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MERGER, RESTRUCTURING AND OTHER ACTIVITY | 12 Months Ended
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Dec. 25, 2021
Merger Restructuring And Other Activity [Abstract] |
MERGER, RESTRUCTURING AND OTHER ACTIVITY | NOTE 3. MERGER, RESTRUCTURING AND OTHER ACTIVITY The Company has taken actions to optimize its asset base and drive operational efficiencies. These actions include acquiring profitable businesses, closing underperforming retail stores and non-strategic distribution facilities, consolidating functional activities, eliminating redundant positions and disposing of non-strategic businesses and assets. The expenses and any income recognized directly associated with these actions are included in Merger, restructuring and other operating expenses, net on a separate line in the Consolidated Statements of Operations in order to identify these activities apart from the expenses incurred to sell to and service 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) |  | 2021 |  |  | 2020 |  |  | 2019 |
Merger and transaction related expenses |  |  |  |  |  |  |  |  |  |  |  |
Severance and retention |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Transaction and integration |  |  | — |  |  |  | 4 |  |  |  | 7 |
Facility closure, contract termination and other expenses, net |  |  | — |  |  |  | 1 |  |  |  | — |
Total Merger and transaction related expenses |  |  | — |  |  |  | 5 |  |  |  | 8 |
Restructuring expenses |  |  |  |  |  |  |  |  |  |  |  |
Severance |  |  | (2 | ) |  |  | 41 |  |  |  | 26 |
Professional fees |  |  | 1 |  |  |  | 21 |  |  |  | 41 |
Facility closure, contract termination, and other expenses, net |  |  | 15 |  |  |  | 35 |  |  |  | 11 |
Total Restructuring expenses, net |  |  | 14 |  |  |  | 97 |  |  |  | 78 |
Other operating expenses |  |  |  |  |  |  |  |  |  |  |  |
Professional fees |  |  | 37 |  |  |  | — |  |  |  | — |
Total Other operating expenses |  |  | 37 |  |  |  | — |  |  |  | — |
Total Merger, restructuring and other operating expenses, net |  | $ | 51 |  |  | $ | 102 |  |  | $ | 86 |
MERGER AND TRANSACTION RELATED EXPENSES In 2021 the Company did not incur any merger and transaction related expenses. In 2020 and 2019, the Company incurred $5 million and $8 million, respectively, of merger and transaction related expenses. Severance and retention include expenses 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 expenses incurred in connection with acquisitions and business integration activities. Facility closure, contract termination, and other expenses, net relate to facility closure accruals, contract termination costs, gains and losses on asset dispositions, and accelerated depreciation. RESTRUCTURING EXPENSES Maximize B2B Restructuring Plan In May 2020, the Company’s Board of Directors approved a restructuring plan to realign the Company’s operational focus to support its “business-to-business” solutions and improve costs (“Maximize B2B Restructuring Plan”). Implementation of the Maximize B2B Restructuring Plan is expected to be substantially completed by the end of 2023. The Maximize B2B Restructuring Plan aims to generate savings through optimizing the Company’s retail footprint, removing costs that directly support the Retail business and additional measures to implement a company-wide low-cost business model, which will then be invested in accelerating the growth of the Company’s business-to-business platform. The plan is broader than restructuring programs the Company has implemented in the past and includes closing and/or consolidating retail stores and distribution facilities and the reduction of up to 13,100 employee positions by the end of 2023. The Company is evaluating the number and timing of retail store and distribution facility closures and/or consolidations. However, it is generally understood that closures will approximate the store’s lease termination date. The Company cl osed 111 retail stores under the Maximize B2B Restructuring Plan in 2021. The Company had closed 70 retail stores and two distribution facilities in 2020 under the Maximize B2B Restructuring Plan. It is anticipated that additional retail stores will be closed in 2022. Total estimated restructuring costs related to the Maximize B2B Restructuring Plan are expected to be up to $111 million, comprised of:
| (a) | severance and related employee costs of approximately $49 million;
| (b) | facility closure costs of approximately $34 million, which are mainly related to retail stores; and
| (c) | other costs, including contract termination costs, to facilitate the execution of the Maximize B2B Restructuring Plan of approximately $28 million.
