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
potential impact of the COVID-19 pandemic on our business, liquidity, suppliers,
consumers, customers, and employees, disruptions or inefficiencies in our supply
chain, our ability to mitigate or manage disruptions posed by COVID-19, 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 26, 2020 (the "2019 Form 10-K") with the
SEC, and Forward-Looking Statements, found in our 2019 Form 10-K.

On June 30, 2020, Office Depot, Inc., the predecessor of The ODP Corporation,
implemented a holding company reorganization (the "Reorganization"), which
resulted in The ODP Corporation becoming the parent company of, and the
successor issuer to, Office Depot, Inc. For purposes of this report, references
to "we," or the "Company" or its management or business at any period prior to
the holding company reorganization (June 30, 2020) refer to Office Depot, Inc.
as the predecessor company and its consolidated subsidiaries and thereafter to
those of The ODP Corporation and its consolidated subsidiaries, except as
otherwise specified or to the extent the context otherwise indicates.

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 2019 Form 10-K.

OVERVIEW

THE COMPANY

We are a leading provider of business services and supplies, products and
technology solutions to small, medium and enterprise businesses, through our
integrated business-to-business ("B2B") distribution platform of dedicated sales
professionals and technicians, online presence, and 1244 retail stores. Through
our banner brands Office Depot®, OfficeMax®, CompuCom® 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 September 26, 2020, our operations are organized into three reportable segments (or "Divisions"): Business Solutions Division, Retail Division and CompuCom Division.



The Business Solutions Division, or BSD, is the largest component of our
integrated B2B platform 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, 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 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.

The CompuCom Division was formed during the fourth quarter of 2017 as a result
of our acquisition of CompuCom Systems, Inc. ("CompuCom"). The CompuCom Division
is a technology services provider supporting the distributed technology needs of
enterprise organizations in the United States and Canada. With a vision of
connecting people, technology, and the edge with a seamless experience, CompuCom
enables enterprise employees to be productive. CompuCom offers a broad range of
solutions including technology lifecycle management, end user computing and
collaboration, service desk, remote technology monitoring and management, and IT
workforce solutions. In 2020, a suite of technology services is being marketed
through BSD and brings CompuCom's enterprise quality services to small and
medium companies.

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STRATEGIC TRANSFORMATION



Since 2017, we have been undergoing a strategic business transformation to pivot
the 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. As part of this transformation, we
acquired CompuCom in 2017 and an enterprise IT solutions integrator and managed
services provider in 2018.

We continue to expand our reach and distribution network through acquisitions of
profitable regional office supply distribution businesses, serving small and
mid-market customers. Many of these customers are in geographic areas that were
previously underserved by our network. Year-to-date 2020, we acquired four small
independent regional office supply distribution businesses which has allowed for
an effective and accretive means to expand our distribution reach, target new
business customers and grow our offerings beyond traditional office supplies.

The aggregate total purchase consideration, including contingent consideration,
for the four acquisitions completed year-to-date 2020 was approximately $37
million, subject to certain customary post-closing adjustments. The aggregate
purchase price was funded with cash on hand.

The operating results of the acquired office supply distribution businesses are
combined with our operating results subsequent to their purchase dates, and are
included in the Business Solutions Division, and the operating results of
CompuCom and the enterprise IT solutions integrator and managed services
provider are included in the CompuCom Division. Refer to Note 2. "Acquisitions"
in Notes to Condensed Consolidated Financial Statements for additional
information.

STOCK SPLIT AND CORPORATE REORGANIZATION



After obtaining the approval of our shareholders on May 11, 2020, our Board of
Directors determined to set a reverse stock split ratio of 1-for-10 for a
reverse stock split of the Company's outstanding shares of common stock, and a
reduction in the number of authorized shares of the Company's common stock by a
corresponding ratio. The reverse stock split was effective on June 30, 2020.

On March 31, 2020, our Board of Directors approved proceeding with the
implementation of a Reorganization of the Company's corporate structure into a
holding company structure. The Reorganization was completed on June 30, 2020,
and Office Depot, Inc. became a wholly-owned subsidiary of a new holding
company, The ODP Corporation, and replaced Office Depot, Inc. as the public
company trading on the NASDAQ Stock Market under the ticker symbol "ODP". All
outstanding shares of Office Depot, Inc. were automatically converted into
shares of common stock in The ODP Corporation. The Reorganization begins to
simplify the Company's legal entity and tax structure, more closely aligns our
operating assets to their respective operating channels within the legal entity
structure, and is intended to increase its operational flexibility. It has not
resulted in a change in the directors, executive officers, management or
business of the Company. In addition, the Reorganization is intended to be a
tax-free transaction for U.S. federal income tax purposes for our shareholders.

RECENT DEVELOPMENTS



On March 11, 2020, the World Health Organization declared the current outbreak
of a novel coronavirus disease ("COVID-19") as a global pandemic. In response to
this declaration and with the rapid spread of COVID-19 globally and throughout
the United States, federal, state and local authorities have declared states of
emergency and imposed varying degrees of restrictions on social and commercial
activities, including travel restrictions and curfews, in order to promote
social distancing in an effort to prevent and slow the spread of the disease.
These restrictive measures have had significant adverse impacts on the national
and global economy year-to-date 2020.

From the beginning of the COVID-19 pandemic, we have made supporting the health
and wellness of our employees and customers a priority. Due to the nature of
products sold in our retail locations and integrated business-to-business
distribution platform, our business is considered to be essential retail
commerce by most local jurisdictions and has remained open and operational.
Based upon the guidance of the U.S. Centers for Disease Control ("CDC") and
local health authorities, we have put appropriate measures in place to help
reduce the spread of infection to our employees and customers, including the
institution of social distancing protocols and increased frequency of cleaning
and sanitizing in those facilities. Since March 2020, employees who are able to,
have been working from home, with only essential employees in our retail stores,
customer support and distribution centers working on site at our facilities, as
well as technicians and field support on-site at customer locations, as
necessary. We have also limited employee travel to only essential business
needs.

