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MERGER AND RESTRUCTURING ACTIVITY | 6 Months Ended
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Jun. 30, 2018
Business Combinations [Abstract] |
MERGER AND RESTRUCTURING ACTIVITY | NOTE 3. MERGER AND RESTRUCTURING ACTIVITY In recent years, the Company has taken actions to adapt to changing and competitive conditions. These actions include acquiring businesses, closing facilities, consolidating functional activities, eliminating redundant positions, disposing of businesses and assets, and taking actions to improve process efficiencies. 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 its customers. These expenses are not included in the determination of Division operating income. The table below summarizes the major components of Merger and restructuring expenses, net.
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Merger and transaction related expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and retention |  | $ | 3 |  |  | $ | — |  |  | $ | 5 |  |  | $ | — |
Transaction and integration |  |  | 4 |  |  |  | 5 |  |  |  | 11 |  |  |  | 11 |
Facility closure, contract termination, and other expenses, net |  |  | 5 |  |  |  | (2 | ) |  |  | 8 |  |  |  | 2 |
Total Merger and transaction related expenses, net |  |  | 12 |  |  |  | 3 |  |  |  | 24 |  |  |  | 13 |
Restructuring expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance |  |  | — |  |  |  | 6 |  |  |  | — |  |  |  | 15 |
Facility closure, contract termination, professional fees and other expenses, net |  |  | 2 |  |  |  | 11 |  |  |  | 7 |  |  |  | 12 |
Total Restructuring expenses |  |  | 2 |  |  |  | 17 |  |  |  | 7 |  |  |  | 27 |
Total Merger and restructuring expenses, net |  | $ | 14 |  |  | $ | 20 |  |  | $ | 31 |  |  | $ | 40 |
Merger and transaction related expenses, net Transaction and integration expenses in 2018 are primarily related to the CompuCom acquisition, including legal, accounting, and other third-party costs incurred by the Company associated with the acquisition and integration of CompuCom and other smaller transactions completed in 2018 and 2017. Such costs are being recognized as incurred. Severance and retention expenses include retention amounts incurred related to the integration of staff functions in connection with the companies that were acquired in 2018 and 2017, and are being expensed through the retention period. Transaction and integration expenses include $2 million and $6 million for the second quarter and first half of 2018, respectively, relating to CompuCom and other acquisitions, as well as $2 million and $5 million for the second quarter and first half of 2018, respectively, relating to the 2013 OfficeMax merger. Facility closure, contract termination and other expenses, net, include $4 million and $5 million for the second quarter and first half of 2018, respectively, relating to the CompuCom acquisition, as well as $1 million and $3 million for the second quarter and first half of 2018, respectively, relating to the 2013 OfficeMax merger. Merger and transaction related expenses, net in the second quarter and first half of 2017 are related to costs associated with the 2013 OfficeMax merger and include a gain of $5 million and $6 million, respectively, from the sale of a warehouse facility as part of a supply chain integration plan. Restructuring expenses During 2017, the Company announced a multi-year strategic transformation to pivot from a traditional office product retailer to a broader omni-channel business services, product and technology provider which included the acquisition of CompuCom. As part of the new strategy, the Company is expanding its technology and business service offerings and accelerating the offering of new subscription-based services, including expanding its service offering to address the needs of small businesses. As part of this multi-year strategic shift, the Company anticipates incurring additional costs over the next few years including professional fees, severance and other related costs. Included in restructuring expenses in the second quarter and first half of 2018 in the table above are professional fees of $2 million and $6 million, respectively, associated with this restructuring plan. Restructuring expense in 2017 and $1 million of restructuring costs in the first half of 2018 were associated with the Comprehensive Business Review strategy (the “Comprehensive Business Review”) announced in August 2016 which included the closure of approximately 300 retail stores in North America over a three-year period, and the reduction of operating and general and administrative expenses through efficiencies and organizational optimization. The Company has incurred approximately $99 million in costs to implement the cost savings programs under the Comprehensive Business Review to date. Expenses associated with implementing the Comprehensive Business Review include severance, facility closure costs, contract termination, accelerated depreciation, professional fees, relocation and disposal gains and losses, as well as other costs associated with the store closures. The Company has completed 139 of the planned 300 retail store closures since announcing this initiative. In the first half of 2018 and the first half of 2017, the Company closed 4 and 33 stores, respectively. The Company will continue to re-evaluate the store closure program on an annual basis. Severance costs related to planned store closures are being accrued through the anticipated facility closure or termination date and consider timing, terms of existing severance plans, expected employee turnover and attrition. Restructuring expenses also include severance and reorganization costs associated with reductions in staff functions that continued into 2017. Merger and Restructuring Accruals The activity in the merger and restructuring accruals in the first half of 2018 is presented in the table below. Of the total $31 million expense presented in Merger and restructuring expenses, net incurred in the first half of 2018 in the Condensed Consolidated Statements of Operations, $9 million is related to Merger and restructuring liabilities and are included as Charges incurred in the table below. The remaining $22 million of expense is comprised of $11 million of Merger transaction and integration expenses and $11 million of property expenses, professional fees, non-cash items and other expenses. These charges are excluded from the table below because they are expensed as incurred, or otherwise not associated with the merger and restructuring balance sheet accounts.
|  | Balance as of |  |  |  |  |  |  |  |  | Balance as of |
|  | December 30, |  |  | Charges |  |  | Cash |  |  | June 30, |
(In millions) |  | 2017 |  |  | Incurred |  |  | Payments |  |  | 2018 |
Termination benefits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | 1 |  |  | $ | 4 |  |  | $ | (2 | ) |  | $ | 3 |
Comprehensive Business Review |  |  | 4 |  |  |  | — |  |  |  | (2 | ) |  |  | 2 |
Lease and contract obligations, accruals for facilities closures and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | 18 |  |  |  | 5 |  |  |  | (10 | ) |  |  | 13 |
Comprehensive Business Review |  |  | 9 |  |  |  | — |  |  |  | (6 | ) |  |  | 3 |
Total |  | $ | 32 |  |  | $ | 9 |  |  | $ | (20 | ) |  | $ | 21 |
The short-term and long-term components of these liabilities are included in Accrued expenses and other current liabilities and Deferred income taxes and other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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