To merge categories you must first make one category a sub-category of another. To do this highlight the category that is to be merged. Click the Edit button on the CATEGORY & TRANSFER LIST window toolbar as you would to edit a category. In the EDIT CATEGORY window, under Type, Click Subcategory of. Click the drop down arrow to view the pull down menu to select the category you wish to merge into. When this category is selected, Click OK. The first category selected is now a subcategory of the second.
Next Click the subcategory (former category) that is to be merged. Click the Delete button from the CATEGORY & TRANSFER LIST window toolbar. You will be prompted with a window asking DELETING SUBCATEGORY. MERGE SUBCATEGORY WITH PARENT? Click Yes. Your categories are now merged.