Overall demand has declined significantly as a result of the disruptions
experienced by our business customers from restrictions on commercial activities
and social distancing measures, and we expect these demand fluctuations to
continue into the fourth quarter of 2020 and beyond. We also experienced lower
than historical levels of sales of back-to-school supplies which typically peak
over several weeks in the third quarter. The delayed start of the school year
and the cancellation or delayed start of in-person school instruction across the
U.S. as a result of the COVID-19 outbreak have negatively impacted our third
quarter results. We expect the demand for back-to-school supplies to be spread
over a longer timeframe in 2020 and extend into the fourth quarter of 2020 and
beyond. We continued to experience higher than forecasted demand in our
e-Commerce platform, as well as in our retail locations

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associated with certain product categories, such as furniture, technology
products, cleaning and breakroom supplies and personal protective equipment that
meet our customers' needs arising from the risks related to potential exposure
to COVID-19. In response to the volatility resulting from the pandemic, we are
taking measures to protect our financial position during this challenging time
period. These measures include creating contingency plans for merchandise
categories that may be in high demand, adjusting our inventory levels, reducing
certain occupancy costs, reducing nonessential expenses, and reducing our
capital spend, among others. In May 2020, we proactively adopted a more
conservative approach to our capital return program to preserve liquidity and
maximum financial flexibility by temporarily suspending our share repurchases
and quarterly cash dividend. In November 2020, our Board of Directors approved
the resumption of the stock repurchase program beginning in the fourth quarter
of 2020 which will run through the end of 2021. Our quarterly cash dividend
remains temporarily suspended.

Beginning towards the end of the second quarter of 2020, states and local
jurisdictions started to phase out restrictions imposed on commercial activities
at varying degrees, while certain states have extended or reinstated
restrictions. We continue to assess our outlook on a daily basis, but we are
unable to accurately predict the pace and shape of the recovery from COVID-19
due to numerous uncertainties, including the duration or any future recurrence
of the outbreak, actions that may be taken by governmental authorities,
additional disruption to the economy and consumers' willingness and ability to
spend, temporary or permanent closures of our business customers, supply chain
disruptions and other unforeseeable consequences. As a result, weaker global
economic conditions and increased unemployment, including continued business
disruption relating to the COVID-19 outbreak and resulting governmental actions
may continue to negatively impact our business and results of operations in the
fourth quarter of 2020 and beyond, as well as result in future impairments of
our assets.

CONSOLIDATED RESULTS AND LIQUIDITY



The following summarizes the more significant factors impacting our operating
results for the 13-week and 39-week periods ended September 26, 2020 (also
referred to as the "third quarter of 2020" and "year-to-date 2020,"
respectively) and September 28, 2019 (also referred to as the "third quarter of
2019" and "year-to-date 2019," respectively).

Our consolidated sales were 9% lower in both the third quarter and year-to-date
2020 compared to the same periods of the prior year. These period-over-period
decreases were primarily driven by lower sales in our Business Solutions
Division, which decreased 11% and 12% during the third quarter and year-to-date
2020, respectively, primarily due to temporary closures of certain enterprise
customers and a transition to a work-from-home environment in response to the
restrictions imposed by local authorities to prevent and reduce the spread of
COVID-19. This decrease was partially offset by higher sales generated by our
eCommerce platform, which is included in our Business Solutions Division. Sales
in our Retail Division decreased 3% and 4% in the third quarter and year-to-date
2020, respectively, due to planned store closures, lower sales in existing
locations due to reduced customer traffic, and decreased sales of back-to-school
supplies due to the delayed start of the school year. Our CompuCom Division also
experienced lower sales of 22% and 15% in the third quarter and year-to-date
2020, respectively, when compared to the prior year periods, primarily due to
certain customer imposed delays and cancellations of previously scheduled
projects and postponed new projects as a result of COVID-19 business disruption
and lower product sales and service volume.



Sales                                  Third Quarter                         Year-to-Date
(In millions)                  2020        2019       Change        2020        2019        Change
Business Solutions Division   $ 1,197     $ 1,350         (11 )%   $ 3,554     $ 4,022          (12 )%
Retail Division                 1,147       1,177          (3 )%     3,216       3,352           (4 )%
CompuCom Division                 197         252         (22 )%       646         758          (15 )%
Other                              (2 )         3        (167 )%         6           7          (14 )%
Total                         $ 2,539     $ 2,782          (9 )%   $ 7,422     $ 8,139           (9 )%




Product sales in the third quarter and year-to-date 2020 both decreased 7% from
the comparative prior year periods, primarily driven by lower sales in the
Business Solutions Division as a result of temporary closures and transition to
a work-from-home environment of certain enterprise customers due to COVID-19, as
described above, and was partially offset by an increase in product sales
generated by our eCommerce platform.



Sales of services in the third quarter and year-to-date 2020 decreased 19% and
16%, respectively, primarily driven by a decline in sales of our copy and print
services in our Retail Division due to reduced demand and in our CompuCom
Division due to customer imposed delays and cancellations of previously
scheduled and postponed new projects and reduced business volume, both as a
result of the impacts of COVID-19 which included shelter-in-place orders,
temporary closures of nonessential businesses, and schools transitioning to
virtual learning. Sales of services were also impacted by the decline of our
copy and print services in our Business Solutions Division due to the impacts of
COVID-19, mainly as a result of the temporary closures of nonessential
businesses. On a consolidated basis, services represented approximately 13% and
14% of our total sales in the third quarter and year-to-date 2020, respectively,
as compared to 15% in both the third quarter and year-to-date 2019.

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Sales                    Third Quarter                          Year-to-Date
(In millions)    2020        2019        Change        2020        2019        Change
Products        $ 2,209     $ 2,377           (7 )%   $ 6,403     $ 6,921           (7 )%
Services            330         405          (19 )%     1,019       1,218          (16 )%
Total           $ 2,539     $ 2,782           (9 )%   $ 7,422     $ 8,139           (9 )%



OTHER SIGNIFICANT FACTORS IMPACTING TOTAL COMPANY RESULTS AND LIQUIDITY

• Total gross profit decreased by $77 million or 12%, and $258 million or 14%,

in the third quarter and year-to-date 2020, respectively, when compared to

the same periods in 2019. The decrease in gross profit was largely driven by

the flow through impact of lower sales in our Business Solutions Division

and Retail Division, which consisted of $53 million and $16 million of the

decrease in gross profit for the third quarter of 2020, respectively, and

$176 million and $65 million of the decrease in the year-to-date 2020

period. The remaining decrease of $8 million and $15 million for the third

quarter and year-to-date 2020, respectively, was attributable to our

CompuCom Division. These reductions were partially offset by the savings

generated from the implementation of the Business Acceleration Program,

which among other things, optimized labor costs in our CompuCom Division,

and acquisitions within our Business Solutions Division.

