
The Company currently accounts for its Rewards loyalty program by accruing a liability equal to the incremental cost of fulfilling its obligations to program participants. Under the new standard, the Company will defer revenue at the time Rewards are earned using a relative fair value approach.
|
The Company continues to assess the impact of adopting this new pronouncement, including quantifying the impact of the changes identified to date. Additional areas of change may be identified prior to the date of adoption.
In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements. Based on its preliminary assessment, upon adoption the Company expects to recognize significant right-to-use assets and corresponding lease liabilities on its balance sheet related to leased facilities.
Note C
-
Acquisition by Funds Managed by Sycamore Partners
On June 28, 2017, Staples entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Arch Parent Inc., a Delaware corporation (the “Parent”), and Arch Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Parent (the “Merger Sub”). The Parent and the Merger Sub are beneficially owned by funds managed by Sycamore Partners Management, L.P. (collectively, the “Sponsor”). The Merger Agreement provides, subject to its terms and conditions, for the acquisition of Staples by the Parent at a price of
$10.25
per share of the Company’s common stock, in cash, through the merger of the Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of the Parent.
Completion of the Merger is subject to the Company obtaining stockholder approval and other customary closing conditions. The Company will hold a stockholders meeting on September 6, 2017 to submit the Merger Agreement to its stockholders for their consideration. On July 26, 2017, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) with respect to the pending Merger. The termination of the waiting period satisfies one of the conditions to the closing, which remains subject to other customary closing conditions.
The Merger Agreement provides that equity awards which do not automatically vest on or before the closing date will automatically be canceled and converted into the contingent right to receive an amount in cash equal to
$10.25
per underlying share (determined assuming target performance in the case of performance share awards) on the earlier of (i) the date on which the original vesting conditions applicable to the award (taking into account any accelerated vesting provisions to which the award is subject) are satisfied or (ii) 180 days following the closing date, subject, in each case, to the grantee’s continuous service to the Company as an employee or consultant through the applicable vesting date; provided that, with respect to performance share awards held by current employees (determined as of immediately prior to the effective time), payment will be made no later than March 15 of the calendar year following the calendar year in which the closing occurs. In addition, with respect to performance share awards held by former employees, payments will be made promptly following the closing date (with the number of shares underlying the award pro-rated in accordance with the applicable award agreement), and with respect to restricted stock units that were granted in July 2017, payments will be made on the earlier of (i) the date on which the original vesting conditions applicable to the award (taking into account any accelerated vesting provisions to which the award is subject) are satisfied and (ii) the date that is the last day of the tenth month following the closing date. Because the current exercise price per share of each outstanding
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
Company stock option is equal to or greater than the
$10.25
per share Merger consideration, all Company stock options will be canceled, without payment of any consideration therefor, and will have no further force or effect. The Company currently estimates a total of
$113 million
of consideration will be paid for approximately
11 million
shares underlying equity awards. See
Note K
-
Equity Based Employee Benefit Plans
for more information.
The Merger Agreement includes customary termination provisions. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, the Company will be required to pay the Parent a termination fee of
$171 million
(including under specified circumstances in connection with the Company’s entry into an agreement with respect to a superior proposal) or reimburse certain Parent expenses up to
$15 million
. The Merger Agreement also provides that the Parent will be required to pay the Company a termination fee of
$343 million
or reimburse certain Company expenses under certain specified circumstances set forth in the Merger Agreement. The Sponsor and certain co-investors have provided Staples with a limited guarantee in favor of the Company guaranteeing Parent’s obligations to pay the reverse termination fee and certain other reimbursement obligations of the Parent and the Merger Sub pursuant to the Merger Agreement.
In connection with the pending transaction, the Company has agreed to suspend the payment of its regular quarterly dividend. Also in connection with the pending transaction, the Company has suspended its employee stock purchase plan effective July 1, 2017, and plans to terminate the plan immediately prior to the effective time of the Merger.
In the second quarter of 2017, in connection with the Merger the Company incurred expenses of approximately
$10 million
related to professional fees.
