SEGMENT INFORMATION

12 Months Ended

Dec. 27, 2014

SEGMENT INFORMATION

NOTE 19. 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.

Following the date of the Merger, the former OfficeMax U.S. Retail business is included in the North American Retail Division. The former OfficeMax United States and Canada Contract business is included in the North American Business Solutions Division. The former OfficeMax businesses in Australia and New Zealand are included in the International Division. Due to the sale of the Company’s interest in Grupo OfficeMax in August 2014, the integration of this business into the International Division was suspended in the second quarter of 2014 and the joint venture’s results have been removed from the International Division and reported as Other to align with how this information is presented for management reporting. The Company continues to assess how best to serve its customers as shopping preferences and market conditions evolve. Should organizational alignment and management reporting change in future periods in response to these factors, segment reporting in future periods could be impacted.

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. 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 Recovery of purchase price, 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.

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	2014	$	6,528	$	6,013	$	3,400	$	155	$	16,096
	2013		4,614		3,580		3,008		40		11,242
	2012		4,458		3,215		3,023		—		10,696
Division operating income	2014		126		232		53		—		411
	2013		8		113		36		—		157
	2012		24		110		36		—		170
Capital expenditures	2014		44		29		29		21		123
	2013		63		24		39		11		137
	2012		61		31		25		3		120
Depreciation and amortization	2014		140		85		35		53		313
	2013		105		51		29		24		209
	2012		103		43		34		23		203
Charges for losses on receivables and inventories	2014		48		4		13		1		66
	2013		38		9		12		—		59
	2012		40		6		19		—		65
Net earnings from equity method investments	2014		—		—		—		—		—
	2013		—		—		14		—		14
	2012		—		—		30		—		30
Assets	2014		1,784		1,695		1,179		2,186		6,844
	2013		1,847		1,573		1,174		2,883		7,477
	2012	$	1,189	$	670	`$	1,312	$	840	$	4,011

* 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, and (ii) $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)	2014			2013			2012
Division operating income	$	411		$	157		$	170
Add/(subtract):
Other operating income (loss)		8			(2	)		—
Recovery of purchase price		—			—			68
Asset impairments		(88	)		(70	)		(139	)
Merger, restructuring, and other operating expenses, net		(403	)		(201	)		(56	)
Legal accrual		(81	)		—			—
Unallocated expenses		(122	)		(89	)		(74	)
Interest income		24			5			2
Interest expense		(89	)		(69	)		(69	)
Loss on extinguishment of debt		—			—			(12	)
Gain on disposition of joint venture		—			382			—
Other income (expense), net		—			14			35
Income (loss) before income taxes	$	(340	)	$	127		$	(75	)

As of December 27, 2014, 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 (in millions).

	Sales						Property and Equipment, Net
	2014		2013		2012		2014		2013		2012
United States	$	12,132	$	8,119	$	7,671	$	757	$	977	$	707
International		3,964		3,123		3,025		206		332		149
Total	$	16,096	$	11,242	$	10,696	$	963	$	1,309	$	856

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, 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:

	2014		2013		2012
Supplies		47.2%		46.6%		45.8%
Technology		38.0%		40.6%		41.8%
Furniture and other		14.8%		12.8%		12.4%
		100.0%		100.0%		100.0%