• Total gross margin for the third quarter and year-to-date 2020 was 23% and

22%, respectively, which were lower than the comparative prior year period

gross margins of 24% and 23%, respectively. The lower gross margin in the

third quarter of 2020 is mainly driven by higher product costs as a result

of product mix. The year-to-date 2020 period is mainly driven by the factors

impacting the third quarter of 2020 as well as the deleveraging impact of

supply chain and occupancy costs as a result of lower sales in the second

quarter of 2020. While we incurred incremental costs related to trade

tariffs on inventory we purchase from suppliers in China, certain actions,

including changes to our contracting model, alternative sourcing strategies,


      and selective price increase pass-through efforts mitigated much of the
      impact of such trade tariffs to our results of operations.

• Total selling, general and administrative expenses decreased by $80 million

or 15%, and $243 million or 15% in the third quarter and year-to-date 2020,

respectively, when compared to the same periods in 2019. The decrease was

the result of store closures in our Retail Division and certain strategic

initiatives, including the Business Acceleration Program, aimed at reducing

our spend on payroll and payroll-related costs and other discretionary

expenses such as professional fees, contingent labor, travel and marketing.

The decreases in total selling, general, and administrative expenses in the

third quarter and year-to-date 2020 were partially offset by increases in

expenses associated with the expansion of our distribution network through

acquisitions within our Business Solutions Division.

• We recorded $26 million and $107 million of merger and restructuring

expenses, net in the third quarter and year-to-date 2020, respectively,

compared to $22 million and $105 million in the third quarter and

year-to-date 2019, respectively. Merger and restructuring expenses in the

third quarter and year-to-date 2020 included $3 million and $17 million,

respectively, of severance, retention, transaction and integration costs

associated with business acquisitions and $23 million and $90 million,

respectively, of expenses associated with restructuring activities. Refer to


      Note 3. "Merger and Restructuring Activity" in Notes to Condensed
      Consolidated Financial Statements for additional information.

• We recorded $10 million and $423 million of asset impairment charges in the

third quarter and year-to-date 2020, respectively, which included $363

million related to goodwill in our Contract and CompuCom reporting units and

other intangible assets impairment year-to-date 2020, and $7 million and $42

million in the third quarter and year-to-date 2020, respectively, related to

impairment of operating lease ROU assets associated with our retail store

locations, with the remainder primarily relating to impairment of fixed

assets and a cost method investment. We recorded $5 million and $50 million

of asset impairment charges in the third quarter and year-to-date 2019,

respectively, which primarily related to impairment of operating lease ROU

assets associated with our retail store locations. Refer to Note 11. "Fair

Value Measurements" in Notes to Condensed Consolidated Financial Statements

for additional information.

• In April 2020, we repaid the remaining balance under the Term Loan Credit

Agreement in full and terminated it. We recognized $12 million of loss from

the extinguishment and modification of debt related to this transaction,

which primarily consists of the write-off of the remaining unamortized

original issue discount and debt issuance costs of the Term Loan Credit

Agreement, and is included in our results for year-to-date 2020. Refer to

Note 8. "Debt" in Notes to Condensed Consolidated Financial Statements for


      additional information.


   •  Our effective tax rates of 42% and (9)% for the third quarter and

year-to-date 2020, respectively, differ from the statutory rate of 21% due

to the impact of state taxes, excess tax deficiencies associated with

stock-based compensation awards and certain nondeductible items, adjustments

to certain tax benefits and the mix of income and losses across U.S. and

non-U.S. jurisdictions. The difference between our year-to-date 2020

effective tax rate and the statutory rate was also impacted by goodwill

impairment. Our effective tax rates of 35% and 39% for the third quarter and

year-to-date 2019, respectively, were primarily influenced by the impact of

state taxes and certain nondeductible items, adjustments to tax credit


      benefits, and the


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mix of income and losses across U.S. and non-U.S. jurisdictions. Refer to


      Note 6. "Income Taxes" in Notes to Condensed Consolidated Financial
      Statements for additional information.

• Diluted earnings per share was $1.04 in the third quarter of 2020 compared

to $1.09 in the third quarter of 2019. Diluted loss per share was $(6.40)


      year-to-date 2020 compared to diluted earnings per share of $0.79
      year-to-date 2019.

• 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 our quarterly cash dividend and our stock

repurchase program. In November 2020, our Board of Directors approved the

resumption of the stock repurchase program beginning in the fourth quarter

of 2020 which will run through the end of 2021. Our quarterly cash dividend

continues to be temporarily suspended. In the third quarter of 2020, we did

not pay a quarterly cash dividend on our common stock. In the third quarter

of 2019, we paid a quarterly cash dividend on our common stock in the amount

of $0.25 per share, resulting in total cash payments of $14 million. In each

of year-to-date 2020 and 2019, we paid total cash dividends of $13 million

and $41 million, respectively.

• At September 26, 2020, we had $743 million in cash and cash equivalents and

$1.0 billion of available credit under the Third Amended Credit Agreement,

for a total liquidity of approximately $1.7 billion. Cash provided by

operating activities was $489 million for year-to-date 2020 compared to $214

million in the comparable prior year period. During the third quarter of

2020, we repaid $300 million of revolving loans outstanding under Third

Amended Credit Agreement. Refer to the "Liquidity and Capital Resources"

section for further information on cash flows.

OPERATING RESULTS BY DIVISION

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.



