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MERGER, RESTRUCTURING, AND OTHER ACCRUALS | 12 Months Ended
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Dec. 27, 2014
MERGER, RESTRUCTURING, AND OTHER ACCRUALS | NOTE 3. MERGER, RESTRUCTURING, AND OTHER ACCRUALS In recent years, the Company has taken actions to adapt to changing and competitive 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. The Company assumed certain restructuring liabilities previously recorded by OfficeMax. Merger, restructuring, and other operating expenses, net The Company presents 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. 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.
(In millions) |  | 2014 |  |  | 2013 |  |  | 2012 |
Merger related expenses |  |  |  |  |  |  |  |  |  |  |  |
Severance, retention, and relocation |  | $ | 148 |  |  | $ | 92 |  |  | $ | — |
Transaction and integration |  |  | 124 |  |  |  | 80 |  |  |  | — |
Other related expenses |  |  | 60 |  |  |  | 8 |  |  |  | — |
Total Merger related expenses |  |  | 332 |  |  |  | 180 |  |  |  | — |
Restructuring and certain other expenses |  |  | 71 |  |  |  | 21 |  |  |  | 56 |
Total Merger, restructuring and other operating expenses, net |  | $ | 403 |  |  | $ | 201 |  |  | $ | 56 |
Severance, retention, and relocation includes expenses incurred by Office Depot in 2013 and by the combined companies since the date of the Merger though December 27, 2014, and reflects integration throughout the staff functions. Since the second quarter of 2014, the 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. Transaction and integration expenses in 2014 include integration-related professional fees, incremental temporary contract labor, salary and benefits for employees dedicated to Merger activity, travel costs, non-capitalizable software integration costs, and other direct costs to combine the companies. Expenses in 2013 primarily relate to legal, accounting, and pre-merger integration activities incurred by Office Depot. Such costs are being recognized as incurred. Other merger related expenses primarily relate to facility closure accruals, gains and losses on asset dispositions, and accelerated depreciation. Facility closure expenses in 2014 include amounts incurred by the Company to close 168 retail stores in the United States as part of the Real Estate Strategy. An additional 232 retail stores are expected to be closed through 2016. The specific sites to close over this period may be influenced by real estate and other market conditions and, therefore, a reasonable estimate of future facility closure accruals cannot be made at this time. Restructuring and certain other expenses in 2014 and 2013 primarily relate to international organizational changes and facility closures prior to the European restructuring plan approved in October 2014 to realign the organization from a geographic-focus to a business channel-focus (the European restructuring plan). The 2012 amounts include restructuring activities taken in North America as well as Europe and include severance accruals, facility closure, and associated other costs. The Company anticipates incurring incremental expenses associated with the European restructuring plan of approximately $120 million, $112 million of which are cash expenditures. The expected $120 million of charges associated with the restructuring plan consist primarily of approximately $95 million of severance pay and other employee termination benefits, and approximately $25 million associated with lease obligations and other costs. Of these total estimated expenses, $37 million has been incurred through December 27, 2014. Merger-related asset impairments are not included in the table above. Refer to Note 16 for further information. Merger and restructuring accruals The activity in the merger and restructuring accruals in 2014 and 2013 is presented in the table below. Of the total $403 million and $201 million Merger, restructuring and other expenses incurred in 2014 and 2013, respectively, $266 million and $98 million are related to merger or restructuring liabilities and are included as Charges incurred in the table below.
(In millions) |  | Beginning Balance |  |  | Charges Incurred |  |  | OfficeMax Merger Additions |  |  | Cash Payments |  |  | Currency, Lease Accretion, and Other Adjustments |  |  | Ending Balance |
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Termination benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | 23 |  |  | $ | 99 |  |  | $ | — |  |  | $ | (91 | ) |  | $ | — |  |  | $ | 31 |
European restructuring plan |  |  | — |  |  |  | 26 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 26 |
Other restructuring accruals |  |  | 5 |  |  |  | 23 |  |  |  | — |  |  |  | (21 | ) |  |  | 1 |  |  |  | 8 |
Acquired entity accruals |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | (2 | ) |  |  | — |
|  |  | 32 |  |  |  | 148 |  |  |  | — |  |  |  | (114 | ) |  |  | (1 | ) |  |  | 65 |
Lease and contract obligations, accruals for facilities closures and other costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | 25 |  |  |  | 111 |  |  |  | — |  |  |  | (65 | ) |  |  | — |  |  |  | 71 |
European restructuring plan |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | — |
Other restructuring accruals |  |  | 62 |  |  |  | 5 |  |  |  | — |  |  |  | (33 | ) |  |  | 1 |  |  |  | 35 |
Acquired entity accruals |  |  | 59 |  |  |  | — |  |  |  | — |  |  |  | (25 | ) |  |  | 2 |  |  |  | 36 |
|  |  | 146 |  |  |  | 118 |  |  |  | — |  |  |  | (125 | ) |  |  | 3 |  |  |  | 142 |
Total |  | $ | 178 |  |  | $ | 266 |  |  | $ | — |  |  | $ | (239 | ) |  | $ | 2 |  |  | $ | 207 |
2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Termination benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | (6 | ) |  | $ | — |  |  | $ | 23 |
Other restructuring accruals |  |  | 6 |  |  |  | 23 |  |  |  | — |  |  |  | (24 | ) |  |  | — |  |  |  | 5 |
Acquired entity accruals |  |  | — |  |  |  | 1 |  |  |  | 4 |  |  |  | (1 | ) |  |  | — |  |  |  | 4 |
|  |  | 6 |  |  |  | 53 |  |  |  | 4 |  |  |  | (31 | ) |  |  | — |  |  |  | 32 |
Lease and contract obligations, accruals for facilities closures and other costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | — |  |  |  | 42 |  |  |  | 22 |  |  |  | (39 | ) |  |  | — |  |  |  | 25 |
Other restructuring accruals |  |  | 87 |  |  |  | 1 |  |  |  | — |  |  |  | (34 | ) |  |  | 8 |  |  |  | 62 |
Acquired entity accruals |  |  | — |  |  |  | 2 |  |  |  | 63 |  |  |  | (6 | ) |  |  | — |  |  |  | 59 |
|  |  | 87 |  |  |  | 45 |  |  |  | 85 |  |  |  | (79 | ) |  |  | 8 |  |  |  | 146 |
Total |  | $ | 93 |  |  | $ | 98 |  |  | $ | 89 |  |  | $ | (110 | ) |  | $ | 8 |  |  | $ | 178 |
The remaining $137 million and $103 million in 2014 and 2013, respectively, are excluded from the table above because these items are expensed as incurred, non-cash, or otherwise not associated with the merger and restructuring balance sheet accounts. The $137 million incurred in 2014 is comprised of $124 million merger transaction and integration expenses, $9 million European restructuring transaction and integration expenses, $5 million employee non-cash equity compensation expenses, and $1 million net credit associated primarily to fixed assets and rent related items. The $103 million incurred in 2013 is comprised of $80 million merger transaction and integration expenses, $20 million employee non-cash equity compensation expenses, and a net $3 million of other expenses.

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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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