STAPLES,INC. (NASDAQ:SPLS) Files An 8-K Regulation FD Disclosure

ME Staff 8-k
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STAPLES,INC. (NASDAQ:SPLS) Files An 8-K Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure.

On July24, 2017, Staples,Inc., a Delaware corporation (the “Company”), will provide certain prospective lenders with information in connection with financing activities relating to the previously announced proposed acquisition of the Company by funds managed by Sycamore Partners Management, L.P. (collectively, the “Sponsor”) to the Agreement and Plan of Merger, dated as of June28, 2017 (the “Merger Agreement”), by and among the Company, 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”), providing for the merger of the Merger Sub with and into the Company (the “Merger”).

In connection with the arrangement of the debt financing for the Company’s North American Delivery (“NAD”) business, the Sponsor and the Company’s management will disclose certain financial and other information to prospective lenders, which information has been included below.

The information contained herein constitutes only a portion of the information being made available to prospective lenders and is intended to be considered in the context of the Company’s filings with the Securities and Exchange Commission and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company disclaims any intention or obligation to update or revise any such information as a result of developments occurring after the date of this Current Report on Form8-K, except as required by law. The information contained in this Current Report on Form8-K does not constitute an offer to sell, or the solicitation of an offer to buy, any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

The information below includes financial measures of the Company that are not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s management believes that these non-GAAP financial measures provide meaningful supplemental information that enhances management’s, investors’ and prospective lenders’ ability to evaluate the Company’s operating results and ability to repay its obligations.

These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, including that other companies may calculate similar non-GAAP financial measures differently than as defined in the attached materials, limiting their usefulness as a comparative tool. The Company compensates for these limitations by providing specific information regarding the GAAP amounts excluded from the non-GAAP financial measures. The Company further compensates for the limitations of its use of non-GAAP financial measures by presenting comparable GAAP measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures contained herein.

Information

· The following tables set forth a summary of certain historical financial information regarding the NAD business (dollars in millions):

LTM(Q1’17)

Adjusted EBITDA (1)

$

$

$

$

Adjusted EBITDA Margin (2)

7.3

%

7.9

%

8.1

%

7.9

%

Pro Forma Adjusted EBITDA (3)

$

$

1,044

$

1,078

$

1,037

% Margin (4)

9.9

%

10.4

%

10.7

%

10.2

%

Capital Expenditures (5)

$

$

$

$

Pro Forma Adjusted EBITDA — CAPEX (6)

$

$

$

$

% Conversion (7)

84.7

%

84.5

%

90.2

%

89.3

%

(1)Represents EBITDA for the remaining operations of North American Delivery but excludes unallocated corporate costs, which include such things as stock based compensation and public company costs.

(2)Represents Adjusted EBITDA divided by sales for the remaining operations of North American Delivery.

(3)Pro Forma Adjusted EBITDA is the sum of Adjusted EBITDA plus estimated cost savings that are expected to be realized in the future as a private company but does not reflect future cost increases or investments.

(4)Represents Pro Forma Adjusted EBITDA divided by sales for the remaining operations of North American Delivery.

(5)Represents capital expenditure specific to North American Delivery and corporate projects.

(6)Represents Pro Forma Adjusted EBITDA less CAPEX for the remaining operations of North American Delivery.

(7)Represents Pro Forma Adjusted EBITDA-CAPEX divided by Pro Forma Adjusted EBITDA.

· No one customer represents more than 1% of NAD sales.

· No end customer industry vertical represents more than 16% of Staples Business Advantage sales, our North American contract business which is a component of NAD.

GAAP to Non-GAAP Reconciliation

FY14

FY15

FY16

LTMQ1

NAD Segment Operating Income

$

$

$

$

SPS Divestiture

(29

)

(13

)

(7

)

(3

)

Depreciation and Amortization

Transfer of Staples.ca

(42

)

(37

)

(43

)

(44

)

Other Adjustments (1)

Adjusted EBITDA

$

$

$

$

Pro Forma Cost Savings

Pro Forma Adjusted EBITDA

$

$

1,044

$

1,078

$

1,037

NAD Segment Capital Expenditures

Pro Forma Adjusted EBITDA – CAPEX

$

$

$

$

(1)Includes adjustments for non-cash and non-recurring items (e.g. non-cash SERP gains/losses, public company expenses,etc.) as well as acquisitions.