BUSINESS SOLUTIONS DIVISION



                               Third Quarter              Year-to-Date
(In millions)                2020         2019         2020         2019
Products                    $ 1,127      $ 1,264      $ 3,338      $ 3,781
Services                         70           86          216          241
Total Sales                 $ 1,197      $ 1,350      $ 3,554      $ 4,022
% change                        (11 )%        (1 )%       (12 )%         1 %
Division operating income   $    45      $    71      $    98      $   203
% of sales                        4 %          5 %          3 %          5 %




Product sales in our Business Solutions Division decreased 11% and 12% in the
third quarter and year-to-date 2020, respectively, compared to the corresponding
periods in 2019. The third quarter and year-to-date 2020 were impacted by lower
demand, especially in product categories such as toner, ink and office supplies
due to a portion of our business-to-business customers having to temporarily
transition into a work-from-home environment or pause operations as a result of
restrictions imposed by federal, state and local authorities, which resulted in
a decrease of $236 million and $705 million in product sales during the third
quarter and year-to-date 2020, respectively. These restrictions, which started
in March 2020 and aim to prevent and reduce the spread of COVID-19, have
continued through the third quarter across a majority of the jurisdictions in
which our customers operate. The lower demand from our business-to-business
customers was partially offset by higher sales in other product categories which
aggregated to $99 million and $262 million, respectively, and primarily related
to cleaning products and personal protective equipment sales of $49 million and
$148 million, respectively, in the third quarter and year-to-date 2020. Higher
sales in our eCommerce platform, which experienced increased demand during this
period as more customers preferred to order online and have their purchases
delivered, and the impact of acquisitions, also contributed positively to our
product revenues for the period, although they were not material drivers of our
results for the third quarter and year-to-date 2020.



Sales of services in our Business Solutions Division decreased 19% and 10% in
the third quarter and year-to-date 2020, respectively, compared to prior
periods. The decrease in both periods is primarily due to lower demand from our
business-to-business customers for our managed print and fulfillment services
and copy and print services as a result of the impact of restrictions due to
COVID-19 on their operations during the third quarter of 2020.



The impacts of the COVID-19 outbreak on the fourth quarter of 2020 and the
magnitude by which sales of products and services of our Business Solutions
Division will be affected will depend heavily on the duration of restrictions
imposed by governmental authorities to prevent and reduce the spread of COVID-19
such as social distancing and shelter-in-place mandates, as well as the
substance and pace of macroeconomic recovery. However, as discussed above, the
impact has been material to the results of the Business Solutions Division in
the third quarter and year-to-date 2020 and could continue into the fourth
quarter of 2020 and beyond.



Our Business Solutions Division operating income was $45 million in the third
quarter of 2020 compared to $71 million in the third quarter of 2019, a decrease
of 37% period-over-period. The decrease in operating income in the third quarter
of 2020 was related to

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the flow through impact of lower product sales volume coupled with a lower gross
profit margin due to a combination of pricing pressures and higher product
costs. This was partially offset by a reduction in selling, general and
administrative expenses achieved through our Business Acceleration Program. Our
Business Solutions Division operating income of $98 million year-to-date 2020 as
compared to $203 million year-to-date 2019, decreased 52% period-over-period,
and was driven by the impact of the factors described above for the third
quarter of 2020.

RETAIL DIVISION



                                    Third Quarter              Year-to-Date
(In millions)                     2020         2019         2020         2019
Products                         $ 1,037      $ 1,036      $ 2,884      $ 2,916
Services                             110          141          332          436
Total Sales                      $ 1,147      $ 1,177      $ 3,216      $ 3,352
% change                              (3 )%        (6 )%        (4 )%        (6 )%
Division operating income        $   119      $    84      $   224      $   160
% of sales                            10 %          7 %          7 %          5 %
Comparable store sales decline       N/A           (4 )%       N/A           (4 )%




Product sales in our Retail Division were flat in the third quarter of 2020
compared to the corresponding period in 2019, and decreased 1% year-to-date 2020
compared to the corresponding period in 2019. Product sales were negatively
impacted by closing underperforming retail stores, fewer transactions in
existing stores, and a decline in sales of back-to-school supplies which
typically peak over several weeks in the third quarter. The delayed start of the
school year and the cancellation or delayed start of in-person school
instruction across the U.S. as a result of the COVID-19 outbreak have negatively
impacted the third quarter of 2020 as compared to the corresponding period in
the prior year. We expect the demand for back-to-school supplies to be spread
over a longer timeframe in 2020 and extend into the fourth quarter of 2020.



The decline in sales was fully offset for third quarter of 2020, and partially
offset for year-to-date 2020, by the increased demand in essential products such
as furniture, technology products, cleaning and breakroom supplies and other
work-from-home and learn-from-home enabling products. The increase in these
product categories were $145 million and $303 million in the third quarter of
2020 and year-to-date 2020, respectively, and was primarily driven by the needs
of our customers to help address their challenges derived from the COVID-19
outbreak. Additionally, the increased demand was driven by needs of customers
who transitioned into remote work and virtual learning environments in March
2020 as a result of restrictions imposed by federal, state and local authorities
in order to prevent and reduce the spread of COVID-19. The demand for these
product categories could decrease 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 have begun to experience supply
constraints in our product categories with high demand such as ink, cleaning and
breakroom supplies, and technology products, and we may continue to face delays
or difficulty sourcing these products.



For the reasons described in the "Recent Developments" section, our business is
considered to be essential retail commerce by most local jurisdictions, and as a
result, the substantial majority of our retail locations remain open and
operational with the appropriate safety measures in place during the COVID-19
outbreak, including a curbside pickup option. Since late in first quarter of
2020, we have temporarily reduced our retail location hours by two hours daily,
which continues to be in effect at the majority of our retail locations. We
believe sales in our Retail Division may be adversely impacted due to the
COVID-19 outbreak in the fourth quarter of 2020 and beyond. As there is
uncertainty of the extent and duration of the impacts of the outbreak, we are
unable to estimate the full impact at this time.



Product sales were also positively impacted during the quarter by the increase
in the volume of transactions where our customers buy online for pick up in our
stores ("BOPIS"). BOPIS transactions are included in our Retail Division results
because they are fulfilled with retail store inventory and serviced by our
retail store associates. Our BOPIS sales have increased 82% and 84% in the third
quarter and year-to-date 2020, respectively, from the corresponding prior year
periods, and we expect this trend to continue during the COVID-19 outbreak.



Sales of services in our Retail Division decreased 22% and 24% in the third
quarter and year-to-date 2020, respectively, compared to the corresponding
periods in 2019. The positive momentum we experienced in early 2020 from the
expansion of our copy and print services and subscription volume was negatively
impacted by a reduction in demand due to temporary closures of nonessential
businesses, as well as the transition of a significant portion of our customers
to a remote work and virtual learning environment, due to COVID-19.

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

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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, 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 are not a meaningful
metric for the third quarter and year-to-date 2020, and therefore is not
provided.