Transaction financing
The Parent expects to fund the purchase price through a combination of equity and debt financing. The Parent has obtained commitments for
$6 billion
of debt financing consisting of a combination of a senior secured first lien term loan facility, asset-based revolving credit facilities, and a senior unsecured bridge facility. The proceeds of the debt financing are expected to be used to finance, in part, the Merger, repay existing indebtedness, pay related fees and expenses, and for ongoing working capital requirements, capital expenditures and other general corporate purposes. The debt financing is conditioned upon consummation of the Merger, as well as other customary conditions. The asset-based revolving credit facilities would replace the Company's existing
$1.0 billion
revolving credit facility. The Company's existing revolving credit facility will remain in place if the transaction is not completed.
Existing debt
The Company has previously issued
2.75%
senior notes in an aggregate principal amount outstanding of
$500 million
due January 2018 (the "January 2018 Notes"), and
4.375%
senior notes in an aggregate principal amount outstanding of
$500 million
due January 2023 (the "January 2023 Notes"). In connection with the Merger, and at the request of the Parent, the Company a) intends to redeem the January 2018 Notes upon the consummation of the Merger, and b) has commenced a tender offer and consent solicitation for the January 2023 Notes, the completion of which is contingent upon customary conditions, including the closing of the Merger. On August 18, 2017, the Company received the requisite consents to amend the change of control provisions in its January 2023 Notes such that the transaction will not be deemed a change of control. The planned redemptions and repurchases would be funded by a combination of cash on-hand and proceeds from the new financings noted above.
Note D
—
Strategic Initiatives, Restructuring and Related Charges
Restructuring Initiatives Related to Staples 20/20 Strategic Plan
In May 2016 the Company announced a strategic plan ("20/20 Plan") under which it plans to:
•
accelerate mid-market growth
|
|
•
|
increase its focus on growth categories, referred to by the Company as "Pro Categories", which include janitorial and sanitation supplies, breakroom products, business machines, computers and accessories, print and promotional materials, shipping and packing supplies, and other products beyond core office supplies
|
|
|
•
|
preserve profitability and rationalize excess capacity in its North American Retail stores
|
|
|
•
|
drive profit improvement and cost reduction across the company
|
|
|
•
|
narrow its geographic focus to North America
|
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
In connection with the 20/20 Plan, the Company also announced a new multi-year cost savings plan which is expected to generate approximately
$300 million
of annualized pre-tax cost savings by the end of 2018, primarily by reducing end-to-end product costs, continuing to evolve promotional strategies, increasing the mix of Staples Brand products, driving savings in supply chain, eliminating fixed costs in retail stores, and generating additional efficiency savings across the entire organization.
In connection with its plan to preserve profitability in its North American retail stores, the Company expects to close approximately 70 North American retail stores in 2017. Pursuant to this plan the Company has closed 33 stores through the second quarter of 2017. The Company does not expect to incur material charges in 2017 related to these closures. The Company expects to incur charges in 2017 and beyond related to other initiatives under the 20/20 Plan. The nature and timing of such charges will depend upon the actions that are taken, and cannot be reasonably estimated at this time.
In the second quarter of 2017, the Company recorded restructuring charges of
$3 million
for severance benefits associated with efforts to reorganize the business to support the new business strategy. These charges primarily relate to the North American Delivery segment.
In connection with the 20/20 Plan, in the first half of 2017 the Company recorded restructuring charges of
$2 million
primarily related to the closure of retail stores in the U.S. and exiting certain contractual vendor arrangements. These charges primarily relate to the North American Retail segment.
The table below shows a reconciliation of the beginning and ending liability balances related to continuing operations for each major type of cost associated with the 20/20 Plan (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20/20 Plan
|
|
|
Employee-Related
|
|
Contractual Obligations
|
|
Other
|
|
Total
|
Accrued restructuring balance as of January 28, 2017
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
Charges
|
|
3
|
|
|
1
|
|
|
1
|
|
|
5
|
|
Cash payments
|
|
(12
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(14
|
)
|
Accrued restructuring balance as of July 29, 2017
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
Of the
$11 million
restructuring liability accrued,
$10 million
is included within Accrued expenses and other current liabilities and the remaining balance is included within Other long-term obligations on the condensed consolidated balance sheet at
July 29, 2017
. The Company expects that payments related to these liabilities will be substantially completed by the end of 2018.
