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SEGMENT INFORMATION | 6 Months Ended
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Jun. 25, 2022
Segment Reporting [Abstract] |
SEGMENT INFORMATION | NOTE 4. SEGMENT INFORMATION A t June 25, 2022, the Company had two reportable segments: Business Solutions Division and Retail Division. The Business Solutions Division sells nationally branded as well as the Company’s private branded office supply and adjacency products and services to customers in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada. Business Solutions Division customers are served through a dedicated sales force, catalogs, telesales, and electronically through the Company’s Internet websites. The Retail Division includes a chain of retail stores in the United States, Puerto Rico and the U.S. Virgin Islands, which sell office supplies, technology products and solutions, business machines and related supplies, cleaning, breakroom and facilities products, personal protective equipment, and office furniture as well as offer business services including copying, printing, digital imaging, mailing, shipping and technology support services. In addition, the print needs for retail and business customers are also facilitated through the Company’s regional print production centers. The Company sold its CompuCom Division through a single disposal group on December 31, 2021, which is presented as discontinued operations for all periods presented. Refer to Note 12 for additional information. The retained global sourcing operations previously included in the former International Division and the operating results of the Varis Division, which is the Company’s new digital platform technology business, are not significant and have been presented as Other. The products and services offered by the Business Solutions Division and the Retail Division are similar. These two operating segments are the Company’s two reportable segments. The Business Solutions Division and the Retail Division are managed separately as they represent separate channels in the way the Company serves its customers. The accounting policies for each segment are the same as those described in Note 1 of the 2021 Form 10-K. 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 Business Solutions Division or the Retail Division, including asset impairments and merger, restructuring and other operating expenses, 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. In addition, the Company regularly evaluates the appropriateness of the reportable segments based on how the business is managed, including decision-making about resources allocation and assessing performance of the segments, particularly in light of organizational changes, merger and acquisition activity and changing laws and regulations. As discussed in Note 1, in connection with the Company’s announcement to maintain all of its businesses under common ownership, the Company announced that it is re-aligning its operations into its consumer business named Office Depot, and three distinct B2B business and digital segments. As of the end of the second quarter, the Company continues to transition the assets that support its B2B and consumer businesses as part of this re-alignment. Upon completion of this re-alignment, the Company will re-evaluate its reportable segments. Therefore, the current reportable segments may change in the future. The following is a summary of sales and operating income (loss) by each of the Divisions and Other, reconciled to consolidated totals.
|  | Sales |
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Business Solutions Division |  | $ | 1,215 |  |  | $ | 1,146 |  |  | $ | 2,445 |  |  | $ | 2,274 |
Retail Division |  |  | 811 |  |  |  | 914 |  |  |  | 1,754 |  |  |  | 1,953 |
Other |  |  | 8 |  |  |  | 10 |  |  |  | 13 |  |  |  | 17 |
Total |  | $ | 2,034 |  |  | $ | 2,070 |  |  | $ | 4,212 |  |  | $ | 4,244 |
|  | Division Operating Income (Loss) |
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Business Solutions Division |  | $ | 45 |  |  | $ | 31 |  |  | $ | 78 |  |  | $ | 48 |
Retail Division |  |  | 46 |  |  |  | 44 |  |  |  | 136 |  |  |  | 145 |
Other |  |  | (15 | ) |  |  | (6 | ) |  |  | (29 | ) |  |  | (9 | )
Total |  | $ | 76 |  |  | $ | 69 |  |  | $ | 185 |  |  | $ | 184 |
A reconciliation of the measure of Division operating income to Consolidated income from continuing operations before income taxes is as follows:
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Total Divisions operating income |  | $ | 76 |  |  | $ | 69 |  |  | $ | 185 |  |  | $ | 184 |
Add/(subtract): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset impairments |  |  | (3 | ) |  |  | (1 | ) |  |  | (5 | ) |  |  | (13 | )
Merger, restructuring and other operating expenses, net |  |  | (23 | ) |  |  | (11 | ) |  |  | (34 | ) |  |  | (23 | )
Unallocated expenses |  |  | (22 | ) |  |  | (27 | ) |  |  | (42 | ) |  |  | (49 | )
Interest income |  |  | 1 |  |  |  | — |  |  |  | 2 |  |  |  | — |
Interest expense |  |  | (4 | ) |  |  | (6 | ) |  |  | (9 | ) |  |  | (14 | )
Other income, net |  |  | 3 |  |  |  | 5 |  |  |  | 5 |  |  |  | 17 |
Income from continuing operations before income taxes |  | $ | 28 |  |  | $ | 29 |  |  | $ | 102 |  |  | $ | 102 |
The components of goodwill by segment are provided in the following table:
|  | Business Solutions |  |  | Retail |  |  |  |  |  |  |  |  |
(In millions) |  | Division |  |  | Division |  |  | Other |  |  | Total |
Balance as of December 25, 2021 |  | $ | 318 |  |  | $ | 78 |  |  | $ | 68 |  |  | $ | 464 |
Balance as of June 25, 2022 |  | $ | 318 |  |  | $ | 78 |  |  | $ | 68 |  |  | $ | 464 |
Goodwill and indefinite-lived intangible assets are tested for impairment annually as of the first day of fiscal December or more frequently when events or changes in circumstances indicate that impairment may have occurred. The most recent annual impairment assessment was performed during the fourth quarter of 2021, using a quantitative assessment for the Contract and Varis reporting units, and qualitative assessments for the Direct and Retail reporting units. The quantitative assessment combined the income approach and the market approach valuation methodologies and concluded that the fair value of the Contract and Varis reporting units exceed their carrying amounts. The margin of passage for the Contract reporting unit was 16%. The Contract reporting unit is a component of the Business Solutions Division segment, and the Varis reporting unit is presented in Other. The CompuCom reporting unit is classified as discontinued operations; refer to Note 12 for further information. The Company is monitoring the performance of its Contract reporting unit, which had been negatively impacted by COVID-19, and has experienced partial recovery as the impacts of the pandemic on its business customers have begun to recede since 2021. The Contract reporting units’ operating performance and future outlook are in line with the Company’s forecasts used in determining the fair value estimates in the most recent quantitative annual impairment test. Accordingly, there are no impairment indicators identified for this reporting unit as of June 25, 2022. The Company also did not identify indicators of impairment related to its other reporting units, which have been performing in accordance with forecasts. The Company will continue to evaluate the recoverability of goodwill at the reporting unit level on an annual basis and whenever events or changes in circumstances indicate there may be a potential impairment. If the operating results of the Company’s reporting units deteriorate in the future, it may cause the fair value of one or more of the reporting units to fall below their carrying amount, resulting in goodwill impairment charges.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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