The Retail Division operating income increased 42% and 40% in the third quarter
and year-to-date 2020, respectively, which, as a percentage of sales, reflects a
period-over-period increase of approximately 320 basis points and 220 basis
points, respectively. The comparative increase in operating income was mostly
attributable to lower selling, general and administrative expenses resulting
from continuous efforts to optimize costs and lower operating lease costs
recognized as a result of store impairments. These improvements have more than
offset the flow-through impact of lower sales.



As of September 26, 2020, the Retail Division operated 1,244 retail stores in
the United States, Puerto Rico and the U.S. Virgin Islands compared to 1,317
stores at the end of the third quarter of 2019. Charges associated with store
closures are reported as appropriate in Merger and restructuring 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.

COMPUCOM DIVISION



                                     Third Quarter           Year-to-Date
(In millions)                       2020        2019        2020       2019
Products                           $    45      $  71      $  166      $ 209
Services                               152        181         480        549
Total Sales                        $   197      $ 252      $  646      $ 758
% change                               (22 )%      (6 )%      (15 )%      (6 )%
Division operating income (loss)   $     3      $   3      $   10      $ (11 )
% of sales                               2 %        1 %         2 %       (1 )%




Product sales in our CompuCom Division decreased 37% and 21% in the third
quarter and year-to-date 2020, respectively, compared to the corresponding
periods in 2019. We experienced strong enterprise demand for computer and
computer-related products in the latter part of the first quarter of 2020 as
many businesses temporarily shifted to a work-from-home environment amid the
COVID-19 outbreak. This was followed by lower demand during the second and third
quarters of 2020 as the immediate needs of business customers for such products
diminished and a portion of our business customers continued to be temporarily
closed due to restrictions put in place by local authorities that aim to prevent
and reduce the spread of COVID-19.



Sales of services in our CompuCom Division decreased 16% and 13% in the third
quarter and year-to-date 2020, respectively, compared to the corresponding
periods in 2019. This was primarily due to lower project-related revenue from
existing customer accounts and lower overall business volume. The reduction in
project-related revenue is due to our customers pausing discretionary project
spending amidst the COVID-19 outbreak and the uncertainty of its impact on the
economy. Although sales of services have been declining since the beginning of
2019, we are continuing our efforts to stabilize and grow revenue in this
Division. In connection with these efforts, we are strategically focusing on our
strengths and placing greater emphasis on our core digital workplace offerings.
We continue to expand our value proposition and capitalize on our unique market
position to serve remote workforces through our capabilities to provision
hardware, provide virtual or call center support and dispatch our field
technicians as needed.



The CompuCom Division operating income was $3 million and $10 million in the
third quarter and year-to-date 2020, respectively, compared to operating income
of $3 million and an operating loss of $11 million in the third quarter and
year-to-date 2019, respectively. Operating income has been increasing
sequentially since the first quarter of 2019, which is mostly attributable to
improved cost efficiencies as a result of our Business Acceleration Program. The
increase in operating profitability despite the flow through impact of lower
service sales volume was achieved through a reduction in associated
labor-related expenses and ongoing expenditures to develop and market additional
service offerings. We continue to take actions to improve future operating
performance at our CompuCom Division, which include increasing the use of
automation and technology to further improve service efficiency, simplifying
organizational structures to improve service velocity, and aligning sales
efforts to better serve our customers and accelerate cross-selling opportunities
including 'powered by CompuCom,' a suite of technology services marketed through
BSD which brings CompuCom's enterprise quality services to small and medium
companies.

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OTHER



Certain operations previously included in the former International Division,
including our global sourcing and trading operations in the Asia/Pacific region,
which we have retained, are presented as Other. These operations primarily
relate to the sale of products to former joint venture partners, and are not
material in any period. Also included in Other is the elimination of
intersegment revenues of $5 million and $12 million for the third quarter and
year-to-date 2020, respectively, and $3 million and $9 million for the third
quarter and year-to-date 2019, respectively.

CORPORATE



The line items in our Condensed Consolidated Statements of Operations included
as Corporate activities are Asset impairments and Merger and restructuring
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.

Asset impairments



In the third quarter and year-to-date 2020, we recognized asset impairment
charges of $10 million and $423 million, respectively. Of the asset impairment
charges in the third quarter of 2020, $7 million was related to impairment of
operating lease ROU assets associated with our retail store locations, and the
remainder was related to impairment of fixed assets. Of the asset impairment
charges year-to-date 2020, $363 million was related to impairment of goodwill in
our CompuCom and Contract reporting units and other intangible assets, $42
million was related to impairment of operating lease ROU assets associated with
our retail store locations, and the remainder was related to impairment of fixed
assets and a cost method investment. In the third quarter and year-to-date 2019,
respectively, we recognized asset impairment charges of $5 million and $50
million. Of these asset impairment charges, $2 million and $41 million,
respectively, were related to the impairment of operating lease ROU assets
associated with our retail store locations, with the remainder primarily 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 third quarter and year-to-date 2020, 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 recoverability analysis
in the third quarter of 2020 also included the impact of the COVID-19 pandemic
on the operations of our retail stores as described in the "Retail Division"
section. As discussed above, there is uncertainty regarding the impact of the
COVID-19 pandemic on the results of our operations in the fourth quarter of 2020
and beyond, which could result in future impairments of store assets if deemed
unrecoverable.

During the second quarter of 2020, due to the macroeconomic impacts of COVID-19
on our current and projected future results of operations, we determined that an
indicator of potential impairment existed requiring an interim quantitative
goodwill impairment test for our CompuCom and Contract reporting units. The
Contract reporting unit is a component of our Business Solutions Division. The
quantitative goodwill impairment test indicated that the carrying value of the
CompuCom and Contract reporting units exceeded their fair value, and impairment
charges of $237 million and $115 million, respectively, were recorded for these
reporting units. CompuCom's tradename, which is an indefinite-lived intangible
asset, was also tested for impairment during this quantitative assessment and an
impairment charge of $11 million was recorded to reduce its carrying amount in
the second quarter of 2020. At September 26, 2020, the CompuCom reporting unit
and the Contract reporting unit have goodwill of $211 million and $241 million,
respectively. These non-cash impairment charges are presented within the Asset
impairments line in the accompanying Condensed Consolidated Statements of
Operations year-to-date 2020. Refer to Note 5. "Segment Information" in Notes to
Condensed Consolidated Financial Statements for additional information regarding
the drivers of decline in the fair values of our CompuCom and Contract reporting
units as well as the methodologies, key inputs and assumptions used in
determining the fair value estimates.

