☒Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

☐Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date: At ~~July 27,~~October 26, 2022, there were ~~48,633,351~~45,810,663 outstanding shares of The ODP Corporation Common Stock, $0.01 par value.

The order and presentation of this Quarterly Report on Form 10-Q differ from that of the traditional U.S. Securities and Exchange Commission (“SEC”) Form 10-Q format. We believe that our format better presents the relevant sections of this document and enhances readability. See “Form 10-Q Cross-Reference Index” within Other Information for a cross-reference index to the traditional SEC Form 10-Q format.

	13 Weeks Ended						26 Weeks Ended						13 Weeks Ended						39 Weeks Ended
	June 25,			June 26,			June 25,			June 26,			September 24,			September 25,			September 24,			September 25,
	2022			2021			2022			2021			2022			2021			2022			2021
Sales	$	2,034		$	2,070		$	4,212		$	4,244		$	2,172		$	2,179		$	6,385		$	6,423
Cost of goods and occupancy costs		1,603			1,638			3,296			3,317			1,686			1,675			4,983			4,992
Gross profit		431			432			916			927			486			504			1,402			1,431
Selling, general and administrative expenses		377			390			773			792			391			382			1,164			1,173
Asset impairments		3			1			5			13			3			5			8			18
Merger, restructuring and other operating expenses, net		23			11			34			23			8			13			42			37
Operating income		28			30			104			99			84			104			188			203
Other income (expense):
Interest income		1			—			2			—			1			—			3			—
Interest expense		(4	)		(6	)		(9	)		(14	)		(1	)		(7	)		(10	)		(20	)
Other income, net		3			5			5			17			5			3			9			19
Income from continuing operations before income taxes		28			29			102			102			89			100			190			202
Income tax expense		8			9			27			20			22			27			48			47
Net income from continuing operations		20			20			75			82			67			73			142			155
Discontinued operations, net of tax		7			(108	)		7			(117	)		—			28			7			(89	)
Net income (loss)	$	27		$	(88	)	$	82		$	(35	)
Net income													$	67		$	101		$	149		$	66
Basic earnings (loss) per share
Continuing operations	$	0.40		$	0.36		$	1.54		$	1.53		$	1.39		$	1.38		$	2.92		$	2.89
Discontinued operations		0.15			(1.98	)		0.14			(2.18	)		(0.01	)		0.54			0.14			(1.65	)
Net basic earnings per share	$	0.55		$	(1.62	)	$	1.68		$	(0.65	)	$	1.38		$	1.92		$	3.06		$	1.24
Diluted earnings (loss) per share
Continuing operations	$	0.39		$	0.35		$	1.49		$	1.47		$	1.36		$	1.33		$	2.84		$	2.79
Discontinued operations		0.15			(1.93	)		0.14			(2.10	)		(0.01	)		0.52			0.13			(1.60	)
Net diluted earnings per share	$	0.54		$	(1.58	)	$	1.63		$	(0.63	)	$	1.35		$	1.85		$	2.97		$	1.19

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in The ODP Corporation Annual Report on Form 10-K filed on February 23, 2022 (the “2021 Form 10-K”).

	13 Weeks Ended						26 Weeks Ended						13 Weeks Ended						39 Weeks Ended
	June 25, 2022			June 26, 2021			June 25, 2022			June 26, 2021			September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Net income (loss)	$	27		$	(88	)	$	82		$	(35	)
Net income													$	67		$	101		$	149		$	66
Other comprehensive income (loss), net of tax, where applicable:
Foreign currency translation adjustments		(11	)		4			(12	)		9			(19	)		(8	)		(31	)		1
Reclassification of foreign currency translation adjustments realized upon disposal of business		—			—			6			—			—			—			6			—
Other		(2	)		1			(2	)		1			(3	)		—			(5	)		1
Total other comprehensive income (loss), net of tax, where applicable		(13	)		5			(8	)		10			(22	)		(8	)		(30	)		2
Comprehensive income (loss)	$	14		$	(83	)	$	74		$	(25	)
Comprehensive income													$	45		$	93		$	119		$	68

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in the 2021 Form 10-K.

	June 25,			December 25,			September 24,			December 25,
	2022			2021			2022			2021
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	417		$	514		$	473		$	514
Receivables, net		566			495			591			495
Inventories		968			859			890			859
Prepaid expenses and other current assets		60			52			47			52
Current assets held for sale		—			469			107			469
Total current assets		2,011			2,389			2,108			2,389
Property and equipment, net		461			477			355			477
Operating lease right-of-use assets		904			936			889			936
Goodwill		464			464			464			464
Other intangible assets, net		50			54			47			54
Deferred income taxes		207			219			185			219
Other assets		377			326			370			326
Total assets	$	4,474		$	4,865		$	4,418		$	4,865
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	917		$	950		$	853		$	950
Accrued expenses and other current liabilities		955			994			1,015			994
Income taxes payable		14			11			9			11
Short-term borrowings and current maturities of long-term debt		17			20			16			20
Current liabilities held for sale		—			290			—			290
Total current liabilities		1,903			2,265			1,893			2,265
Deferred income taxes and other long-term liabilities		139			159			124			159
Pension and postretirement obligations, net		18			22			20			22
Long-term debt, net of current maturities		177			228			175			228
Operating lease liabilities		724			753			707			753
Total liabilities		2,961			3,427			2,919			3,427
Commitments and contingencies
Stockholders' equity:
Common stock — authorized 80,000,000 shares of $0.01 par value; issued shares — 65,500,578 at June 25, 2022 and 64,704,979 at December 25, 2021; outstanding shares — 48,504,879 at June 25, 2022 and 48,455,951 at December 25, 2021		1			1
Common stock — authorized 80,000,000 shares of $0.01 par value; issued shares — 65,632,777 at September 24, 2022 and 64,704,979 at December 25, 2021; outstanding shares — 46,736,821 at September 24, 2022 and 48,455,951 at December 25, 2021								1			1
Additional paid-in capital		2,723			2,692			2,733			2,692
Accumulated other comprehensive loss		(14	)		(6	)		(36	)		(6	)
Accumulated deficit		(535	)		(617	)		(468	)		(617	)
Treasury stock, at cost — 16,995,699 shares at June 25, 2022 and 16,249,028 shares at December 25, 2021		(662	)		(632	)
Treasury stock, at cost — 18,895,956 shares at September 24, 2022 and 16,249,028 shares at December 25, 2021								(731	)		(632	)
Total stockholders' equity		1,513			1,438			1,499			1,438
Total liabilities and stockholders’ equity	$	4,474		$	4,865		$	4,418		$	4,865

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in the 2021 Form 10-K.

	26 Weeks Ended						39 Weeks Ended
	June 25,			June 26,			September 24,			September 25,
	2022			2021			2022			2021
Cash flows from operating activities:
Net income (loss)	$	82		$	(35	)
Net income							$	149		$	66
Income (loss) from discontinued operations, net of tax		7			(117	)		7			(89	)
Net income from continuing operations		75			82			142			155
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		68			74			100			110
Charges for losses on receivables and inventories		8			10			15			17
Asset impairments		5			13			8			18
Gain on disposition of assets, net		(3	)		(3	)		(4	)		(3	)
Compensation expense for share-based payments		19			20			31			26
Deferred income taxes and deferred tax asset valuation allowances		12			7			33			5
Changes in working capital and other operating activities		(268	)		(68	)		(246	)		(72	)
Net cash provided by (used in) operating activities of continuing operations		(84	)		135
Net cash provided by operating activities of continuing operations								79			256
Net cash used in operating activities of discontinued operations		—			(60	)		—			(10	)
Net cash provided by (used in) operating activities		(84	)		75
Net cash provided by operating activities								79			246
Cash flows from investing activities:
Capital expenditures		(43	)		(28	)		(68	)		(47	)
Businesses acquired, net of cash acquired		—			(28	)		—			(29	)
Proceeds from disposition of assets		6			3			6			4
Settlement of company-owned life insurance policies		2			21			3			21
Net cash used in investing activities of continuing operations		(35	)		(32	)		(59	)		(51	)
Net cash provided by (used in) investing activities of discontinued operations		74			(1	)		74			(3	)
Net cash provided by (used in) investing activities		39			(33	)		15			(54	)
Cash flows from financing activities:
Net payments on long and short-term borrowings		(11	)		(13	)		(16	)		(20	)
Debt retirement		(43	)		—			(43	)		—
Share purchases for taxes, net of proceeds from employee share-based transactions		(17	)		(23	)		(19	)		(25	)
Repurchase of common stock for treasury		—			(46	)		(69	)		(122	)
Other financing activities		(3	)		(1	)		(4	)		(1	)
Net cash used in financing activities of continuing operations		(74	)		(83	)		(151	)		(168	)
Effect of exchange rate changes on cash and cash equivalents		(1	)		3			(6	)		—
Net decrease in cash and cash equivalents		(120	)		(38	)
Net increase (decrease) in cash, cash equivalents and restricted cash								(63	)		24
Cash and cash equivalents at beginning of period		537			729			537			729
Cash and cash equivalents at end of period – continuing operations	$	417		$	691
Cash, cash equivalents and restricted cash at end of period – continuing operations							$	474		$	753
Supplemental information on non-cash investing and financing activities
Right-of-use assets obtained in exchange for new finance lease liabilities	$	—		$	2		$	2		$	3
Right-of-use assets obtained in exchange for new operating lease liabilities		113			37			171			69
Business acquired in exchange for common stock issuance		—			35			—			35
Other current receivable obtained from disposition of discontinued operations		30			—			30			—
Promissory note receivable obtained from disposition of discontinued operations		55			—			55			—
Earn-out receivable obtained from disposition of discontinued operations		9			—			9			—
Transfer from additional paid-in capital to treasury stock for final settlement of the accelerated share repurchase agreement		29			—			29			—

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in the 2021 Form 10-K.

	26 Weeks Ended June 25, 2022																			39 Weeks Ended September 24, 2022
	Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total Equity			Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total Equity
Balance at December 25, 2021		64,704,979	$	1	$	2,692		$	(6	)	$	(617	)	$	(632	)	$	1,438			64,704,979	$	1	$	2,692		$	(6	)	$	(617	)	$	(632	)	$	1,438
Net income		—		—		—			—			55			—			55			—		—		—			—			55			—			55
Other comprehensive income		—		—		—			5			—			—			5			—		—		—			5			—			—			5
Exercise and release of incentive stock (including income tax benefits and withholding)		652,606		—		(14	)		—			—			—			(14	)		652,606		—		(14	)		—			—			—			(14	)
Amortization of long-term incentive stock grants		—		—		9			—			—			—			9			—		—		9			—			—			—			9
Other		—		—		—			—			—			(1	)		(1	)		—		—		—			—			—			(1	)		(1	)
Balance at March 26, 2022		65,357,585	$	1	$	2,687		$	(1	)	$	(562	)	$	(633	)	$	1,492			65,357,585	$	1	$	2,687		$	(1	)	$	(562	)	$	(633	)	$	1,492
Net income		—		—		—			—			27			—			27			—		—		—			—			27			—			27
Other comprehensive loss		—		—		—			(13	)		—			—			(13	)		—		—		—			(13	)		—			—			(13	)
Exercise and release of incentive stock (including income tax benefits and withholding)		142,993		—		(3	)		—			—			—			(3	)		142,993		—		(3	)		—			—			—			(3	)
Amortization of long-term incentive stock grants		—		—		10			—			—			—			10			—		—		10			—			—			—			10
Final settlement of the accelerated share repurchase agreement		—		—		29			—			—			(29	)		—			—		—		29			—			—			(29	)		—
Balance at June 25, 2022		65,500,578	$	1	$	2,723		$	(14	)	$	(535	)	$	(662	)	$	1,513			65,500,578	$	1	$	2,723		$	(14	)	$	(535	)	$	(662	)	$	1,513
Net income																					—		—		—			—			67			—			67
Other comprehensive loss																					—		—		—			(22	)		—			—			(22	)
Exercise and release of incentive stock (including income tax benefits and withholding)																					132,199		—		(2	)		—			—			—			(2	)
Amortization of long-term incentive stock grants																					—		—		12			—			—			—			12
Repurchase of common stock																					—		—		—			—			—			(69	)		(69	)
Balance at September 24, 2022																					65,632,777	$	1	$	2,733		$	(36	)	$	(468	)	$	(731	)	$	1,499

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in the 2021 Form 10-K.

26 Weeks Ended June 26, 2021

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Treasury
Stock

Total
Equity

Balance at December 26, 2020

62,551,255

$
1

$
2,675

$
(32
)

$
(409
)

$
(355
)

$
1,880

Net income

—

—

—

—

53

—

53

Other comprehensive income

—

—

—

5

—

—

5

Exercise and release of incentive stock
   (including income tax benefits and
   withholding)

1,225,876

—

(23
)

—

—

—

(23
)
Amortization of long-term incentive
   stock grants

—

—

10

—

—

—

10

Common stock issuance related to the
   BuyerQuest acquisition

827,498

—

35

—

—

—

35

Balance at March 27, 2021

64,604,629

$
1

$
2,697

$
(27
)

$
(356
)

$
(355
)

$
1,960

Net loss

—

—

—

—

(88
)

—

(88
)
Other comprehensive income

—

—

—

5

—

—

5

Exercise and release of incentive stock
   (including income tax benefits and
   withholding)

18,767

—

—

—

—

—

—

Amortization of long-term incentive
   stock grants

—

—

10

—

—

—

10

Repurchase of common stock

—

—

—

—

—

(46
)

(46
)
Balance at June 26, 2021

64,623,396

$
1

$
2,707

$
(22
)

$
(444
)

$
(401
)

$
1,841

	39 Weeks Ended September 25, 2021
	Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total Equity
Balance at December 26, 2020		62,551,255	$	1	$	2,675		$	(32	)	$	(409	)	$	(355	)	$	1,880
Net income		—		—		—			—			53			—			53
Other comprehensive income		—		—		—			5			—			—			5
Exercise and release of incentive stock (including income tax benefits and withholding)		1,225,876		—		(23	)		—			—			—			(23	)
Amortization of long-term incentive stock grants		—		—		10			—			—			—			10
Common stock issuance related to the BuyerQuest acquisition		827,498		—		35			—			—			—			35
Balance at March 27, 2021		64,604,629	$	1	$	2,697		$	(27	)	$	(356	)	$	(355	)	$	1,960
Net loss		—		—		—			—			(88	)		—			(88	)
Other comprehensive income		—		—		—			5			—			—			5
Exercise and release of incentive stock (including income tax benefits and withholding)		18,767		—		—			—			—			—			—
Amortization of long-term incentive stock grants		—		—		10			—			—			—			10
Repurchase of common stock		—		—		—			—			—			(46	)		(46	)
Balance at June 26, 2021		64,623,396	$	1	$	2,707		$	(22	)	$	(444	)	$	(401	)	$	1,841
Net income		—		—		—			—			101			—			101
Other comprehensive loss		—		—		—			(8	)		—			—			(8	)
Exercise and release of incentive stock (including income tax benefits and withholding)		75,944		—		(2	)		—			—			—			(2	)
Amortization of long-term incentive stock grants		—		—		6			—			—			—			6
Repurchase of common stock		—		—		—			—			—			(76	)		(76	)
Balance at September 25, 2021		64,699,340	$	1	$	2,711		$	(30	)	$	(343	)	$	(477	)	$	1,862

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in the 2021 Form 10-K.

The ODP Corporation ~~including~~(including its consolidated subsidiaries, ~~(“ODP”~~“ODP” or the “Company”),is a leading provider of ~~business~~products, services and ~~supplies, products and digital workspace~~ technology solutions ~~to small, medium-sized and enterprise businesses. The Company operates~~ through ~~its direct and indirect subsidiaries and maintains a fully~~an integrated business-to-business (“B2B”) distribution platform ~~of thousands of~~and omnichannel presence, which includes supply chain and distribution operations, dedicated sales ~~and technology service~~ professionals, a B2B digital procurement solution, online presence, and ~~1,020~~a network of Office Depot and OfficeMax retail ~~stores, all supported by supply chain facility and delivery operations.~~stores. Through its ~~banner brands~~operating companies Office ~~Depot®, OfficeMax®~~Depot, LLC; ODP Business Solutions, LLC; Veyer, LLC; and ~~Grand & Toy®, as well as others,~~Varis, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day.

Prior to the Company offers its customers the tools and resources they need to focus on starting, growing and running their business. The Company’s corporate headquarters is located in Boca Raton, FL, and its primary website is www.officedepot.com.

