Cincinnati Bell 2009 Annual Report Download - page 136

3. Restructuring Charges
In 2009, the Company incurred restructuring charges of $5.0 million, which consisted of $10.5 million of
employee separation obligations and the remaining amortization of $2.1 million of special termination benefits
partially offset by a curtailment gain of $7.6 million. In 2008, the Company incurred restructuring charges
totaling $28.1 million, which consisted primarily of $27.0 million of special termination benefits and a $15.5
million curtailment charge partially offset by a $14.2 million reduction in employee separation obligations. In
2007, the Company incurred restructuring charges totaling $39.8 million, which consisted primarily of $25.3
million of employee separation benefits, $8.2 million of special termination benefits, and a curtailment charge of
$6.4 million.
Restructuring charges
(dollars in millions)
Initial
charges Utilization
Balance
December 31,
2007 Income Utilization
Balance
December 31,
2008 Charge Utilization
Balance
December 31,
2009
Employee separation
obligations ........ $25.3 $(1.9) $23.4 $(14.2) $(1.2) $8.0 $10.5 $(4.1) $14.4
•Employee separation obligations — In the first quarter of 2007, the Company incurred severance
liabilities of $2.4 million related to both the outsourcing of certain accounting functions and headcount
reductions in other administrative functions. In the fourth quarter of 2007, the Company recorded
severance liabilities of $22.9 million to reduce headcount to planned levels. In the first quarter of 2008,
284 union employees accepted retirement based on an offer of special termination benefits described
below. As a result, the number of employees to be severed was reduced, and in 2008 the Company
decreased the severance liability by $14.2 million. In the fourth quarter of 2009, the Company determined
an additional need to reduce its headcount over the next five years to conform its Wireline operations to
the decreased access lines being served by the Company, resulting in a charge of $10.5 million for
additional employee separation obligations.
•Special termination benefits — The Company offered and, by December 31, 2007, 105 management
employees accepted special termination benefits totaling $12 million. The Company determined that $8.2
million of these benefits had been earned through December 31, 2007, and this amount was therefore
accrued as of December 31, 2007. In February 2008, the Company reached an agreement with its union
workforce on a new three-year labor agreement. As part of this agreement, the Company offered and, by
March 31, 2008, 284 union employees accepted, special termination benefits totaling $25 million of which
$22.1 million had been earned and accrued through March 31, 2008. Remaining special termination
benefits for both union and management employees were subject to future service requirements as
determined by the Company and were amortized to expense over the future service period. The Company
amortized $4.9 million of the remaining special termination benefits in 2008 and the remaining $2.1
million was amortized in 2009.
•Pension and postretirement curtailment charges — Management terminations accepted in 2007
represented 10% of plan service years for the management pension plan and 15% of plan service years for
the management postretirement plan, resulting in a pension and postretirement plan curtailment charge of
$6.4 million in 2007. Union terminations accepted in 2008 represented approximately 11% of the plan
service years for both the pension and postretirement plans, resulting in a curtailment charge of $15.5
million for the pension and postretirement plans in 2008. In 2009, the Company announced significant
changes to its pension and postretirement plans, which resulted in a curtailment gain of $7.6 million.
See Note 9 for further information related to the special termination benefits and curtailment charges
discussed above.
All of the restructuring expense in 2009 was associated with the Wireline segment. The restructuring
expense in 2008 was associated with the Wireline segment for $27.1 million, Wireless for $0.5 million,
Technology Solutions for $0.7 million and Corporate for income of $0.2 million. The restructuring expense in
2007 was associated with the Wireline segment for $36.1 million, Wireless for $2.1 million, Technology
Solutions for $1.0 million, and Corporate for $0.6 million. At December 31, 2009, $6.4 million of the employee
separation obligation was included in “Other current liabilities,” and $8.0 million was included in “Other
noncurrent liabilities” in the Consolidated Balance Sheet. At December 31, 2008, $1.5 million of the employee
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