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MERGER, RESTRUCTURING, AND OTHER ACCRUALS | 9 Months Ended
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Sep. 27, 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 market conditions. These actions include closing facilities, consolidating functional activities, eliminating redundant positions, disposing of businesses and assets, and taking actions to improve process efficiencies. Additionally, in 2013, the Merger was completed and integration activities similar to the actions described above began. In connection with the Merger, the Company assumed certain restructuring liabilities previously recorded by OfficeMax. 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. These expenses are not included in the determination of Division operating income. The table below summarizes the major components of Merger, restructuring and other operating expenses, net.
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Merger related expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee related expenses |  | $ | 17 |  |  | $ | 10 |  |  | $ | 136 |  |  | $ | 19 |
Transaction and integration |  |  | 33 |  |  |  | 24 |  |  |  | 92 |  |  |  | 45 |
Other related expenses |  |  | 5 |  |  |  | 6 |  |  |  | 14 |  |  |  | 8 |
Total Merger related expenses |  |  | 55 |  |  |  | 40 |  |  |  | 242 |  |  |  | 72 |
Restructuring and certain other expenses |  |  | 17 |  |  |  | 4 |  |  |  | 34 |  |  |  | 18 |
Total Merger, restructuring and other operating expenses, net |  | $ | 72 |  |  | $ | 44 |  |  | $ | 276 |  |  | $ | 90 |
Employee related expenses are termination benefits and certain incentives to relocate and retain employees. Since the second quarter of 2014, the Company’s real estate strategy has been 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 method to estimating the store closure severance accrual. The calculation considers factors such as the expected timing of store closures, terms of existing severance plans, expected employee turnover and attrition. As the integration evolves and additional decisions about the identity and timing of closures 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 related facilities are no longer in use. Transaction and integration expenses in 2013 primarily relate to legal, accounting, and pre-merger integration activities. Expenses in 2014 include integration-related professional fees, incremental temporary contract labor, non-capitalizable software integration costs, and other direct costs to combine the companies. Such costs are being recognized as incurred. Other merger related expenses primarily relate to accelerated depreciation, lease closure accruals and asset dispositions. Restructuring expenses primarily relate to European organizational changes as of the end of the third quarter 2014. Such expenses include severance and associated other costs. Refer to Note 13 for a description of the European restructuring plan approved in the fourth quarter of 2014. Merger-related asset impairments are not included in the table above. Refer to Note 10 for further information. Merger and restructuring accruals The activity in the merger and restructuring accruals in year-to-date 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 |  |  | $ | 90 |  |  | $ | (79 | ) |  | $ | — |  |  | $ | 34 |
Other restructuring accruals |  |  | 5 |  |  |  | 19 |  |  |  | (16 | ) |  |  | — |  |  |  | 8 |
Acquired entity accruals |  |  | 4 |  |  |  | — |  |  |  | (2 | ) |  |  | (1 | ) |  |  | 1 |
|  |  | 32 |  |  |  | 109 |  |  |  | (97 | ) |  |  | (1 | ) |  |  | 43 |
Lease and contract obligations, accruals for facilities closures and other costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | 25 |  |  |  | 55 |  |  |  | (54 | ) |  |  | (6 | ) |  |  | 20 |
Other restructuring accruals |  |  | 62 |  |  |  | 13 |  |  |  | (36 | ) |  |  | 1 |  |  |  | 40 |
Acquired entity accruals |  |  | 59 |  |  |  | 1 |  |  |  | (18 | ) |  |  | (1 | ) |  |  | 41 |
|  |  | 146 |  |  |  | 69 |  |  |  | (108 | ) |  |  | (6 | ) |  |  | 101 |
Total |  | $ | 178 |  |  | $ | 178 |  |  | $ | (205 | ) |  | $ | (7 | ) |  | $ | 144 |
The charges incurred of $178 million in the table above are included in the $276 million Merger, restructuring and other expenses, net recognized in year-to-date 2014. Transaction and integration expenses of $92 million and employee non-cash equity compensation expenses of $6 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 and retain employees associated to the Merger activities amount to $41 million and are included in the table above as a component of Lease and contract obligations, accruals for facilities closures and other costs.

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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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