Note 3. Restructuring, Impairment and Other Charges

The Company recorded restructuring, impairment and other charges of $133.5 million, $1,118.5 million and $667.8 million for the years ended December 31, 2013, 2012 and 2011, respectively.

The restructuring charges recorded are based on restructuring 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 adjustments to the restructuring liabilities.

Restructuring, Impairment and Other Charges Recognized in Results of Operations

2013	Employee Terminations		Other Restructuring Charges		Total Restructuring Charges		Impairment		Other Charges		Total
Publishing and Retail Services	$	17.0	$	14.1	$	31.1	$	12.3	$	30.3	$	73.7
Variable Print		2.2		12.5		14.7		0.9		—		15.6
Strategic Services		2.8		2.0		4.8		6.3		8.1		19.2
International		14.3		3.6		17.9		1.0		—		18.9
Corporate		4.1		1.6		5.7		0.4		—		6.1
Total	$	40.4	$	33.8	$	74.2	$	20.9	$	38.4	$	133.5

In 2013, the Company recorded restructuring charges of $40.4 million for employee termination costs, lease termination and other restructuring charges of $33.8 million, $17.6 million of impairment charges for other long-lived assets, $3.3 million for the impairment of other intangible assets and $38.4 million of other estimated charges as a result of its decision to withdraw from certain multi-employer pension plans.

Restructuring and Impairment Charges

For the year ended December 31, 2013, the Company recorded net restructuring charges of $40.4 million for employee termination costs for 1,382 employees, of whom 1,363 were terminated as of December 31, 2013. These charges primarily related to the closing of two manufacturing facilities within the Publishing and Retail Services segment and one manufacturing facility within the Variable Print segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $33.8 million for the year ended December 31, 2013, of which $14.7 million related to multi-employer pension plan complete or partial withdrawal charges primarily attributable to manufacturing facility closures. For the year ended December 31, 2013, the Company also recorded $17.6 million of impairment charges primarily related to buildings and machinery and equipment associated with facility closings. The fair values of the buildings and machinery and equipment were determined to be Level 3 under the fair value hierarchy and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions.

During the fourth quarter of 2013, the Company recorded non-cash charges of $3.3 million related to the impairment of acquired customer relationship intangible assets in the financial reporting unit within the Strategic Services segment. The impairment of the acquired customer relationship intangible assets resulted from declines in compliance services volume from these relationships. The impairment of the acquired customer relationship intangible assets was determined using Level 3 inputs and estimated based on a cash flow analysis, which included management’s assumptions related to future revenues and profitability. See Note 8 for further discussion of these Level 3 inputs.

Other Charges

For the year ended December 31, 2013, the Company recorded charges of $38.4 million as a result of its decision to withdraw from certain multi-employer pension plans. These charges for multi-employer pension plan withdrawal obligations, unrelated to facility closures, represent the Company’s best estimate of the expected settlement of these withdrawal liabilities. The liabilities for these withdrawal obligations of $38.4 million were included in other noncurrent liabilities as of December 31, 2013. See Note 11 for further discussion of multi-employer pension plans.

2012	Employee Terminations		Other Restructuring Charges		Total Restructuring Charges		Impairment		Other Charges		Total
Publishing and Retail Services	$	13.3	$	5.2	$	18.5	$	827.7	$	—	$	846.2
Variable Print		14.2		5.6		19.8		9.8		—		29.6
Strategic Services		7.7		6.0		13.7		132.9		—		146.6
International		11.0		4.0		15.0		50.7		—		65.7
Corporate		20.4		4.5		24.9		5.5		—		30.4
Total	$	66.6	$	25.3	$	91.9	$	1,026.6	$	—	$	1,118.5

Restructuring, impairment and other charges in 2012 included $848.4 million and $158.0 million for the impairment of goodwill and acquired customer relationship intangible assets, respectively. Additionally in 2012, the Company recorded restructuring charges of $66.6 million for employee termination costs, $25.3 million of lease termination and other facility closure costs and $20.2 million of impairment charges for other long-lived assets.

