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Staples Module 11 Presentation

Staples Module 11 Presentation. Mary Astuno 6 april 2014. Business Segments. North American Commercial segment consists of the U.S. and Canadian business units that sell and deliver office products and services directly to businesses, including Staples Advantage and Quill.com .

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Staples Module 11 Presentation

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  1. Staples Module 11 Presentation Mary Astuno 6april2014

  2. Business Segments North American Commercial segment consists of the U.S. and Canadian business units that sell and deliver office products and services directly to businesses, including Staples Advantage and Quill.com. International Operations segment consists of businesses in 23 countries in Europe, Australia, South America and Asia] Reported negative NI of $210.7M for FY 2012 Reported NI of $620M for FY 2013

  3. Inventory Valuation Staples uses a weighted-average cost to value its inventory. Therefore, conversion to FIFO is unnecessary.

  4. Capital vs. Operating Lease Capital lease method-Both the lease asset and the lease liability are reported on the balance sheet. Operating lease method-neither the lease asset nor the lease liability is on the balance sheet Adjustment suggested is an “as if” capitalization Results start to look like FASB/IASB exposure draft.

  5. Operating Leases

  6. Capital Lease Obligations

  7. Capital Lease Obligations-No Present Value Provided The schedule of capital lease obligations above does not include a present value of minimum lease payments given that there were no new capital lease obligations in 2012 or 2013. The only schedule for capital lease obligations includes that for long-term debt. Therefore, unable to compute an implicit discount rate.

  8. Present Value of Operating Lease Payments

  9. Adjustments to Balance Sheet from Capitalization of Operating Leases

  10. Adjustments to the Income Statement Remove rent expense from operating expense Add depreciation expense from the lease assets to operating expense and add interest expense from the lease obligation as a nonoperating expense.

  11. Ratio Effects of Adjustments from Capitalization of Operating Leases

  12. Special Purpose Entities • Lumping together of many items • Effects are generally on risk • Specifically, the cost of debt capital and liquidity • Changes calculation of WACC • Staples has no Special Purpose Entities that it reports for FY 2013.

  13. Share-Based Compensation Adjustments needed to recognize addition liability due to outstanding options based on difference between current market and exercise price. Adjustments needed to recognize additional compensation due to difference between U.S. GAAP expense, measured at grant date, and difference between market and exercise price, the actual expense.

  14. Stock Options-2014

  15. Stock Options-2012

  16. Options Summary

  17. Step 1

  18. Step 2

  19. Step 3

  20. Step 4

  21. Step 5

  22. Step 6 Effect of change in exercisable options:

  23. Step 6 continued Effect of exercising and cancellation:

  24. Adjustments

  25. The End Questions, comments?

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