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SEGMENT INFORMATION | 9 Months Ended
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Sep. 28, 2024
Segment Reporting [Abstract] |
SEGMENT INFORMATION | NOTE 4. SEGMENT INFORMATION At September 28, 2024, the Company had three reportable segments: ODP Business Solutions Division – The Company’s leading B2B distribution solutions provider serving small, medium, and enterprise level companies, including those in the public and education sectors. This segment operates in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada. The ODP Business Solutions Division sells nationally branded, as well as the Company’s private branded, office supply and adjacency products and services to customers, who are served through a dedicated sales force, catalogs, telesales, and electronically through the Company’s Internet websites. Adjacency products and services include cleaning, janitorial and breakroom supplies, office furniture, technology products, and copy and print services. This segment also includes our Federation entities, which are over 20 regional office supply distribution businesses acquired by the Company as part of its transformation to expand its reach and distribution network into geographic areas that were previously underserved, and which continue to operate under their own brand names. The acquisition of these businesses has allowed for an effective means to expand our distribution reach, target new business customers, and grow our offerings beyond traditional office supplies. Office Depot Division – The Company’s leading provider of retail consumer and small business products and services distributed through a fully integrated omni-channel platform of 885 Office Depot and OfficeMax retail locations in the United States, Puerto Rico, and the U.S. Virgin Islands, and an eCommerce presence (www.officedepot.com). The Office Depot Division sells 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 offering business services including copying, printing, digital imaging, mailing, shipping, and technology support services. In addition, the print needs for retail and business customers are facilitated through the Company’s regional print production centers. Veyer Division – The Company’s supply chain, distribution, procurement, and global sourcing operation, which specializes in B2B and consumer business service delivery, with core competencies in distribution, fulfillment, transportation, global sourcing, and purchasing. The Veyer Division’s customers include our Office Depot Division and ODP Business Solutions Division, as well as third-party customers. The Veyer Division also includes the Company’s global sourcing operations in Asia. On April 24, 2024, management obtained the Board of Directors’ approval and committed to a plan to sell its Varis Division through a single disposal group. The Varis Division is the Company’s tech-enabled B2B indirect procurement marketplace, which provides a seamless way for buyers and suppliers to transact through the platform’s consumer-like buying experience, advanced spend management tools, network of suppliers, and technology capabilities. The Varis Division disposal group has met the accounting criteria to be classified as held for sale as of April 2024 and is presented as discontinued operations. Subsequently, on October 18, 2024, the Company sold its Varis Division to an affiliate of Arising Ventures, while retaining a minority interest of 19.9% after the sale. Refer t o Note 12 for additional information. 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 and merger and restructuring expenses, net, 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. The following is a summary of sales and operating income by each of the Divisions, reconciled to consolidated totals:
(In millions) |  | ODP Business Solutions Division |  |  | Office Depot Division |  |  | Veyer Division |  |  | Eliminations |  |  | Total |
Third Quarter of 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales (external) |  | $ | 914 |  |  | $ | 852 |  |  | $ | 14 |  |  | $ | — |  |  | $ | 1,780 |
Sales (internal) |  |  | 2 |  |  |  | 9 |  |  |  | 1,190 |  |  |  | (1,201 | ) |  |  | — |
