Form 8-K STAPLES INC For: May 18

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 18, 2016

Registrant’s telephone number, including area code: 508-253-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On May 18, 2016, Staples, Inc. announced its financial results for the first quarter ended April 30, 2016.  The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K and the exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (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 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

The exhibit listed on the Exhibit Index immediately preceding such exhibit is furnished as part of this Current Report on Form 8-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit 99.1

Staples, Inc. Announces First Quarter 2016 Performance

FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 18, 2016--Staples, Inc. (Nasdaq: SPLS) announced today the results for its first quarter ended April 30, 2016. Total company sales for the first quarter of 2016 were $5.1 billion, a decrease of three percent compared to the first quarter of 2015. On a GAAP basis, the company reported net income of $41 million, or $0.06 per diluted share. First quarter 2016 results on a GAAP basis include pre-tax charges of $66 million primarily related to costs associated with the proposed acquisition of Office Depot and store closures, and $32 million related to the pending sale of the company’s Print Solutions business.

Total company sales for the first quarter of 2016 decreased one percent compared to the first quarter of 2015 after excluding the impact of changes in foreign exchange rates and store closures during the past year. Excluding the impact of charges taken during the first quarter of 2016, the company reported non-GAAP net income of $109 million, or $0.17 per diluted share, versus first quarter 2015 non-GAAP net income of $109 million, or $0.17 per diluted share.

“We delivered a solid first quarter and we made good progress on our critical priorities,” said Ron Sargent, Staples’ chairman and chief executive officer. “We grew sales in key categories beyond office supplies, drove growth in our mid-market contract business, and improved customer conversion in stores and online. We plan to build on our momentum as we pursue our strategic plan to enhance long-term value.”

First Quarter 2016 Highlights

• Reduced total company selling, general and administrative expense as a percentage of sales by 28 basis points on a GAAP basis, or 44 basis points on a non-GAAP basis after excluding charges of $24 million during the first quarter of 2016 and $15 million during the first quarter of 2015.
• Improved total company operating income rate by 27 basis points on a GAAP basis, or 14 basis points on a non-GAAP basis after excluding charges of $67 million during the first quarter of 2016 and $75 million during the first quarter of 2015.
• Grew sales in North American Commercial one percent on a local currency basis.
• Grew operating income in North American Commercial by $14 million and improved operating income rate by 63 basis points.
• Generated operating cash flow of $276 million and invested $44 million in capital expenditures resulting in free cash flow of $232 million.
• Closed 14 stores in North America as part of a previously announced plan to close approximately 50 stores in North America during 2016.

*Indicates a non-GAAP measure. Refer to “Presentation of Non-GAAP Information” and the accompanying reconciliations for more detailed information about these non-GAAP measures.

Total company non-GAAP operating income rate increased 14 basis points to 3.4 percent from the rate of 3.3 percent achieved during the first quarter of 2015. This increase reflects reduced labor and marketing expense. This was partially offset by lower product margin rate in International Operations.

The company ended the quarter with $2.0 billion in liquidity, including $946 million in cash and cash equivalents.

*Comparable sales includes comparable store sales and Staples.com sales growth excluding the impact of changes in foreign exchange rates.

Sales for the first quarter of 2016 were $2.2 billion, a decrease of five percent compared to the first quarter of 2015. Store closures negatively impacted first quarter 2016 sales growth by approximately two percent. Sales growth was also negatively impacted by approximately one percent due to changes in foreign exchange rates. Comparable sales, which combines comparable store sales and Staples.com sales growth excluding the impact of changes in foreign exchange rates, decreased three percent versus the prior year. Sales declines in business machines, technology accessories, computers and mobility, and ink and toner were partially offset by growth in furniture, office supplies, facilities supplies, and copy and print. Comparable store sales decreased four percent, reflecting a two percent decline in average order size and a two percent decline in traffic versus the prior year. Staples.com sales were flat in U.S. dollars and grew one percent on a local currency basis during the first quarter of 2016.

Operating income rate decreased 40 basis points to 2.8 percent compared to the first quarter of 2015. This primarily reflects the negative impact of lower sales on fixed expenses and lower product margin rate in Staples.com. This was partially offset by reduced marketing expense, improved retail product margin rate, and savings related to a reduction in headcount versus the prior year.

Sales for the first quarter of 2016 were $2.1 billion, flat in U.S. dollars or an increase of one percent on a local currency basis compared to the first quarter of 2015. This primarily reflects growth in promotional products, facilities supplies, and breakroom supplies, partially offset by declines in ink and toner, and paper.

Operating income rate increased 63 basis points to 7.0 percent compared to the first quarter of 2015. This improvement primarily reflects lower labor costs and marketing expense.

Sales for the first quarter of 2016 were $738 million, a decrease of six percent in U.S. dollars or three percent on a local currency basis compared to the first quarter of 2015. This was primarily driven by sales declines in Europe, partially offset by double-digit growth in China. Comparable store sales in Europe declined nine percent during the first quarter of 2016, primarily reflecting a decrease in traffic versus the prior year.

Operating income rate for International Operations increased 13 basis points to an operating loss of 2.4 percent compared to the first quarter of 2015. This reflects improvement in Australia, China, and Europe.

