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MERGER AND RESTRUCTURING ACTIVITY | 9 Months Ended
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Sep. 27, 2025
Merger Restructuring And Other Activity [Abstract] |
MERGER AND RESTRUCTURING ACTIVITY | NOTE 3. MERGER AND RESTRUCTURING ACTIVITY The Company has taken actions to optimize its asset base and drive operational efficiencies. These actions include 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 and restructuring (income) 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 customers. These expenses are not included in the determination of Division operating income. The table below summarizes the major components of Merger and restructuring (income) expenses, net.
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Merger and transaction related expenses |  |  |  |  |  |  |  |  |  |  |  |
Transaction and integration |  | $ | 8 |  |  | $ | (1 | ) |  | $ | 8 |  |  | $ | (1 | )
Total Merger and transaction related expenses |  |  | 8 |  |  |  | (1 | ) |  |  | 8 |  |  |  | (1 | )
Restructuring expenses |  |  |  |  |  |  |  |  |  |  |  |
Non-facility termination benefits |  |  | — |  |  |  | (1 | ) |  |  | 12 |  |  |  | 25 |
Professional fees |  |  | 1 |  |  |  | — |  |  |  | 5 |  |  |  | 14 |
Facility closure and termination benefits, contract termination, and other expenses, net |  |  | (13 | ) |  |  | 4 |  |  |  | 32 |  |  |  | 9 |
Total Restructuring expenses, net |  |  | (12 | ) |  |  | 3 |  |  |  | 49 |  |  |  | 48 |
Total Merger and restructuring (income) expenses, net |  | $ | (4 | ) |  | $ | 2 |  |  | $ | 57 |  |  | $ | 47 |
MERGER AND TRANSACTION RELATED EXPENSES Transaction and integration expenses include legal, accounting, and other third-party expenses incurred in connection with acquisitions. In the third quarter and year-to-date 2025, the Company had transaction and integration expenses of $8 million, which consisted of third-party professional fees, including advisory and legal fees, related to the acquisition of the Company by an affiliate of Atlas Holding s. Additionally, the Company had transaction and integration income of $1 million related to the reversal of an earnout accrual from a prior acquisition, which was offset by legal fees year-to-date 2025. In the third quarter and year-to-date 2024, the Company recognized transaction and integration expenses of $1 million related to the acquisition of the small independent regional office supply distribution business in Canada, and reversed a $2 million earnout payment accrual related to a prior acquisition. RESTRUCTURING EXPENSES Optimize for Growth In February 2025, the Company’s Board of Directors approved a restructuring plan to realign the Company’s organizational structure, product assortments, and capital resources to strategically position the Company to pursue higher growth opportunities in the business-to-business (“B2B”) market (“Optimize for Growth”). The plan aims to further expand the Company’s presence into new B2B market segments, including hospitality, healthcare and adjacent markets, as well as third-party logistics. In order to achieve these goals, the plan includes re-allocating capital towards investments in resources and infrastructure essential to drive growth in the expanded B2B market, while reducing fixed costs such as occupancy costs of store and distribution facilities. As part of this plan, the Company is suspending further growth investment in its consumer business, and expects to close retail stores and distribution facilities that currently serve these stores. These actions are expected to be completed through 2028, and will result in the Company having a significantly smaller retail footprint. The Company is evaluating the retail store and distribution facilities that will be closed, as well as the timing of such closures, however it is generally understood that closures will approximate the store’s lease termination date. Total cash restructuring costs related to the Optimize for Growth restructuring plan are estimated to be in the range of $185 million to $230 million, of which $25 million to $35 million are estimated to be termination benefits, which mainly consists of severance related to corporate employees, $125 million to $150 million are facility closure costs which mainly relate to retail store and distribution facility closures including severance for employees at these locations, and $35 million to $45 million are other costs which include contract termination costs and costs to facilitate the program. These cash expenditures will be funded with cash flows from operations. Non-cash restructuring costs related to the Optimize for Growth restructuring plan are expected to include