In the fourth quarter of 2012, as a result of the Company’s annual goodwill impairment test completed under the Previous Organization Structure, the Company recorded total non-cash charges to recognize the impairment of goodwill of $461.7 million, $318.7 million and $68.0 million in the magazines, catalogs and retail inserts, books and directories and Europe reporting units, respectively. These goodwill impairment charges resulted from a reduction in the estimated fair value of the magazines, catalogs and retail inserts, books and directories and Europe reporting units based on lower expectations for future revenue, profitability and cash flows as compared to expectations as of the October 31, 2011 annual goodwill impairment test. The lower expectations for the magazines, catalogs and retail inserts reporting unit were due to price pressures driven by excess capacity in the industry and erosion of ad pages and circulation for magazines. The lower expectations for the books and directories reporting unit were due to lower demand for educational books as a result of state and local budget constraints, the impact of electronic substitution on consumer book and directory volumes and price pressures driven by excess capacity in the industry. The lower expectations for the Europe reporting unit were due to lower volumes from existing customers and price pressures driven by excess capacity in the industry. Because the fair values of these reporting units were below their carrying values, including goodwill, the Company performed an additional fair value measurement calculation to determine the amount of the impairment charge for each reporting unit. As part of this calculation, the Company also estimated the fair values of the significant tangible and intangible long-lived assets of each reporting unit. The goodwill impairment charges were determined using Level 3 inputs, including discounted cash flow analyses, comparable marketplace fair value data and management’s assumptions in valuing the significant tangible and intangible assets. Of the $461.7 million goodwill impairment charge recorded in the magazines, catalogs and retail inserts reporting unit under the Previous Organization Structure, $365.8 million and $95.9 million of impairment is now included in the Publishing and Retail Services and Strategic Services segments, respectively. Of the $318.7 million goodwill impairment charge recorded in the books and directories reporting unit under the Previous Organization Structure, $304.1 million, $10.9 million and $3.7 million of impairment is now included in the Publishing and Retail Services, Strategic Services and Variable Print segments, respectively. Of the $68.0 million goodwill impairment charge recorded in the Europe reporting unit under the Previous Organization Structure, $44.9 million and $23.1 million of impairment is now included in the International and Strategic Services segments, respectively.

During the fourth quarter of 2012, the Company recorded total non-cash charges of $158.0 million related to the impairment of acquired customer relationship intangible assets consisting of $123.8 million, $28.5 million and $5.7 million in the books and directories, magazines, catalogs and retail inserts and Latin America reporting units, respectively, under the Previous Organization Structure. The impairment of the acquired customer relationship intangible assets resulted from lower expectations for future revenue to be derived from these relationships, driven by the same factors that caused the goodwill impairment in the books and directories and magazines, catalogs and retail inserts reporting units and driven by the impact of electronic substitution on forms and statement printing in the Latin America reporting unit. The impairment of the acquired customer relationship intangible assets was determined using Level 3 inputs and estimated based on cash flow analyses, which included estimates of customer attrition rates and management’s assumptions related to future revenues and profitability. Of the $123.8 million impairment of other intangible assets charge recorded in the books and directories reporting unit under the Previous Organization Structure, $121.9 million, $1.4 million and $0.5 million of impairment is now included in the Publishing and Retail Services, Variable Print and Strategic Services segments, respectively. Of the $28.5 million impairment of other intangible assets charge recorded in the magazines, catalogs and retail inserts reporting unit under the Previous Organization Structure, $28.2 million and $0.3 million of impairment is now included in the Publishing and Retail Services and Strategic Services segments, respectively. The $5.7 million impairment of other intangible assets recorded in the Latin America reporting unit under the Previous Organization Structure is now included within the International segment. See Note 8 for further discussion of these Level 3 inputs.

