UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from __ __ __ __to __ __ __ __
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange on which Registered |
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The NASDAQ Stock Market ( |
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.
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).
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.:
☒ |
Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
Emerging growth company |
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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 August 2, 2023, there were
1
TABLE OF CONTENTS
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.
Financial Statements |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) |
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4 |
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5 |
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6 |
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Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) |
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7 |
Notes to Condensed Consolidated Financial Statements (Unaudited) |
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8 |
Management’s Discussion and Analysis (MD&A) |
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20 |
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24 |
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29 |
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31 |
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31 |
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Other Information |
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32 |
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32 |
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32 |
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32 |
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33 |
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33 |
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34 |
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35 |
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36 |
2
THE ODP CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
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13 Weeks Ended |
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26 Weeks Ended |
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July 1, |
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June 25, |
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July 1, |
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June 25, |
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2023 |
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2022 |
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2023 |
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2022 |
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Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of goods and occupancy costs |
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Gross profit |
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Selling, general and administrative expenses |
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Asset impairments |
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Merger, restructuring and other operating expenses, net |
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Operating income |
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Other income (expense): |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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Other income, net |
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Income from continuing operations before income taxes |
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Income tax expense |
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Net income from continuing operations |
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Discontinued operations, net of tax |
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— |
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— |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Basic earnings per share |
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Continuing operations |
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$ |
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$ |
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$ |
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$ |
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Discontinued operations |
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— |
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— |
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Net basic earnings per share |
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$ |
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$ |
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$ |
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$ |
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Diluted earnings per share |
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Continuing operations |
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$ |
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$ |
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$ |
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$ |
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Discontinued operations |
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— |
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— |
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Net diluted earnings per share |
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$ |
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$ |
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$ |
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$ |
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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 March 1, 2023 (the “2022 Form 10-K”).
3
THE ODP CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
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13 Weeks Ended |
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26 Weeks Ended |
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July 1, |
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June 25, |
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July 1, |
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June 25, |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income, net of tax, where applicable: |
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Foreign currency translation adjustments |
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( |
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( |
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Reclassification of foreign currency translation adjustments |
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— |
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— |
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Other |
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( |
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( |
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( |
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( |
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Total other comprehensive income, net of tax, where |
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( |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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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 2022 Form 10-K.
4
THE ODP CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
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July 1, |
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December 31, |
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2023 |
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2022 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Inventories |
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Prepaid expenses and other current assets |
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Current assets held for sale |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Other intangible assets, net |
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Deferred income taxes |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Trade accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Income taxes payable |
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Short-term borrowings and current maturities of long-term debt |
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Total current liabilities |
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Deferred income taxes and other long-term liabilities |
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Pension and postretirement obligations, net |
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Long-term debt, net of current maturities |
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Operating lease liabilities |
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Total liabilities |
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Stockholders' equity: |
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Common stock — authorized |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Treasury stock, at cost — |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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 2022 Form 10-K.
5
THE ODP CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
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26 Weeks Ended |
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July 1, |
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June 25, |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Income from discontinued operations, net of tax |
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— |
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Net income from continuing operations |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of debt discount and issuance costs |
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— |
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Charges for losses on receivables and inventories |
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Asset impairments |
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Gain on disposition of assets, net |
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( |
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( |
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Compensation expense for share-based payments |
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Deferred income taxes and deferred tax asset valuation allowances |
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Changes in working capital and other operating activities |
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( |
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( |
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Net cash provided by (used in) operating activities of continuing operations |
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( |
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Net cash provided by (used in) operating activities of discontinued operations |
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— |
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— |
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Net cash provided by (used in) operating activities |
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( |
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Cash flows from investing activities: |
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Capital expenditures |
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( |
) |
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( |
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Businesses acquired, net of cash acquired |
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( |
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— |
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Proceeds from disposition of assets |
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Settlement of company-owned life insurance policies |
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Net cash provided by (used in) investing activities of continuing operations |
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( |
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Net cash provided by investing activities of discontinued operations |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Net payments on long and short-term borrowings |
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( |
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( |
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Debt retirement |
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( |
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( |
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Debt issuance |
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— |
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Share purchases for taxes, net of proceeds from employee share-based transactions |
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( |
) |
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( |
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Repurchase of common stock for treasury |
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( |
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— |
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Other financing activities |
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— |
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( |
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Net cash used in financing activities of continuing operations |
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( |
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( |
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Net cash used in financing activities of discontinued operations |
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— |
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— |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental information on non-cash investing and financing activities |
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Right-of-use assets obtained in exchange for new operating lease liabilities |
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$ |
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$ |
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Promissory note receivable obtained from disposition of discontinued operations |
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Cash taxes paid, net |
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— |
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Cash interest paid, net of amounts capitalized and non-recourse debt |
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— |
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Earn-out receivable obtained from disposition of discontinued operations |
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Right-of-use assets obtained in exchange for new finance lease liabilities |
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— |
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Other current receivable obtained from disposition of discontinued operations |
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— |
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Transfer from additional paid-in capital to treasury stock for final settlement of |
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— |
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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 2022 Form 10-K.
6
THE ODP CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except share amounts)
(Unaudited)
|
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26 Weeks Ended July 1, 2023 |
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Common |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Treasury |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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Exercise and release of incentive stock |
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— |
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( |
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— |
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— |
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— |
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( |
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Amortization of long-term incentive |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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( |
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( |
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Other |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at April 1, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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