SPLS Staples, Inc.

Item 7.01.  Regulation FD Disclosure.

On August 7, 2017, Staples, Inc., a Delaware corporation (the “Company”), will provide certain prospective investors 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”) pursuant to the Agreement and Plan of Merger, dated as of June 28, 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 debt financing for the Company’s North American Delivery (“NAD”) business, the Sponsor and, as required by the Merger Agreement, the Company’s management, prepared certain financial and other information related to the NAD business, which will be disclosed to prospective investors.

The information contained herein (including Exhibit 99.1) constitutes only a portion of the information being made available to prospective investors 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. Such information does not represent a comprehensive statement of the financial results for the Company or the NAD business. Such information may vary from, and may not be directly comparable to, the historical financial information of the NAD business, or the Company on a consolidated basis, prior to the Merger and any such differences may be material.  Accordingly, investors and stockholders should not place undue reliance on such financial information.  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 Form 8-K, except as required by law.  The information contained in this Current Report on Form 8-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 contained herein 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

·                   Exhibit 99.1 hereto contains unaudited pro forma condensed consolidated financial information, including a reconciliation of the pro forma adjustments to the Company’s  historical financial information.

·                   The following table sets forth a reconciliation of NAD’s Pro Forma Net (Loss) Income to NAD’s Pro Forma EBITDA to NAD’s Pro Forma Adjusted EBITDA:

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(a)   Principally includes (i) merger related costs, (ii) litigation fees, (iii) restructuring charges and (iv) PNI data security incident costs.

(b)   Principally includes (i) stock-based compensation, (ii) asset impairments, (iii) loss on extinguishment of debt and (iv) loss on disposal of assets.

(c)   Principally includes (i) the removal of non-operating income, (ii) public company costs and (iii) acquisition costs.

(d)   Represents estimated cost savings relating to vendor renegotiations, headcount reductions and elimination of wholesaler margins due to expansion of stocked SKUs.

The information in this Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 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.

Item 9.01  Financial Statements and Exhibits.

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

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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 filed a definitive Proxy Statement with the SEC in connection with the transaction, including a form of proxy card, on August 3, 2017. The definitive Proxy Statement and form of proxy card have been mailed to the Company’s stockholders. This filing does not constitute a solicitation of any vote or approval.  The Proxy Statement contains important information about the Parent, the Company, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully.

Investors and security holders can 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 can obtain free copies of the Proxy Statement from the Company by contacting Staples Investor Relations department at investor@staples.com.  In addition, the proxy statement and our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant 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 Form 10-K for the year ended January 28, 2017 and its proxy statement dated April 20, 2017, and in the Proxy Statement dated August 3, 2017, each of which is 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 document 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 Form 10-K for the year ended January 28, 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.

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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.

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Exhibit Index

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Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information is presented to illustrate the estimated effects of the pending acquisition of the outstanding ownership interest of Staples, Inc. (“Staples” or “the Company”) by Arch Merger Sub Inc. (“Merger Sub”), a wholly owned subsidiary of Arch Parent Inc. (“Parent”) and the related transactions described below.

The unaudited pro forma condensed consolidated balance sheet and statements of income are prepared to give effect to the following: (1) acquisition of all outstanding shares and settlement of all vested and unvested stock options, performance shares and restricted stock units of Staples (the “outstanding equity awards”) and the merger of Staples with Merger Sub (the “Merger”), with Staples continuing as the surviving company; (2) the new financing arrangements (the “Financing”) entered into in connection with the Merger; (3) the separation of Staples’  United States retail business and its Canadian retail business, including the staples.ca business, from the delivery business (“North American Delivery” or “NAD”) (the “Carveout Transactions”); and (4) the removal of Staples Print Solutions (“SPS”) from the historical results of operations of the Company (the “Removal of SPS”) (collectively, the “Transactions”).