The information in this Item 7.01 of this Current Report on Form8-K shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Additional Information and Where to Find It

This filing may be deemed solicitation material in respect of the proposed acquisition of the Company by the Parent. The Company plans to file with the SEC and mail to its stockholders a Proxy Statement in connection with the transaction. This filing does not constitute a solicitation of any vote or approval. The Proxy Statement will

contain important information about the Parent, the Company, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. The Company filed preliminary proxy materials with the SEC on July21, 2017.

Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Parent and the Company through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Proxy Statement from the Company by contacting Staples Investor Relations department at [email protected]. In addition, the proxy statement and our annual reports on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K and amendments to those reports filed or furnished to section 13(a)or 15(d)of the Securities Exchange Act of 1934 are available free of charge through our website at investor.staples.com as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

The Company, and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders with respect to the transactions contemplated by the Merger Agreement.Information regarding the Company’s directors and executive officers, including their ownership of the Company’s securities, is contained in the Company’s Annual Report on Form10-K for the year ended January28, 2017 and its proxy statement dated April20, 2017, which are filed with the SEC. Investors and security holders may obtain additional information regarding the direct and indirect interests of the Company and its directors and executive officers in the proposed transaction by reading the proxy statement and other public filings referred to above.

Safe Harbor for Forward-Looking Statements

Statements in this filing regarding the proposed transaction between the Parent and the Company, the Parent’s proposed financing, the expected timetable for completing the transaction and any other statements about the Parent and the Company managements’ future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” estimates and similar expressions) should also be considered to be forward looking statements, although not all forward-looking statements contain these identifying words. Readers should not place undue reliance on these forward-looking statements. The Company’s actual results may differ materially from such forward-looking statements as a result of numerous factors, some of which the Company may not be able to predict and may not be within the Company’s control. Factors that could cause such differences include, but are not limited to, (i)the risk that the proposed Merger may not be completed in a timely manner, or at all, which may adversely affect the Company’s business and the price of its common stock, (ii)the failure to satisfy all of the closing conditions of the proposed Merger, including the adoption of the Merger Agreement by the Company’s stockholders and the receipt of certain governmental and regulatory approvals in the U.S. and in foreign jurisdictions, (iii)the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, (iv)the effect of the announcement or pendency of the proposed Merger on the Company’s business, operating results, and relationships with customers, suppliers, competitors and others, (v)risks that the proposed Merger may disrupt the Company’s current plans and business operations, (vi)potential difficulties retaining employees as a result of the proposed Merger, (vii)risks related to the diverting of management’s attention from the Company’s ongoing business operations, and (viii)the outcome of any legal proceedings instituted against the Company related to the Merger Agreement or the proposed Merger. There are a number of important, additional factors that could cause actual results or events to differ materially from those indicated by such forward looking statements, including the factors described in the Company’s Annual Report on Form10-K for the year ended January28, 2017 and its most recent quarterly report filed with the SEC. The Company disclaims any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this filing.


About STAPLES,INC. (NASDAQ:SPLS)

Staples, Inc. is a provider of products and services for business customers and consumers. The Company offers a selection of products, Websites and mobile platforms, and a range of copy, print and technology services. The Company operates through three business segments, which include North American Stores & Online, North American Commercial and International Operations. The North American Stores & Online segment includes its retail stores and Staples.com businesses in the United States and Canada. The North American Commercial segment consists of the United States and Canadian businesses that sell and deliver products and services directly to businesses, including Staples Advantage and Quill.com. The International Operations segment consists of businesses in approximately 25 countries in Europe, Australia, South America and Asia. It serves businesses of all sizes and consumers in North America, Europe, Australia, South America and Asia.