NOTE 6 – INTEGRATION AND RESTRUCTURING

On July 30, 2019, the Company internally announced a plan to integrate three operating segments with three other operating segments (Project Synchronize, the Plan or Phase I), which reduced the number of operating segments from 16 to 13. The Plan was implemented to streamline and reduce the Company’s cost structure, improve asset utilization and capitalize on operational synergies. Additionally, the Company announced the planned implementation of Business Improvement Plans (BIP), which is expected to increase profitability by right-sizing trailer-to-tractor ratios, yielding management capacity allocations, and improving maintenance execution. On September 4, 2019, the Company announced a comprehensive restructuring plan (Project Pivot) intended to reduce its cost base, right size its organization and management team and increase and accelerate its previously announced operational improvement goals. As part of Project Pivot, the Company executed a new management restructuring and substantial corporate cost reduction plan.

The Company implemented Project Synchronize and Project Pivot which resulted in recording of integration and restructuring costs. The integration and restructuring costs consist of assets impairments, employee-related costs, other transition and termination costs related to restructuring activities. Employee-related costs include severance, tax preparation, and relocation costs. Severance, tax preparation and relocation costs are expensed in accordance with ASC 420. Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities, which are expensed as incurred. Costs are reported in restructuring charges in the consolidated statements of operations and comprehensive loss. The obligation related to employee separation costs is included in other current liabilities in the consolidated balance sheets.

On March 10, 2020, the Company announced a plan to integrate three operating segments with three other operating segments (Phase II of the Plan), which will further reduce the number of operating segments from 13 to 10. Phase II was initially expected to be significantly completed by June 30, 2020, however, due to uncertainties and changes in focus caused by the COVID-19 pandemic, the Company now expects Phase II to be completed by December 31, 2020. The Company is in the process of determining the estimated impact of Phase II on the financial statements.

During the quarter ended March 31, 2020, the Company made the decision to close certain of the Aveda terminals and wind down those operations. The Company recorded $0.4 million of restructuring and exit costs in connection with the closure of these terminals in the three months ended March 31, 2020.

The Company recorded $0.1 million of integration and restructuring expenses in connection with Phase I, and Project Pivot in the three months ended March 31, 2020, completing Phase I of Project Synchronize.

The following table summarizes the integration and restructuring costs for Phase I of Project Synchronize and Project Pivot as of March 31, 2020 (in millions):


	Severance
	and
	Other Payroll		Other		Total
Balance, December 31, 2019	$	1.8	$	—	$	1.8
Specialized Solution
Costs accrued		—		0.1		0.1
Amounts paid or charged		—		(0.1)		(0.1)
Specialized Solution balance at March 31, 2020		—		—		—
Flatbed Solution
Costs accrued		—		—		—
Amounts paid or charged		—		—		—
Flatbed Solution balance at March 31, 2020		—		—		—
Corporate
Costs accrued		—		—		—
Amounts paid or charged		(1.1)		—		(1.1)
Corporate balance at March 31, 2020		(1.1)		—		(1.1)
Consolidated
Costs accrued		—		0.1		0.1
Amounts paid or charged		(1.1)		(0.1)		(1.2)
Consolidated balance at March 31, 2020	$	0.7	$	—	$	0.7

The following table summarizes the restructuring and exit costs for the Aveda closed terminals as of March 31, 2020 (in millions):


	Severance
	and
	Other Payroll		Other		Total
Specialized Solution
Costs accrued	$	0.4	$	—	$	0.4
Amounts paid or charged		(0.3)		—		(0.3)
Specialized Solution balance at March 31, 2020	$	0.1	$	—	$	0.1