The unaudited pro forma condensed consolidated balance sheet as of April 29, 2017 and the unaudited pro forma condensed consolidated statements of income for the fiscal year ended January 28, 2017, the thirteen week periods ended April 29, 2017 and April 30, 2016, and the 52 weeks ended April 29, 2017 are presented herein. The unaudited pro forma condensed consolidated balance sheet presents the historical financial position of Staples, as of April 29, 2017, giving effect to the Transactions as if they had been completed on April 29, 2017. The unaudited pro forma condensed consolidated statements of income present the historical results of Staples for the thirteen week periods ended April 29, 2017 and April 30, 2016 and the results of Staples for the fiscal year ended January 28, 2017 and the 52 weeks ended April 29, 2017 giving effect to the Transactions as if they occurred on January 31, 2016.  For the fiscal year ended January 28, 2017 and the 52 weeks ended April 29, 2017, the historical results of Staples have been recast to consistently reflect for all periods presented the classification of certain businesses deemed to be discontinued operations as of April 29, 2017, including the Removal of SPS.  The unaudited pro forma condensed consolidated statement of income for the 52 weeks ended April 29, 2017 has been derived by adding the financial data from our unaudited pro forma condensed consolidated statement of income for the fiscal year ended January 28, 2017, as recast, to the financial data from our unaudited pro forma condensed consolidated statement of income for the thirteen weeks ended April 29, 2017 and subtracting the financial data from our unaudited pro forma condensed consolidated statement of income for the thirteen weeks ended April 30, 2016. The pro forma condensed consolidated financial information for the 52 weeks ended April 29, 2017 has been included in this offering memorandum in order to provide prospective investors with historical and pro forma information for the latest practicable 52 week period.

For the thirteen weeks ended April 30, 2016, fiscal year ended January 28, 2017, and 52 weeks ended April 29, 2017, the pro forma condensed consolidated statements of income reflect adjustments to eliminate the results of operations for the Removal of SPS, a component of NAD that was divested on July 5, 2016.   The elimination of SPS provides for the presentation of the results of operations for the ongoing NAD business for those periods.

The historical financial information has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the Transactions, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed consolidated statements of income, expected to have a continuing impact on the consolidated results of the Company.

The Merger will be accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), with Merger Sub representing the accounting acquirer. The following unaudited pro forma condensed consolidated financial information primarily gives effect to:

·                   Application of the acquisition method of accounting in connection with the Merger;

·                   Adjustments to reflect the Financing;

·                   Transaction costs expected to be incurred in connection with the Transactions;

·                   The Carveout Transactions, including their related effects from the acquisition method of accounting; and

·                   Adjustments to remove SPS.

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The unaudited pro forma condensed consolidated financial information reflects an estimate of the consideration to be paid for the Merger. At the effective time of the Merger, the cash paid, debt financing required, the number of shares of Staples’ common stock issued and outstanding, and vested and unvested equity awards may differ from the information in the unaudited pro forma condensed consolidated financial information depending on the actual number of shares, equity awards of Staples outstanding as of the closing date of the Merger, the conditions of the debt markets, amount of cash on hand and the actual allocation of the type and amount and the terms of the Financing.

The unaudited pro forma condensed consolidated financial information does not give effect to any cost savings, operating synergies or revenue enhancements expected to result from the Transactions or the costs to achieve these cost savings, operating synergies or revenue enhancements.

The unaudited pro forma condensed consolidated statements of income do not include non-recurring items related to costs associated with the Transactions which are not capitalized as part of the transactions described above or additional expense associated with accelerated vesting of Staples’ share-based compensation arrangements.

The unaudited pro forma condensed consolidated financial information includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes.  The accompanying unaudited pro forma condensed consolidated financial information reflects all adjustments that, in the opinion of management, are necessary to present fairly the pro forma results of operations and financial position of Staples as of and for the periods indicated. The accompanying unaudited pro forma condensed consolidated financial information is presented for illustrative and informational purposes only and are not intended to represent or be indicative of the financial condition or results of operations that would have actually occurred had the Transactions occurred on the date or at the beginning of the periods indicated, nor does it purport to represent Staples’ future financial position or results of operations. The unaudited pro forma condensed consolidated financial information is based upon the historical and historical recast condensed consolidated financial statements of Staples as discussed above and described further in Note 2 to this financial information. The unaudited pro forma condensed consolidated financial information presented is based on the assumptions and adjustments described in the accompanying notes, which should be read together with the pro forma condensed consolidated financial statements. Future results may vary significantly from the results reflected because of various factors outside of our control.

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