In the second quarter of 2016, the Company incurred charges of
$5 million
for severance and related benefits related to the termination of the Company's previous chief executive officer, and charges of
$6 million
related to exiting certain product categories in its North American retail stores, of which
$4 million
is included in Cost of goods sold and occupancy costs and
$2 million
is included in Impairment of long-lived assets.
2014 Restructuring Plan
In 2014 the Company announced a plan to close at least
225
retail stores in North America. Pursuant to this plan, the Company closed
290
stores from 2014 to 2016.
In addition, in 2014 the Company initiated a cost savings plan to generate annualized pre-tax savings of approximately
$500 million
by the end of fiscal 2015. The Company reinvested some of the savings in its strategic initiatives.
The actions taken related to the
$500 million
cost savings plan, together with the actions taken related to the store closure Plan, are referred to as the "2014 Plan". This plan is substantially complete.
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
During the second quarter and first half of
2017
, the Company recorded restructuring charges of approximately
$1 million
and
$4 million
, respectively, primarily related to ongoing expenses associated with closed retail stores. These charges relate to the North American Retail segment. Also during the second quarter of 2017, the Company recorded an adjustment to reduce the liability for contractual obligations by
$3 million
as a result of the execution of lease terminations and changes in sublease estimates.
The table below shows a reconciliation of the beginning and ending liability balances for each major type of cost associated with the 2014 Restructuring Plan (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 Plan
|
|
|
Employee-Related
|
|
Contractual Obligations
|
|
Other
|
|
Total
|
Accrued restructuring balance as of January 28, 2017
|
|
$
|
6
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
54
|
|
Charges
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Adjustments
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
Cash payments
|
|
(2
|
)
|
|
(14
|
)
|
|
(2
|
)
|
|
(18
|
)
|
Accrued restructuring balance as of July 29, 2017
|
|
$
|
4
|
|
|
$
|
31
|
|
|
$
|
2
|
|
|
$
|
37
|
|
In addition to the contractual obligations shown in the table above, the Company also has a related liability of
$15 million
and
$12 million
recorded on the condensed consolidated balance sheet as of
July 29, 2017
and
January 28, 2017
, which primarily represents amounts previously accrued to reflect rent expense on a straight-line basis for leased properties which the Company has now ceased using.
For the restructuring liabilities associated with the 2014 Restructuring Plan,
$18 million
of contractual obligations are included within Other long-term obligations and the remaining balances are included within Accrued expenses and other current liabilities in the Company's condensed consolidated balance sheet as of
July 29, 2017
. The Company expects that payments related to employee related liabilities associated with the 2014 Plan will be substantially completed by the end of fiscal year 2017. The Company anticipates that payments related to facility lease obligations will be completed by the end of fiscal year 2026.
During the second quarter and first half of
2016
, the Company recorded restructuring charges of
$4 million
and
$14 million
, respectively, related to the 2014 Restructuring Plan, primarily related to lease obligations for closed retail stores. These charges relate to the Company's North American Retail segment. During the first half of 2016, the Company also recorded adjustments to reduce the employee-related liabilities by
$5 million
due to changes in estimates, and to reduce liabilities for contractual obligations by
$4 million
primarily as a result of lease termination agreements executed during the period.
Note E
—
Impairment of Long-Lived Assets
In the second quarter and first half of 2017, the Company recorded long-lived asset impairment charges of
$1 million
and
$3 million
, respectively. These charges primarily relate to the closure of retail stores in the U.S.
In the second quarter of 2016 the Company recorded long-lived asset impairment charges of
$3 million
related to closing store locations. Also in the second quarter of 2016, the Company recorded long-lived asset impairment charges of
$12 million
related to fixed assets at North American retail stores that were not yet identified for closure. The Company determined the carrying values of these assets were not recoverable from future cash flows, primarily as a result of declining sales.