During the third quarter of 2020, our CompuCom and Contract reporting units
continued to experience the negative impacts of COVID-19, which are consistent
with the factors discussed in Note 5. "Segment Information" referred to above
that gave rise to the decline in their fair values. The CompuCom and Contract
reporting units' operating performance and future outlook are in line with the
Company's revised forecasts used in determining the fair value estimates.
Accordingly, there are no impairment indicators identified for these reporting
units as of September 26, 2020. We also did not identify indicators of
impairment related to our other

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reporting units, which mainly serve consumers through our retail stores and
eCommerce platform and have been performing in accordance with our forecasts. 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.

Merger and restructuring expenses, net



Since 2017, 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. The expenses and any income
recognized directly associated with these actions are included in Merger and
restructuring 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 and
restructuring expenses, net was $26 million and $107 million in the third
quarter and year-to-date 2020, respectively, compared to $22 million and $105
million in the third quarter and year-to-date 2019, respectively.

Maximize B2B Restructuring Plan



In May 2020, our Board of Directors approved a restructuring plan to realign our
operational focus to support our "business-to-business" solutions and IT
services business units and improve costs. 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
our retail footprint, removing costs that directly support our Retail business
and additional measures to implement a company-wide low-cost business model,
which will then be invested in accelerating the growth of our
business-to-business platform. The plan is broader than restructuring programs
we have 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. We are evaluating the number of retail store and
distribution facility closures and/or consolidations, as well as the timing of
any such closures and/or consolidations, however we generally expect that
closures will approximate the store's lease termination date. We closed six
retail stores and two distribution facilities under the Maximize B2B
Restructuring Plan during the third quarter and year-to-date 2020. We estimate
that approximately 63 additional retail stores will be closed by the end of
2020. Such closures are in addition to the closures we anticipate in connection
with the Business Acceleration Plan, as discussed below. Total estimated
restructuring costs related to the Maximize B2B Restructuring Plan are expected
to be up to $143 million, comprised of:

(a) severance costs of approximately $55 million;

(b) facility closure costs of approximately $51 million, which are mainly


       related to retail stores; and


   (c) other costs, including contract termination costs, to facilitate the

       execution of the Maximize B2B Restructuring Plan of approximately $37
       million.


The total costs of up to $143 million above are expected to be cash expenditures
through 2023 funded primarily with cash on hand and cash from operations. As
part of the optimization of our Retail footprint, potential closure prior to
lease terms were considered. However, it is generally expected that closures
would approximate their lease termination dates. Changes in future economic
conditions and events may influence the decisions made which would not be a part
of this plan. If stores are determined to be closed before the end of their
lease term and the fair values of their assets are not sufficient to cover their
carrying amounts, we may also incur non-cash asset impairment charges related to
the operating lease ROU assets and fixed assets at these locations. The timing
and amount of these future impairments will be dependent upon the decisions that
will be made and whether the closures or disposals occur prior to the lease
maturity dates or useful lives of the assets involved. Impairment charges on
these assets, if any, will be reflected on the Asset impairments line item of
our Condensed Consolidated Statements of Operations.



In the third quarter of 2020, we incurred $17 million in restructuring expenses
associated with the Maximize B2B Restructuring Plan which consisted of $1
million in severance, $7 million in third-party professional fees, and $9
million of retail store and facility closure costs and other that were mainly
related to closure accruals, gains and losses on asset dispositions, and
accelerated depreciation. Of these amounts, $13 million were cash expenditures
in the third quarter of 2020. Year-to-date 2020, we incurred $68 million in
restructuring expenses associated with the Maximize B2B Restructuring Plan which
consisted of $43 million in severance, $7 million in third-party professional
fees, and $18 million of retail store and facility closure costs and other that
were mainly related to facility closure accruals, gains and losses on asset
dispositions, and accelerated depreciation. Of these amounts, $16 million were
cash expenditures year-to-date 2020.

Business Acceleration Program



In May 2019, our Board of Directors approved the Business Acceleration Program,
a company-wide, multi-year, cost reduction and business improvement program to
systematically drive down costs, improve operational efficiencies, and enable
future growth investments. In connection with the Business Acceleration Program,
we anticipate closing approximately 85 underperforming retail

                                       35

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stores and eight other facilities, consisting of distribution centers and sales
offices, by the end of 2020. In the third quarter and year-to-date 2020, we
closed 10 and 57 retail stores, respectively. We closed one other facility in
2020, and seven other facilities were closed as of the end of 2019. No other
facilities were closed in the third quarter of 2020. Total estimated costs to
implement the Business Acceleration Program are expected to be approximately
$107 million, of which approximately $99 million are expected to be cash
expenditures through 2020 funded primarily with cash on hand and cash from
operations. We incurred $101 million in restructuring expenses to implement the
Business Acceleration Program since its inception in 2019 through the end of the
third quarter of 2020. The Business Acceleration Program is expected to be
substantially completed by the end of 2020.

In the third quarter of 2020, we incurred $5 million in restructuring expenses
associated with the Business Acceleration Program which consisted of $2 million
in third-party professional fees, and $3 million of retail store and facility
closure costs and other. We made cash expenditures of $4 million for the
Business Acceleration Program in the third quarter of 2020. Year-to-date 2020,
we incurred $19 million in restructuring expenses associated with the Business
Acceleration Program which consisted of $11 million in third-party professional
fees and $8 million of retail store and facility closure costs and other. We
made cash expenditures of $27 million for the Business Acceleration Program
year-to-date 2020.

Other



Included in restructuring expenses in the third quarter and year-to-date 2019
were costs incurred in connection with the Comprehensive Business Review which
concluded at the end of 2019. These costs included severance, facility closure
costs, contract termination, accelerated depreciation, relocation and disposal
gains and losses, as well as other costs associated with retail store closures.
Included in restructuring expenses in the third quarter and year-to-date 2020
were third-party professional fees incurred in connection with the
Reorganization.

Refer to Note 3. "Merger and Restructuring Activity" in Notes to Condensed Consolidated Financial Statements for an extensive analysis of these Corporate charges.



