Restructuring, Impairment and Transaction-Related Charges

The Company recorded restructuring, impairment and transaction-related charges for the three months ended March 31, 2015 and 2014, as follows:



	Three Months Ended March 31,
	2015			2014
Employee termination charges	$	5.1		$	6.0
Impairment charges	6.3			1.1
Transaction-related charges (income)	(9.2		)	0.6
Integration costs	1.8			2.7
Other restructuring charges	6.1			1.5
Total	$	10.1		$	11.9

The costs related to these activities have been recorded in the condensed consolidated statements of operations as restructuring, impairment and transaction-related charges. See Note 19, "Segment Information," for restructuring, impairment and transaction-related charges by segment.

Restructuring Charges

The Company began a restructuring program in 2010 related to eliminating excess manufacturing capacity and properly aligning its cost structure. The Company has announced a total of 26 plant closures and has reduced headcount by approximately 9,000 employees since 2010.

The Company announced the closure of the Queretaro, Mexico plant during the three months ended March 31, 2015. The Company recorded the following charges as a result of plant closures and other restructuring programs for the three months ended March 31, 2015 and 2014:


•	Employee termination charges of $5.1 million and $6.0 million during the three months ended March 31, 2015 and 2014, respectively. The Company reduced its workforce through facility consolidations and involuntary separation programs.


•	Integration costs of $1.8 million and $2.7 million during the three months ended March 31, 2015 and 2014, respectively. Integration costs were primarily related to preparing existing facilities to meet new production requirements resulting from work transferring from closed plants, as well as other costs related to the integration of the acquired companies.

•

Other restructuring charges of $6.1 million during the three months ended March 31, 2015, which consisted of: (1) $2.2 million of vacant facility carrying costs, (2) $0.4 million of equipment and infrastructure removal costs from closed plants and (3) $3.5 million of lease exit charges primarily related to the closure of the Atlanta, Georgia facility. Other restructuring charges of $1.5 million during the three months ended March 31, 2014, which consisted of: (1) $0.9 million of vacant facility carrying costs, (2) $0.1 million of equipment and infrastructure removal costs from closed plants and (3) $0.5 million of lease exit charges.

The restructuring charges recorded are based on plans that have been committed to by management and are, in part, based upon management's best estimates of future events. Changes to the estimates may require future restructuring charges and adjustments to the restructuring liabilities. The Company expects to incur additional restructuring charges related to these and other initiatives.

Impairment Charges

The Company recognized impairment charges of $6.3 million during the three months ended March 31, 2015, consisting of: (1) $4.1 million of impairment charges for machinery and equipment no longer being utilized in production as a result of facility consolidations including Atlanta, Georgia; Dickson, Tennessee; and Queretaro, Mexico, as well as other capacity reduction restructuring initiatives and (2) $1.2 million of impairment charges for land and building, $0.9 million of impairment charges for machinery and equipment and $0.1 million of impairment charges for other intangible assets as a result of the recently commenced restructuring proceedings in Argentina for the Company's Argentina subsidiaries, World Color Argentina, S. A. and Morvillo (the "Argentina Subsidiaries").

In addition, a $23.3 million non-cash goodwill impairment charge was recorded within the Latin America reporting unit of the International segment during the three months ended March 31, 2015. This non-cash charge is included in the line item entitled goodwill impairment in the Company's condensed consolidated statements of operations. See Note 4, "Goodwill and Other Intangible Assets," for further information.

The Company recognized impairment charges of $1.1 million during the three months ended March 31, 2014, related to machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction restructuring initiatives.

The fair values of the impaired assets were determined by the Company to be Level 3 under the fair value hierarchy (see Note 12, "Financial Instruments and Fair Value Measurements," for the definition of Level 3 inputs) and were estimated based on broker quotes and internal expertise related to current marketplace conditions. These assets were adjusted to their estimated fair values at the time of impairment.

Transaction-Related Charges (Income)

The Company incurs transaction-related charges (income) primarily consisting of professional service fees related to business acquisition and divestiture activities. The Company recognized transaction-related charges (income) of $(9.2) million during the three months ended March 31, 2015, which includes a $10.0 million non-recurring gain as a result of Courier Corporation's ("Courier") termination of the agreement pursuant to which Quad/Graphics was to acquire Courier, partially offset by $0.8 million of professional service fees primarily for the terminated acquisition of Courier and the acquisitions of Marin's and Copac Global Packaging, Inc. ("Copac") (see Note 22, "Subsequent Events," for further details on the acquisition of Copac). The Company recognized transaction-related charges of $0.6 million during the three months ended March 31, 2014, which primarily included professional service fees for the acquisitions of Brown Printing and Unigraphic. The transaction-related charges were expensed as incurred in accordance with the applicable accounting guidance on business combinations.

Reserves for Restructuring, Impairment and Transaction-Related Charges

Activity impacting the Company's reserves for restructuring, impairment and transaction-related charges for the three months ended March 31, 2015, was as follows:



	Employee Termination Charges			Impairment Charges			Transaction-Related Charges (Income)			Integration Costs			Other Restructuring Charges			Total
Balance at December 31, 2014	$	10.0		$	—		$	0.5		$	1.8		$	13.6		$	25.9
Expense (income)	5.1			6.3			(9.2		)	1.8			6.1			10.1
Cash receipts (payments)	(7.7		)	—			9.4			(2.1		)	(5.3		)	(5.7		)
Non-cash adjustments	—			(6.3		)	—			—			0.7			(5.6		)
Balance at March 31, 2015	$	7.4		$	—		$	0.7		$	1.5		$	15.1		$	24.7

The Company's restructuring, impairment and transaction-related reserves at March 31, 2015 included a short-term and a long-term component. The short-term portion included $17.0 million in accrued liabilities and $1.9 million in accounts payable in the condensed consolidated balance sheets as the Company expects these reserves to be paid within the next twelve months. The long-term portion of $5.8 million is included in other long-term liabilities (see Note 13, "Other Long-Term Liabilities") in the condensed consolidated balance sheets, of which $5.5 million is included in restructuring reserve and $0.3 million is included in multiemployer pension plans ("MEPPs") withdrawal liability (see Note 14, "Employee Retirement Plans," for further details on the Company's MEPPs).