These total estimated restructuring costs of up to $111 million above are less than the Company’s estimate of total costs for this restructuring plan when it commenced, mainly as a result of the reduction in the number of expected retail store and distribution facility closures based upon the Company’s most recent evaluation of economic factors that influence expected store closures. There could be further fluctuations in the estimate of total expected costs in the future and timing of such costs as a result of an assessment of general market conditions and changes in the Company’s business strategy, including the potential sale of the consumer business or the Separation described in Note 1 above. In addition, the reduction of employee positions may also be impacted as a result of fewer retail store closures and the changes in the Company’s business strategy. The $111 million of total costs are expected to be cash expenditures through 2023 and funded primarily with cash on hand and cash from operations. The Company incurred $95 million in restructuring expenses to implement the Maximize B2B Restructuring Plan since its inception in 2020 and through 2021, of which $53 million were cash expenditures. Of these amounts, $6 million of restructuring expenses and $2 million of cash expenditures were related to the CompuCom Division which is now presented in discontinued operations. In 2021, the Company incurred $14 million in restructuring expenses associated with the Maximize B2B Restructuring Plan which consisted of $1 million third-party professional fees, $18 million in facility closures, contract termination and other costs, partially offset by $2 million in reversals of employee severance accruals due to changes in estimates and a $3 million gain on sale of retail stores assets. The facility closure costs were mainly related to retail store closure accruals and accelerated depreciation. In 2021, the Company made cash payments of $24 million associated with expenditures for the Maximize B2B restructuring plan. Other Included in restructuring expenses in 2020 and 2019 are $19 million and $68 million, respectively, of costs incurred in connection with the Business Acceleration Program. These costs included third-party professional fees, retail and facility closure costs and other costs. The Business Acceleration Program was announced in 2019 and largely concluded at the end of 2020. Additionally, restructuring expense in 2019 included $8 million of costs incurred in connection with the Comprehensive Business Review, a program announced in 2016 and concluded at the end of 2019. Under the Comprehensive Business Review, the Company closed a total of 208 retail stores, and the costs incurred included severance, facility closure costs, contract termination, accelerated depreciation, relocation and disposal gains and losses, as well as other costs associated with retail store closures. Restructuring expenses in 2020 also included $3 million in third-party professional fees incurred in connection with the Reorganization. Asset impairments related to the restructuring initiatives are not included in the table above. Refer to Note 15 for further information. OTHER OPERATING EXPENSES USR Parent, Inc. proposals During the first quarter of 2021, the Company received two proposals from USR Parent, Inc., the parent company of Staples Inc. and a portfolio company of Sycamore Partners, to acquire 100% of the Company’s issued and outstanding stock or certain assets of the Company. After careful review and consideration of the proposals and in consultation with the Company’s financial and legal advisors, the Company’s Board of Directors unanimously concluded that the transactions described in the proposals were not in the best interest of the Company and its shareholders, and that there was a more compelling path forward to create value. The Company filed statements on Schedule 14D-9 with the SEC on January 19, 2021 and March 15, 2021 containing its Board of Directors’ recommendation. Also, on March 31, 2021, USR Parent, Inc. publicly announced that it decided to defer the March 2021 launch of a tender offer for the Company’s common stock while reserving the right to commence one in the future. During the second quarter of 2021, the Company received a third proposal from USR Parent, Inc. to acquire the Company’s consumer business, including its retail stores, and reiterated its intention to commence a tender offer if negotiations for an alternative transaction are not successful. In November 2021, USR Parent, Inc. reaffirmed this third proposal to acquire the Company’s consumer business, and announced its decision to abandon its previously announced intent to commence a tender offer for all of the outstanding shares of the Company. The Company’s Board of Directors is carefully reviewing this proposal with the assistance of its financial and legal advisors to determine the course of action that it believes is in the best