~~At June 25,~~third quarter of 2022, the Company had 2two reportable segments (or “Divisions”):, which were its Business Solutions Division and Retail Division. During the third quarter of 2022, the Company re-aligned its operations into its consumer business named Office Depot, and three distinct B2B business and digital segments which are ODP Business Solutions, Veyer and Varis. As a result, the Company re-evaluated its reportable segments, and determined that at September 24, 2022, the Company had four Divisions: ODP Business Solutions Division, Office Depot Division, Veyer Division, and Varis Division. Refer to Note 3 for additional information.

The Company’s CompuCom Division was sold through a single disposal group on December 31, 2021. The Company has reclassified the financial results of the CompuCom Division to Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented. The Company also reclassified the related assets and liabilities as assets and liabilities held for sale on the accompanying Condensed Consolidated Balance Sheets as of December 25, 2021, and presented cash flows from the Company’s discontinued operations in the Condensed Consolidated Statements of Cash Flows for all periods. Refer to Note 1211 for additional information.

The Condensed Consolidated Financial Statements as of ~~June 25,~~September 24, 2022, and for the 13-week and ~~26-week~~39-week periods ended ~~June 25,~~September 24, 2022 (also referred to as the ~~“second~~“third quarter of 2022” and ~~the “first half of~~“year-to-date 2022,” respectively) and ~~June 26,~~September 25, 2021 (also referred to as the ~~“second~~“third quarter of 2021” and ~~the “first half of~~“year-to-date 2021,” respectively) are unaudited. However, in management’s opinion, these Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature necessary to provide a fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. Business acquisitions in 2021 are included prospectively from the date of acquisition, thus affecting the comparability of the Company’s financial statements for the periods presented in this report on Form 10-Q.

The Company has prepared the Condensed Consolidated Financial Statements included herein pursuant to the rules and regulations of the SEC. Some information and note disclosures, which would normally be included in comprehensive annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), have been condensed or omitted pursuant to those SEC rules and regulations. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. For a better understanding of the Company and its Condensed Consolidated Financial Statements, the Company recommends reading these Condensed Consolidated Financial Statements in conjunction with the audited financial statements, which are included in the Company’s 2021 Form 10-K. These interim results are not necessarily indicative of the results that should be expected for the full year.

In May 2021, the Company’s Board of Directors unanimously approved a plan to pursue a separation of the Company into two independent, publicly traded companies representing its B2B and consumer businesses, which was planned to be achieved through a spin-off of its consumer business. On January 14, 2022, the Company announced that its Board of Directors determined to delay the previously announced public company separation to evaluate a potential sale of the Company’s consumer business and that it had received a non-binding proposal from another third party, in addition to the previously received proposal from USR Parent, Inc., to acquire the Company’s consumer business.

On June 21, 2022, the Company’s Board of Directors, with the assistance of its financial and legal advisors, completed its review of both proposals received by the Company to acquire its consumer business and unanimously determined it to be in the best interests of the Company and its shareholders not to divest the consumer business at ~~this~~that time. Further, due to current market conditions, the Company’s Board of Directors also determined not to resume the Company’s previously planned spin-off of its consumer business at ~~this~~that time and instead to maintain all of its businesses under common ownership.

As discussed above, in connection with the Company’s announcement to maintain all of its businesses under common ownership, during the third quarter of 2022, the Company ~~announced that it is re-aligning~~re-aligned its operations into its consumer business named Office Depot, and three distinct B2B business and digital segments which are ODP Business Solutions, Veyer and Varis. ~~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.~~

The cash management process generally utilizes zero balance accounts which provide for the settlement of the related disbursement and cash concentration accounts on a daily basis. Amounts not yet presented for payment to zero balance disbursement accounts of $7$5 million at ~~June 25,~~September 24, 2022 are presented in Trade accounts payable and Accrued expenses and other current liabilities, and $1 million at December 25, 2021 are presented in Current liabilities held for sale.

At ~~June 25,~~September 24, 2022 and December 25, 2021, cash and cash equivalents held outside the United States amounted to ~~$110~~$103 million and $108 million, respectively. At December 25, 2021, there was $17 million cash and cash equivalents held outside the United States included in Current assets held for sale.

Restricted cash consists primarily of cash in bank committed to fund UK pension obligations based on the agreements that govern the UK pension plan. Restricted cash is valued at cost, which approximates fair value. Restricted cash was $1 million at September 24, 2022. There was no restricted cash at December 25, 2021.

The Company generates substantially all of its revenue from contracts with customers for the sale of products and services. Refer to Note 3 for information on revenue by reportable segment and product category. Contract balances primarily consist of receivables, assets related to deferred contract acquisition costs, liabilities related to payments received in advance of performance under the contract, and liabilities related to unredeemed gift cards and loyalty programs. The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:

The Company recognized revenues of $23 million and $23 million in year-to-date 2022 and 2021, respectively, which were included in the short-term contract liability balance at the beginning of each respective period.

The Company has taken actions to optimize its asset base and drive operational efficiencies. These actions include acquiring profitable businesses, closing underperforming retail stores and non-strategic distribution facilities, consolidating functional activities, eliminating redundant positions and disposing of non-strategic businesses and assets. The expenses and any income recognized directly associated with these actions are included in Merger, restructuring and other operating expenses, net on a separate line in the Condensed Consolidated Statements of Operations in order to identify these activities apart from the expenses incurred to sell to and service customers. These expenses are not included in the determination of Division operating income. The table below summarizes the major components of Merger, restructuring and other operating expenses, net.

	Second Quarter						First Half						Third Quarter						Year-to-Date
(In millions)	2022			2021			2022			2021			2022			2021			2022			2021
Merger and transaction related expenses
Transaction and integration	$	—		$	—			—			1		$	(7	)	$	(1	)		(7	)		—
Total Merger and transaction related expenses		—			—			—			1			(7	)		(1	)		(7	)		—
Restructuring expenses
Severance		(1	)		(2	)		(1	)		(1	)		(1	)		(1	)		(2	)		(2	)
Professional fees		—			—			—			—			—			—			—			1
Facility closure, contract termination, and other expenses, net		1			—			2			9			2			5			4			14
Total Restructuring expenses, net		—			(2	)		1			8			1			4			2			13
Other operating expenses
Professional fees		23			13			33			14			14			10			47			24
Total Other operating expenses		23			13			33			14			14			10			47			24
Total Merger, restructuring and other operating expenses, net	$	23		$	11		$	34		$	23		$	8		$	13		$	42		$	37

In the ~~second~~third quarter ~~and first half~~ of 2022, the Company recognized $7 million income related to earn-out adjustment on the acquisition of BuyerQuest Holdings, Inc. In year-to-date 2022, the Company did 0tnot incur any additional transaction and integration expenses. In the third quarter and year-to-date 2021 the Company did not incur any transaction and integration expenses. ~~In the second quarter of 2021, the Company did 0t incur any transaction and integration expenses. In the first half of 2021, the Company incurred transaction and integration expenses of~~The $1 million ~~primarily related to its acquisition~~income represents the impact of ~~BuyerQuest Holdings, Inc. (“BuyerQuest”), which is part of its Varis Division.~~earnout adjustments on acquisitions made in prior periods.

In May 2020, the Company’s Board of Directors approved a restructuring plan to realign the Company’s operational focus to support its “business-to-business” solutions and IT services business units and improve costs (“Maximize B2B Restructuring Plan”). Implementation of the Maximize B2B Restructuring Plan is expected to be substantially completed by the end of 2023. The Maximize B2B Restructuring Plan aims to generate savings through optimizing the Company’s retail footprint, removing costs that directly support the Retail business and additional measures to implement a company-wide low-cost business model, which will then be invested in accelerating the growth of the Company’s business-to-business platform. The plan is broader than restructuring programs the Company has implemented in the past and includes closing and/or consolidating retail stores and distribution facilities and the reduction of up to 13,100 employee positions by the end of 2023. The Company is evaluating the number and timing of retail store and distribution facility closures and/or consolidations. However, it is generally understood that closures will approximate the store’s lease termination date. The Company closed 1210 and 1828 retail stores in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, 111 retail stores in 2021, and 70 retail stores and 2two distribution facilities in 2020 under the Maximize B2B Restructuring Plan. It is anticipated that additional retail stores will be closed in 2022. Total estimated restructuring costs related to the Maximize B2B Restructuring Plan are expected to be up to $111 million, comprised of:

The total costs of up to $111 million above are less than the Company’s estimate of total costs for this restructuring plan when it commenced, mainly as a result of the reduction in the number of expected retail store and distribution facility closures based upon the Company’s most recent evaluation of economic factors that influence expected store closures. There could be further fluctuations in the estimate of total expected costs in the future and timing of such costs as a result of an assessment of general market conditions and changes in the Company’s business strategy. In addition, the reduction of employee positions may also be impacted as a result of fewer retail store closures and the changes in the Company’s business strategy. The $111 million of total costs are expected to be incurred as cash expenditures through 2023 and funded primarily with cash on hand and cash from operations. The Company incurred ~~$96~~$97 million in restructuring expenses to implement the Maximize B2B Restructuring Plan since its inception in 2020 and through the ~~second~~third quarter of 2022, of which ~~$56~~$58 million were cash expenditures.

In the ~~second~~third quarter and ~~first half of~~year-to-date 2022, the Company incurred $1$2 million and $2$4 million, respectively, in facility closure and other costs associated with the Maximize B2B Restructuring Plan. The Company also reversed $1 million and $2 million of employee severance accruals in the ~~second~~third quarter and ~~first half of~~year-to-date 2022 due to changes in estimates. The Company had $1$2 million and $3$5 million of cash expenditures in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, associated with the Maximize B2B Restructuring Plan.

In the ~~second~~third quarter of 2021, the Company incurred ~~$(2)~~$4 million, net, in restructuring expenses associated with the Maximize B2B Restructuring Plan, which consisted of $2$5 million of facility closure, contract termination and other costs, partially offset by $1 million in reversal of employee severance accruals due to changes in ~~estimates and a $1 million gain on sale of retail store assets, partially offset by $1 million of facility closure, contract termination and other costs. In the first half of~~estimates. Year-to-date 2021, the Company incurred $8$13 million in restructuring expenses associated with the Maximize B2B Restructuring Plan, which consisted of $101 million in third-party professional fees, $15 million of ~~retail store and~~ facility closure, ~~costs,~~ contract termination and other ~~that were mainly related to closure accruals and accelerated depreciation,~~costs, partially offset by $1$2 million in reversal of employee severance accruals due to changes in estimates and a $1 million gain on sale of retail store assets. Of these amounts, $112 million and ~~$15~~$17 million were cash expenditures in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, respectively.

Other operating expenses represent costs incurred that are incremental to those related to running the Company’s core operations, which are presented within Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

As described in Note 1 above, the Company had been evaluating the separation of its consumer business, first through a spin-off and subsequently through a potential sale. On June 21, 2022, the Company’s Board of Directors, with the assistance of its financial and legal advisors, completed its review of both proposals received by the Company to acquire its consumer business and unanimously determined it to be in the best interests of the Company and its shareholders not to divest the consumer business at this time. Further, due to current market conditions, the Company’s Board of Directors also determined not to resume the Company’s previously planned separation of its consumer business at this time and instead to maintain all of its businesses under common ownership. The Company incurred ~~$23 million and~~ $33 million in third-party professional fees in year-to-date 2022 related to separation activities, which was all incurred in the ~~second quarter and~~ first half of ~~2022, respectively, related to separation activities.~~2022. The Company had incurred ~~$32~~$9 million and $20 million in third-party professional fees associated with separation activities in ~~2021.~~the third quarter and year-to-date 2021, respectively, related to separation activities.

Also as described in Note 1 above, during the third quarter of 2022, the Company re-aligned its operations into four Divisions, which also represent its new reportable segments. The Company incurred $14 million in third-party professional fees in connection with the re-alignment in the third quarter of 2022. At September 24, 2022, the Company continues to perform certain activities related to the re-alignment, which is expected to be substantially completed in 2022. The costs incurred in the third quarter of 2022 represent trailing costs to complete activities that were previously started as part of the separation process discussed above, and leveraged to achieve the re-alignment. The Company does not expect to have a re-alignment of its businesses in the future. Accordingly, the Company has presented the costs associated with the re-alignment as Other operating expenses, as they represent incremental operating expenses that are not part of its core costs to support its operations.

Other operating expenses ~~of $2~~in the third quarter and year-to-date 2021 also included $1 million and $3$4 million, ~~in the second quarter and first half~~respectively, of ~~2021, respectively, represent~~ third-party professional fees incurred related to the evaluation of USR Parent, Inc.’s proposals received during the first half of 2021.

The activity in the merger, restructuring and other accruals in ~~the first half of~~year-to-date 2022 is presented in the table below. Certain merger, restructuring and other charges are excluded from the table because they are paid as incurred or non-cash, such as accelerated depreciation and gains and losses on asset dispositions.

	Balance as of								Balance as of		Balance as of								Balance as of
	December 25,		Charges (credits)			Cash			June 25,		December 25,		Charges (credits)			Cash			September 24,
(In millions)	2021		Incurred			Payments			2022		2021		Incurred			Payments			2022
Termination benefits:
Maximize B2B Restructuring Plan		19		(1	)		—			18		19		(2	)		—			17
Lease and contract obligations, accruals for facilities closures and other costs:
Maximize B2B Restructuring Plan		6		2			(3	)		5		6		5			(5	)		6
Comprehensive Business Review		1		—			—			1		1		—			—			1
Previously planned separation of consumer business		2		32			(18	)		16
Previously planned separation of consumer business and realignment												2		44			(37	)		9
Total	$	28	$	33		$	(21	)	$	40	$	28	$	47		$	(42	)	$	33

The short-term and long-term components of these liabilities are included in Accrued expenses and other current liabilities and Deferred income taxes and other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets.

As a result of the CompuCom Division’s presentation as discontinued operations, the Company’s level of service revenue is below 10% of the Company’s total revenue for all periods presented. Accordingly, revenues and cost of sales from services and products are not separately disclosed in the Company’s Condensed Consolidated Statements of Operations. The Company updated its major revenue categories disclosed herein according to this presentation, and prior period amounts have been reclassified to conform to the current period presentation.

~~The following table provides information about disaggregated revenue from continuing operations by Division, and major revenue categories.~~

Second Quarter of 2022

(In millions)

Business Solutions
Division

Retail
Division

Other

Total

Major revenue categories

Supplies

$
686

$
286

$
4

$
976

Technology

278

321

2

601

Furniture and other

187

112

2

301

Copy and print

64

92

—

156

Total

$
1,215

$
811

$
8

$
2,034

Second Quarter of 2021

(In millions)

Business Solutions
Division

Retail
Division

Other

Total

Major revenue categories

Supplies

$
599

$
304

$
3

$
906

Technology

298

397

2

697

Furniture and other

189

126

5

320

Copy and print

60

87

—

147

Total

$
1,146

$
914

$
10

$
2,070

First Half of 2022

(In millions)

Business Solutions
Division

Retail
Division

Other

Total

Major revenue categories

Supplies

$
1,383

$
637

$
6

$
2,026

Technology

565

704

4

1,273

Furniture and other

371

238

3

612

Copy and print

126

175

—

301

Total

$
2,445

$
1,754

$
13

$
4,212

First Half of 2021

(In millions)

Business Solutions
Division

Retail
Division

Other

Total

Major revenue categories

Supplies

$
1,179

$
671

$
5

$
1,855

Technology

608

849

3

1,460

Furniture and other

367

270

9

646

Copy and print

120

163

—

283

Total

$
2,274

$
1,953

$
17

$
4,244

The Company sells its supplies, technology, furniture and other products through its Business Solutions and Retail Divisions. Customers can purchase products through the Company’s call centers, electronically through its Internet websites, or through its retail stores. Revenues from supplies, technology, and furniture and other product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.

Furniture and other products also include arrangements where customers can make special furniture interior design and installation orders that are customized to their needs. The performance obligations related to these arrangements are satisfied over time.

Substantially all of the Company’s copy and print and technology support services offerings are satisfied at a point in time and revenue is recognized as such. The majority of copy and print offerings, which includes printing, copying, and digital imaging, are fulfilled through retail stores and the related performance obligations are satisfied within a short period of time (generally within the same day).

Revenue is recognized upon transfer of control of promised products or services to customers for an amount that reflects the consideration the Company is entitled to receive in exchange for those products or services. For product sales, transfer of control occurs at a point in time, typically upon delivery to the customer. For service offerings, the transfer of control and satisfaction of the performance obligation is either over time or at a point in time. When performance obligations are satisfied over time, the Company evaluates the pattern of delivery and progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Revenue is recognized net of allowance for returns and net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling costs are considered fulfillment activities and are recognized within the Company’s cost of goods sold.

Contracts with customers could include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Determining the standalone selling price also requires judgment. The Company did not have significant revenues generated from such contracts in the first halves of 2022 and 2021.