Total sales |  | $ | 916 |  |  | $ | 861 |  |  | $ | 1,204 |  |  | $ | (1,201 | ) |  | $ | 1,780 |
Division operating income |  | $ | 28 |  |  | $ | 23 |  |  | $ | 9 |  |  | $ | — |  |  | $ | 60 |
Year-to-Date 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales (external) |  | $ | 2,753 |  |  | $ | 2,580 |  |  | $ | 34 |  |  | $ | — |  |  | $ | 5,367 |
Sales (internal) |  |  | 7 |  |  |  | 24 |  |  |  | 3,591 |  |  |  | (3,622 | ) |  |  | — |
Total sales |  | $ | 2,760 |  |  | $ | 2,604 |  |  | $ | 3,625 |  |  | $ | (3,622 | ) |  | $ | 5,367 |
Division operating income |  | $ | 87 |  |  | $ | 91 |  |  | $ | 23 |  |  | $ | — |  |  | $ | 201 |
Third Quarter of 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales (external) |  | $ | 996 |  |  | $ | 1,000 |  |  | $ | 11 |  |  | $ | — |  |  | $ | 2,007 |
Sales (internal) |  |  | 4 |  |  |  | 10 |  |  |  | 1,320 |  |  |  | (1,334 | ) |  |  | — |
Total sales |  | $ | 1,000 |  |  | $ | 1,010 |  |  | $ | 1,331 |  |  | $ | (1,334 | ) |  | $ | 2,007 |
Division operating income |  | $ | 56 |  |  | $ | 66 |  |  | $ | 10 |  |  | $ | — |  |  | $ | 132 |
Year-to-Date 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales (external) |  | $ | 3,001 |  |  | $ | 2,991 |  |  | $ | 28 |  |  | $ | — |  |  | $ | 6,020 |
Sales (internal) |  |  | 11 |  |  |  | 27 |  |  |  | 4,044 |  |  |  | (4,082 | ) |  |  | — |
Total sales |  | $ | 3,012 |  |  | $ | 3,018 |  |  | $ | 4,072 |  |  | $ | (4,082 | ) |  | $ | 6,020 |
Division operating income |  | $ | 140 |  |  | $ | 186 |  |  | $ | 31 |  |  | $ | — |  |  | $ | 357 |
The reconciliation of the measure of Division operating income to Consolidated income from continuing operations before income taxes is as follows, and includes charges and credits retained at the Corporate level:
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Total Divisions operating income |  | $ | 60 |  |  | $ | 132 |  |  | $ | 201 |  |  | $ | 357 |
Add/(subtract): |  |  |  |  |  |  |  |  |  |  |  |
Asset impairments |  |  | (7 | ) |  |  | (3 | ) |  |  | (21 | ) |  |  | (13 | )
Merger and restructuring expenses, net |  |  | (2 | ) |  |  | (1 | ) |  |  | (47 | ) |  |  | (2 | )
Legal matter monetization |  |  | 70 |  |  |  | — |  |  |  | 70 |  |  |  | — |
Unallocated expenses |  |  | (19 | ) |  |  | (20 | ) |  |  | (60 | ) |  |  | (63 | )
Interest income |  |  | 2 |  |  |  | 3 |  |  |  | 7 |  |  |  | 7 |
Interest expense |  |  | (6 | ) |  |  | (5 | ) |  |  | (16 | ) |  |  | (15 | )
Other income, net |  |  | (3 | ) |  |  | 3 |  |  |  | (4 | ) |  |  | 8 |
Income from continuing operations before income taxes |  | $ | 95 |  |  | $ | 109 |  |  | $ | 130 |  |  | $ | 279 |
The following table provides information about disaggregated sales by major categories:
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Major sales categories |  |  |  |  |  |  |  |  |  |  |  |
Supplies |  | $ | 877 |  |  | $ | 1,013 |  |  | $ | 2,652 |  |  | $ | 3,012 |
Technology |  |  | 485 |  |  |  | 530 |  |  |  | 1,489 |  |  |  | 1,669 |
Furniture and other |  |  | 263 |  |  |  | 296 |  |  |  | 752 |  |  |  | 846 |
Copy and print |  |  | 155 |  |  |  | 168 |  |  |  | 474 |  |  |  | 493 |
Total |  | $ | 1,780 |  |  | $ | 2,007 |  |  | $ | 5,367 |  |  | $ | 6,020 |
The components of goodwill by segment are as follows:
(In millions) |  | Balance as of December 30, 2023 |  |  | Acquisitions |  |  | Balance as of September 28, 2024 |
ODP Business Solutions Division |  | $ | 149 |  |  | $ | 9 |  |  | $ | 158 |
Office Depot Division |  |  | 219 |  |  |  | — |  |  |  | 219 |
Veyer Division |  |  | 35 |  |  |  | — |  |  |  | 35 |
Total |  | $ | 403 |  |  | $ | 9 |  |  | $ | 412 |
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. Each reportable segment also represents a reporting unit. There were no events or changes in circumstances that indicate an impairment may have occurred during the third quarter of 2024. The Company will continue to evaluate the recoverability of goodwill at the reporting unit level. 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 value, resulting in goodwill impairment charges.

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