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Board to Ask Shareholders to Declassify Board, Continuing Commitment to Best Practices in Governance
FRAMINGHAM, Mass.--(BUSINESS WIRE)--Staples, Inc., (Nasdaq: SPLS) in conjunction with its annual investor conference, announced today that its board of directors has authorized the additional repurchase of up to $1.5 billion of its common stock. This stock repurchase plan will begin when the existing $1 billion repurchase program is completed, which is expected to occur during November 2005. The new repurchase program is expected to run through 2007.
The company confirmed its outlook for the third quarter and fiscal year 2005, and announced earnings expectations for fiscal 2006. For the third quarter of 2005, Staples expects to achieve earnings per share in line with average analyst estimates of $0.32, on a diluted basis. Staples expects to achieve low double digit sales growth for the total company. For North American Retail, the company expects a low single digit comparable sales increase. In the North American Delivery business, the company expects sales growth in the mid-teens, and for the International business, Staples expects low single digit sales growth.
For fiscal 2005, Staples expects revenues to grow in the low double digits, with low single digit North American Retail comparable sales. North American Retail sales are expected to increase in the high single digits, North American Delivery revenue growth is expected to be in the mid-teens range, and the International business is expected to have mid to high single digit sales growth. The company expects to achieve earnings per share for the full year consistent with average analyst estimates of $1.11, on a diluted basis, representing 19 percent growth compared to the prior year.
Staples also announced its expectations for sales and earnings performance for fiscal 2006. The company expects revenues to grow in the low double digits, and expects to achieve earnings per share growth in the range of 15 to 20 percent, including a 53rd week in fiscal 2006 and the adjustment for stock option expense in 2005 and 2006. Staples will expense stock options beginning in the first quarter of 2006, and restate earnings for 2005 to reflect the impact of stock option expense, which is expected to reduce 2005 earnings per share by $0.06 to $0.07, on a diluted basis. Stock option expense is expected to impact earnings per share by $0.07 to $0.08, on a diluted basis, in 2006. As a result of expensing stock options, earnings per share for 2006 are expected to be in the range of $1.20 to $1.26, on a diluted basis.
In addition, consistent with Staples' commitment to best practices in corporate governance, the company's board of directors decided to recommend that its shareholders declassify the board. The company will submit to its shareholders for their approval, at the company's 2006 annual meeting, a proposal to amend its bylaws to require, after an initial phase-in period, each director to stand for election annually. Currently, the company's bylaws divide the board into three classes with directors elected to staggered three-year terms.
In connection with the company's new share buyback program, repurchases will be made in open market or privately negotiated transactions, the timing and amount of which will be determined by the company's management based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the company's stock plans and for other corporate purposes.
Staples, Inc. invented the office superstore concept in 1986 and today is the world's largest office products company. With 65,000 talented associates, the company is committed to making it easy to buy a wide range of office products, including supplies, technology, furniture, and business services. With 2004 sales of $14.4 billion, Staples serves consumers and businesses ranging from home-based businesses to Fortune 500 companies in 21 countries throughout North and South America, Europe and Asia. Headquartered outside of Boston, Staples operates approximately 1,716 office superstores and also serves its customers through mail order catalog, e-commerce and contract businesses. More information 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. 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 market is highly competitive and we may not continue to compete successfully; we may be unable to continue to open new stores and enter new markets successfully; our growth may continue to strain operations, which could adversely affect our business and financial results; our operating results may be impacted by changes in the economy; our stock price may fluctuate based on market expectations; our quarterly operating results are subject to significant fluctuation and are impacted by the extent to which sales in new stores result in the loss of sales in existing stores, the mix of products sold, pricing actions of competitors, the level of advertising and promotional expenses and seasonality; our expanding international operations expose us to the unique risks inherent in foreign operations; our debt level and operating lease commitments could impact our ability to obtain future financing and continue our growth strategy; a California wage and hour class action lawsuit; and those other factors discussed in our quarterly report on Form 10-Q for the quarter ended July 30, 2005, and any subsequent periodic reports filed by us with the SEC. In addition, any forward-looking statements represent our estimates only as of today 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.