Products are generally sold with a right of return and the Company may provide other incentives, such as rebates and coupons, which are accounted for as variable consideration when estimating the amount of revenue to recognize. The Company estimates returns and incentives at contract inception and includes the amount in the transaction price for which significant reversal is not probable. These estimates are updated at the end of each reporting period as additional information becomes available.

The Company offers a customer loyalty program that provides customers with rewards that can be applied to future purchases or other incentives. Loyalty rewards are accounted for as a separate performance obligation and deferred revenue is recorded in the amount of the transaction price allocated to the rewards, inclusive of the impact of estimated breakage. The estimated breakage of loyalty rewards is based on historical redemption rates experienced under the loyalty program. Revenue is recognized when the loyalty rewards are redeemed or expire. As of June 25, 2022 and December 25, 2021, the Company had $8 million and $12 million of deferred revenue related to the loyalty program, respectively, which is included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

The Company recognizes revenue in certain circumstances before product delivery occurs (commonly referred to as bill-and-hold transactions). Revenue from bill-and-hold transactions is recognized when all specific requirements for transfer of control under a bill-and-hold arrangement have been met which include, among other things, a request from the customer that the product be held for future scheduled delivery. For these bill-and-hold arrangements, the associated product inventory is identified separately as belonging to the customer and is ready for physical transfer.

The timing of revenue recognition may differ from the timing of invoicing to customers. A receivable is recognized in the period the Company delivers goods or provides services, and is recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is also recognized for unbilled services where the Company’s right to consideration is unconditional, and is recorded based on an estimate of time and materials. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 20 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the contracts do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services.

The Company receives payments from customers based upon contractual billing schedules. Contract assets include amounts related to deferred contract acquisition costs (refer to the section “Costs to Obtain a Contract” below) and if applicable, the Company’s conditional right to consideration for completed performance under a contract. The short- and long-term components of contract assets in the table below are included in Prepaid expenses and other current assets, and Other assets, respectively, in the Condensed Consolidated Balance Sheets. Contract liabilities include payments received in advance of performance under the contract, which are recognized as revenue when the performance obligation is completed under the contract, as well as accrued contract acquisition costs, liabilities related to the Company’s loyalty program and gift cards. The short- and long-term components of contract liabilities in the table below are included in Accrued expenses and other current liabilities, and Deferred income taxes and other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets.

~~The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:~~

~~In the first halves of 2022 and 2021, the Company did not~~have any contract assets related to conditional rights. The Company recognized revenues of $11 million and $17 million in the first halves of 2022 and 2021, respectively, which were included in the short-term contract liability balance at the beginning of each respective period. ~~There were 0 contract assets and liabilities that were recognized in the first half of 2022 as a result of business combinations.~~ The Company recognized 0 contract assets and $2 million of contract liabilities in the first half of 2021 as a result of business combinations. There were 0 significant adjustments to revenue from performance obligations satisfied in previous periods and there were 0 contract assets ~~recognized~~ at the beginning of each respective period that transferred to receivables in the first halves of 2022 and 2021. Included in the table above are short- and long-term contract assets of $1 million and $2 million as of December 25, 2021, respectively, related to CompuCom, which were presented as part of assets held for sale on the Condensed Consolidated Balance Sheet as of December 25, 2021. Also included in the table above are short- and long-term contract liabilities of $10 million and $2 million as of December 25, 2021, respectively, which were presented as part of liabilities held for sale on the Condensed Consolidated Balance Sheet as of December 25, 2021.

A majority of the purchase orders and statements of work related to contracts with customers require delivery of the product or service within one year or less. For certain service contracts that exceed one year, the Company recognizes revenue at the amount to which it has the right to invoice for services performed. Accordingly, the Company has applied the optional exemption provided by the current revenue recognition standard relating to unsatisfied performance obligations and does not disclose the value of unsatisfied performance obligations for its contracts.

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain rebate incentive programs meet the requirements to be capitalized. These costs are periodically reviewed for impairment, and are amortized on a straight-line basis over the expected period of benefit. As of June 25, 2022 and December 25, 2021, short-term contract assets and long-term contract assets in the table above represent capitalized acquisition costs. In the second quarter and first half of 2022, amortization expense was $5 million and $10 million, respectively. In the second quarter and first half of 2021, amortization expense was $6 million and $12 million, respectively. The Company had 0 asset impairment charges related to contract assets in the periods presented herein. There is uncertainty regarding the continued impacts of COVID-19 on the global and national economies, which could negatively affect the Company’s customers and result in future impairments of contract assets.

During the third quarter of 2022, the Company re-aligned its operations into its consumer business named Office Depot, and three distinct B2B business and digital segments which are ODP Business Solutions, Veyer and Varis. The decision to re-align was driven by how the Company is looking at its products and offerings and serving its customers. How the Company’s customers work and interact has changed, where businesses demand a wider range of products and services, and a more modern digital environment in which to operate, and consumers demand an omni-channel retail experience. In addition, dependable supply chain operations have become increasingly important in meeting these demands. The Company performed a full strategic review of its operations in light of these factors, and determined that completing the re-alignment of its operations in this manner enables the Company to better focus on its customers by being in a better position to meet a wider array of customer needs for product, service, and omni-channel choices. The Company also determined that the re-alignment provides for greater accountability internally for product and service outcomes, customer experiences, capital allocations, and pursuing strategic opportunities.

~~NOTE 4. SEGMENT INFORMATION~~The re-alignment resulted in a change in the Company’s reportable segments. In addition, management of the Company also changed how it analyzes these businesses, which resulted in the inclusion of certain corporate costs, mainly payroll related, previously excluded from segment profitability measures. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties. The changes to its reportable segments did not impact the Company’s current Consolidated Financial Statements. Prior period amounts, including interim periods, have been recast to conform to the current presentation. These changes have no impact on previously reported Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders’ Equity, or Statements of Cash Flows.

ODP Business Solutions Division – The Company’s leading B2B solutions provider serving small, medium and enterprise level companies. This segment includes the contract sales channel of the Company’s previous Business Solutions Division, and ~~Retail Division.~~operates in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada. This segment also includes our Federation entities, which are over a dozen 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 ODP 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~~who are served through a dedicated sales force, catalogs, telesales, and electronically through the Company’s Internet websites.

Office Depot Division – The ~~Retail Division includes a chain~~Company’s leading provider of retail ~~stores~~consumer and small business products and services distributed through a fully integrated omnichannel platform of approximately 1,000 Office Depot and OfficeMax retail locations in the United States, Puerto Rico and the U.S. Virgin Islands, ~~which sell~~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 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.

Veyer Division – The Company’s supply chain, distribution, procurement and global sourcing operation. Veyer specializes in B2B and consumer business service delivery, with core competencies in distribution, fulfillment, transportation, global sourcing and purchasing. Veyer’s customers include our Office Depot Division and ODP Business Solutions Division, as well as third-party customers. Veyer also includes the Company’s global sourcing operations in Asia.

Varis Division – The Company’s tech-enabled B2B indirect procurement marketplace, which provides a better 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. In connection with the Company’s development efforts of this Division, it acquired BuyerQuest Holdings, Inc. (“BuyerQuest”) in 2021, a software as a service eProcurement platform company. BuyerQuest’s operating results are included in the Varis Division. Varis Division currently serves enterprise businesses and provides its services to middle- and small-sized businesses. It is focused on filling the growing demand for a B2B centric digital commerce platform that is modern, trusted, and provides the procurement controls and visibility businesses require to operate.

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 1211 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 2 operating segments are the Company’s 2 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,~~Divisions, 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.~~totals:

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

(In millions)	ODP Business Solutions Division		Office Depot Division		Veyer Division		Varis Division			Eliminations			Total
Third Quarter of 2022
Sales (external)	$	1,030	$	1,133	$	7	$	2		$	-		$	2,172
Sales (internal)		5		10		1,477		-			(1,492	)	$	-
Total sales	$	1,035	$	1,143	$	1,484	$	2		$	(1,492	)	$	2,172
Division operating income (loss)	$	48	$	83	$	9	$	(17	)	$	-		$	123

Year-to-Date 2022
Sales (external)	$	3,004	$	3,358	$	18	$	5		$	-		$	6,385
Sales (internal)		15		25		4,415		-			(4,455	)		-
Total sales	$	3,019	$	3,383	$	4,433	$	5		$	(4,455	)	$	6,385
Division operating income (loss)	$	103	$	228	$	25	$	(48	)	$	-		$	308

Third Quarter of 2021
Sales (external)	$	940	$	1,229	$	8	$	2		$	-		$	2,179
Sales (internal)		7		10		1,520		-			(1,537	)		-
Total sales	$	947	$	1,239	$	1,528	$	2		$	(1,537	)	$	2,179
Division operating income (loss)	$	34	$	108	$	7	$	(10	)	$	-		$	139

Year-to-Date 2021
Sales (external)	$	2,697	$	3,699	$	24	$	3		$	-		$	6,423
Sales (internal)		19		26		4,493		-			(4,538	)		-
Total sales	$	2,716	$	3,725	$	4,517	$	3		$	(4,538	)	$	6,423
Division operating income (loss)	$	55	$	266	$	22	$	(21	)	$	-		$	322

AThe reconciliation of the measure of Division operating income to Consolidated income from continuing operations before income taxes is as follows:

	Second Quarter						First Half						Third Quarter						Year-to-Date
(In millions)	2022			2021			2022			2021			2022			2021			2022			2021
Total Divisions operating income	$	76		$	69		$	185		$	184		$	123		$	139		$	308		$	322
Add/(subtract):
Asset impairments		(3	)		(1	)		(5	)		(13	)		(3	)		(5	)		(8	)		(18	)
Merger, restructuring and other operating expenses, net		(23	)		(11	)		(34	)		(23	)		(8	)		(13	)		(42	)		(37	)
Unallocated expenses		(22	)		(27	)		(42	)		(49	)		(28	)		(17	)		(70	)		(64	)
Interest income		1			—			2			—			1			—			3			—
Interest expense		(4	)		(6	)		(9	)		(14	)		(1	)		(7	)		(10	)		(20	)
Other income, net		3			5			5			17			5			3			9			19
Income from continuing operations before income taxes	$	28		$	29		$	102		$	102		$	89		$	100		$	190		$	202

The ~~components of goodwill~~following table provides information about disaggregated sales by ~~segment are provided in the following table:~~major categories:

The following table provides information about total assets by each of the Divisions, reconciled to consolidated totals:

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 presentedchanges 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 estimatesreportable segments described above also resulted 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 resultschange of the Company’s reporting units ~~deteriorate in~~during the ~~future,~~third quarter of 2022, where each reportable segment also represents a reporting unit. Goodwill was allocated to the new reporting units using their relative fair values. The Company performed a qualitative goodwill impairment assessment of its legacy reporting units immediately before the change and determined that it ~~may cause~~was more likely than not that the respective fair values of the legacy reporting units were greater than their respective carrying values. The Company also performed a quantitative goodwill impairment assessment of its current reporting units immediately after the change and determined the fair ~~value~~values of ~~one or more of the~~all reporting units ~~to fall below~~exceeded their carrying ~~amount, resulting~~amounts. Changes in goodwill ~~impairment charges.~~by segment were as follows:

During 2022 and 2021, the mix of income and losses across jurisdictions, although still applicable, has become less of a factor in influencing the Company’s effective tax rates due to limited international operations and improved operating results. The Company’s effective tax rates were ~~29%~~25% for both the third quarter and ~~26%~~year-to-date 2022, and 27% and 23% for the ~~second~~third quarter and ~~first half of 2022, respectively, and 31% and 20% for~~year-to-date 2021, respectively. For the ~~second~~third quarter and ~~first half of 2021, respectively. In~~ the ~~first half of~~year-to-date 2022, the Company’s effective rate was primarily impacted by the recognition of a tax benefit associated with stock-based compensation awards ~~year-to-date.~~year-to-date and the reversal of uncertain tax positions. This along with the impact of state taxes and the mix of income and losses across U.S. and non-U.S. jurisdictions, caused the Company’s effective tax rate to differ from the statutory rate of 21%. ~~In the first half of~~Year-to-date 2021, the Company’s effective rate was primarily impacted by the recognition of tax benefits associated with stock-based compensation awards year-to-date and recognition of tax benefits due to an agreement reached with the IRS related to a prior tax position. These factors, along with the impact of state taxes and the mix of income and losses across U.S. and non-U.S. jurisdictions, caused the Company’s effective tax rate to differ from the statutory rate of 21%. Changes in pretax income projections and the mix of income across jurisdictions could impact the effective tax rates in future quarters.

The Company continues to have a U.S. valuation allowance for certain U.S. federal credits and state tax attributes, which relates to deferred tax assets that require certain types of income or for income to be earned in certain jurisdictions in order to be realized. The Company will continue to assess the realizability of its deferred tax assets in the U.S. and remaining foreign jurisdictions in future periods. Changes in pretax income projections could impact this evaluation in future periods. The sale of CompuCom resulted in the Company recognizing a capital loss of approximately $210 million, tax effected. A portion of this capital loss, approximately $20 million, is available to be carried back in several jurisdictions. The tax benefit of these carry back claims was reflected in the discontinued operations income tax expense at December 25, 2021. The Company has determined that it is more likely than not that the benefit from the excess capital loss of $190 million will not be realized at this time. In recognition of this risk, the Company has provided a full valuation allowance during the first quarter of 2022 against the excess capital loss not carried back.

The Company files a U.S. federal income tax return and other income tax returns in various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state and local income tax examinations for years prior to 2021 and 2014, respectively. The acquired OfficeMax U.S. consolidated group is no longer subject to U.S. federal income tax examination, and with few exceptions, is no longer subject to U.S. state and local income tax examinations for years prior to 2013. Generally, the Company is subject to routine examination for years 2013 and forward in its international tax jurisdictions.

It is anticipated that $1 million of tax positions will be resolved within the next 12 months. Additionally, the Company anticipates that it is reasonably possible that new issues will be raised or resolved by tax authorities that may require changes to the balance of unrecognized tax benefits; however, an estimate of such changes cannot be reasonably made.

The following table represents the calculation of earnings (loss) per common share – basic and diluted:

	Second Quarter					First Half					Third Quarter					Year-to-Date
(In millions, except per share amounts)	2022		2021			2022		2021			2022			2021		2022		2021
Basic Earnings (Loss) Per Share
Numerator:
Net income from continuing operations	$	20	$	20		$	75	$	82		$	67		$	73	$	142	$	155
Income (loss) from discontinued operations, net of tax		7		(108	)		7		(117	)		—			28		7		(89	)
Net income (loss)	$	27	$	(88	)	$	82	$	(35	)
Net income											$	67		$	101	$	149	$	66
Denominator:
Weighted-average shares outstanding		49		54			49		54			48			53		49		54
Basic earnings (loss) per share:
Continuing operations	$	0.40	$	0.36		$	1.54	$	1.53		$	1.39		$	1.38	$	2.92	$	2.89
Discontinued operations		0.15		(1.98	)		0.14		(2.18	)		(0.01	)		0.54		0.14		(1.65	)
Net basic earnings (loss) per share	$	0.55	$	(1.62	)	$	1.68	$	(0.65	)
Net basic earnings per share											$	1.38		$	1.92	$	3.06	$	1.24
Diluted Earnings (Loss) Per Share
Numerator:
Net income from continuing operations	$	20	$	20		$	75	$	82		$	67		$	73	$	142	$	155
Income (loss) from discontinued operations, net of tax		7		(108	)		7		(117	)		—			28		7		(89	)
Net income (loss)	$	27	$	(88	)	$	82	$	(35	)
Net income											$	67		$	101	$	149	$	66
Denominator:
Weighted-average shares outstanding		49		54			49		54			48			53		49		54
Effect of dilutive securities:
Stock options and restricted stock		1		2			1		2			1			2		1		2
Diluted weighted-average shares outstanding		50		56			50		56			49			55		50		56
Diluted earnings (loss) per share:
Continuing operations	$	0.39	$	0.35		$	1.49	$	1.47		$	1.36		$	1.33	$	2.84	$	2.79
Discontinued operations		0.15		(1.93	)		0.14		(2.10	)		(0.01	)		0.52		0.13		(1.60	)
Net diluted earnings (loss) per share	$	0.54	$	(1.58	)	$	1.63	$	(0.63	)
Net diluted earnings per share											$	1.35		$	1.85	$	2.97	$	1.19

Awards of stock options and nonvested shares representing additional shares of outstanding common stock were 1 million in the third quarter and less than 1 million ~~in both the second quarter and first half of~~year-to-date 2022, and less than 1 million in both the ~~second~~third quarter and ~~first half of~~year-to-date 2021, but they were not included in the computation of diluted weighted-average shares outstanding because their effect would have been antidilutive.

