Earthlink 2015 Annual Report Download - page 87

Table of Contents
EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11. Restructuring, Acquisition and Integration-Related Costs
Restructuring, acquisition and integration-related costs consisted of the following during the years ended December 31, 2013, 2014 and 2015 :
Year Ended December 31,
2013
2014
2015
(in thousands)
Integration-related costs $ 21,622
$ 9,043
$ 5,924
Severance, retention and other employee costs 14,844
9,297
9,798
Facility-related costs 2,328
1,744
3,598
Transaction-related costs 1,021
4
—
Legacy plan restructuring costs 215
—
—
Restructuring, acquisition and integration-related costs $ 40,030
$ 20,088
$ 19,320
Restructuring, acquisition and integration-related costs consist of costs related to the Company's restructuring, acquisition and integration-related activities. Such
costs include: 1) integration-related costs, such as system conversions, rebranding costs and integration-related consulting and employee costs; 2) severance,
retention and other employee termination costs associated with restructuring, acquisition and integration activities and with certain voluntary employee separations;
3) facility-related costs, such as lease termination and asset impairments; and 4) transaction-related costs, which are direct costs incurred to effect business
combinations, such as advisory, legal, accounting, valuation and other professional fees. The Company recognizes a liability for costs associated with an exit or
disposal activity when the liability is incurred. The Company recognizes severance costs when they are both probable and reasonably estimable.
During the year ended December 31, 2013, the Company recorded $2.8 million of restructuring costs to restructure its sales organization, which resulted in a
reduction in the Company's sales workforce and some office closings. The Company recorded $2.2 million of severance costs and $0.6 million of facility-related
costs in connection with this restructuring. During the year ended December 31, 2014, the Company recorded $7.3 million of restructuring costs in connection with
a reduction in workforce that eliminated approximately 450 positions. The reduction in workforce was driven by changes in the Company's business strategy. The
restructuring costs consisted of severance and other employee benefit costs. During the year ended December 31, 2015, the Company recorded $13.4 million of
restructuring costs in connection with changes in the Company's business strategy. The restructuring costs consisted of $9.8 million of severance and other
employee costs due to reductions in workforce and $3.6 million of facilities-related costs primarily due to the closing of certain sales offices and other facilities.
Restructuring costs for the years ended December 31, 2013, 2014 and 2015 are included in restructuring, acquisition and integration-related costs in the
Consolidated Statements of Comprehensive Loss.
The following table summarizes activity for liability balances associated with facility exit and restructuring liabilities for the years ended December 31, 2014 and
2015:
Severance and
Benefits
Facilities
Total
(in thousands)
Balance as of December 31, 2013 $ —
$ 5,064
$ 5,064
Accruals 7,337
1,744
9,081
Payments (1,964)
(2,095)
(4,059)
Balance as of December 31, 2014 5,373
4,713
10,086
Accruals 9,798
3,598
13,396
Payments (11,632)
(2,769)
(14,401)
Balance as of December 31, 2015 $ 3,539
$ 5,542
$ 9,081
As of December 31, 2014 , $6.8 million of facility exit and restructuring liabilities were classified within current liabilities and $3.3 million were classified as other
long-term liabilities. As of December 31, 2015 , $5.4 million of facility exit and restructuring liabilities were classified within current liabilities and $3.7 million
were classified as other long-term liabilities.
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