Unallocated Expenses

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 also include the pension credit related to the
frozen OfficeMax pension and other benefit plans. Additionally, the pension plan
in the United Kingdom that has been retained by us in connection with the sale
of the European Business, as well as certain general and administrative costs
previously allocated to the former International Division have been included in
corporate unallocated expenses.

Unallocated expenses were $29 million and $75 million in the third quarter and
year-to-date 2020, respectively, and $23 million and $80 million in the third
quarter and year-to-date 2019, respectively. The increase in the third quarter
of 2020 compared to the prior year period was primarily due to higher legal
expenses. The decrease year-to-date 2020 compared to the prior year period was
primarily due to lower deferred compensation expenses in our executive function
and lower professional fees in the first quarter of 2020, partially offset by
higher legal expenses in the third quarter of 2020.

Other Income and Expense



                                                    Third Quarter          Year-to-Date
(In millions)                                      2020        2019       2020       2019
Interest income                                   $    -       $   5     $     3     $  16
Interest expense                                      (6 )       (22 )       (35 )     (68 )
Loss on extinguishment and modification of debt        -           -         (12 )       -
Other income, net                                      3           2           7         7




In April 2020, we entered into the Third Amended Credit Agreement which provides
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 $2 million and $5 million of interest expense in the third quarter
and year-to-date 2020, respectively, related to the Third Amended Credit
Agreement.

We recorded $10 million of interest expense year-to-date 2020, and $10 million
and $31 million in the third quarter and year-to-date 2019, respectively,
related to the Term Loan Credit Agreement. In April 2020, we repaid the
remaining balance under the Term Loan Credit Agreement in full and terminated
it. We recognized $12 million of loss from the extinguishment and modification
of debt related to this transaction year-to-date 2020, which primarily included
the write-off of the remaining unamortized original issue discount and debt
issuance costs of the Term Loan Credit Agreement.

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Refer to Note 8. "Debt" in Notes to Condensed Consolidated Financial Statements for additional information.



Income Taxes

During 2020 and 2019, 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 the dispositions of the international businesses and
improved operating results. As a result, our effective tax rates are 42% for the
third quarter and (9)% for year-to-date 2020, and 35% for the third quarter and
39% for year-to-date 2019. Our effective tax rates for the third quarter and
year-to-date 2020 differ from the statutory rate of 21% primarily due to the
impact of state taxes, excess tax deficiencies associated with stock-based
compensation awards and certain nondeductible items, adjustments to certain tax
benefits and the mix of income and losses across U.S. and non-U.S.
jurisdictions. The difference between our year-to-date 2020 effective tax rate
and the statutory rate was also impacted by goodwill impairment. Our effective
tax rates in prior periods have varied considerably as a result of several
primary factors including the mix of income and losses across U.S. and non-U.S.
jurisdictions, the impact of excess tax deficiencies associated with stock-based
compensation awards and the derecognition of valuation allowances against
deferred tax assets that were not more-likely-than-not realizable in the U.S.
and certain non-U.S. jurisdictions. Changes in pretax income projections and the
mix of income across jurisdictions could impact the effective tax rate in future
quarters.

The Tax Cuts and Jobs Act repealed the corporate Alternative Minimum Tax ("AMT")
and allows unutilized AMT credits to be refunded. For tax years 2018 through
2020, taxpayers could receive 50% of their uncredited balances as a cash refund
with any remaining amounts refunded in full in 2021. As of year-end 2019, we
determined it was more-likely-than-not that $22 million of our AMT credits would
be refunded and was expected to be received in the third quarter of 2020. During
the first quarter of 2020, the Coronavirus Aid, Relief and Economic Security Act
(the "CARES Act") was enacted. The CARES Act allows for us to refund 100% of our
remaining AMT credits in 2020. We filed for the remaining $22 million in the
second quarter of 2020 for a total refund of $44 million. We received the entire
$44 million in the third quarter of 2020. We continue to evaluate the other
provisions of the CARES Act to determine if they would have any material impact.



During the first quarter of 2020, we net settled our Timber notes receivable and
Non-recourse debt. We had previously recorded a deferred tax liability related
to the taxes deferred from the original transaction. The deferred liability was
realized in the first quarter of 2020. We anticipate that certain capital loss
carryforwards, available tax credits and net operating losses will offset the
resulting gain and no material cash income taxes will be due upon the
realization.



We continue to have a U.S. valuation allowance for certain U.S. federal credits
and state tax attributes, which relate 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.



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
2017 and 2013, 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. Our U.S. federal income tax return for 2017 is
currently under review. Generally, we are subject to routine examination for
years 2012 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.

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY



At September 26, 2020 and December 28, 2019, we had $743 million and $698
million in cash and cash equivalents, respectively, and $1.0 billion and $920
million of available credit under the Third Amended Credit Agreement (as defined
in Note 8. "Debt" in Notes to Condensed Consolidated Financial Statements),
respectively, for a total liquidity of approximately $1.7 billion and $1.6
billion, respectively. 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 full year cash flows generated from operations, we will be
able to fund our working capital, capital expenditures, debt repayments, merger
integration and restructuring expenses, 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. 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. To preserve liquidity and maximize
financial flexibility in the current environment, our Board of Directors has
proactively adopted a more conservative approach and temporarily suspended the
stock repurchase program and the quarterly cash dividend beginning with the
second quarter of 2020. In November 2020, our Board of Directors approved the
resumption of the stock

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repurchase program beginning in the fourth quarter of 2020 which will run through the end of 2021. Our quarterly cash dividend remains temporarily suspended. We intend to continue to evaluate and implement additional cost-cutting measures as is necessary to mitigate the negative financial impact of COVID-19.



Financing

As disclosed in Note 8. "Debt" in Notes to Condensed Consolidated Financial
Statements, we received a net cash payment of $87.7 million upon maturity of the
Installment Notes and the Bridge Loan on January 29, 2020, which were net
settled as they were with the same third-party financial institution. This
amount includes principal of $82.5 million and interest of $5.2 million. Also,
as noted in the "Income Taxes" section above, we received a refund of unutilized
AMT credits of $44 million in the third quarter of 2020.

