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SEGMENT INFORMATION
 12 Months Ended
Dec. 26, 2015
SEGMENT INFORMATION

NOTE 17. SEGMENT INFORMATION

The Company has three reportable segments: North American Retail Division, North American Business Solutions Division, and International Division. The North American Retail Division includes retail stores in the United States, including Puerto Rico and the U.S. Virgin Islands, which offer office supplies, technology products and solutions, business machines and related supplies, facilities products, and office furniture. Most stores also have a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in Canada and the United States, including Puerto Rico and the U.S. Virgin Islands. North American Business Solutions Division customers are served through dedicated sales forces, through catalogs, telesales, and electronically through its Internet sites. The International Division sells office products and services through direct mail catalogs, contract sales forces, Internet sites, and retail stores in Europe and Asia/Pacific.

The office supply products and services offered across all operating segments are similar. The Company’s three operating segments are the three reportable segments. The North American Retail Division and North American Business Solutions Division are managed separately, primarily because of the way customers are reached and served. The International Division is managed separately because of the geographical, operational and marketplace differences outside of North America. Due to the sale of the Company’s interest in Grupo OfficeMax in August 2014, the joint venture’s results have been reported as Other to align with how this information was presented for management reporting. The accounting policies for each segment are the same as those described in Note 1. Division operating income is determined based on the measure of performance reported internally to manage the business and for resource allocation. This measure charges to the respective Divisions those expenses considered directly or closely related to their operations and allocates support costs. Certain operating expenses and credits are not allocated to the Divisions including Asset impairments, Merger, restructuring and other operating expenses, net, and Legal accrual, as well as expenses and credits retained at the Corporate level, including certain management costs and legacy pension and environmental matters. Other companies may charge more or less of these items to their segments and results may not be comparable to similarly titled measures used by other entities. Assets for 2014 and 2013 reflect adoption in 2015 of the accounting standards as discussed in Note 1.

 

A summary of significant accounts and balances by segment, reconciled to consolidated totals follows.

 

(In millions)           

North

American

Retail

     

North

American

Business

Solutions

      International     

Corporate,

Eliminations,

and Other*

     

Consolidated

Total

  

Sales

      2015       $ 6,004       $ 5,708       $ 2,773       $ —       $ 14,485   
     2014         6,528         6,013         3,400         155         16,096   
     2013         4,614         3,580         3,008         40         11,242   

Division operating income

      2015         310         226         23         —         559   
     2014         126         232         53         —         411   
     2013         8         113         36         —         157   

Capital expenditures

      2015         56         70         19         18         163   
     2014         44         29         29         21         123   
     2013         63         24         39         11         137   

Depreciation and amortization

      2015         130         82         31         40         283   
     2014         140         85         35         53         313   
     2013         105         51         29         24         209   

Charges for losses on receivables and inventories

      2015         42         11         7         —         60   
     2014         48         4         13         1         66   
     2013         38         9         12         —         59   

Net earnings from equity method investments

      2015         —         —         —         —         —   
     2014         —         —         —         —         —   
     2013         —         —         14         —         14   

Assets

      2015         1,625         1,607         963         2,247         6,442   
     2014         1,736         1,687         1,160         2,174         6,757   
     2013       $ 1,804       $ 1,554       $ 1,152       $ 2,855       $ 7,365   

 

* Amounts included in “Corporate, Eliminations, and Other” consist of (i) assets (including all cash and cash equivalents) and depreciation related to corporate activities, (ii) accounts and balances associated with Grupo OfficeMax prior to disposition, and (iii) $377 million of goodwill in December 28, 2013, which was allocated to reporting units in 2014.

A reconciliation of the measure of Division operating income to Income (loss) before income taxes follows:

 

(In millions)    2015      2014      2013  

Division operating income

    $ 559       $ 411       $ 157   

Add/(subtract):

         

Other operating income (loss)

      —         8         (2 ) 

Asset impairments

      (13 )       (88 )       (70 ) 

Merger, restructuring, and other operating expenses, net

      (332 )       (403 )       (201 ) 

Legal accrual

      —         (81 )       —   

Unallocated expenses

      (99 )       (122 )       (89 ) 

Interest income

      24         24         5   

Interest expense

      (93 )       (89 )       (69 ) 

Gain on disposition of joint venture

      —         —         382   

Other income, net

      1         —         14   
  

 

 

  

Income (loss) before income taxes

    $ 47       $ (340 )     $ 127   
  

 

 

  

 

As of December 26, 2015, the Company sold to customers throughout North America, Europe, and Asia/Pacific. The Company operates through wholly-owned entities and participates in other ventures and alliances. There is no single country outside of the United States or single customer that accounts for 10% or more of the Company’s total sales. Geographic financial information relating to the Company’s business is as follows:

 

     Sales           Property and Equipment, Net  
(In millions)    2015      2014      2013            2015      2014      2013  

United States

    $ 11,387       $ 12,132       $ 8,119          $ 617       $ 757       $ 977   

International

      3,098         3,964         3,123            168         206         332   
  

 

 

        

 

 

  

Total

    $ 14,485       $ 16,096       $ 11,242          $ 785       $ 963       $ 1,309   
  

 

 

        

 

 

  

The Company classifies products into three categories: (1) supplies, (2) technology, and (3) furniture and other. The supplies category includes products such as paper, binders, writing instruments, cleaning and breakroom items and school supplies. The technology category includes products such as desktop and laptop computers, monitors, tablets, printers, ink and toner, cables, software, digital cameras, telephones, and wireless communications products. The furniture and other category includes products such as desks, chairs, luggage, sales in the copy and print centers, and other miscellaneous items.

Total Company sales by product category were as follows:

 

     2015      2014      2013  

Supplies

      47.6%         47.2%         46.6%   

Technology

      37.3%         38.0%         40.6%   

Furniture and other

      15.1%         14.8%         12.8%   
  

 

 

  
     100.0%         100.0%         100.0%