On April 17, 2020, the Company entered into the Third Amended and Restated Credit Agreement (the “Third Amended Credit Agreement”), which provides for a $1.2 billion asset-based revolving credit facility and a $100 million asset-based first-in, last-out term loan facility (the “FILO Term Loan Facility”), for an aggregate principal amount of up to $1.3 billion (the “New Facilities”). The New Facilities mature on April 17, 2025. The Third Amended Credit Agreement replaced the Company’s then existing amended and restated credit agreement that was due to mature in May 2021. During the first quarter of 2022, the Company reduced its asset-based revolving credit facility by $200 million to $1.0 billion and retired $43 million of outstanding FILO Term Loan Facility loans under the Third Amended Credit Agreement.

As provided by the Third Amended Credit Agreement, available amounts that can be borrowed at any given time are based on percentages of certain outstanding accounts receivable, credit card receivables, inventory, cash value of company-owned life insurance policies, and certain specific real estate of the Company. At ~~June 25,~~September 24, 2022, the Company had 0no revolving loans ~~outstanding,~~outstanding. The Company had $57 million of outstanding FILO Term Loan Facility loans, $47 million of outstanding standby letters of credit, and ~~$953~~$934 million of available credit under the Third Amended Credit ~~Agreement.~~Agreement at September 24, 2022. The Company was in compliance with all applicable covenants at ~~June 25,~~September 24, 2022.

Accumulated other comprehensive loss activity, net of tax, where applicable, is provided in the following table:

	Foreign			Change in						Foreign			Change in
	Currency			Deferred						Currency			Deferred
	Translation			Pension and						Translation			Pension and
(In millions)	Adjustments			Other			Total			Adjustments			Other			Total
Balance at December 25, 2021	$	(27	)	$	21		$	(6	)	$	(27	)	$	21		$	(6	)
Other comprehensive loss activity before reclassifications		(12	)		(2	)		(14	)		(31	)		(5	)		(36	)
Reclassification of foreign currency translation adjustments realized upon disposal of business		6			—			6			6			—			6
Balance at June 25, 2022	$	(33	)	$	19		$	(14	)
Balance at September 24, 2022										$	(52	)	$	16		$	(36	)

The Board of Directors reviewed the Company’s existing capital allocation programs in connection with the sale of CompuCom, and on December 31, 2021, authorized an additional $200 million for share repurchases under the then existing stock repurchase program, for a total authorization of $650 million. This stock repurchase program expired on June 30, 2022, and in July 2022, the Board of Directors approved a new stock repurchase program of up to $600 million, available through June 30, 2024. In October 2022, the Board of Directors approved a new stock repurchase program of up to $1 billion, available through December 31, 2025 to replace the existing $600 million stock repurchase program effective November 3, 2022. The new ~~authorization~~authorizations may be suspended or discontinued at any time. The exact timing of share repurchases will depend on market conditions and other factors, and will be funded through available cash balances.

On November 16, 2021, as part of the stock repurchase program ~~expiring~~that expired on June 30, 2022, the Company entered into an accelerated share repurchase agreement (“ASR”) to repurchase shares of the Company’s common stock in exchange for an up-front payment $150 million. The ASR repurchase period ran through May 25, 2022, and the Company received 0.7 million shares of its common stock as the final settlement of the ASR in the second quarter of 2022. The Company repurchased 3.6 million shares of its common stock in total at an average price per share of $41.46 under the ASR. ~~The Company did 0t repurchase any additional shares of its common stock in the second quarter and first half of 2022.~~ InIn July 2022, as part of the new $600 million stock repurchase program, the Board of Directors approved a Dutch auction tender offer to repurchase up to ~~$300~~$300 million worth of shares of its common stock, based on demand. Subject to certain limitations and legal requirements, the Company could repurchase up to an additional 2% of the outstanding shares in the tender offer. Through this tender offer, the Company’s shareholders ~~have~~had the opportunity to tender some or all of their shares at a price within the range of $~~31.50~~$31.50 to $~~36.00~~$36.00 per share subject to the conditions set forth in the tender offer documents. The tender offer commenced on July 18,, 2022 and ~~is expected to expire~~expired on August 12, 2022. The Company repurchased 14 thousand shares under the tender offer at a cost of $1 million. The Company repurchased 2 million additional shares of its common stock at a cost of $69 million in the third quarter of 2022 under the new repurchase program. As a result, the Company repurchased 3 million shares year-to-date 2022, including the final settlement of the ASR, at a cost of $98 million. As of September 24, 2022, $530 million remains available for stock repurchases under the current stock repurchase program. Subsequent to the end of the third quarter of 2022 and through October 26, 2022, the Company repurchased 1 million shares of its common stock at a cost of $34 million~~2022~~.~~, unless extended or earlier terminated by the Company.~~

At ~~June 25,~~September 24, 2022, there were 1719 million shares of common stock held in treasury. The Company’s Third Amended Credit Agreement permits restricted payments, such as common stock repurchases, but may be limited if the Company does not meet the required minimum liquidity or fixed charge coverage ratio requirements. Refer to Note 76 for additional information about the Company’s compliance with covenants.

In May 2020, in order to preserve liquidity during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic impact, the Company’s Board of Directors suspended the Company’s quarterlyThe Company did not declare any cash ~~dividend beginning~~dividends year-to-date 2022. The Company does not anticipate declaring cash dividends in the ~~second quarter of 2020. There was no quarterly cash dividend declared and paid in the second quarter and the first half of 2022. The Company’s~~ ~~quarterly cash dividend remains suspended.~~ ~~Prior to its suspension, dividends have been recorded as a reduction to additional paid-in capital as the Company is in an accumulated deficit position.~~foreseeable future. The Company’s Third Amended Credit Agreement permits restricted payments, such as dividends, but may be limited if the Company does not meet the required minimum liquidity or fixed charge coverage ratio requirements. Refer to Note 76 for additional information about the Company’s compliance with covenants.

The components of net periodic pension benefit for the Company’s North America pension plans are as follows:

	Second Quarter						First Half						Third Quarter						Year-to-Date
(In millions)	2022			2021			2022			2021			2022			2021			2022			2021
Service cost	$	0		$	0		$	0		$	0		$	—		$	—		$	—		$	—
Interest cost		5			5			11			10			5			5			16			15
Expected return on plan assets		(7	)		(8	)		(13	)		(15	)		(6	)		(7	)		(19	)		(22	)
Net periodic pension benefit	$	(2	)	$	(3	)	$	(2	)	$	(5	)	$	(1	)	$	(2	)	$	(3	)	$	(7	)

The North American qualified pension plan is in a net asset position and included in Other assets in the Condensed Consolidated Balance Sheets at ~~June 25,~~September 24, 2022 and December 25, 2021. The North American nonqualified pension plan is in a net liability position and included in Pension and postretirement obligations, net in the Condensed Consolidated Balance Sheets at ~~June 25,~~September 24, 2022 and December 25, 2021. During ~~the first half of~~year-to-date 2022, $1$2 million of cash contributions were made to the North America pension plans. The Company expects to make additional cash contributions of approximately $21 million to the North America pension plans during the remainder of 2022.

The components of net periodic pension benefit for the Company’s pension plan in the United Kingdom (“UK”) are as follows:

	Second Quarter						First Half						Third Quarter						Year-to-Date
(In millions)	2022			2021			2022			2021			2022			2021			2022			2021
Service cost	$	0		$	0		$	0		$	0		$	—		$	—		$	—		$	—
Interest cost		1			1			2			2			1			1			3			3
Expected return on plan assets		(2	)		(2	)		(3	)		(3	)		(1	)		(1	)		(5	)		(4	)
Net periodic pension benefit	$	(1	)	$	(1	)	$	(1	)	$	(1	)	$	—		$	—		$	(2	)	$	(1	)

The UK pension plan is in a net asset position and included in Other assets in the Condensed Consolidated Balance Sheets at ~~June 25,~~September 24, 2022 and December 25, 2021. During ~~the first half of~~year-to-date 2022, cash contributions of $1 million were made to the UK pension plan. The Company is 0tnot required to make any additional cash contributions to the UK pension plan in the remainder of 2022.

Net periodic pension benefits for the North America and UK pension plans and other postretirement benefit plans (the “Plans”) are recorded at the Corporate level. The service cost for the Plans are reflected in Selling, general and administrative expenses, and the other components of net periodic pension benefits are reflected in Other income, net, in the Condensed Consolidated Statements of Operations.

The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In developing its fair value estimates, the Company uses the following hierarchy:

In accordance with GAAP, certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company’s assets and liabilities that are adjusted to fair value on a recurring basis are money market funds that qualify as cash equivalents, and derivative financial instruments, which may be entered into to mitigate risks associated with changes in foreign currency exchange rates, fuel and other commodity prices and interest rates. The Company did 0tnot have derivative financial instruments during the ~~second~~third quarter and ~~first half of~~year-to-date 2022.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. In the ~~second~~third quarter and ~~first half of~~year-to-date 2022, the Company recognized asset impairment charges of $3 million and $5$8 million, respectively, primarily related to the impairment of operating lease right-of-use (“ROU”) assets associated with the Company’s retail store locations. In the ~~second~~third quarter and ~~first half of~~year-to-date 2021, the Company recognized asset impairment charges of $1$5 million and ~~$13~~$18 million, respectively. Of the asset impairment charges in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, $1$4 million and ~~$11~~$15 million were related to the impairment of ROU assets associated with the Company’s retail store locations, and the remainder were related to impairment of fixed assets. All impairment charges discussed in the sections below are presented in Asset impairments in the Condensed Consolidated Statements of Operations.

The Company regularly reviews retail store assets for impairment indicators at the individual store level, as this represents the lowest level of identifiable cash flows. When indicators of impairment are present, a recoverability analysis is performed which considers the estimated undiscounted cash flows over the retail store’s remaining life and uses input from retail operations and accounting and finance personnel. These inputs include management’s best estimates of retail store-level sales, gross margins, direct expenses, exercise of future lease renewal options when reasonably certain to be exercised, and resulting cash flows that can naturally include judgments about how current initiatives will impact future performance. The assumptions used within the recoverability analysis for the retail stores were updated to consider current quarter retail store operational results and formal plans for future retail store closures as part of the Company’s restructuring programs, including the probability of closure at the retail store level. While it is generally understood that closures will approximate the store’s lease termination date, it is possible that changes in store performance or other conditions could result in future changes in assumptions utilized. These assumptions reflected declining sales over the forecast period, and gross margin and operating cost assumptions that are consistent with recent actual results and consider plans for future initiatives. The Company also analyzed the impact of the COVID-19 pandemic on store asset recoverability. Due to the nature of products sold, the retail stores were considered to be essential by most local jurisdictions and as a result, the substantial majority of these retail stores have remained open and operational with the appropriate safety measures in place since the beginning of the COVID-19 outbreak, including a curbside pickup option. Since late in the first quarter of 2020, the Company has reduced retail location hours by one to two hours daily, which continues to be in effect at the majority of its retail locations. The Company’s recoverability assessment included evaluating the impact of these developments.

If the undiscounted cash flows of a retail store cannot support the carrying amount of its assets, the assets are impaired if necessary and written down to estimated fair value. The fair value of retail store assets is determined using a discounted cash flow analysis which uses Level 2 unobservable inputs that are corroborated by market data such as independent real estate valuation opinions. Specifically, the analysis uses assumptions of potential rental rates for each retail store location which are based on market data for comparable locations. These estimated cash flows used in the ~~second~~third quarter of 2022 impairment calculation were discounted at a weighted average discount rate of 8%.

The Company will continue to evaluate initiatives to improve performance and lower operating costs. There are uncertainties regarding the impact of the COVID-19 pandemic, supply chain and macroeconomic conditions on the future results of operations, including the forecast period used in the recoverability analysis. To the extent that forward-looking sales and operating assumptions

are not achieved and are subsequently reduced, additional impairment charges may result. However, at the end of the ~~second~~third quarter of 2022, the impairment recognized reflects the Company’s best estimate of future performance.

In addition to its retail store assets, the Company also regularly evaluates whether there are impairment indicators associated with its other long-lived assets, which were negatively impacted by the COVID-19 pandemic. The Company did not identify any impairment indicators for these long-lived assets as of ~~June 25~~September 24, 2022, and as a result, there were no associated impairment charges.

The Company’s corporate headquarters in Boca Raton met the criteria to be classified as held for sale during the third quarter of 2022. The asset was measured at the lower of its carrying amount or estimated fair value less costs to sell upon classification to held for sale, which was $104 million, and did not result in any valuation reserve being recorded. Accordingly, the Company presented its corporate headquarters in Boca Raton within current assets held for sale in the Condensed Consolidated Balance Sheets as of September 24, 2022. The Company has entered into an agreement in principle with a third-party buyer to sell this facility. The completion of the sales transaction, which is expected to occur during the fourth quarter of 2022, is subject to various conditions, including an intention for the Company to lease back a portion of the building’s office space from the new owner.

The fair values of cash and cash equivalents, receivables, trade accounts payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

The following table presents information about financial instruments at the balance sheet dates indicated.

	June 25,				December 25,				September 24,				December 25,
	2022				2021				2022				2021
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
(In millions)	Amount		Value		Amount		Value		Amount		Value		Amount		Value
Financial assets:
Company-owned life insurance		137		137		137		137		138		138		137		137
Financial liabilities:
Long-term debt:
New Facilities loans under the Third Amended Credit Agreement, due 2025		57		57		100		100		57		57		100		100
Revenue bonds, due in varying amounts periodically through 2029		75		76		75		76		75		76		75		76
American & Foreign Power Company, Inc. 5% debentures, due 2030		15		14		15		16		15		14		15		16

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

The Company is involved in litigation arising in the normal course of business. While, from time to time, claims are asserted that make demands for a large sum of money (including, from time to time, actions which are asserted to be maintainable as class action suits), the Company does not believe that contingent liabilities related to these matters (including the matters discussed below), either individually or in the aggregate, will materially affect the Company’s financial position, results of operations, or cash flows.

In the ordinary course of business, sales to and transactions with government customers may be subject to lawsuits, investigations, audits and review by governmental authorities and regulatory agencies, with which the Company cooperates. Many of these lawsuits, investigations, audits and reviews are resolved without material impact to the Company. While claims in these matters may at times assert large demands, the Company does not believe that contingent liabilities related to these matters, either individually or in the aggregate, will materially affect its financial position, results of operations, or cash flows.

In addition to the foregoing, OfficeMax is named as a defendant in a number of lawsuits, claims, and proceedings arising out of the operation of certain paper and forest products assets prior to those assets being sold in 2004, for which OfficeMax agreed to retain responsibility. Also, as part of that sale, OfficeMax agreed to retain responsibility for all pending, threatened and future proceedings alleging asbestos-related injuries arising out of the operation of the paper and forest products assets prior to the closing of the sale. The

Company has made provision for losses with respect to the pending proceedings. Additionally, as of ~~June 25,~~September 24, 2022, the Company has made provision for environmental liabilities with respect to certain sites where hazardous substances or other contaminants are or may be located. For these liabilities, the Company’s estimated range of reasonably possible losses was approximately $15 million to $25 million. The Company regularly monitors its estimated exposure to these liabilities. As additional information becomes known, these estimates may change, however, the Company does not believe any of these OfficeMax retained proceedings are material to the Company’s financial position, results of operations, or cash flows.

The Company sold its former CompuCom Division through a single disposal group on December 31, 2021. The transaction was structured and accounted for as an equity sale. The related Securities Purchase Agreement (“SPA”) provides for consideration consisting of a cash purchase price equal to $125 million (subject to customary adjustments, including for cash, debt and working capital), an interest-bearing promissory note in the amount of $55 million, and a holding fee (“earn-out”) provision providing for payments of up to $125 million in certain circumstances. The promissory note accrues interest at 6six percent per annum, payable on a quarterly basis in cash or in-kind, and is due in full on June 30, 2027. Under the earn-out provision, if the purchaser receives dividends or sale proceeds from the CompuCom business equal to (i) three (3) times its initial capital investment in the CompuCom business plus (ii) 15% per annum on subsequent capital investments, the Company will be entitled to 50% of any subsequent dividends or sale proceeds up to and until the Company has received an aggregate of $125 million. The Company also agreed to provide certain transitional services to the purchaser for a period of three to twelve months under a separate agreement after closing. The SPA contains customary warranties of the Company and the purchaser.