interests of the Company and its shareholders. The Company incurred $5 million in third-party professional fees related to the evaluation of USR Parent, Inc.’s proposals in 2021, including expenses incurred in connection with a Civil Investigative Demand (“CID”) from the U.S. Federal Trade Commission (“FTC”), which is conducting an investigation of USR Parent, Inc.’s proposals. In order to relieve the Company from the continuation of a costly and burdensome process, the FTC has agreed to defer requiring further responses from the Company unless and until USR Parent, Inc. formally launches a tender offer or the parties execute a negotiated agreement. Additionally, on May 4, 2021 the Canadian Competition Bureau (the “Bureau”) advised the Company that it has determined that USR Parent, Inc.’s proposed acquisition of the Company would likely result in a substantial lessening or prevention of competition in the sale of business essentials to enterprise customers in Canada. While it is not known for certain what the Bureau would do if USR Parent, Inc. actually launches a tender offer in the future, the Bureau’s determination signals that the Bureau would likely challenge the acquisition. The Company cannot be certain that USR Parent, Inc. will not commence a tender offer in the future. The Company a nticipates that it will incur additional significant legal and other expenses in the future if USR Parent, Inc. pursues a tender offer. Planned Separation of Consumer Business In May 2021, the Company’s Board of Directors unanimously approved a plan to pursue a separation of the Company into two independent, publicly traded companies, as further described in Note 1 above. The Company incurred $32 million in third-party professional fees associated with the Separation in 2021 related to the Separation. The execution of the Separation has been delayed, however, if executed, the Company expects to incur significant costs in connection with the Separation, which are expected to primarily be third-party professional fees related to investment banking, accounting, legal, consulting and other similar types of services associated with the Separation transaction, as well as costs associated with the operational separation of the two companies, such as those related to human resources, brand management, real estate and IT infrastructure. Separation costs also may include the costs associated with bonuses and restricted stock grants awarded to certain employees for retention through the Separation. The Company currently estimates that costs to complete the separation will exceed $100 million, although such estimate is subject to a number of assumptions and uncertainties. MERGER AND RESTRUCTURING ACCRUALS The activity in the merger and restructuring accruals in 2021 and 2020 is presented in the table below. Certain merger and restructuring charges are excluded from the table because they are paid as incurred or non-cash, such as accelerated depreciation and gains and losses on asset dispositions.
(In millions) |  | Beginning Balance |  |  | Charges Incurred |  |  | Cash Payments |  |  | Ending Balance |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Termination benefits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Maximize B2B Restructuring Plan |  |  | 27 |  |  |  | (2 | ) |  |  | (6 | ) |  |  | 19 |
Business Acceleration Program |  |  | 2 |  |  |  | — |  |  |  | (2 | ) |  |  | — |
Lease and contract obligations, accruals for facilities closures and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Maximize B2B Restructuring Plan |  |  | 10 |  |  |  | 9 |  |  |  | (13 | ) |  |  | 6 |
Business Acceleration Program |  |  | 1 |  |  |  | — |  |  |  | (1 | ) |  |  | — |
Comprehensive Business Review |  |  | 2 |  |  |  | — |  |  |  | (1 | ) |  |  | 1 |
USR Parent, Inc. proposals |  |  | — |  |  |  | 5 |  |  |  | (5 | ) |  |  | — |
Planned separation of consumer business |  |  | — |  |  |  | 32 |  |  |  | (30 | ) |  |  | 2 |
Total |  | $ | 42 |  |  | $ | 44 |  |  | $ | (58 | ) |  | $ | 28 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Termination benefits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Maximize B2B Restructuring Plan |  |  | — |  |  |  | 35 |  |  |  | (8 | ) |  |  | 27 |
Business Acceleration Program |  |  | 6 |  |  |  | — |  |  |  | (4 | ) |  |  | 2 |
Lease and contract obligations, accruals for facilities closures and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Merger-related accruals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Maximize B2B Restructuring Plan |  |  | — |  |  |  | 27 |  |  |  | (17 | ) |  |  | 10 |
Business Acceleration Program |  |  | 5 |  |  |  | 20 |  |  |  | (24 | ) |  |  | 1 |
Comprehensive Business Review |  |  | 3 |  |  |  | — |  |  |  | (1 | ) |  |  | 2 |
Total |  | $ | 14 |  |  | $ | 82 |  |  | $ | (54 | ) |  | $ | 42 |
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 Consolidated Balance Sheets.

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