The impairment charges were based on measurements of the fair value of the impaired assets derived using the income and market approaches. The measurements determined using the income approach incorporated Level 3 inputs as defined in ASC Topic 820, “Fair Value Measurements and Disclosures”. The Company considered the expected net cash flows to be generated by the use of the assets, as well as the expected cash proceeds from the disposition of the assets, if any.
Note F
-
Discontinued Operations
In 2016 the Company announced its Staples 20/20 strategic plan, under which the Company plans to focus on growth opportunities in North America. In connection with this plan, in the fourth quarter of 2016 the Company disposed of its retail business in the United Kingdom and entered into an agreement to sell a controlling interest in its remaining European operations. The Company closed on the sale of this controlling interest on February 27, 2017. Beginning in the fourth quarter of 2016, the
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
Company presented its combined European operations as discontinued operations in the Company’s consolidated financial statements.
In the first quarter of 2017, in connection with the Staples 20/20 plan the Company completed the sale of its operations in Australia and New Zealand, and pursued the sale of the Company’s operations in Asia and South America. The Company expects to complete a sale of its Asian and South American operations within the next twelve months. The operations in Asia and South America are classified as held for sale at July 29, 2017.
Beginning in the first quarter of 2017, the Company has presented its operations in Australia, New Zealand, Asia, and South America as discontinued operations. These operations, together with the European operations, comprised the Company’s former International Operations segment.
Sale of controlling interest in European Operations
On February 27, 2017 Staples completed the sale of a controlling interest in its European operations to an affiliate of Cerberus Capital Management, L.P. (“Cerberus”). Per the terms of the share purchase agreement, Cerberus acquired
85%
of the common shares and
100%
of the preferred shares in the Company's subsidiary holding the European operations for total consideration of €
50 million
($
53 million
). Staples has retained
15%
of the common shares, which the Company accounts for using the cost method of accounting. The Company determined that the fair value of its retained interest is not material. The Company used a market Back-Solve approach utilizing an option pricing model to assess the fair value of its retained investment.
In accordance with the terms of the share purchase agreement ("SPA"), upon completion of the transaction Staples delivered the European operations with €
166 million
(
$176 million
) related to a preliminary estimate of the requisite unrestricted cash, which is equal to (i) €
20 million
, plus (ii) €
146 million
relating to indebtedness, underfunded pension liabilities, working capital, and certain other adjustments, plus an additional €
6 million
(
$7 million
) related to other obligations outlined in the SPA. The preliminary estimate of the unrestricted cash amount is subject to adjustment based on finalization of the completion accounts. The parties to the transaction are currently disputing the final amount of unrestricted cash. The final unrestricted cash amount, once determined, may vary significantly from the preliminary estimate.
Per the terms of the SPA, the Company has indemnified the Buyer for any losses incurred related to income taxes relating to periods prior to closing, and for any losses incurred related to certain legal matters. At the time of closing, the Company recorded a liability of approximately
$26 million
related to the fair value of the indemnification obligations.
Following the closing, Staples is providing certain customary transitional services during a period of up to 36 months, and is partnering with the disposed operations on managing certain global customer accounts. Commercial transactions between the parties following the closing of the transaction are not expected to be significant.
In the first quarter of 2017, the Company recorded a loss of
$907 million
related to the sale of this controlling interest. The loss includes
$242 million
related to the release of cumulative foreign currency translation losses and
$290 million
related to the write-off of deferred pension costs, both of which were recorded as components of accumulated other comprehensive loss.
Sale of operations in Australia and New Zealand
On March 10, 2017, Staples entered into a share purchase agreement pursuant to which Platinum Equity (“Platinum”) agreed to purchase 100% of the outstanding shares related to the Company’s operations in Australia and New Zealand. The transaction was completed on April 28, 2017 (Eastern Daylight Time). The purchase consideration provides the divested business with the right to use the Corporate Express trade name in Australia and New Zealand. Following a transition period, the divested operations will cease using the Staples trade name.