Also as disclosed in Note 8. "Debt", on April 17, 2020, 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 replaces our then existing amended and restated credit
agreement that was due to mature in May 2021. Upon the closing of the
transaction, we made an initial borrowing in the amount of $400 million under
the New Facilities. These proceeds, along with available cash on hand, were used
to repay in full the remaining $388 million balance under the Term Loan Credit
Agreement and terminate it and to repay approximately $66 million of other debt
and related interest. We recognized $12 million of loss from the extinguishment
and modification of debt related to this transaction in the second quarter of
2020, which primarily included the write-off of the remaining unamortized
original issue discount and debt issuance costs of the Term Loan Credit
Agreement as of the closing date of the transaction. During the third quarter of
2020, we repaid $300 million of revolving loans outstanding under the Third
Amended Credit Agreement.

There were no revolving loans outstanding, $100 million of outstanding FILO Term
Loan Facility loans, and $55 million of outstanding standby letters of credit
under the Third Amended Credit Agreement at the end of the third quarter of
2020, and we were in compliance with all applicable financial covenants at
September 26, 2020.

Strategic Transformation



In addition to the acquisitions disclosed herein, we have evaluated, and expect
to continue to evaluate, possible acquisitions and dispositions of businesses
and assets as well the possible acceleration of potential restructuring plans in
connection with our strategic transformation. Such transactions may be material
and may involve cash, our securities or the incurrence of additional
indebtedness (Refer to Note 2. "Acquisitions" and Note 3. "Merger and
Restructuring Activity" in Notes to Condensed Consolidated Financial Statements
for additional information).

Capital Expenditures

We estimated capital expenditures in 2020 to be up to approximately
$150 million, which includes investments to support our business priorities.
However, due to the factors described in the "Recent Developments" section
above, we are unable to estimate the magnitude by which capital expenditures
will be affected in the fourth quarter of 2020. These expenditures will be
funded through available cash on hand and operating cash flows.

Capital Return Programs - Share Repurchases and Dividends



In November 2018, our Board of Directors approved a stock repurchase program of
up to $100 million of our common stock effective January 1, 2019, which extends
until the end of 2020. In November 2019, our Board of Directors approved an
increase in the authorization of the existing stock repurchase program of up to
$200 million and extended the program through the end of 2021. The current
authorization includes the remaining authorized amount under the existing stock
repurchase program. 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 share repurchases will depend on market conditions and other
factors, and will be funded through available cash balances. Our Third Amended
Credit Agreement includes certain covenants on restricted payments such as
common stock repurchases, based on our fixed charge coverage ratio, liquidity
and borrowing availability. The authorized amount under the stock repurchase
program excludes fees, commissions or other expenses. As a result of the
continued economic uncertainty due to COVID-19, our Board of Directors
temporarily suspended the stock repurchase program in May 2020, however, the
stock repurchase authorization remains effective. We did not purchase any shares
of our common stock in the third quarter of 2020. In November 2020, our Board of
Directors approved the resumption of the stock repurchase program beginning in
the fourth quarter of 2020. Under the stock repurchase program before its
temporary suspension in May 2020, we purchased approximately 1 million shares of
our common stock at a cost of $30 million year-to-date 2020. As of September 26,
2020, approximately $130 million remains available for stock repurchases under
the current stock repurchase program which will resume in the fourth quarter of
2020 and run through the end of 2021.

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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 temporarily suspended the Company's quarterly cash dividend beginning
in the second quarter of fiscal 2020. There was no quarterly cash dividend
declared and paid in the second or third quarters of 2020. Our quarterly cash
dividend remains temporarily suspended. Prior to its temporary suspension,
dividends have been recorded as a reduction to additional paid-in capital as we
are in an accumulated deficit position. Our Third Amended Credit Agreement
permits payment of dividends provided that we have the required minimum
liquidity or fixed charge coverage ratio, but may be limited if we do not meet
the necessary requirements.

We will re-evaluate our capital return program when 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 2019 Form 10-K,
as supplemented by our discussion of "Risk Factors" within Other Information in
this quarterly report.

CASH FLOWS

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





                          Year-to-Date
(In millions)            2020        2019
Operating activities   $    489     $  214
Investing activities        746       (142 )
Financing activities     (1,188 )     (145 )




Operating Activities

Year-to-date 2020, cash provided by operating activities was $489 million,
compared to $214 million during the corresponding period in 2019. This increase
in cash flows from operating activities was primarily driven by $278 million
more cash inflows from working capital and $9 million less cash outflows for
contingent consideration payment, partially offset by $12 million less 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. Year-to-date 2020, the primary
driver for working capital improvements was the reduction in our receivables as
a result of improved collections and lower sales on credit and less cash outflow
on payables due to payment terms and timing of payments. After adjusting for
non-cash charges, net income year-to-date 2020 was consistent with the
corresponding period in 2019.

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



Investing Activities

Cash from investing activities was $746 million year-to-date 2020, compared to
cash used in investing activities of $142 million year-to-date 2019. The cash
inflow year-to-date 2020 was driven by the cash proceeds from the collection of
the Timber notes receivable of $818 million, which was partially offset by $28
million in business acquisitions, net of cash acquired, and $54 million in
capital expenditures associated with improvements in our service platform,
distribution network, and eCommerce capabilities. The cash outflow year-to-date
2019 was driven by $123 million in capital expenditures and $21 million in
business acquisitions, net of cash acquired.

Financing Activities



Cash used in financing activities was $1,188 million year-to-date 2020, compared
to $145 million year-to-date 2019. The cash outflow year-to-date 2020 primarily
consisted of activity related to our debt, which included $735 million
Non-recourse debt retirement, $388 million Term Loan Credit Agreement
retirement, $64 million of borrowings associated with our company owned life
insurance policies, $337 million of net payments on other short- and long-term
borrowings, $9 million revenue bond maturity, and $6 million of debt related
fees, offset by $400 million of debt proceeds under the Third Amended Credit
Agreement. We also used $13 million in payment of cash dividends and $30 million
in repurchases of common stock, including commissions year-to-date 2020. The
cash outflow year-to-date 2019 primarily consisted of $74 million in repayments
on long- and short-term borrowings, $41 million in payment of cash dividends,
$11 million in repurchases of common stock, and $12 million acquisition
contingent consideration payment up to the amount of the acquisition-date
liability.

NEW ACCOUNTING STANDARDS

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.


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CRITICAL ACCOUNTING POLICIES



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 2019 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 28, 2019.


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OTHER INFORMATION

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