For the year ended December 31, 2012, the Company also recorded net restructuring charges of $66.6 million for employee termination costs for 2,200 employees, substantially all of whom were terminated as of December 31, 2013. These charges primarily related to actions resulting from the reorganization of sales and administrative functions across all segments, the closing of three manufacturing facilities within the Variable Print segment, two manufacturing facilities within the Publishing and Retail Services segment and one manufacturing facility within the International segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $25.3 million for the year ended December 31, 2012. For the year ended December 31, 2012, the Company also recorded $20.2 million of impairment charges primarily related to machinery and equipment associated with facility closures and other asset disposals. The fair values of the land, buildings, machinery and equipment and leasehold improvements were determined to be Level 3 under the fair value hierarchy and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions.

2011	Employee Terminations		Other Restructuring Charges		Total Restructuring Charges		Impairment		Other Charges		Total
Publishing and Retail Services	$	21.8	$	12.3	$	34.1	$	18.7	$	—	$	52.8
Variable Print		8.3		13.6		21.9		365.8		—		387.7
Strategic Services		20.2		27.1		47.3		24.6		—		71.9
International		18.1		5.3		23.4		119.7		—		143.1
Corporate		8.3		1.3		9.6		2.7		—		12.3
Total	$	76.7	$	59.6	$	136.3	$	531.5	$	—	$	667.8

Restructuring, impairment and other charges in 2011 included $392.3 million for the impairment of goodwill and $90.7 million of impairment primarily related to acquired customer relationship intangible assets. Additionally in 2011, the Company recorded restructuring charges of $76.7 million for employee termination costs, $59.6 million for other restructuring charges, of which $15.1 million related to multi-employer pension plan complete or partial withdrawal charges and the remaining amount related to lease termination and other facility closure costs, and $48.5 million of impairment charges for other long-lived assets.

In the fourth quarter of 2011, as a result of the Company’s annual goodwill impairment test completed under the Previous Organization Structure, the Company recorded non-cash charges to recognize the impairment of goodwill of $170.4 million, $99.9 million, $62.2 million and $59.8 million in the commercial, forms and labels, Canada and Latin America reporting units, respectively. These goodwill impairment charges resulted from reductions in the estimated fair value of the commercial, forms and labels, Canada and Latin America reporting units, based on lower expectations for future revenue, profitability and cash flows due to the continued impact of electronic substitution on demand for business forms and other products and price pressures. Because the fair values of these reporting units were below their carrying values, including goodwill, the Company performed an additional fair value measurement calculation to determine the amount of impairment loss. As part of this calculation, the Company also estimated the fair value of the significant tangible and intangible long-lived assets of these reporting units. The goodwill impairments were determined using Level 3 inputs, including discounted cash flow analyses, comparable marketplace fair value data and management’s assumptions in valuing the significant tangible and intangible assets. Of the $170.4 million goodwill impairment charge recorded in the commercial reporting unit under the Previous Organization Structure, $167.5 million and $2.9 million of impairment is now included in Variable Print and Strategic Services segments, respectively. The $99.9 million goodwill impairment charge recorded in the forms and labels reporting unit under the Previous Organization Structure is now included in the Variable Print segment. Of the $62.2 million and $59.8 million goodwill impairment charge recorded in the Canada and Latin America reporting units, respectively, under the Previous Organization Structure, $116.0 million and $6.0 million and of impairment is now included in the International and Strategic Services segments, respectively.

Additionally, during the fourth quarter of 2011, the Company recorded $90.7 million of non-cash charges primarily related to the impairment of acquired customer relationship intangible assets in the forms and labels reporting unit under the Previous Organization Structure. The impairment of the acquired customer relationship intangible assets resulted from lower expectations for future revenue, profitability and cash flows due to the continued impact of electronic substitution on demand for business forms and price pressures in the forms and labels reporting unit. The impairment of the acquired customer relationship intangible assets was determined using Level 3 inputs and estimated based on cash flow analyses, which included estimates of customer attrition rates and management’s assumptions related to future revenues and profitability. Of the $90.7 million impairment of other intangible assets charge primarily recorded in the forms and labels reporting unit under the Previous Organization Structure, $89.7 million and $1.0 million is now included in the Variable Print and Strategic Services segments, respectively.

