Other Operating Items, Net

3 Months Ended

Mar. 31, 2012

Other Operating Items, Net

Other Operating Items, Net

Note 2                    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, contractual charges and other periodic costs related to the strategic repositioning of our businesses; (iii) gain or loss on the sale or disposal of assets; and (iv) pension curtailments.  The table below reflects our other operating items, net:

	Successor Company
	Three months ended March 31,
	2012			2011
Restructuring charges	$	1.2		$	3.7
Professional fees and contractual charges related to reorganization and restructuring	0.7			2.0
Sale or disposal of certain assets	(1.0		)	(1.1		)
Pension curtailments	(0.1		)	—
Total	$	0.8		$	4.6

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 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 11, Benefit Plans, for further information.

For the three months ended March 31, 2012, we recorded new restructuring activities of $3.2, primarily related to severance, principally related to continued headcount reductions in North America; with an adjustment to sublease assumptions associated with the abandonment of one floor of our White Plains, New York facility. The associated employee severance payments are expected to be substantially completed by the end of 2012. During the quarter, we also reversed $2.0 in accrued severance, primarily related to 2011 Successor Company initiatives, mainly due to several employee resignations.

For the three months ended March 31, 2011, we recorded new restructuring activities of $3.7. This was primarily related to $2.2 in severance, principally due to continued headcount reductions in our Europe and APLA regions. Additionally, we recorded $0.9 in 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; along with $0.6 in contractual charges related to abandonment of leases in APLA and North America.

The table below reflects changes in our restructuring accruals, by type of initiative, for the Successor Company, for the three months ended March 31, 2012:

	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, 2011	$	25.7		$	1.0		$	0.6		$	27.3		$	0.9		$	5.3		$	—		$	6.2		$	33.5
Accruals, net	0.4			(0.3		)	—			0.1			—			1.1			—			1.1			1.2
Spending	(5.7		)	(0.4		)	—			(6.1		)	—			(0.4		)	—			(0.4		)	(6.5		)
Balance at March 31, 2012	$	20.4		$	0.3		$	0.6		$	21.3		$	0.9		$	6.0		$	—		$	6.9		$	28.2
Cumulative Accounts
Predecessor Company’s liabilities assumed in fresh start accounting	$	—		$	—		$	14.3		$	14.3		$	—		$	—		$	0.3		$	0.3		$	14.6
Accruals, net	34.3			22.3			(5.8		)	50.8			1.4			7.8			(0.2		)	9.0			59.8
Spending	(13.9		)	(22.0		)	(7.9		)	(43.8		)	(0.5		)	(1.8		)	(0.1		)	(2.4		)	(46.2		)
Balance at March 31, 2012	$	20.4		$	0.3		$	0.6		$	21.3		$	0.9		$	6.0		$	—		$	6.9		$	28.2

The table below reflects changes in our restructuring accruals, by reportable segment, for the Successor Company, for the three months ended March 31, 2012:

	Successor Company
	Severance												Contracts
	North America			Europe			APLA			Total Severance			North America			Europe			APLA			Total Contracts			Grand  Total
Balance at December 31, 2011	$	4.6		$	19.4		$	3.3		$	27.3		$	5.3		$	0.9		$	—		$	6.2		$	33.5
Accruals, net	1.7			(1.2		)	(0.4		)	0.1			1.1			—			—			1.1			1.2
Spending	(1.6		)	(2.8		)	(1.7		)	(6.1		)	(0.4		)	—			—			(0.4		)	(6.5		)
Balance at March 31, 2012	$	4.7		$	15.4		$	1.2		$	21.3		$	6.0		$	0.9		$	—		$	6.9		$	28.2
Cumulative Accounts
Predecessor Company’s liabilities assumed in fresh start accounting	$	1.7		$	11.3		$	1.3		$	14.3		$	—		$	—		$	0.3		$	0.3		$	14.6
Accruals, net	17.8			25.1			7.9			50.8			7.9			1.0			0.1			9.0			59.8
Spending	(14.8		)	(21.0		)	(8.0		)	(43.8		)	(1.9		)	(0.1		)	(0.4		)	(2.4		)	(46.2		)
Balance at March 31, 2012	$	4.7		$	15.4		$	1.2		$	21.3		$	6.0		$	0.9		$	—		$	6.9		$	28.2