impairments, accelerated depreciation, and gains and losses on sale of retail store assets and distribution facilities. The Company closed 12 and 44 retail stores in the third quarter and year-to-date 2025, respectively, under this plan. The Company also closed one distribution facility and 15 satellite locations in the third quarter of 2025, and four distribution facilities and 16 satellite locations in year-to date 2025. In the third quarter of 2025, the Company recognized $13 million of inco me associated with Optimize for Growth, which consisted of $17 million gain on disposal of an owned distribution facility, partially offset by $4 million of retail store and distribution facility closure costs including accelerated depreciation, and $1 million of third-party professional fees to facilitate the program. Year-to-date 2025, the Company incurred $48 million of restructuring costs associated with Optimize for Growth. Of these costs, $46 million represented retail store and distribution facility closure costs, which includes severance costs related to retail store and distribution facility employees included in the plan. The restructuring costs also included $13 million severance related to corporate employees and $5 million of third-party professional fees to facilitate the program. These costs were partially offset by $17 million gain on disposal of an owned distribution facility. The Company made cash payments of $6 million and $20 million associated with expenditures for Optimize for Growth in the third quarter and year-to-date 2025, respectively. Project Core In March 2024, the Company’s Board of Directors approved a restructuring plan to redesign its company-wide low-cost business model approach and create further efficiencies in its business to lower costs (“Project Core”). Project Core will be completed in 2025, and the majority of the actions were taken by the end of 2024. In the third quarter and year-to-date 2025, the Company incurred $1 million and $3 million, respectively, of costs to facilitate the program, which was offset by $2 million in reversals of employee severance accruals due to changes in estimates year-to-date 2025. In the third quarter and year-to-date 2024, the Company incurred $2 million and $44 million of restructuring costs, respectively, associated with Project Core. These costs related to severance, third-party professional fees, and other costs to facilitate the program, as presented in the table above. In addition, in year-to-date 2024, the Company incurred $8 million of severance expenses related to the Varis Division, which are presented in discontinued operations and excluded from the table above. The Company made cash payments of $1 million and $5 million associated with expenditures for Project Core in the third quarter and year-to-date 2025, respectively. The Company made cash payments of $9 million and $41 million associated with expenditures for Project Core in the third quarter and year-to-date 2024, respectively. Of these cash payments, $8 million were related to the Varis Division. Other The Company made cash payments of $1 million year-to-date 2025 associated with expenditures for the Maximize B2B restructuring plan. The Maximize B2B restructuring plan was announced in May 2020 and completed in December 2024. MERGER AND RESTRUCTURING ACCRUALS The activity in the merger and restructuring accruals year-to-date 2025 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.
|  | Balance as of |  |  |  |  |  |  |  |  | Balance as of |
|  | December 28, |  |  | Charges (credits) |  |  | Cash |  |  | September 27, |
(In millions) |  | 2024 |  |  | Incurred |  |  | Payments |  |  | 2025 |
Non-facility termination benefits: |  |  |  |  |  |  |  |  |  |  |  |
Optimize for Growth |  | $ | — |  |  | $ | 13 |  |  | $ | (4 | ) |  | $ | 9 |
Project Core |  |  | 7 |  |  |  | (2 | ) |  |  | (2 | ) |  |  | 3 |
Lease and contract obligations, accruals for facility closures including termination benefits and other costs: |  |  |  |  |  |  |  |  |  |  |  |
Atlas Holdings Acquisition |  |  | — |  |  |  | 3 |  |  |  | (3 | ) |  |  | — |
Optimize for Growth |  |  | — |  |  |  | 41 |  |  |  | (16 | ) |  |  | 25 |
Maximize B2B Restructuring Plan |  |  | 2 |  |  |  | — |  |  |  | (1 | ) |  |  | 1 |
Total |  | $ | 9 |  |  | $ | 55 |  |  | $ | (26 | ) |  | $ | 38 |
Of these liabilities, $19 million are short-term and are included in Accrued expenses and other current liabilities, and $19 million are long-term and are included in Deferred income taxes and other long-term liabilities 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 -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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