CompuCom was presented as held for sale as of December 25, 2021, and the loss from classification to held for sale was measured at the lower of its carrying amount or estimated fair value less costs to sell and was included in the valuation allowance of current assets held for sale as of December 25, 2021. The estimated fair value of CompuCom was based on the terms of the SPA, and amounted to $190 million, which included $126 million for cash purchase price after adjusting for cash, debt and working capital, $55 million for the promissory note, and $9 million for the earn-out. Of the cash purchase price, $30 million iswas related to adjustments for cash, debt and working capital, and is a current receivable as of ~~June 25,~~September 24, 2022. The promissory note and the earn-out are non-current receivables as of ~~June 25,~~September 24, 2022. The earn-out provision was identified to be a derivative in accordance with ASC 815, and its fair value was determined using Monte Carlo simulation. The resulting loss from classification to held for sale was $170 million in the fourth quarter of 2021. During ~~the first half of~~year-to-date 2022, the Company incurred further loss on disposal of $1 million in third-party professional fees related to the sale of CompuCom. In addition, during ~~the second quarter and first half of~~year-to-date 2022, the Company received $7 million of insurance proceeds for the malware incident that occurred in 2021 reflected in gain on disposal of discontinued operations.

Merger and restructuring expenses incurred by the former CompuCom Division, that were previously presented as Corporate expenses, are included in the measurement and presentation of discontinued operations in all periods presented.

The following table represents a reconciliation of the major components of discontinued operations, net of tax presented in the Condensed Consolidated Statements of Operations.

	Second Quarter					First Half						Third Quarter					Year-to-Date
(In millions)	2022		2021			2022			2021			2022		2021			2022			2021
Major components of discontinued operations before income taxes:
Sales	$	—	$	216		$	—		$	408		$	—	$	201		$	—		$	610
Cost of goods and occupancy costs:		—		176			—			329			—		161			—			491
Gross profit		—		40			—			79			—		40			—			119
Selling, general and administrative expenses		—		38			—			89			—		29			—			117
Asset impairments				114			—			114					—			—			114
Merger, restructuring and other operating expenses, net		—		(4	)		—			(3	)		—		—			—			(2	)
Operating loss		—		(108	)		—			(121	)
Operating income (loss)													—		11			—			(110	)
Other income (expense):
Other income, net		—		—			—			—			—		—			—			(1	)
Loss from major components of discontinued operations before income taxes		—		(108	)		—			(121	)
Income (loss) from major components of discontinued operations before income taxes													—		11			—			(111	)
Gain (loss) on disposal of discontinued operations		7		—			6			—			—		(1	)		6			(1	)
Income (loss) from discontinued operations before income taxes		7		(108	)		6			(121	)		—		10			6			(112	)
Income tax benefit		—		—			(1	)		(4	)		—		(18	)		(1	)		(23	)
Discontinued operations, net of tax	$	7	$	(108	)	$	7		$	(117	)	$	—	$	28		$	7		$	(89	)

The following table represents the major classes of assets and liabilities of the disposal group classified as held for sale presented in the Condensed Consolidated Balance Sheets as of December 25, 2021. The Company completed the sale of CompuCom on December 31, 2021, and therefore no assets or liabilities are included in discontinued operations as of ~~June 25,~~September 24, 2022.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This document, including the following discussion and analysis, contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. All statements that are not statements of historical fact are forward-looking statements. Without limitation, when we use the words “believe,” “estimate,” “plan,” “expect,” “intend,” “anticipate,” “continue,” “may,” “project,” “probably,” “should,” “could,” “will” and similar expressions in this Quarterly Report on Form 10-Q, we are identifying forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements appear in a number of places in this discussion and analysis and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations, the Company’s ability to achieve its strategic plans, the potential impact of the COVID-19 pandemic on our business, liquidity, suppliers, consumers, customers, and employees, disruptions or inefficiencies in our supply chain, our strategic shift to maintain all of our businesses under common ownership, our ability to mitigate or manage disruptions posed by COVID-19, uncertainties arising from the Russia-Ukraine conflict including its effect on the U.S. economy, changes in worldwide and U.S. economic conditions that materially impact consumer spending and employment and the demand for our products and services, and the outcome of contingencies such as litigation and investigations. Readers are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. More information regarding these risks, uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth herein under “Risk Factors,” found in Other Information which supplements our discussion of “Risk Factors” within Other Key Information in our Annual Report on Form 10-K filed on February 23, 2022 (the “2021 Form 10-K”) with the SEC, Forward-Looking Statements, found in our 2021 Form 10-K.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist readers in better understanding and evaluating our financial condition and results of operations. We recommend reading this MD&A in conjunction with our Condensed Consolidated Financial Statements and the Notes to those statements included in the “Financial Statements” section of this Quarterly Report on Form 10-Q, as well as our 2021 Form 10-K.

We are a leading provider of business services and supplies, products and digital workplace technology solutions to small, medium-sized and enterprise businesses. We operate through our direct and indirect subsidiaries and maintain a fully integrated business-to-business (“B2B”) distribution platform of thousands of dedicated sales and technology service professionals, online presence and ~~1,020~~1,009 retail stores. Through our banner brands Office Depot®, OfficeMax® and Grand & Toy®, as well as others, we offer our customers the tools and resources they need to focus on starting, growing and running their business.

~~As of June 25, 2022, our operations are organized into two reportable segments (or “Divisions”): Business Solutions Division and Retail Division.~~ ~~We sold our CompuCom Division through a single disposal group on December 31, 2021. Accordingly, that business is presented as discontinued operations.~~

~~The Business Solutions Division~~, or BSD, is the largest component of our integrated B2B distribution platform in terms of both revenue and customers, and provides our customers with nationally branded as well as our private branded office supply products and services. Additionally, BSD provides adjacency products and services including cleaning and breakroom supplies, personal protective equipment, technology services, copy and print services, and office furniture products and services in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada through a dedicated sales force, catalogs, telesales, and electronically through our Internet websites. BSD includes the regional office supply distribution businesses we have acquired as part of our strategic transformation described in the section below.

~~The Retail Division~~ includes our chain of retail stores in the United States, Puerto Rico and the U.S. Virgin Islands where we sell office supplies, technology products and solutions, business machines and related supplies, print, cleaning, breakroom supplies and facilities products, and furniture. In addition, our Retail Division offers a range of business-related services targeted to small businesses, technology support services as well as printing, copying, mailing and shipping services.

In May 2021, our Board of Directors had unanimously approved a plan to pursue a separation of the Company into two independent, publicly traded companies, representing our B2B and consumer businesses, which was planned to be achieved through a spin-off of our consumer business. On January 14, 2022, we announced that our Board of Directors determined to delay the previously announced public company separation to evaluate a potential sale of our consumer business and that we had received a non-binding proposal from another third party, in addition to that previously received from USR Parent, Inc., to acquire our consumer business. On June 21, 2022, our Board of Directors, with the assistance of its financial and legal advisors, completed its review of both proposals received by the Company to acquire our consumer business and unanimously determined it to be in the best interests of the Company and its shareholders not to divest our consumer business at this time. Further, due to current market conditions, our Board of Directors also determined not to resume our previously planned separation of our consumer business at this time and instead to maintain all of our businesses under common ownership.

We have been undergoing a strategic business transformation to pivot our Company into an integrated B2B distribution platform, with the objective of expanding our product offerings to include value-added services for our customers and capture greater market share. Using the flexibility afforded by our holding company restructuring that was previously completed, we ~~are transforming~~have re-aligned our operations under our holding company structure into our consumer business named Office Depot, and three distinct B2B business and digital segments which are ODP Business Solutions, Veyer and Varis. The decision to re-align was driven by how we are looking at our products and offerings and serving our customers. How our customers work and interact has changed, where businesses demand a wider range of products and services, and a more modern digital environment in which to operate, and consumers demand an omni-channel retail experience. In addition, dependable supply chain operations have become increasingly important in meeting these demands. We performed a full strategic review of our operations in light of these factors, and determined that completing the re-alignment of our operations in this manner enables us to better focus on our customers by being in a better position to meet a wider array of customer needs for product, service, and omni-channel choices. We also determined that the re-alignment provides for greater accountability internally for product and service outcomes, customer experiences, capital allocations, and pursuing strategic opportunities. We also believe our B2B and consumer businesses operating collectively under our holding company structure will improve shareholder value and derive benefits from scaling. ~~We continue to~~ ~~transition the assets that support our B2B and consumer businesses as part of this process.~~ Upon completion of this re-alignment, we ~~will~~ also ~~re-evaluate~~re-evaluated our

reportable segments based on how the business is managed, including decision-making about resources allocation and assessing performance of the segments.

As ~~part~~of September 24, 2022, our operations are organized into four reportable segments (or “Divisions”), as described below. Previously, we had two reportable segments which were the Business Solutions Division and Retail Division. We sold our CompuCom Division through a single disposal group on December 31, 2021. Accordingly, that business is presented as discontinued operations.

ODP Business Solutions Division – Our leading B2B solutions provider serving small, medium and enterprise level companies. This segment includes the contract sales channel of our ~~transformation, we are also developing our new digital platform technology business, Varis, which is part of our evolving B2B business. We aim to transform the B2B procurement~~previous Business Solutions Division, and sourcing industry by filling the growing demand for a modern, trusted, digital B2B platform. In connection with our development efforts in this area, we had acquired BuyerQuest Holdings, Inc. in 2021, a business services software company with an eProcurement platform. BuyerQuest’s operating results are included in our Varis Division. We continue to grow our customer and supplier relationships and investoperates in the ~~capabilities of~~United States, Puerto Rico, the U.S. Virgin Islands, and Canada. The ODP Business Solutions Division sells nationally branded, as well as our ~~Varis Division~~private branded, office supply and ~~its platform in order~~adjacency products and services to ~~drive future value in the large~~customers, who are served through a dedicated sales force, catalogs, telesales, and ~~growing business commerce market.~~

~~Our strategy continues to include expanding~~electronically through our ~~reach and distribution network through~~Internet websites. This segment also includes our Federation entities, which ~~comprise more than~~are over a dozen ~~profitable~~ regional office supply distribution businesses acquired by us ~~over time, serving small~~as part of our transformation to expand our reach and ~~mid-market customers. Many of these customers are in~~distribution network into geographic areas that were previously underserved, ~~by our network. These Federation entities,~~and which continue to operate under their own brand ~~names,~~names. The acquisition of these businesses have allowed for an effective and accretive means to expand our distribution reach, target new business customers and grow our offerings beyond traditional office supplies. ~~During~~

Office Depot Division - Our leading provider of retail consumer and small business products and services distributed through a fully integrated omnichannel platform of approximately 1,000 Office Depot and OfficeMax retail locations in the ~~second quarter~~United States, Puerto Rico and ~~first half of 2022, we did not have any new acquisitions.~~the U.S. Virgin Islands, and an eCommerce presence (www.officedepot.com). Our 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 offer business services including copying, printing, digital imaging, mailing, shipping and technology support services. In addition, ~~we continue to invest in~~the print needs for retail and business customers are facilitated through our regional print production centers.

Veyer Division – Our supply chain, distribution, procurement and global sourcing ~~operations supporting~~operation, which has over 30 years of experience with proven leadership, is branded under a new name. Veyer specializes in B2B and consumer business service delivery, with core competencies in distribution, fulfillment, transportation, global sourcing and purchasing. Veyer’s customers include our ~~businesses,~~Office Depot Division and ODP Business Solutions Division, as well as third-party customers. Veyer also includes the ~~logistics needs~~Company’s global sourcing operations in Asia.

Varis Division – Our tech-enabled B2B indirect procurement marketplace, which provides a better way for ~~other third parties.~~

~~Finally,~~buyers and suppliers to transact through the platform’s consumer-like buying experience, advanced spend management tools, network of suppliers, and technology capabilities. In connection with our development efforts of this Division, we ~~sold~~acquired BuyerQuest Holdings, Inc. (“BuyerQuest”) in 2021, a software as a service eProcurement platform company. BuyerQuest’s operating results are included in our ~~CompuCom~~Varis Division. Varis Division currently serves enterprise businesses and provides its services to middle- and small-sized businesses. It is focused on ~~December 31, 2021, which allows us~~filling the growing demand for a B2B centric digital commerce platform that is modern, trusted, and provides the procurement controls and visibility businesses require to ~~enhance our focus on our core capabilities and strategies discussed above. Refer to the “Dispositions” section below for more information on this sale.~~operate.

The sale of CompuCom, which represented our former CompuCom Division, was completed on December 31, 2021. The transaction was structured and accounted for as an equity sale. The related Securities Purchase Agreement (“SPA”) provides for consideration consisting of a cash purchase price equal to $125 million (subject to customary adjustments, including for cash, debt and working capital), an interest-bearing promissory note in the amount of $55 million, and a holding fee (“earn-out”) provision providing for payments of up to $125 million in certain circumstances. The promissory note accrues interest at six percent per annum, payable on a quarterly basis in cash or in-kind, and is due in full on June 30, 2027. Under the earn-out provision, if the purchaser receives dividends or sale proceeds from the CompuCom business equal to (i) three (3) times its initial capital investment in the CompuCom business plus (ii) 15% per annum on subsequent capital investments, the Company will be entitled to 50% of any subsequent dividends or sale proceeds up to and until the Company has received an aggregate of $125 million. The Company also agreed to provide certain transitional services to the purchaser for a period of three to twelve months under a separate agreement after closing. The SPA contains customary warranties of the Company and the purchaser.

The sale of CompuCom represented a strategic shift that had a major impact on our operations and financial results. Accordingly, the operating results and cash flows are classified as discontinued operations for all periods presented. Refer to Note ~~12.~~11. “Discontinued Operations” in Notes to Condensed Consolidated Financial Statements for additional information.

For a discussion of the impacts to our business from COVID-19, refer to “COVID-19 Update” included in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations, certain risk factors included in Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 25, 2021 and the information presented below within Operating Results by Division.

We are closely monitoring the unfolding events due to the Russia-Ukraine conflict and its regional and global ramifications. We do not have operations in Ukraine or Russia, and our supply chain has not been impacted. While we do have certain vendors that are based in Ukraine, we have not experienced an impact as a result of the conflict. Other impacts due to this rapidly evolving situation are currently unknown and the broader economic impacts could potentially subject our business to materially adverse consequences should the situation escalate beyond its current scope.

The following summarizes the more significant factors impacting our operating results for the 13-week and ~~26-week~~39-week periods ended ~~June 25,~~September 24, 2022 (also referred to as the ~~“second~~“third quarter of 2022” and ~~the “first half of~~“year-to-date 2022,” respectively) and ~~June 26,~~September 25, 2021 (also referred to as the ~~“second~~“third quarter of 2021” and ~~the “first half of~~“year-to-date 2021,” respectively). Prior year amounts have been recast to conform to the current presentation of our reportable segments. In addition, management of the Company also changed how it analyzes these businesses, which resulted in the inclusion of certain corporate costs, mainly payroll related, previously excluded from segment profitability measures.The changes to our reportable segments did not impact our Consolidated Financial Statements. These changes also have no impact on previously reported Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders’ Equity, or Statements of Cash Flows.

Our consolidated sales were ~~2% lower~~relatively flat in the ~~second~~third quarter of 2022 compared to the same period of the prior year. Sales in our ODP Business Solutions Division increased ~~$69~~$90 million, or 6%10%, as compared to the same period in the prior year. ~~This increase was driven by higher sales of $88 million to our business-to-business customers, which was partially offset by lower sales in our eCommerce platform.~~ The increase in sales in our ODP Business Solutions Division were mainly in categories of ~~cleaning,~~paper, furniture, breakroom, school and office supplies, copy and print services, and personal protective equipment ~~breakroom, office~~and cleaning supplies ~~paper, and copy and print services.~~. Sales in our ~~Retail~~Office Depot Division decreased ~~$103~~$96 million, or ~~11%~~8%, as compared to the same period in the prior year, mainly as a result of planned store closures and lower demand. Our ~~Retail~~Office Depot Division had lower demand in certain product categories that had higher sales in the prior year comparable quarter driven by the needs of our customers to help address their challenges derived from the COVID-19 pandemic, such as facilitating the continued remote work and virtual learning ~~environments.~~environments, as well as lower sales in our eCommerce platform. The contribution of our Veyer Division and Varis Division to consolidated sales was not material.