For the year ended December 31, 2011, the Company also recorded net restructuring charges of $76.7 million for employee termination costs for 2,899 employees, all of whom were terminated as of December 31, 2013. These charges primarily related to the closings of certain facilities and headcount reductions due to the Bowne acquisition, as well as the closing of four manufacturing facilities within the Publishing and Retail Services segment and one manufacturing facility within the Variable Print segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $59.6 million for the year ended December 31, 2011, of which $15.1 million related to multi-employer pension plan complete or partial withdrawal charges primarily attributable to the closing of two manufacturing facilities within the Publishing and Retail Services segment and one manufacturing facility within the Variable Print segment. For the year ended December 31, 2011, the Company also recorded $48.5 million of impairment charges primarily related to land, buildings, machinery and equipment and leasehold improvements associated with facility closings. The fair values of the land, buildings, machinery and equipment and leasehold improvements were determined to be Level 3 under the fair value hierarchy and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions.

Restructuring Reserve

The restructuring reserve as of December 31, 2013 and 2012, and changes during the year ended December 31, 2013, were as follows:

	December 31, 2012		Restructuring Charges		Foreign Exchange and Other			Cash Paid			December 31, 2013
Employee terminations	$	23.4	$	40.4	$	(2.1	)	$	(42.0	)	$	19.7
Multi-employer pension plan withdrawal obligations		25.1		14.7		—			(3.0	)		36.8
Lease terminations and other		30.0		19.1		1.1			(29.1	)		21.1
Total	$	78.5	$	74.2	$	(1.0	)	$	(74.1	)	$	77.6

The current portion of restructuring reserves of $32.3 million at December 31, 2013 was included in accrued liabilities, while the long-term portion of $45.3 million, primarily related to multi-employer pension plan complete or partial withdrawal obligations related to facility closures and lease termination costs, was included in other noncurrent liabilities at December 31, 2013.

The Company anticipates that payments associated with the employee terminations reflected in the above table will be substantially completed by December 2014.

Payments on all of the Company’s multi-employer pension plan complete or partial withdrawal obligations, including those related to facility closures and as a result of the Company’s decision to withdraw from the plan, are scheduled to be substantially completed by 2033. Changes based on uncertainties in these estimated withdrawal obligations could affect the ultimate charges related to multi-employer pension plan withdrawals. See Note 11 for further discussion of multi-employer pension plans.

The restructuring liabilities classified as “lease terminations and other” consisted of lease terminations, other facility closing costs and contract termination costs. Payments on certain of the lease obligations are scheduled to continue until 2026. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charges related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the Consolidated Financial Statements of future periods.

The restructuring reserve as of December 31, 2012 and 2011, and changes during the year ended December 31, 2012, were as follows:

	December 31, 2011		Restructuring Charges			Foreign Exchange and Other			Cash Paid			December 31, 2012
Employee terminations	$	27.2	$	66.6		$	(1.7	)	$	(68.7	)	$	23.4
Multi-employer pension withdrawal obligations		27.9		(0.4	)		—			(2.4	)		25.1
Lease terminations and other		32.6		25.7			2.0			(30.3	)		30.0
Total	$	87.7	$	91.9		$	0.3		$	(101.4	)	$	78.5

The current portion of restructuring reserves of $35.8 million was included in accrued liabilities at December 31, 2012, while the long-term portion of $42.7 million, primarily related to multi-employer pension plan complete or partial withdrawal obligations and lease termination costs associated with facility closures, was included in other noncurrent liabilities at December 31, 2012.

Payments associated with the employee terminations reflected in the above table were substantially completed by December 2013.