DIVISION INFORMATION

6 Months Ended

Jun. 25, 2016

DIVISION INFORMATION

NOTE 11. DIVISION 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 services. 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. 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, restructuring and other operating (income) 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 Division operating income (loss) by each of the Divisions, reconciled to consolidated totals.

	Sales
	Second Quarter					First Half
(In millions)	2016			2015		2016			2015
North American Retail Division	$	1,249		$	1,342	$	2,755		$	2,995
North American Business Solutions Division		1,330			1,434		2,698			2,910
International Division		639			664		1,309			1,412
Total	$	3,218		$	3,440	$	6,762		$	7,317
	Division Operating Income (Loss)
	Second Quarter					First Half
(In millions)	2016			2015		2016			2015
North American Retail Division	$	30		$	42	$	132		$	128
North American Business Solutions Division		63			63		109			120
International Division		(10	)		2		(19	)		15
Total	$	83		$	107	$	222		$	263

A reconciliation of the measure of Division operating income to Consolidated income before income taxes is as follows:

	Second Quarter						First Half
(In millions)	2016			2015			2016			2015
Total Division operating income	$	83		$	107		$	222		$	263
Add/(subtract):
Asset impairments		—			(4	)		—			(9	)
Merger, restructuring and other operating income (expenses), net		187			(120	)		143			(163	)
Unallocated expenses		(17	)		(34	)		(40	)		(55	)
Interest income		6			6			12			12
Interest expense		(25	)		(23	)		(48	)		(48	)
Other income (expense), net		—			1			—			2
Income (loss) before income taxes	$	234		$	(67	)	$	289		$	2

As of June 25, 2016 and December 26, 2015, goodwill totaled $378 million, of which $78 million was recorded in the North American Retail Division, $285 million in the North American Business Solutions Division and $15 million in the International Division.

As a result of the Company’s common stock price change following termination of the Staples Merger Agreement, the Company analyzed whether such an event indicated it was likely that the fair values of reporting units were below their carrying values and concluded that no interim test for goodwill impairment was necessary. The annual goodwill impairment test is conducted based on balances as of the first day of the third quarter.