Our consolidated sales were $38 million, or 1%, lower ~~in the first half of~~year-to-date 2022 compared to the same period of the prior year. Sales in our ODP Business Solutions Division increased ~~$171~~$307 million, or 8%11%, as compared to the same period in the prior year. ~~This increase was driven by higher sales of $217 million to our business-to-business customers, which was partially offset by lower sales in our eCommerce platform.~~ The increase in sales in our ODP Business Solutions Division were mainly in categories of ~~cleaning,~~paper, furniture, breakroom, school and office supplies, copy and print services, and personal protective equipment ~~breakroom, office~~and cleaning supplies ~~paper, and copy and print services.~~. Sales in our ~~Retail~~Office Depot Division decreased ~~$199~~$341 million, or ~~10%~~9%, as compared to the same period in the prior year, mainly as a result of planned store closures and lower demand. Our ~~Retail~~Office Depot Division had lower demand in certain product categories that had higher sales in the prior year comparable period driven by the needs of our customers to help address their challenges derived from the COVID-19 pandemic, such as facilitating the continued remote work and virtual learning ~~environments.~~environments, as well as lower sales in our eCommerce platform. The contribution of our Veyer Division and Varis Division to change in consolidated sales was not material.

Sales

Second Quarter

First Half

(In millions)

2022

2021

Change

2022

2021

Change

Business Solutions Division

$
1,215

$
1,146

6
%

$
2,445

$
2,274

8
%
Retail Division

811

914

(11
)%

1,754

1,953

(10
)%
Other

8

10

(20
)%

13

17

(24
)%
Total

$
2,034

$
2,070

(2
)%

$
4,212

$
4,244

(1
)%

Sales (External)	Third Quarter							Year-to-Date
(In millions)	2022		2021¹		Change			2022¹		2021¹		Change
ODP Business Solutions Division	$	1,030	$	940		10	%	$	3,004	$	2,697		11	%
Office Depot Division		1,133		1,229		(8	)%		3,358		3,699		(9	)%
Veyer Division		7		8		(13	)%		18		24		(25	)%
Varis Division		2		2		0	%		5		3		67	%
Total	$	2,172	$	2,179		(0	)%	$	6,385	$	6,423		(1	)%

Discussion of additional income and expense items, including material charges and credits and changes in interest and income taxes follows our review of segment results.

Second Quarter

First Half

(In millions)

2022

2021

2022

2021

Sales

$
1,215

$
1,146

$
2,445

$
2,274

% change

6
%

12
%

8
%

(4
)%
Division operating income

$
45

$
31

$
78

$
48

% of sales

4
%

3
%

3
%

2
%

	Third Quarter						Year-to-Date
(In millions)	2022			2021¹			2022¹			2021¹
Sales (external)	$	1,030		$	940		$	3,004		$	2,697
Sales (internal)	$	5		$	7		$	15		$	19
% change of total sales		9	%					11	%
Division operating income	$	48		$	34		$	103		$	55
% of total sales		5	%		4	%		3	%		2	%

Sales in our ODP Business Solutions Division increased 6%9% in the ~~second~~third quarter of 2022 compared to the corresponding quarter in 2021. During the ~~second~~third quarter of 2022, our ODP Business Solutions Division experienced higher demand across the majority of our product categories. The higher demand was driven by the continued recovery of our business-to-business customers, including those in the education sector, from the disruptions to their operations as a result of the impacts of the COVID-19 pandemic. The increase in demand resulted in ~~$88~~$100 million higher sales across a majority of our offerings, including paper, furniture, breakroom, school and office supplies, copy and print services, as well as personal protective equipment and cleaning ~~supplies, which contributed $9 million~~supplies. In addition to ~~this increase. The~~ higher demand, ~~from our business-to-business customers was~~inflationary initiatives also resulted in favorable pricing, which also contributed to the increase in sales. These increases were partially offset by ~~$20~~a decline of $12 million ~~lower~~in ink and toner sales, mainly as a result of supply challenges. Sales include internal sales of $5 million and $7 million in ~~our eCommerce platform, as compared to~~ the ~~second~~third quarter of ~~2021.~~ 2022 and 2021, respectively, which relate to ODP Business Solutions Division customers’ transactions held at Office Depot Division retail store locations.

Sales in our ODP Business Solutions Division increased ~~8% in the first half of~~11% year-to-date 2022 compared to the corresponding period in 2021. ~~During the first half of~~In year-to-date 2022, our ODP Business Solutions Division experienced higher demand across the majority of our product categories. The higher demand was driven by the continued recovery of our business-to-business customers, including those in the education sector, from the disruptions to their operations as a result of the impacts of the COVID-19 pandemic. The increase in demand resulted in ~~$217~~$320 million higher sales across a majority of our offerings, including paper, furniture, breakroom, school and office supplies, copy and print services, as well as personal protective equipment and cleaning supplies, which contributed ~~$66~~$69 million toof this increase. The ~~higher demand from our business-to-business customers was~~drivers of the increase were consistent with those described above for the third quarter of 2022. These increases were partially offset by ~~$45~~a decline of $17 million ~~lower~~in ink and toner sales, ~~in our eCommerce platform,~~mainly as ~~compared~~a result of supply challenges. Sales include internal sales of $15 million and $19 million year-to-date 2022 and year-to-date 2021, respectively, which relate to ~~the first half of 2021.~~ODP Business Solutions Division customers’ transactions held at Office Depot Division retail store locations.

Our ODP Business Solutions Division sales could be impacted in the near term related to numerous factors, among others, a weaker U.S. economy and higher unemployment and inflation that materially impact ~~consumer~~ spending, the demand for our products and services and

the availability of supply. Specifically, we experienced supply constraints in some of our larger product categories such as ink and technology products, and we may continue to face delays or difficulty sourcing these products.

The ~~impacts~~changes in work environments as a result of the COVID-19 outbreak in 2022 and the magnitude by which sales of our Business Solutions Division will be affected will depend heavily on the duration of the pandemic through new variants, impact and speed of vaccination distributions, as well as the substance and pace of macroeconomic recovery. However, as discussed above, the impact has been material to the results of the ODP Business Solutions Division in the ~~second~~third quarter and ~~first half of 2022 and could continue into the third quarter of 2022 and beyond. In addition, changes in work environments, such as a~~year-to-date 2022. A prolonged or permanent shift to hybrid or continued remote work arrangements, as well as the substance and pace of macroeconomic recovery could also have a material impact to the future results of the ODP Business Solutions Division.

Our ODP Business Solutions Division operating income was ~~$45~~$48 million in the ~~second~~third quarter of 2022 compared to ~~$31~~$34 million in the ~~second~~third quarter of 2021, an increase of ~~45%~~41%, which was mainly driven by the flow through impact of higher sales and ~~lower selling, general and administrative expenses.~~higher gross profit. As a percentage of sales, operating income increased approximately 100 basis points. Although we experienced ~~increases in third-party~~higher product and import transportation costs due to the impacts of COVID-19 and inflation, this was more than offset by adjustments to selling price. Our selling, general and administrative expenses as a percentage of sales was flat compared to the corresponding period in the prior year.

Our ODP Business Solutions Division operating income was $103 million year-to-date 2022 compared to $55 million year-to-date 2021, an increase of 87%, which ~~reduced our~~was mainly driven by the flow through impact of higher sales and higher gross ~~margin by~~profit. As a percentage of sales, operating income increased approximately 60140 basis ~~points,~~points. Although we experienced higher product and import transportation costs due to the impacts of COVID-19 and inflation, this was more than offset by adjustments to selling price and lower selling, general and administrative expenses as a percentage of ~~our sales.~~sales. The improvement in our selling, general and administrative expenses is attributable to cost saving initiatives of our Maximize B2B restructuring program, which reduced costs in payroll, advertising and other operating expenses.

Our Business Solutions Division operating income was $78 million in the first half of 2022 compared to $48 million in the first half of 2021, an increase of 63%, which was mainly driven by the flow through impact of higher sales and lower selling, general and administrative expenses. As a percentage of sales, operating income increased approximately 110 basis points. Although we experienced increases in third-party transportation costs due to the impacts of COVID-19, which reduced our gross margin by approximately 20 basis points, this was more than offset by adjustments to selling price and lower selling, general and administrative expenses as a percentage of sales. The improvement in our selling, general and administrative expenses is attributable to cost saving initiatives of our Maximize B2B restructuring program, which reduced costs in payroll, advertising and other operating expenses.

Second Quarter

First Half

(In millions)

2022

2021

2022

2021

Sales

$
811

$
914

$
1,754

$
1,953

% change

(11
)%

0
%

(10
)%

(6
)%
Division operating income

$
46

$
44

$
136

$
145

% of sales

6
%

5
%

8
%

7
%

	Third Quarter						Year-to-Date
(In millions)	2022			2021¹			2022¹			2021¹
Sales (external)	$	1,133		$	1,229		$	3,358		$	3,699
Sales (internal)	$	10		$	10		$	25		$	26
% change of total sales		(8	)%					(9	)%
Division operating income	$	83		$	108		$	228		$	266
% of total sales		7	%		9	%		7	%		7	%

Sales in our ~~Retail~~Office Depot Division decreased ~~11%~~8% and ~~10%~~9% in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, compared to the corresponding periods in 2021. As vaccination rates have increased since early in 2021 and the effects of the COVID-19 pandemic have begun to recede, more of our customers are transitioning into on-site work and in-person learning. As a result of this recovery, we experienced $5$2 million and ~~$12~~$14 million of increased sales in copy and print services in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively. This was more than offset by fewer transactions in product sales for the ~~second~~third quarter and ~~first half of~~year-to-date 2022, as a result of both planned store closures and lower demand. Specifically, technology products, furniture, office supplies, cleaning supplies and personal protective equipment had lower sales in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, compared to the corresponding periods in 2021. These categories had experienced higher demand in the prior year, which was driven by the needs of our customers to help address their challenges derived from the COVID-19 pandemic, and included facilitating the continued remote work and virtual learning environments.

Since late in the first quarter of 2020, we have reduced our retail location hours by one to two hours daily, which continues to be in effect at the majority of our retail locations. We believe sales in our Office Depot Division may continue to be adversely impacted in the fourth quarter of 2022 and potentially longer. Our sales could be impacted in the near term related to numerous factors, among others, a weaker U.S. economy and higher unemployment that materially impact consumer spending, the demand for our products and services and the availability of supply. Specifically, we experienced supply constraints in some of our larger product categories such as ink and technology products, and we may continue to face delays or difficulty sourcing these products.

Sales include internal sales of $10 million and $25 million in the third quarter of and year-to-date 2022, respectively, which relate to print services provided to the ODP Business Solutions Division as well as internal service fee for providing buy online, pick up in store (“BOPIS”) transactions ~~are included in~~to ODP Business Solutions Division customers. Internal sales were flat to comparable prior periods.

Sales generated through our ~~Retail Division results because they are~~eCommerce platform includes online sales fulfilled through warehouses, BOPIS transactions, online orders shipped from store, and same day delivery orders fulfilled with retail store ~~inventory~~inventory. These sales represented 28% and ~~serviced by our retail store associates. Our BOPIS~~30% of Office Depot Division’s total sales ~~were $75 million and $161 million~~ in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, as compared to ~~$79 million~~27% and ~~$168 million~~28% of total sales in the ~~second quarter and first half~~comparable prior periods, respectively.

We are re-evaluating the definition of ~~2021, respectively.~~our comparable store metric in light of the re-alignment of our eCommerce platform along with our retail stores under this Division. We expect to resume providing our comparable store metric in fiscal 2023.

Our business is considered to be essential by most local jurisdictions, and as a result, the substantial majority of our retail locations have remained open and operational with the appropriate safety measures in place during the COVID-19 pandemic, including a curbside pickup option. Since late in the first quarter of 2020, we have reduced our retail location hours by one to two hours daily, which continues to be in effect at the majority of our retail locations. We believe sales in our RetailOffice Depot Division ~~may continue to be adversely impacted~~operating income was $83 million in the third quarter of 2022, ~~and potentially longer. As there is uncertainty in the extent and duration of the impacts of the pandemic, we are unable~~which decreased 23% as compared to ~~estimate the full impact at this time as there is uncertainty in the extent and duration of the impacts of the pandemic.~~

We have historically reported our comparable store sales, which relate to stores that have been open for at least one year. Stores are removed from the comparable sales calculation one month prior to closing, as sales during that period are mostly related to clearance activity. Stores are also removed from the comparable sales calculation during periods of store remodeling, store closures due to hurricanes, natural disasters or epidemics/pandemics, or if significantly downsized. Our measure of comparable store sales has been applied consistently across periods, but may differ from measures used by other companies. Due to the reduction in our retail location hours due to COVID-19 during late in the first quarter of 2020, and the variability in COVID-19 related restrictions imposed by state and local governments such as occupancy levels and business regulations that can affect demand for our in-store products and services, comparable store sales is not a meaningful metric for the second quarter and first half of 2022, and therefore is not provided.

~~The Retail Division operating income was $46~~$108 million in the ~~second quarter of 2022, which increased 5% as compared to $44 million in the second~~third quarter of 2021. In addition, operating income as a percentage of sales ~~increased 1%~~decreased 2% in the ~~second~~third quarter of 2022 compared to the corresponding period in 2021. The ~~improvement~~reduction in operating income was mainly due to ~~higher gross margin rate as a result of favorable product mix, which more than offset~~ the flow through impact of lower ~~sales.~~sales as well as a lower gross margin rate. The ~~Retail~~gross margin rate decreased as a result of higher supply chain and occupancy costs which were impacted by cost increases due to COVID-19, inflation, and the higher rent costs from lease renewals. Selling, general and administrative costs as a percentage of sales was flat compared to the corresponding period in the prior year. Our Office Depot Division operating income was ~~$136~~$228 million ~~in the first half of~~year-to-date 2022, which decreased 6%14% as compared to ~~$145~~$266 million ~~in the first half of~~year-to-date 2021. The decrease is mostly attributable to the flow-through impact of lower sales and higher supply chain and occupancy costs, which more than offset ~~lower selling,~~improved product margin. Selling, general and administrative ~~expenses resulting from continuous efforts to optimize~~ costs ~~lower operating lease costs recognized~~ as a ~~result~~percentage of ~~store closures, and improved product margin.~~sales was flat compared to the corresponding period in the prior year.

As of ~~June 25,~~September 24, 2022, ~~the Retail~~our Office Depot Division operated ~~1,020~~1,009 retail stores in the United States, Puerto Rico and the U.S. Virgin Islands compared to ~~1,091~~ 1,084 stores at the end of the ~~second~~third quarter of ~~2021~~.2021. Charges associated with store closures as part of a restructuring plan are reported as appropriate in Asset impairments and Merger, restructuring and other operating expenses, net in the Condensed Consolidated Statements of Operations. In addition, as part of our periodic recoverability assessment of owned retail stores and distribution center assets, and operating lease ROU assets, we recognize impairment charges in the Asset impairments line item of our Condensed Consolidated Statements of Operations. These charges are reflected in Corporate reporting and are not included in the determination of Division operating income. Refer to the “Corporate” section below for additional information of expenses incurred to date.

Internal sales represent sales of product and supply chain services provided to our Office Depot Division and ODP Business Solutions Division, which are then sold to third-party customers through those divisions. Internal sales of product are made at a price that includes a service fee to the cost of product we source from third-party vendors, net of the impact of vendor income, and certain other adjustments. Internal sales of services represent supply chain and logistics support services, which include warehousing, shipping and handling, returns and others. These internal sales of services are also provided to the Office Depot Division and the ODP Business Solutions Division, at a service fee over cost. Internal sales are eliminated upon consolidation.

In the third quarter of 2022 and 2021, $752 million and $821 million of internal sales are to the Office Depot Division, and $726 million and $699 million are to the ODP Business Solutions Division, respectively. The decrease in internal sales to the Office Depot Division is related to the decline in customer demand at our retail stores and eCommerce platform, which is discussed further in the Office Depot Division section above. The increase in internal sales to the ODP Business Solutions Division is related to the increase in demand from our business customers, which is discussed above in the ODP Business Solutions Division section. Year-to-date 2022 and 2021, $2.2 billion and $2.5 billion of internal sales are to the Office Depot Division, and $2.2 billion and $2.0 billion are to the ODP Business Solutions Division, respectively. The drivers of the change in internal sales on a year-to-date basis are consistent with those described above.

External sales represent supply chain services provided to third parties, as well as product sales by our Asia sourcing operation to third parties. The reduction in external sales in the third quarter of 2022 and year-to-date 2022 were driven by a decline in product sales of our Asia sourcing operation which had higher sales in the prior year comparable periods driven by the needs of our customers to help address their supply chain challenges as a result of the COVID-19 pandemic.

Our Veyer Division operating income was $9 million in the third quarter of 2022 compared to $7 million in the third quarter of 2021, and $25 million year-to-date 2022 compared to $22 million year-to-date 2021. The increase in both periods were related to the higher favorable impact from our freight collection activities as well as the mix of sales between the Office Depot Division and the ODP Business Solutions Division. Future performance of our Veyer Division is dependent upon market conditions in the transportation and logistics industry, including fluctuations in labor and fuel costs, and its ability to pass any cost increases through to its customers.