Outlook

For the second quarter of 2016, the company expects sales to decrease versus the second quarter of 2015. The company expects to achieve fully diluted non-GAAP earnings per share in the range of $0.11 to $0.13 for the second quarter of 2016. The company’s earnings guidance excludes costs related to the company’s proposed acquisition of Office Depot and costs associated with the termination of the Office Depot merger agreement, as well as the impact of ongoing store closures. For the full year 2016, the company expects to generate approximately $600 million of free cash flow excluding the impact of payments associated with financing for the proposed acquisition of Office Depot and costs associated with the termination of the Office Depot merger agreement. The company plans to close at least 50 stores in North America in 2016.

Presentation of Non-GAAP Information

This press release presents certain results with and without restructuring and related charges, long-lived asset impairment, gains and losses related to the sale of businesses and assets, and costs related to the proposed acquisition of Office Depot. This press release also presents certain results both with and without the impact of fluctuations in foreign currency exchange rates and with and without the impact of store closures. The presentation of these results, as well as the presentation of free cash flow, are non-GAAP financial measures that should be considered in addition to, and should not be considered superior to, or as a substitute for, the presentation of results determined in accordance with GAAP. Management believes that the non-GAAP financial measures enable management and investors to understand and analyze the company’s performance by providing meaningful information that facilitates the comparability of underlying business results from period to period. Management uses these non-GAAP financial measures to evaluate the operating results of the company’s business against prior year results and its operating plan, and to forecast and analyze future periods. Management recognizes there are limitations associated with the use of non-GAAP financial measures as they may reduce comparability with other companies that use different methods to calculate similar non-GAAP measures. Management generally compensates for these limitations by considering GAAP as well as non-GAAP results. In addition, management provides a reconciliation to the most comparable GAAP financial measure. With respect to earnings per share and free cash flow, financial guidance on a GAAP basis has not been provided given that current estimates for charges to be incurred related to the closure of North American retail stores, and the potential related impact on cash flow cannot be reasonably estimated.

Today's Conference Call

The company will host a conference call today at 8:00 a.m. (ET) to review these results and its outlook. Investors may listen to the call at http://investor.staples.com.

About Staples

Staples retail stores and Staples.com help small business customers make more happen by providing a broad assortment of products, expanded business services and easy ways to shop, all backed with a lowest price guarantee. Staples offers businesses the convenience to shop and buy how and when they want - in store, online, via mobile or though social apps. Staples.com customers can either buy online and pick-up in store or ship for free from Staples.com with Staples Rewards minimum purchase. Expanded services also make it easy for businesses to succeed with in-store Business Centers featuring shipping services and products, copying, scanning, faxing and computer work stations, Tech Services, full-service Print & Marketing Services, Staples Merchant Services, small business lending and credit services.

Staples Business Advantage, the business-to-business division of Staples, Inc., helps mid-market, commercial and enterprise-sized customers make more happen by offering a curated assortment of products and services combined with deep expertise, best-in-class customer service, competitive pricing and state-of-the art-ecommerce site. Staples Business Advantage is the one-source solution for all things businesses need to succeed, including office supplies, facilities cleaning and maintenance, breakroom snacks and beverages, technology, furniture, interior design and Print & Marketing Services. Headquartered outside of Boston, Staples, Inc. operates throughout North and South America, Europe, Asia, Australia and New Zealand. More information about Staples (NASDAQ: SPLS) is available at www.staples.com.

Certain information contained in this news release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995 including, but not limited to, the information set forth under “Outlook” and other statements regarding our future business and financial performance. Any statements contained in this news release that are not statements of historical fact should be considered forward-looking statements. You can identify forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”, “estimates”, and other similar expressions, whether in the negative or affirmative, although not all forward-looking statements include such words. Forward-looking statements are based on a series of expectations, assumptions, estimates and projections which involve substantial uncertainty and risk, including the review of our assessments by our outside auditor and changes in management’s assumptions and projections. Actual results may differ materially from those indicated by such forward-looking statements as a result of risks and uncertainties, including but not limited to our ability to meet the changing needs of our customers; our ability to successfully transform our business; industry, operating and competitive pressures and global economic conditions, including their impact on prices and demand for our products and services, our financial condition and our results of operations; risks related to international operations and fluctuations in foreign exchange rates; compromises of our information security; changes in our effective tax rate; our ability to retain qualified employees; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks; and factors discussed or referenced in our Annual Report on Form 10-K filed on March 6, 2015, as well as our quarterly reports on Form 10-Q filed with the SEC since the 10-K, under the heading “Risk Factors” and elsewhere, and any subsequent periodic or current reports filed by us with the SEC. In addition, any forward-looking statements represent our estimates only as of the date such statements are made (unless another date is indicated) and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

Note that certain percentage figures shown in the tables above may not recalculate due to rounding.

This presentation refers to growth rates in local currency so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Staples' business performance. To present this information, current period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the prior year average monthly exchange rates.

Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. The company defines free cash flow as net cash provided by operating activities less capital expenditures. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The company believes free cash flow is a useful measure of performance and uses this measure as an indication of the company's ability to generate cash and invest in its business.

CONTACT:
Staples, Inc.
Media Contact:
Mark Cautela, 508-253-3832
or
Investor Contact:
Chris Powers/Scott Tilghman, 508-253-4632/1487

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