The purchase price was
200 million
Australian dollars, subject to adjustment based on finalization of net working capital and net cash (“the Completion Accounts”). At the time of closing, the Company received cash proceeds of
205 million
Australian dollars (
$156 million
), and recorded a receivable of
16 million
Australian dollars (
$12 million
) representing the preliminary estimated amount of additional proceeds the Company expects to receive upon finalization of the Completion Accounts. Based on these preliminary proceeds, the Company recorded a loss on sale of
$1 million
in the first quarter of 2017. The loss reflects, in part, the release of
$40 million
of cumulative foreign currency translation losses that were recorded in accumulated other comprehensive loss. Per the terms of the SPA, Staples had 90 days from the date of closing to finalize the Completion Accounts, and Platinum has up to 150 days following closing to provide notice of any dispute related to preparation of the Completion Accounts.
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
Following the closing, Staples is providing certain customary transitional services during a period of up to 18 months, and is partnering with the disposed operations on managing certain global customer accounts. Commercial transactions between the parties following the closing of the transaction are not expected to be significant.
Financial statement information
The table below provides a reconciliation of the carrying amounts of the major classes of assets and liabilities of the discontinued operations to the amounts presented separately in the consolidated balance sheets at
July 29, 2017
and January 28, 2017. The balances at
July 29, 2017
include only Asia and South America, as the Company’s operations in Europe, Australia and New Zealand had been disposed of prior to that date.
|
|
|
|
|
|
|
|
|
|
|
July 29, 2017
|
|
January 28, 2017
|
|
Receivables, net
|
$
|
109
|
|
|
$
|
495
|
|
|
Merchandise inventories
|
29
|
|
|
281
|
|
|
Property, plant and equipment
|
12
|
|
|
252
|
|
|
Intangible assets
|
—
|
|
|
29
|
|
|
Other assets
|
9
|
|
|
98
|
|
|
Loss recognized on classification as held for sale
|
(5
|
)
|
|
(231
|
)
|
|
Assets of discontinued operations
|
154
|
|
|
924
|
|
|
|
|
|
|
|
Accounts payable
|
97
|
|
|
352
|
|
|
Accrued expenses and other current liabilities
|
14
|
|
|
194
|
|
|
Other liabilities
|
8
|
|
|
90
|
|
|
Liabilities of discontinued operations
|
$
|
119
|
|
|
$
|
636
|
|
|
|
|
|
|
|
STAPLES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
The following table provides the major classes of line items constituting the results of the discontinued operations during the first half of 2017 and the first half of 2016. The results of operations during the first half of 2017 include the results of the European operations through February 27, 2017 and Australian operations through April 29, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 weeks ended
|
|
|
|
July 29, 2017
|
|
July 30, 2016
|
|
|
Sales
|
|
$
|
471
|
|
|
$
|
1,459
|
|
|
Cost of goods sold and occupancy costs
|
|
384
|
|
|
1,119
|
|
|
Gross profit
|
|
87
|
|
|
340
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Selling, general and administrative
|
|
92
|
|
|
360
|
|
|
Impairment of long-lived assets
|
|
4
|
|
|
645
|
|
|
Restructuring charges
|
|
—
|
|
|
(2
|
)
|
|
Amortization of intangibles
|
|
1
|
|
|
10
|
|
|
Total operating expenses
|
|
97
|
|
|
1,013
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(10
|
)
|
|
(673
|
)
|
|
|
|
|
|
|
|
Interest and other, net
|
|
(2
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
Pretax operating loss of discontinued operations
|
|
(12
|
)
|
|
(674
|
)
|
|
Loss recognized on classification as held for sale
|
|
(5
|
)
|
|
—
|
|
|
Loss on sale of discontinued operations
|
|
(908
|
)
|
|
—
|
|
|
Total pretax loss of discontinued operations
|
|
(925
|
)
|
|
(674
|
)
|
|
Income tax expense
|
|
3
|
|
|
4
|
|
|
Loss of discontinued operations
|
|
$
|
(928
|
)
|
|
$
|
(678
|
)
|
|
|
|
|
|
|
|