Sales in the former International Division, including our global sourcing and trading operations in the Asia/Pacific region, which we have retained, are not significant and have been presented as Other. These operations primarily relate to the sale of products to former joint venture partners, and are not material in any period. The operating results of our Varis Division were flat in the third quarter of 2022 and increased $2 million or 67% in year-to-date 2022, compared to the corresponding periods in the prior year. The increase in sales in the year-to-date period was driven by the acquisition of BuyerQuest in the first quarter of 2021, and the impact of purchase accounting adjustments on prior period sales, which istotaled $1 million in the year-to-date period. Our Varis Division also acquired new customers on the platform in 2021 and early 2022 that contributed to the increase in sales.

Division operating loss was $17 million in the third quarter of 2022 compared to operating loss of $10 million in the third quarter of 2021, an increase of 70%, which was driven by investments in the resources required to expand and scale the technology platform and upgraded product offerings. The costs were mainly related to payroll, third-party professional fees, and amortization of internally developed software. Division operating loss was $48 million year-to-date 2022 compared to operating loss of $21 million in the corresponding period in 2021, an increase of 129%, which similarly was driven by investments to expand and scale the business. We expect to continue to incur costs and invest in growing our ~~new digital platform technology business, are also not significant and presented as Other.~~Varis Division in the near future.

The line items in our Condensed Consolidated Statements of Operations included as Corporate activities are Asset impairments and Merger, restructuring and other operating expenses, net. These activities are managed at the Corporate level and, accordingly, are not included in the determination of Division income for management reporting or external disclosures. In addition to these charges and credits, certain selling, general and administrative expenses are not allocated to the Divisions and are managed at the Corporate level. Those expenses are addressed in the section “Unallocated Expenses” below.

We recognized asset impairment charges of $3 million and $5$8 million in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, primarily related to impairment of operating lease ROU assets associated with our retail store locations. We recognized asset impairment charges of $1$5 million and ~~$13~~$18 million in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, respectively. Of the asset impairment charges in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, $1$4 million and ~~$11~~$15 million were related to impairment of operating lease ROU assets associated with our retail store locations, respectively, and the remainder was related to impairment of fixed assets.

We regularly review retail store assets for impairment indicators at the individual store level, as this represents the lowest level of identifiable cash flows. When indicators of impairment are present, a recoverability analysis is performed which considers the estimated undiscounted cash flows over the retail store’s remaining life and uses inputs from retail operations and accounting and finance personnel. These inputs include our best estimates of retail store-level sales, gross margins, direct expenses, exercise of future lease renewal options when reasonably certain to be exercised, and resulting cash flows, which, by their nature, include judgments about how current initiatives will impact future performance. In the ~~second~~third quarter and ~~first half of~~year-to-date 2022, the assumptions used within the recoverability analysis for the retail stores were updated to consider current quarter retail store operational results and formal plans for future retail store closures as part of our restructuring programs, including the probability of closure at the retail store level. While it is generally expected that closures will approximate the store’s lease termination date, it is possible that changes in store performance or other conditions could result in future changes in assumptions utilized. In addition, the assumptions used reflected declining sales over the forecast period, and gross margin and operating cost assumptions that are consistent with recent actual results and consider plans for future initiatives. If the undiscounted cash flows of a retail store cannot support the carrying amount of its assets, the assets are impaired and written down to estimated fair value. Our retail store assets recoverability analyses in the ~~second~~third quarter of 2022 also included the impact of the COVID-19 pandemic on the operations of our retail stores as described in the ~~“Retail~~“Office Depot Division” section. As discussed above, there is uncertainty regarding the impact of the COVID-19 pandemic on the results of our operations in the ~~third~~fourth quarter of 2022 and beyond, which could result in future impairments of store assets if deemed unrecoverable.

We ~~are monitoring~~test our goodwill and indefinite-lived intangible assets for impairment annually as of the ~~performance~~first day of fiscal December or more frequently when events or changes in circumstances indicate that impairment may have occurred. The re-alignment of our ~~Contract reporting unit, which is a component~~reportable segments described above also resulted in the change of our ~~Business Solutions Division segment. The operating performance and future outlook for~~reporting units during the ~~Contract~~third quarter of 2022, where each reportable

segment also represents a reporting ~~unit are in line with~~unit. We allocated goodwill to our ~~revised forecasts used in determining the~~new reporting units using their relative fair ~~value estimates in the most recent quantitative annual~~values. We performed impairment assessment ~~which it passed by a 16% margin. Accordingly, there are no impairment indicators identified for this reporting unit as~~ of ~~June 25, 2022. We also did not identify indicators of impairment related to~~ our ~~other~~legacy and current reporting units ~~which mainly serve consumers through our retail stores, eCommerce platform~~immediately before and ~~digital B2B platform, and have been performing~~after this change. No impairment

was recorded as result of this assessment. Refer to Note 3. “Segment Information” in ~~accordance with our forecasts.~~Notes to Condensed Consolidated Financial Statements for an additional information. We 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 our 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 ~~additional~~ goodwill impairment charges. Further, while we are currently in a strong liquidity and capital position, a significant deterioration may have a material impact on our liquidity and capital in future periods.

We have taken actions to optimize our asset base and drive operational efficiencies. These actions include acquiring profitable businesses, closing underperforming retail stores and non-strategic distribution facilities, consolidating functional activities, eliminating redundant positions and disposing of non-strategic businesses and assets. ~~In addition, we~~We have also incurred costs related to our actions to separate our consumer business through a potential sale, prior to our Board of Directors’ decision on June 21, 2022 to maintain the consumer business under common ownership. In addition, we have incurred costs related to completing the re-alignment of operations into four Divisions, which also represent our new reportable segments. The expenses and any income recognized directly associated with these actions are included in Merger, restructuring and other operating expenses, net on a separate line in the Condensed Consolidated Statements of Operations in order to identify these activities apart from the expenses incurred to sell to and service customers. These expenses are not included in the determination of Division operating income. Merger, restructuring and other operating expenses, net were ~~$23~~$8 million and ~~$34~~$42 million in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, compared to ~~$11~~$13 million and ~~$23~~$37 million

in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, respectively. Refer to Note 2. “Merger, Restructuring and Other Activity” in Notes to Condensed Consolidated Financial Statements for an additional analysis of these Corporate charges.

We allocate to our Divisions functional support expenses that are considered to be directly or closely related to segment activity. These allocated expenses are included in the measurement of Division operating income. Other companies may charge more or less for functional support expenses to their segments, and our results, therefore, may not be comparable to similarly titled measures used by other companies. The unallocated expenses primarily consist of the buildings used for our corporate headquarters and personnel not directly supporting the Divisions, including certain executive, finance, legal, audit and similar functions. Unallocated expenses were ~~$22~~$28 million and ~~$42~~$70 million in the ~~second~~third quarter and ~~first half of~~year-to-date 2022 compared to ~~$27~~$17 million and ~~$49~~$64 million in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, respectively. The ~~decrease~~increase in the ~~second~~third quarter of 2022 compared to the prior year period was primarily due to ~~lower~~higher Corporate payroll and incentive ~~expenses.~~expenses as well as higher third-party professional fees. The ~~decrease~~increase in ~~the first half of~~year-to-date 2022 compared to the prior year period was primarily due to ~~lower Corporate incentive expenses and lower~~higher third-party professional fees.

	Second Quarter						First Half						Third Quarter						Year-to-Date
(In millions)	2022			2021			2022			2021			2022			2021			2022			2021
Interest income	$	1		$	—		$	2		$	—		$	1		$	—		$	3		$	—
Interest expense		(4	)		(6	)		(9	)		(14	)		(1	)		(7	)		(10	)		(20	)
Other income, net		3			5			5			17			5			3			9			19

In April 2020, we entered into the Third Amended Credit Agreement which provided for an aggregate principal amount of up to $1.3 billion asset-based revolving credit facility and asset-based FILO Term Loan Facility, maturing in April 2025. We recorded $1 million and $2 million of interest expense in the ~~second~~third quarter and ~~first half of~~year-to-date 2022, respectively, and $1 million and $2$3 million of interest expense in the ~~second~~third quarter and ~~first half of~~year-to-date 2021, respectively, related to the Third Amended Credit Agreement. We also recorded interest expense related to our finance lease obligations and revenue bonds in all periods presented. Interest expense in the third quarter and year-to-date 2022 also includes $3 million of income related to reversal of uncertain tax positions.

Other income, net includes the pension credit related to the frozen OfficeMax pension and other benefit plans, as well as the pension credit related to the pension plan in the United Kingdom that has been retained by us in connection with the sale of the European Business. We also recorded $7 million of other income, net related to the release of certain liabilities of our former European Business year-to-date in ~~the first half of~~ 2021.

During 2022 and 2021, the mix of income and losses across jurisdictions, although still applicable, has become less of a factor in influencing our effective tax rates due to limited international operations and improved operating results. Our effective tax rates were ~~29%~~25% for both the third quarter and ~~26%~~year-to-date 2022, and 27% and 23% for the ~~second~~third quarter and ~~first half of 2022, respectively, and 31% and 20% for the second quarter and first half of~~year-to-date 2021, respectively. InFor the ~~first half of~~quarter-to-date and the year-to-date 2022, ~~our~~the Company’s effective rate was primarily impacted by the recognition of a tax benefit associated with stock-based compensation awards ~~year-to-date.~~year-to-date and the reversal of uncertain tax positions. This along with the impact of state taxes and the mix of income and losses across U.S and non-U.S. jurisdictions, caused our effective tax rate to differ from the statutory rate of 21%. ~~In the first half of~~Year-to-date 2021, our effective rate was primarily impacted by the recognition of tax benefits associated with stock-based compensation awards year-to-date and recognition of tax benefits due to an agreement reached with the IRS related to a prior tax position. These factors, along with the impact of state taxes and the mix of income and losses across U.S. and non-U.S. jurisdictions, caused our effective tax rate to differ from the statutory rate of 21%. Changes in pretax income projections and the mix of income across jurisdictions could impact the effective tax rates in future quarters.

We continue to have a U.S. valuation allowance for certain U.S. federal credits and state tax attributes, which relates to deferred tax assets that require certain types of income or for income to be earned in certain jurisdictions in order to be realized. We will continue to assess the realizability of our deferred tax assets in the U.S. and remaining foreign jurisdictions in future periods. Changes in pretax income projections could impact this evaluation in future periods. The sale of CompuCom resulted in us recognizing a capital loss of approximately $210 million, tax effected. A portion of this capital loss, approximately $20 million, is available to be carried back in several jurisdictions. The tax benefit of these carry back claims was reflected in the discontinued operations income tax expense at December 25, 2021. We have determined that it is more likely than not that the benefit from the excess capital loss of $190 million will not be realized at this time. In recognition of this risk, we have provided a full valuation allowance against the excess capital loss not carried back.

We file a U.S. federal income tax return and other income tax returns in various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal and state and local income tax examinations for years prior to 2021 and 2014, respectively. The acquired OfficeMax U.S. consolidated group is no longer subject to U.S. federal income tax examination, and with few exceptions, is no longer subject to U.S. state and local income tax examinations for years prior to 2013. Generally, we are subject to routine examination for years 2013 and forward in our international tax jurisdictions.

It is anticipated that $1 million of tax positions will be resolved within the next 12 months. Additionally, we anticipate that it is reasonably possible that new issues will be raised or resolved by tax authorities that may require changes to the balance of unrecognized tax benefits; however, an estimate of such changes cannot be reasonably made at this time.

Refer to Note ~~12.~~11. “Discontinued Operations” in Notes to Condensed Consolidated Financial Statements for information regarding the CompuCom Division which is accounted for as discontinued operations.

At ~~June 25,~~September 24, 2022 and December 25, 2021, we had ~~$417~~$473 million and $514 million in cash and cash equivalents, respectively, and ~~$953~~$934 million and $877 million of available credit under the Third Amended Credit Agreement, ~~(as defined in Note 7. “Debt” in Notes to Condensed Consolidated Financial Statements),~~ respectively, for a total liquidity of approximately $1.4 billion at the end of both respective periods. Despite the weaker global economic conditions and the uncertainties related to the impacts of the COVID-19 pandemic, we currently believe that as a result of our strong financial position, including our cash and cash equivalents on hand, availability of funds under the Third Amended Credit Agreement, and future year cash flows generated from operations, we will be able to fund our working capital, capital expenditures, debt repayments, common stock repurchases, dividends (if any), merger integration and restructuring expenses, costs associated with the previously planned Separation of our consumer business, and future acquisitions consistent with our strategic growth initiatives for at least the next twelve months from the date of this Quarterly Report on Form 10-Q. From time to time, we may prepay outstanding debt and/or restructure or refinance debt obligations. As the impact of the COVID-19 pandemic on the global and national economies and our operations evolve, we will continue to assess our liquidity needs.

On April 17, 2020, as disclosed in Note 7.6. “Debt,” we entered into the Third Amended and Restated Credit Agreement, which provides for a $1.2 billion asset-based revolving credit facility and a $100 million asset-based FILO Term Loan Facility, for an aggregate principal amount of up to $1.3 billion (the “New Facilities”). The New Facilities mature in April 2025. The Third Amended and Restated Credit Agreement replaced our then existing amended and restated credit agreement that was due to mature in May 2021. During the first quarter of 2022, we reduced our asset-based revolving credit facility by $200 million to $1.0 billion and retired $43 million of outstanding FILO Term Loan Facility loans under the Third Amended Credit Agreement.

There were no revolving loans ~~outstanding,~~outstanding. We had $57 million of outstanding FILO Term Loan Facility loans and $47 million of outstanding standby letters of credit under the Third Amended Credit Agreement at the end of the ~~second~~third quarter of 2022, and we were in compliance with all applicable covenants at ~~June 25,~~September 24, 2022.

In addition to the acquisitions disclosed herein, we have evaluated, and expect to continue to evaluate, possible acquisitions and dispositions of businesses and assets in connection with our strategic transformation. Such transactions may be material and may involve cash, our securities or the incurrence of additional indebtedness.

We estimate capital expenditures in 2022 to be up to approximately ~~$110~~$100 million, which includes investments to support our business priorities. These expenditures will be funded through available cash on hand and operating cash flows.

Our Board of Directors reviewed the existing capital allocation programs in connection with the sale of CompuCom, and on December 31, 2021, authorized an additional $200 million for share repurchases under the then existing stock repurchase program, for a total authorization of $650 million. This stock repurchase program expired on June 30, 2022, and in July 2022, our Board of Directors approved a new stock repurchase program of up to $600 million, available through June 30, 2024. In October 2022, our Board of Directors approved a new stock repurchase program of up to $1 billion, available through December 31, 2025 to replace the existing $600 million stock repurchase program effective November 3, 2022. The new ~~authorization~~authorizations may be suspended or discontinued at any time. The exact timing of share repurchases will depend on market conditions and other factors, and will be funded through available cash balances.

tender offer to repurchase up to $300 million worth of shares of its common stock, based on demand. Subject to certain limitations and legal requirements, the Company could repurchase up to an additional 2% of the outstanding shares in the tender offer. Through this tender offer, the Company’s shareholders ~~have~~had the opportunity to tender some or all of their shares at a price within the range of $31.50 to $36.00 per share subject to the conditions set forth in the tender offer documents. The tender offer commenced on July 18, 2022 and ~~is expected to expire~~expired on August 12, 2022. We repurchased 14 thousand shares under the tender offer at a cost of $1 million. We repurchased 2 million additional shares of our common stock in the third quarter of 2022 at a cost of $69 million. As a result, we repurchased 3 million in year-to-date 2022, including the final settlement of the ASR, at a cost of $98 million. As of September 24, 2022, $530 million remains available for stock repurchases under the current stock repurchase program. 12Subsequent to the end of the third quarter of 2022 and through October 26, 2022, ~~, 2022, unless extended or earlier terminated by the Company. We expect to~~ we repurchased 1 million~~use~~ shares of our common stock at a ~~combination~~cost of ~~funds borrowed under our asset-based revolving credit facility and cash on hand to fund the purchase of accepted shares.~~ $34 million.

The stock repurchase authorization permits us to repurchase stock from time-to-time through a combination of open market repurchases, privately negotiated transactions, 10b5-1 trading plans, accelerated stock repurchase transactions and/or other derivative transactions. The exact number and timing of stock repurchases will depend on market conditions and other factors, and will be funded through available cash balances. Our Third Amended Credit Agreement permits restricted payments, such as common stock repurchases, but may be limited if we do not meet the required minimum liquidity or fixed charge coverage ratio requirements. The authorized amount under the stock repurchase program excludes fees, commissions or other expenses.

