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MERGER AND RESTRUCTURING ACTIVITY | 9 Months Ended
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Sep. 29, 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.
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Merger and transaction related expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and retention |  | $ | 4 |  |  | $ | — |  |  | $ | 9 |  |  | $ | — |
Transaction and integration |  |  | 5 |  |  |  | 4 |  |  |  | 16 |  |  |  | 15 |
Facility closure, contract termination, and other expenses, net |  |  | 2 |  |  |  | 2 |  |  |  | 10 |  |  |  | 4 |
Total Merger and transaction related expenses, net |  |  | 11 |  |  |  | 6 |  |  |  | 35 |  |  |  | 19 |
Restructuring expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance |  |  | — |  |  |  | 11 |  |  |  | — |  |  |  | 26 |
Facility closure, contract termination, professional fees and other expenses, net |  |  | 3 |  |  |  | 4 |  |  |  | 10 |  |  |  | 16 |
Total Restructuring expenses |  |  | 3 |  |  |  | 15 |  |  |  | 10 |  |  |  | 42 |
Acquisition related expenses – Refer to Note 2 |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Total Merger and restructuring expenses, net |  | $ | 14 |  |  | $ | 22 |  |  | $ | 45 |  |  | $ | 62 |
Merger and transaction related expenses, net Severance and retention include costs related to the integration of staff functions in connection with business acquisitions and are expensed through the severance and retention period. Transaction and integration include legal, accounting, and other third-party costs incurred in connection with acquisitions and business integration activities, and consist primarily of costs incurred for the CompuCom acquisition. Transaction and integration expenses include $5 million and $11 million for the third quarter and year-to-date 2018, respectively, related to CompuCom and other smaller acquisitions, with the remainder related to the 2013 OfficeMax merger. Facility closure, contract termination and other expenses, net, include $5 million in year-to-date 2018 related to the CompuCom acquisition, which was all incurred in the first half of 2018, and $2 million and $5 million for the third quarter and year-to-date 2018, respectively, related to the 2013 OfficeMax merger. Merger and transaction related expenses, net in the third quarter and year-to-date 2017 are related to the 2013 OfficeMax merger. The year-to-date 2017 expenses, net include a gain of $6 million 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. As part of this strategy, the Company is expanding its technology and business service offerings, and is accelerating the offering of new subscription-based services to address the needs of small, medium and enterprise businesses. As such, 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 year-to-date 2018 in the table above are professional fees of $9 million associated with this strategic plan. In August 2016, the Company announced a comprehensive business review strategy (the “Comprehensive Business Review”), 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 completed 141 retail store closures since announcing this initiative. In year-to-date 2018 and year-to-date 2017, the Company closed 6 and 37 stores, respectively. The Company continues to re-assess its store closure program on an annual basis, and is considering potential alternative uses for its retail portfolio. As a result, the anticipated number of store closures and period over which this program will be implemented may change. The Company recognized restructuring expenses of $1 million and $42 million in year-to-date 2018 and 2017, respectively. 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. Merger and Restructuring Accruals Of the total $45 million merger and restructuring expenses, net incurred in year-to-date 2018, $13 million remained accrued as of the balance sheet date and are included as Charges Incurred in the table below. The remaining $32 million is comprised of $16 million of merger transaction and integration expenses, and $16 million of facility closure expenses, professional fees, non-cash items and other expenses. These remaining charges are excluded from the table below because they are paid as incurred.
|  | Balance as of |  |  |  |  |  |  |  |  | Balance as of |
|  | December 30, |  |  | Charges |  |  | Cash |  |  | September 29, |
(In millions) |  | 2017 |  |  | Incurred |  |  | Payments |  |  | 2018 |
Termination benefits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | 1 |  |  | $ | 7 |  |  | $ | (4 | ) |  | $ | 4 |
Comprehensive Business Review |  |  | 4 |  |  |  | — |  |  |  | (3 | ) |  |  | 1 |
Lease and contract obligations, accruals for facilities closures and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | 18 |  |  |  | 5 |  |  |  | (11 | ) |  |  | 12 |
Comprehensive Business Review |  |  | 9 |  |  |  | 1 |  |  |  | (8 | ) |  |  | 2 |
Total |  | $ | 32 |  |  | $ | 13 |  |  | $ | (26 | ) |  | $ | 19 |
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, in 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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