IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

9 Months Ended

Sep. 30, 2011

IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

4.  IMPAIRMENT LOSSES AND RESTRUCTURING CHARGES

Assets Held for Sale

In 2010, we committed to a plan to sell the buildings at our closed facilities in Laramie, Wyoming and Greeley, Colorado.  We received estimates of the selling prices of these buildings, and have reduced the value of the buildings and land to fair value less the costs to sell, or approximately $5,103 as of September 30, 2011.  We reclassified these long-lived assets as current assets held for sale on our Condensed Consolidated Balance Sheets.  In order for an asset to be held for sale, management must determine that the asset is to be held for sale in its current condition, an active plan to complete the sale of the asset has been initiated and the sale of the asset is probable within one year.  We evaluated the facilities during 2010 and the current period and determined these assets meet all the criteria for an asset held for sale.

Impairment Losses

During the nine months ended September 30, 2011, we recorded approximately $1,026 of impairment losses ($844 in our U.S. segment and $182 in our Canadian segment).  During the three and nine months ended September 30, 2010, we recorded approximately $450 (all in our U.S. segment) and $3,063 ($2,655 in our U.S. segment and $408 in our Canadian segment) of impairment losses, respectively.  We recorded the impairment related to certain long-lived assets for which the carrying value of those assets is not recoverable.  These assets are in locations for which we are uncertain about our ability to generate future cash flows to support the carrying value of these assets.  The long-lived assets include computer and telephone equipment, furniture and fixtures, leasehold improvements and software.  Refer to Note 7, “Fair Value Measurements,” of this Form 10-Q, for additional information on the fair value measurements for all assets and liabilities, including impairment losses, that are measured at fair value in the Condensed Consolidated Financial Statements.

Restructuring Charges

We routinely assess the profitability and utilization of our facilities and existing markets. In some cases, we have chosen to close under-performing facilities and complete reductions in workforce to enhance future profitability. Severance payments that occur from reductions in workforce are in accordance with our postemployment plans and/or statutory requirements that are communicated to all employees upon hire date; therefore, severance liabilities are recognized when they are determined to be probable and reasonably estimable.  Other liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, rather than upon commitment to a plan.  A significant assumption used in determining the amount of estimated liability for closing facilities is the future lease payments on vacant facilities, which we determine based on our ability to successfully negotiate early termination agreements with landlords and/or to sublease the facility. If our actual results differ from these estimates, additional gains or losses would be recorded within restructuring charges in the accompanying Condensed Consolidated Statements of Operations. Refer to Note 7, “Fair Value Measurements,” of this Form 10-Q, for additional information on the fair value measurements for all assets and liabilities, including restructuring charges, that are measured at fair value in the Condensed Consolidated Financial Statements.

A summary of the activity under the restructuring plans as of September 30, 2011, and changes during the nine months ended September 30, 2011, are presented below:

	Facility-Related Costs
	Victoria			Laramie			Grand Junction			U.S. Total			Regina			Sarnia			Kingston			Canada Total
Balance as of January 1, 2011	$	491		$	32		$	506		$	1,029		$	1,033		$	32		$	—		$	1,065
Expense	—			25			—			25			788			—			87			875
Payments, net of receipts for sublease	(36		)	(52		)	(180		)	(268		)	(1,002		)	(32		)	—			(1,034		)
Foreign currency translation adjustment	—			—			—			—			(50		)	—			(1		)	(51		)
Balance as of September 30, 2011	$	455		$	5		$	326		$	786		$	769		$	—		$	86		$	855

	Termination Benefits
	Cornwall			Kingston			Canada Total
Balance as of January 1, 2011	$	—		$	—		$	—
Expense	1,081			557			1,638
Payments	(1,132		)	(414		)	(1,546		)
Foreign currency translation adjustment	51			(98		)	(47		)
Balance as of September 30, 2011	$	—		$	45		$	45

Our Victoria, Texas facility has been sublet through the remainder of its lease term and we have recorded an accrual for certain property taxes we still owe in Victoria, which we expect to pay through the remainder of our lease term, or 2014.  The lease for our Sarnia, Ontario facility expired in January 2011 and we do not expect to incur material charges in future periods for this location.  During the nine months ended September 30, 2011, we recorded approximately $788 of expense due to a change in our estimate of our Regina, Saskatchewan lease liability.  We expect completion of the Laramie, Wyoming and Grand Junction, Colorado restructuring plans no later than 2011 and 2012, respectively; however, completion may be earlier or later depending on our ability to sublease the facilities, buy-out the lease or sell the facilities.  We expect completion of our restructuring plans in Cornwall, Ontario and Kingston, Ontario to be completed by the end of 2011.  We do not expect to incur any facility-related costs with our Cornwall downsizing because we plan to keep that facility open with reduced space.  We expect to pay $1,692 in our U.S. segment and $4,996 in our Canadian segment in facility related costs and $1,591 in our Canadian segment in termination benefits over the term of the restructuring plans.  The cumulative amount paid as of September 30, 2011 related to the closures was $906 in our U.S. segment and $5,688 in our Canadian segment ($4,142 in facility-related costs and $1,546 in termination benefits).