OfficeMax 2014 Annual Report Download - page 41

Table of Contents
Merger, restructuring and other operating expenses, net
The table below summarizes the major components of Merger, restructuring and other operating expenses, net.
(In millions)  2013 2012
Merger related expenses
Severance, retention, and relocation  $ 92 $ —
Transaction and integration   80 —
Other related expenses   8 —
Total Merger related expenses   180 —
Restructuring and certain other expenses   21 56
Total Merger, restructuring and other operating expenses, net   $ 201 $ 56
Merger-related expenses
Expenses in 2014 include severance, employee retention, integration-related professional fees, incremental temporary contract labor, salary and benefits for
employees dedicated to Merger activity, travel and relocation costs, non-capitalizable software integration costs, facility closure accruals, gains and losses on
asset dispositions, accelerated depreciation, and other direct costs to combine the companies.
Expenses in 2013 include expenses incurred by Office Depot prior to the Merger and are primarily investment banking and professional fees associated with
the transaction, including preparation for regulatory filings and shareholder approvals, as well employee retention accruals, direct incremental travel and
dedicated personnel costs.
It is expected that significant Merger-related expenses will continue to be incurred in future periods as decisions are made about facility closures,
organizational structure and other integration activities in 2015 and 2016.
Restructuring and other operating expenses, net
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). These charges include severance and other costs for organizational changes intended to promote operational efficiency in future periods,
as well as a net benefit from the reversal of cumulative translation account balances following the liquidation of certain subsidiaries.
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 of costs associated with lease obligations and other costs. Of these
total estimated expenses, $37 million has been incurred through December 27, 2014 with the remainder expected to be recognized during 2015.
Restructuring and certain other expenses in 2012 include severance, lease and other restructuring accruals, primarily related to the consolidation and
elimination of functions in Europe, as well as Company-wide process improvement initiatives. Additionally, in 2012, the Company recognized $5 million of
expense related to the purchase price recovery discussed above.
Refer to Note 2, “Merger, Acquisitions and Dispositions” and Note 3, “Merger, Restructuring, and Other Accruals”, in Notes to the Consolidated Financial
Statements for additional information.
39