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MERGER, RESTRUCTURING, AND OTHER ACCRUALS | 6 Months Ended
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Jun. 28, 2014
MERGER, RESTRUCTURING, AND OTHER ACCRUALS | NOTE 3. MERGER, RESTRUCTURING, AND OTHER ACCRUALS In recent years, the Company has taken restructuring actions to adapt to changing and competitive conditions. These actions include closing facilities, consolidating functional activities, disposing of businesses and assets, and taking actions to improve process efficiencies. Additionally, in 2013, the Merger was approved and completed and integration activities began. In connection with the Merger, the Company assumed restructuring liabilities previously recorded by OfficeMax. Refer to Note 2 for additional information on the Merger. Merger, restructuring, and other operating expenses, net Starting in the fourth quarter of 2013, the Company began presenting Merger, restructuring and other operating expenses, net on a separate line in the Consolidated Statements of Operations to identify these activities apart from the expenses incurred to sell to and service its customers. Prior period presentation has been updated accordingly. As disclosed in Note 1, these expenses are not included in the determination of Division operating income (loss). The table below summarizes Merger, restructuring and other operating expenses, net.
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Merger, restructuring and other operating expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger related expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee related expenses |  | $ | 48 |  |  | $ | 7 |  |  | $ | 119 |  |  | $ | 9 |
Transaction and integration |  |  | 38 |  |  |  | 9 |  |  |  | 59 |  |  |  | 21 |
Other related expenses |  |  | 6 |  |  |  | 1 |  |  |  | 10 |  |  |  | 2 |
Total Merger related expenses |  |  | 92 |  |  |  | 17 |  |  |  | 188 |  |  |  | 32 |
Restructuring and certain other expenses |  |  | 11 |  |  |  | 10 |  |  |  | 16 |  |  |  | 14 |
Total |  | $ | 103 |  |  | $ | 27 |  |  | $ | 204 |  |  | $ | 46 |
Employee related expenses are termination benefits and certain incentives to relocate, retain and motivate employees. In the second quarter of 2014, the Company’s real estate strategy was sufficiently developed to provide a basis for estimating termination benefits for certain retail and supply chain closures that are expected to extend through 2016. Such benefits are being accrued through the anticipated employee full eligibility date. Because the specific identity of retail locations to be closed is subject to change as the real estate strategy evolves, the Company applied a probability-weighted method to estimate the store closure severance accrual. The calculation considers factors such as the expected timing of store closures, terms of existing severance plans, employee turnover and attrition. As the integration evolves and additional decisions are made, more current information will be available and assumptions used in estimating the termination benefits accrual may change. Additionally, closure costs for facilities with remaining lease commitments will be recognized when the facilities are no longer in use. Transaction and integration activities are primarily legal, accounting, and integration-related and are being recognized as incurred. Restructuring expenses primarily relate to activities in Europe, such as severance and other costs for organizational changes. Refer to Note 10 for further discussion on Merger-related asset impairments. Merger and restructuring accruals The activity in the merger and restructuring accruals in the first half of 2014 is presented in the table below.
(In millions) |  | Beginning Balance |  |  | Charges Incurred |  |  | Cash Payments |  |  | Currency, Lease Accretion and Other Adjustments |  |  | Ending Balance |
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Termination benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | 23 |  |  | $ | 76 |  |  | $ | (60 | ) |  | $ | — |  |  | $ | 39 |
Other restructuring accruals |  |  | 5 |  |  |  | 9 |  |  |  | (9 | ) |  |  | — |  |  |  | 5 |
Acquired entity accruals |  |  | 4 |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | 2 |
|  |  | 32 |  |  |  | 85 |  |  |  | (71 | ) |  |  | — |  |  |  | 46 |
Lease and contract obligations, accruals for facilities closures and other costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | 25 |  |  |  | 48 |  |  |  | (29 | ) |  |  | (3 | ) |  |  | 41 |
Other restructuring accruals |  |  | 62 |  |  |  | 6 |  |  |  | (25 | ) |  |  | 3 |  |  |  | 46 |
Acquired entity accruals |  |  | 59 |  |  |  | 1 |  |  |  | (14 | ) |  |  | — |  |  |  | 46 |
|  |  | 146 |  |  |  | 55 |  |  |  | (68 | ) |  |  | — |  |  |  | 133 |
Total |  | $ | 178 |  |  | $ | 140 |  |  | $ | (139 | ) |  | $ | — |  |  | $ | 179 |
The charges incurred of $140 million in the table above are included in the $204 million Merger, restructuring and other expenses, net recognized in the first half of 2014. Transaction and integration expenses of $59 million and employees non-cash equity compensation expenses of $5 million, which are also included in Merger, restructuring and other expenses, net, are not included in the accrual activity in the table above. Transaction and integration expenses are being recognized as incurred. Certain incentives to relocate, retain and motivate employees associated to the Merger activities are presented as other costs in the table and amount to $38 million.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 + Details
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