SPLS Staples, Inc.

Item 2.02.  Results of Operations and Financial Condition.

In connection with a senior notes offering by Arch Merger Sub Inc. (“Merger Sub”) relating to the previously announced proposed acquisition of Staples, Inc. (“Staples” or “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. (the “Parent”) and Merger Sub, providing for the merger of Merger Sub with and into the Company (the “Merger”), Staples is disclosing preliminary estimates of certain financial results for the thirteen weeks ended July 29, 2017 to prospective investors.

Staples is currently finalizing its financial results for the thirteen weeks ended July 29, 2017. The preliminary financial results provided below are not a comprehensive statement of the Company’s financial results for this period and reflect the Company’s estimates based solely upon information available to it as of the date hereof. The Company’s actual results are subject to its financial and operating closing procedures, and may differ materially from these estimates following the completion of such procedures. In addition, even if the Company’s actual results are consistent with these estimates, those results or developments may not be indicative of results or developments in subsequent periods. Therefore, you should not place undue reliance upon these preliminary financial results.

While complete financial information and operating data are not available, based on information currently available, the Company expects the following results with respect to the North American Delivery business of Staples (“NAD”):

·                   NAD sales, as reported under U.S. GAAP, for the thirteen weeks ended July 29, 2017 are expected to be between $2,495 million and $2,585 million as compared to $2,588 million for the thirteen weeks ended July 30, 2016. The recent sales trend is driven by the divestiture of the Staples Print Solutions business unit (the “SPS Divestiture”) and continued growth in Staples Business Advantage (“SBA”) offset by modest declines in Quill and Staples.com.

·                   NAD sales, as adjusted to give effect to the exclusion of the Staples.ca online business and the SPS Divestiture, for the thirteen weeks ended July 29, 2017 are expected to be between $2,400 million and $2,500 million as compared to $2,438 million for the thirteen weeks ended July 30, 2016. The recent sales trend is driven by continued growth in SBA offset by modest declines in Quill and Staples.com.

The following table sets forth a reconciliation of NAD sales as reported under U.S. GAAP to NAD sales, as adjusted to give effect to the exclusion of the Staples.ca online business and the SPS Divestiture for the thirteen weeks ended July 30, 2016 and July 29, 2017:

·                   NAD segment operating income, as reported under U.S. GAAP, for the thirteen weeks ended July 29, 2017 is expected to be between $135 million and $143 million as compared to $164 million for the thirteen weeks ended July 30, 2016. The recent trend reflects strategic investments, including in the supply chain workforce and occupancy to realize the executed initiatives, the hiring of new sales representatives, investments in marketing, as well as other cost increases.

·                   Pro Forma Adjusted EBITDA for the thirteen weeks ended July 29, 2017 is expected to be between $215 million and $225 million as compared to $265 million for the thirteen weeks ended July 30, 2016. The recent trend reflects strategic investments, including in the supply chain workforce and occupancy to realize the executed initiatives, the hiring of new sales representatives, investments in marketing, as well as other cost increases.

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The following table sets forth a reconciliation of NAD’s segment operating income to NAD’s Pro Forma Adjusted EBITDA for the thirteen weeks ended July 30, 2016 and July 29, 2017:

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

The Company cannot assure you that its actual results will be within the ranges the Company currently estimates. The Company undertakes no obligation to update or supplement the information provided above until it releases its results of operation for the thirteen weeks ended July 29, 2017. The Company’s independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to the financial data related to the thirteen weeks ended July 29, 2017 or the thirteen weeks ended July 30, 2016 and does not express an opinion or any other form of assurance with respect thereto.

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 herein 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.

None of the information contained herein shall 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.

Presentation of Non-GAAP Information

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.

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 Company’s expected results for the thirteen weeks ended July 29, 2017, 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

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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, (viii) the outcome of any legal proceedings instituted against the Company related to the Merger Agreement or the proposed Merger, and (ix) any adjustments to the preliminary results that are identified in the process of closing the Company’s books for the quarter ended July 29, 2017 or during the review of the Company’s financial statements by its independent registered public accounting firm. 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, except as required by law.

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