Other Operating Items, Net

9 Months Ended

Sep. 30, 2011

Other Operating Items, Net

Other Operating Items, Net

Note 4                    Other Operating Items, Net

Items included in other operating items, net consist of the following: (i) restructuring charges, representing the streamlining of our organizational structure; (ii) professional fees related to our exit from bankruptcy and the implementation of fresh start accounting; (iii) professional fees, contractual charges and other periodic costs related to the strategic repositioning of our businesses; (iv) gain or loss on the disposal of assets; and (v) pension curtailments.  The tables below reflect other operating items, net:

	Successor Company
	Three months ended September 30,
	2011			2010
Restructuring charges	$	9.2		$	(2.5	)
Professional fees associated with bankruptcy, fresh start accounting, reorganization and restructuring	1.5			2.9
Sale or disposal of certain assets	(0.2		)	(0.8		)
Total	$	10.5		$	(0.4	)

	Successor Company						Predecessor Company
	Nine months ended September 30, 2011			February 20 to September 30, 2010			January 1 to February 19, 2010
Restructuring charges	$	14.8		$	15.8		$	10.6
Professional fees associated with bankruptcy, fresh start accounting, reorganization and restructuring	5.4			18.4			3.1
Sale or disposal of certain assets	(1.9		)	(0.9		)	0.3
Pension curtailments	—			(0.4		)	—
Total	$	18.3		$	32.9		$	14.0

Restructuring Activities

Restructuring charges are recorded in accordance with ASC Topic 712, Compensation - Nonretirement Postemployment Benefits (“ASC 712”) or ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”).  Employees terminated as a result of our restructuring activities were terminated under our pre-existing severance policy; therefore, we recognized severance amounts pursuant to ASC 712.  Severance charges represent the cost to separate employees from our operations to streamline the organization.  As such, severance amounts are recorded when a termination plan is developed and approved, including the identification of positions to be separated, and when payment is probable and estimable.  Other amounts related to restructuring actions, including charges to terminate contractual obligations in connection with streamlining activities, are recorded in accordance with ASC 420.

Effective April 2, 2009, our Reader’s Digest Association, Inc. Retirement Plan (“U.S. Qualified Pension Plan” or “Retirement Plan”) was temporarily amended to provide additional benefits to employees involuntarily terminated.  As a result, a portion of our severance obligation is being satisfied by payments from the U.S. Qualified Pension Plan.  See Note 15, Benefit Plans, for further information.

For the three months ended September 30, 2011, we recorded new restructuring activities of $9.2, primarily related to severance, principally related to continued headcount reductions in Europe and APLA.

For the nine months ended September 30, 2011, we recorded new restructuring activities of $14.8.  This was primarily related to severance, principally due to continued headcount reductions in our Europe and APLA regions.  Additionally, we recorded contractual charges related to the abandonment of one floor of our White Plains, New York facility, due to additional charges to ready the space for sublease and adjustments to our expected sublease income; contractual charges related to abandonment of leases in Europe, APLA and North America; and fees related to a contract termination in France.  Employee severance payments are expected to be substantially completed by the end of 2012, related to these activities.

For the period February 20 to September 30, 2010, we recorded new restructuring activities of $15.8, which included a favorable adjustment of prior estimates of $2.5, for the three months ended September 30, 2010.  This was primarily related to severance of approximately 300 employees in a global strategic effort to reduce the Company’s overhead to levels consistent with the industry.  The efforts largely consisted of consolidating functions across business units within our Company.  Employee severance payments are expected to be substantially completed by the end of calendar year 2011, related to these activities.  The above accruals were net of accrual reductions attributed to planned severance being lower than originally anticipated for a variety of reasons, including employee resignations and final negotiated agreements.

During the period January 1 to February 19, 2010, we recorded new restructuring activities of $10.6, primarily related to severance in our international locations, principally France.  Employee severance payments are expected to be substantially completed by the end of 2011, related to these activities.

The table below reflects changes in our restructuring accruals, by type of initiative, for the Successor Company, for the nine months ended September 30, 2011:

	Successor Company
	Severance												Contracts
	2011			2010									2011			2010
	Successor Company Initiatives			Successor Company Initiatives			Predecessor Company Initiatives			Total Severance			Successor Company Initiatives			Successor Company Initiatives			Predecessor Company Initiatives			Total Contracts			Grand Total
Balance at December 31, 2010	$	—		$	8.9		$	3.6		$	12.5		$	—		$	4.8		$	—		$	4.8		$	17.3
Accruals, net	12.7			0.6			(0.9		)	12.4			1.5			1.3			—			2.8			15.2
Spending	(3.1		)	(7.7		)	(1.4		)	(12.2		)	(0.5		)	(1.1		)	—			(1.6		)	(13.8		)
Balance at September 30, 2011	$	9.6		$	1.8		$	1.3		$	12.7		$	1.0		$	5.0		$	—		$	6.0		$	18.7
Cumulative Amounts
Predecessor Company’s liabilities assumed in fresh start accounting	$	—		$	—		$	14.5		$	14.5		$	—		$	—		$	0.3		$	0.3		$	14.8
Accruals, net	12.7			23.0			(5.6		)	30.1			1.5			6.1			(0.2		)	7.4			37.5
Spending	(3.1		)	(21.2		)	(7.6		)	(31.9		)	(0.5		)	(1.1		)	(0.1		)	(1.7		)	(33.6		)
Balance at September 30, 2011	$	9.6		$	1.8		$	1.3		$	12.7		$	1.0		$	5.0		$	—		$	6.0		$	18.7

The table below reflects changes in our restructuring accruals, by reportable segment, for the Successor Company, for the nine months ended September 30, 2011:

	Successor Company
	Severance															Contracts
													Total												Total			Grand
	North America			Europe			APLA			LED			Severance			North America			Europe			APLA			Contracts			Total
Balance at December 31, 2010	$	1.2		$	9.2		$	2.0		$	0.1		$	12.5		$	4.8		$	—		$	—		$	4.8		$	17.3
Accruals, net	3.2			8.1			1.2			(0.1		)	12.4			1.3			0.9			0.6			2.8			15.2
Spending	(2.5		)	(7.5		)	(2.2		)	—			(12.2		)	(1.2		)	(0.1		)	(0.3		)	(1.6		)	(13.8		)
Balance at September 30, 2011	$	1.9		$	9.8		$	1.0		$	—		$	12.7		$	4.9		$	0.8		$	0.3		$	6.0		$	18.7
Cumulative Amounts
Predecessor Company’s liabilities assumed in fresh start accounting	$	1.7		$	11.3		$	1.3		$	0.2		$	14.5		$	—		$	—		$	0.3		$	0.3		$	14.8
Accruals, net	10.9			13.6			5.8			(0.2		)	30.1			6.1			0.9			0.4			7.4			37.5
Spending	(10.7		)	(15.1		)	(6.1		)	—			(31.9		)	(1.2		)	(0.1		)	(0.4		)	(1.7		)	(33.6		)
Balance at September 30, 2011	$	1.9		$	9.8		$	1.0		$	—		$	12.7		$	4.9		$	0.8		$	0.3		$	6.0		$	18.7