In May 2020, in order to preserve liquidity during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic impact, our Board of Directors temporarily suspended the Company’s quarterlyWe did not declare any cash ~~dividend beginning~~dividends year-to-date 2022. We do not anticipate declaring cash dividends in the second quarter of fiscal 2020. There was no quarterly cash dividend declared and paid in the second quarter and first half of 2022. Our quarterly cash dividend remains suspended. Prior to its suspension, dividends had been recorded as a reduction to additional paid-in capital as we are in an accumulated deficit position. foreseeable future. Our Third Amended Credit Agreement permits restricted payments, such as dividends, but may be limited if we do not meet the required minimum liquidity or fixed charge coverage ratio requirements.

We will continue to evaluate our capital return programs as appropriate. Decisions regarding future share buybacks and dividends are within the discretion of our Board of Directors, and depend on a number of factors, including, general business and economic conditions, which includes the impact of COVID-19 on such conditions, and other factors which are discussed in this discussion and analysis and “Risk Factors” within Other Key Information in our 2021 Form 10-K.

Cash provided by (used in) operating, investing and financing activities from continuing operations is summarized as follows:

	First Half						Year-to-Date
(In millions)	2022			2021			2022			2021
Operating activities of continuing operations	$	(84	)	$	135		$	79		$	256
Investing activities of continuing operations		(35	)		(32	)		(59	)		(51	)
Financing activities of continuing operations		(74	)		(83	)		(151	)		(168	)

In the ~~first half of~~year-to-date 2022, cash ~~used in~~provided by operating activities from continuing operations was ~~$84~~$79 million, compared to cash provided by operating activities of ~~$135~~$256 million during the corresponding period in 2021.This decrease in cash flows from operating activities was primarily driven by ~~$200~~$174 million more cash outflows from working capital and ~~$24~~$31 million less net income after adjusting for non-cash charges, slightly offset by $5$28 million more usage of deferred tax assets against current obligations. Working capital is influenced by a number of factors, including period end sales, the flow of goods, credit terms, timing of promotions, vendor production planning, new product introductions and working capital management. ~~For the first half of~~Year-to-date 2022, the primary ~~driver~~drivers for higher working capital usage was due to ~~$93~~$104 million increase in cash outflows from our inventories, ~~$73~~$42 million more cash outflows due to changes in our trade payables and other liabilities, and ~~$34~~$25 million less cash inflows due to changes in our receivables. The change in inventories is mainly attributable to purchase volume. The change in our payables and other liabilities is reflective of the timing of payments. The change in our receivables is due to the impact of the COVID-19 pandemic on the sales of our ODP Business Solutions Division in the prior year period, as well as the recovery we are observing ~~in the first half of~~year-to-date 2022.

For our accounting policy on cash management, refer to Note 1. “Summary of Significant Accounting Policies” in Notes to Condensed Consolidated Financial Statements.

Cash used in investing activities from continuing operations was ~~$35~~$59 million ~~first half of~~year-to-date 2022, compared to ~~$32~~$51 million ~~first half of~~year-to-date 2021. The cash outflow ~~in the first half of~~year-to-date 2022 was driven by ~~$43~~$68 million in capital expenditures associated with improvements in our service platform, distribution network, and eCommerce capabilities. These outflows were partially offset by proceeds from sale of assets of $6 million and the cash proceeds from our company-owned life insurance policies of ~~$2 million~~.$3 million. The cash outflow ~~in the first half of~~year-to-date 2021 was driven by ~~$28~~$29 million in business acquisitions, net of cash acquired, and ~~$28~~$47 million in capital expenditures associated with improvements in our service platform, distribution network, and eCommerce capabilities. These outflows were partially offset by the cash proceeds from our company-owned life insurance policies of $21 million and proceeds from sale of assets of $3$4 million.

Cash used in financing activities from continuing operations was ~~$74~~$151 million ~~first half of~~year-to-date 2022, compared to ~~$83~~$168 million ~~first half of~~year-to-date 2021. The cash outflow in ~~the first half of~~year-to-date 2022 primarily consisted of ~~$11~~$16 million of net payments on long- and short-term borrowings activity related to our debt, $43 million payment on our FILO Term Loan Facility loans under the Third Amended Credit Agreement, $69 million in repurchases of common stock, including commissions, and ~~$17~~$19 million share purchases for taxes, net of proceeds, for employee share-based transactions. Cash used ~~in the first half of~~year-to-date 2021 primarily consisted of ~~$13~~$20 million of net payments on long- and short-term borrowings activity related to our debt, ~~$46~~$122 million in repurchases of common stock, including commissions, and ~~$23~~$25 million share purchases for taxes, net of proceeds, for employee share-based transactions.

Cash provided by (used in) operating and investing activities from discontinued operations is summarized as follows:

	First Half					Year-to-Date
(In millions)	2022		2021			2022		2021
Operating activities of discontinued operations	$	—	$	(60	)	$	—	$	(10	)
Investing activities of discontinued operations		74		(1	)		74		(3	)

There was no cash flow related to operating activities of discontinued operations ~~in the first half of~~year-to-date 2022. Cash used in operating activities from discontinued operations was ~~$60~~$10 million ~~in the first half of~~year-to-date 2021. The change in operating cash flows of discontinued operations in the comparative periods was primarily driven by the sale of our CompuCom Division on December 31, 2021.

Cash flows from investing activities from discontinued operations was ~~$74~~$74 million in ~~the first half of~~year-to-date 2022, compared to cash used in investing activities from discontinued operations of $1$3 million ~~in the first half of~~year-to-date 2021. The change in investing cash flows of discontinued operations in the comparative periods reflects proceeds received from the sale of our CompuCom Division, net of cash sold and selling costs, on December 31, 2021. In addition, ~~the first half of~~year-to-date 2022 includes $7 million of insurance proceeds received related to the malware incident in 2021.

For a description of new applicable accounting standards, refer to Note 1. “Summary of Significant Accounting Policies” in Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2021 Form 10-K, in Note 1 of the Notes to the Consolidated Financial Statements and the Critical Accounting Policies and Estimates section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations. Except for our accounting policy updates described in Note 1 “Summary of Significant Accounting Policies” in Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, there have been no significant changes to our critical accounting policies since December 25, 2021.

At ~~June 25,~~September 24, 2022, there had not been a material change in the interest rate, foreign exchange, and commodities risks information disclosed in the “Market Sensitive Risks and Positions” subsection of the Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in our 2021 Form 10-K.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the possible controls and procedures. Each reporting period, we carry out an evaluation, with the participation of our principal executive officer and principal financial officer, or persons performing similar functions, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Based on management’s evaluation, our principal executive officer and principal financial officer have concluded that, as of ~~June 25,~~September 24, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosures.

There were no changes in our internal control over financial reporting during the quarter ended ~~June 25,~~September 24, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We continually monitor and assess the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

For a description of our legal proceedings, see Note ~~11.~~10. “Commitments and Contingencies” in Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” within Other Key Information in our 2021 Form 10-K.

We repurchased 2 million shares of our common stock at a cost of $69 million in the third quarter of 2022. At ~~June 25,~~September 24, 2022, ~~$314~~$530 million remained available for additional repurchases under the current stock ~~repurchase program which expired on June 30, 2022.~~repurchase. Subsequent to the end of the third quarter of 2022 and through October 26, 2022, we repurchased 1 million shares of our common stock at a cost of $34 million.

Approximate Dollar

Total Number of

Value of Shares that

Total

Shares Purchased as

May Yet Be

Number

Part of a Publicly

Purchased Under

of Shares

Average

Announced Plan or

the Repurchase

Purchased

Price Paid

Program

Programs

Period

(In millions)

per Share

(In millions)

(In millions)₍₁₎

March 27, 2022 — April 23, 2022

—

$
—

—

$
342

April 24, 2022 — May 21, 2022

0.3

$
39.93

0.3

$
328

May 22, 2022 — June 25, 2022

0.4

$
38.10

0.4

$
314

Total

0.7

$
39.00

0.7

							Approximate Dollar
					Total Number of		Value of Shares that
	Total				Shares Purchased as		May Yet Be
	Number				Part of a Publicly		Purchased Under
	of Shares		Average		Announced Plan or		the Repurchase
	Purchased		Price Paid		Program		Programs
Period	(In thousands)		per Share		(In thousands)		(In millions)₍₁₎
June 26, 2022 — July 23, 2022		-	$	—		—	$	600
July 24, 2022 — August 20, 2022		14	$	36.00		14	$	599
August 21, 2022 — September 24, 2022		1,886	$	36.62		1,886	$	530
Total		1,900	$	36.62		1,900

(1) In May 2021, our Board of Directors approved a new stock repurchase program of up to $300 million, available through June 30, 2022. On November 16, 2021, we entered into an accelerated share repurchase agreement (“ASR”) to repurchase shares of our common stock in exchange for an up-front payment of $150 million and increased the authorization to $450 million. Our Board of Directors reviewed the existing capital allocation programs in connection with the sale of CompuCom, and on December 31, 2021, authorized an additional $200 million for share repurchases under the then existing stock repurchase program, for a total authorization of $650 million. The ASR repurchase period ran through May 25, 2022, and we received 0.7 million shares of our common stock as the final settlement of the ASR in the second quarter of 2022. We repurchased 3.6 million shares of our common stock in total at an average price per share of $41.46 under the ASR. We ~~did not repurchase any~~repurchased 2 million additional shares of our common stock in the ~~second~~third quarter of 2022. As a result, we repurchased 3 million shares in year-to-date 2022 including the final settlement of the ASR. In July 2022, our Board of Directors approved a new stock repurchase program of up to $600 million, available through June 30, 2024, which replaced our current $650 million stock repurchase program that expired on June 30, 2022. In October 2022, our Board of Directors approved a new stock repurchase program of up to $1 billion, available through December 31, 2025 to replace the existing $600 million stock repurchase program effective November 3, 2022.The ~~authorization~~authorizations may be suspended or discontinued at any time. The stock repurchase ~~authorization permits~~authorizations permit us to repurchase stock from time-to-time through a combination of open market repurchases, privately negotiated transactions, 10b5-1 trading plans, accelerated stock repurchase transactions and/or other derivative transactions. The exact number and timing of stock repurchases will depend on market conditions and other factors, and will be funded through a combination of funds borrowed under our asset-based revolving credit facility and cash on hand. Our Third Amended Credit Agreement permits restricted payments, such as common stock repurchases, but may be limited if we do not meet the required minimum liquidity or fixed charge coverage ratio requirements. The authorized amount under the stock repurchase program excludes fees, commissions or other expenses.

In order to preserve liquidity during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic impact, in May 2020, our Board of Directors suspended the Company’s quarterlyWe did not declare any cash ~~dividend beginning~~dividends year-to-date 2022. We do not anticipate declaring cash dividends in the second quarter of 2020. There was no quarterly cash dividend declared and paid in the second quarter and first half of 2022. Our quarterly cash dividend remains suspended. Prior to its suspension, dividends had been recorded as a reduction to additional paid-in capital as we are in an accumulated deficit position.foreseeable future. Our Third Amended Credit Agreement permits restricted payments, such as dividends, but may be limited if we do not meet the required minimum liquidity or fixed charge coverage ratio requirements.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Delaware	85-1457062
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)



6600 North Military Trail, Boca Raton, Florida	33496
(Address of Principal Executive Offices)	(Zip Code)

Financial Statements		Page
Condensed Consolidated Statements of Operations (Unaudited)		3
Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ (Unaudited)		4
Condensed Consolidated Balance Sheets (Unaudited)		5
Condensed Consolidated Statements of Cash Flows (Unaudited)		6
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)		7
Notes to Condensed Consolidated Financial Statements (Unaudited)		89
Management’s Discussion and Analysis (MD&A)
Overview		24
Operating Results by Division		28
Liquidity and Capital Resources		3233
New Accounting Standards		3436
Critical Accounting Policies		3436
Other Information
Quantitative and Qualitative Disclosures About Market Risk		3537
Controls and Procedures		3537
Legal Proceedings		3537
Risk Factors		3537
Unregistered Sales of Equity Securities and Use of Proceeds		3638
Exhibits		3739
Form 10-Q Cross-Reference Index		3840
Signatures		3941

Level 1:		Quoted prices in active markets for identical assets or liabilities.

Level 2:		Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:		Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows or option pricing models using the Company’s own estimates and assumptions or those expected to be used by market participants.


31.1		Certification of Principal Executive Officer required by Securities and Exchange Commission Rule 13a-14(a) or 15d-14(a)

31.2		Certification of Principal Financial Officer required by Securities and Exchange Commission Rule 13a-14(a) or 15d-14(a)

32		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from this Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

	26 Weeks Ended June 26, 2021
	Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total Equity
Balance at December 26, 2020		62,551,255	$	1	$	2,675		$	(32	)	$	(409	)	$	(355	)	$	1,880
Net income		—		—		—			—			53			—			53
Other comprehensive income		—		—		—			5			—			—			5
Exercise and release of incentive stock (including income tax benefits and withholding)		1,225,876		—		(23	)		—			—			—			(23	)
Amortization of long-term incentive stock grants		—		—		10			—			—			—			10
Common stock issuance related to the BuyerQuest acquisition		827,498		—		35			—			—			—			35
Balance at March 27, 2021		64,604,629	$	1	$	2,697		$	(27	)	$	(356	)	$	(355	)	$	1,960
Net loss		—		—		—			—			(88	)		—			(88	)
Other comprehensive income		—		—		—			5			—			—			5
Exercise and release of incentive stock (including income tax benefits and withholding)		18,767		—		—			—			—			—			—
Amortization of long-term incentive stock grants		—		—		10			—			—			—			10
Repurchase of common stock		—		—		—			—			—			(46	)		(46	)
Balance at June 26, 2021		64,623,396	$	1	$	2,707		$	(22	)	$	(444	)	$	(401	)	$	1,841

	Second Quarter of 2022
(In millions)	Business Solutions Division		Retail Division		Other		Total
Major revenue categories
Supplies	$	686	$	286	$	4	$	976
Technology		278		321		2		601
Furniture and other		187		112		2		301
Copy and print		64		92		—		156
Total	$	1,215	$	811	$	8	$	2,034

	Second Quarter of 2021
(In millions)	Business Solutions Division		Retail Division		Other		Total
Major revenue categories
Supplies	$	599	$	304	$	3	$	906
Technology		298		397		2		697
Furniture and other		189		126		5		320
Copy and print		60		87		—		147
Total	$	1,146	$	914	$	10	$	2,070

	First Half of 2022
(In millions)	Business Solutions Division		Retail Division		Other		Total
Major revenue categories
Supplies	$	1,383	$	637	$	6	$	2,026
Technology		565		704		4		1,273
Furniture and other		371		238		3		612
Copy and print		126		175		—		301
Total	$	2,445	$	1,754	$	13	$	4,212

	First Half of 2021
(In millions)	Business Solutions Division		Retail Division		Other		Total
Major revenue categories
Supplies	$	1,179	$	671	$	5	$	1,855
Technology		608		849		3		1,460
Furniture and other		367		270		9		646
Copy and print		120		163		—		283
Total	$	2,274	$	1,953	$	17	$	4,244

	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

(In millions)	Balance as of September 24, 2022
ODP Business Solutions Division	$	784
Office Depot Division		1,700
Veyer Division		1,104
Varis Division		112
Corporate and other		718
Total	$	4,418

(In millions)	Balance as of December 25, 2021		Allocation to New segment			Balance as of September 24, 2022
Business Solutions Division	$	318	$	(318	)	$	—
Retail Division		78		(78	)		—
Other		68		(68	)		—
ODP Business Solutions Division		—		142			142
Office Depot Division		—		219			219
Veyer Division		—		35			35
Varis Division		—		68			68
Total	$	464	$	—		$	464

Item		Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited)		3
Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ (Unaudited)		4
Condensed Consolidated Balance Sheets (Unaudited)		5
Condensed Consolidated Statements of Cash Flows (Unaudited)		6
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)		7
Notes to Condensed Consolidated Financial Statements (Unaudited)		89
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3537
Item 4. Controls and Procedures		3537
Part II - Other Information
Item 1. Legal Proceedings		3537
Item 1A. Risk Factors		3537
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3638
Item 3. Defaults Upon Senior Securities		Not Applicable
Item 4. Mine Safety Disclosures		Not Applicable
Item 5. Other Information		Not Applicable
Item 6. Exhibits		3739
Signatures		3941

	THE ODP CORPORATION
		(Registrant)

Date: ~~August 3,~~November 2, 2022	By:	/s/ GERRY P. SMITH
		Gerry P. Smith
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~August 3,~~November 2, 2022	By:	/s/ D. ANTHONY SCAGLIONE
		D. Anthony Scaglione
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)