Note 8: Restructuring charges

Net restructuring charges for the years ended December 31 consisted of the following components:

	2011			2010			2009
Severance accruals	$	8,826		$	9,331		$	10,625
Severance reversals		(1,737	)		(2,398	)		(3,523	)
Operating lease obligations		52			933			1,177
Operating lease obligation reversals		(6	)		(380	)		(32	)
Net restructuring accruals		7,135			7,486			8,247
Other costs		6,586			2,841			3,739
Net restructuring charges	$	13,721		$	10,327		$	11,986

The net restructuring charges are reflected in the consolidated statements of income for the years ended December 31 as follows:

	2011		2010		2009
Cost of goods sold	$	1,978	$	2,356	$	4,558
Operating expenses		11,743		7,971		7,428
Net restructuring charges	$	13,721	$	10,327	$	11,986

2011 restructuring charges – During 2011, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continue to reduce costs. The restructuring accruals included severance benefits for approximately 400 employees. These charges were reduced by the reversal of restructuring accruals, the majority of which were recorded in prior years, as fewer employees received severance benefits than originally estimated. The majority of the employee reductions are expected to be completed by the end of 2012, and we expect most of the related severance payments to be paid by mid-2013, utilizing cash from operations. The remaining payments due under operating lease obligations will be paid through May 2013. Other restructuring costs, which were expensed as incurred, included items such as employee and equipment moves, training and travel related to our restructuring activities.

2010 restructuring charges – During 2010, the net restructuring accruals included severance charges related to employee reductions in various functional areas, primarily fulfillment, sales and marketing, as we continue our cost reduction initiatives, as well as actions related to our integration of Custom Direct (see Note 4). Net restructuring accruals also included operating lease obligations on facilities vacated during 2010. The restructuring accruals included severance benefits for approximately 470 employees. These charges were reduced by the reversal of restructuring accruals, primarily those recorded in prior years, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as employee and equipment moves, training and travel related to our restructuring activities.

2009 restructuring charges – During 2009, the net restructuring accruals included severance charges related to employee reductions in various functional areas as we continued our cost reduction initiatives, including the closing of a Small Business Services customer call center located in Colorado Springs, Colorado in the first quarter of 2010, and further consolidation in the sales, marketing and fulfillment organizations. Net restructuring accruals also included operating lease obligations on manufacturing facilities closed during 2009. The restructuring accruals included severance benefits for approximately 640 employees. These charges were reduced by the reversal of previously recorded restructuring accruals as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as equipment moves, training and travel related to our restructuring activities.

Restructuring accruals of $6,032 as of December 31, 2011 are reflected in the consolidated balance sheet as accrued liabilities of $5,946 and other non-current liabilities of $86. Restructuring accruals of $6,798 as of December 31, 2010 are reflected in the consolidated balance sheet as accrued liabilities of $6,435 and other non-current liabilities of $363. As of December 31, 2011, approximately 260 employees had not yet started to receive severance benefits.

By company initiative, our restructuring accruals were as follows:

	NEBS acquisition related and 2006 initiatives			2007 initiatives			2008 initiatives			2009 initiatives			2010 initiatives			2011 initiatives			Total
Balance, December 31, 2008	$	214		$	335		$	19,830		$	-		$	-		$	-		$	20,379
Restructuring charges		-			-			886			10,916			-			-			11,802
Restructuring reversals		(19	)		(34	)		(3,354	)		(148	)		-			-			(3,555	)
Payments		(195	)		(237	)		(15,187	)		(1,515	)		-			-			(17,134	)
Balance, December 31, 2009		-			64			2,175			9,253			-			-			11,492
Restructuring charges		-			-			525			99			9,640			-			10,264
Restructuring reversals		-			(64	)		(985	)		(1,465	)		(264	)		-			(2,778	)
Payments		-			-			(1,598	)		(7,235	)		(3,347	)		-			(12,180	)
Balance, December 31, 2010		-			-			117			652			6,029			-			6,798
Restructuring charges		-			-			-			9			75			8,794			8,878
Restructuring reversals		-			-			(17	)		(57	)		(1,058	)		(611	)		(1,743	)
Payments		-			-			(100	)		(420	)		(4,265	)		(3,116	)		(7,901	)
Balance, December 31, 2011	$	-		$	-		$	-		$	184		$	781		$	5,067		$	6,032

Cumulative amounts:
Restructuring charges	$	41,107		$	7,181		$	27,545		$	11,024		$	9,715		$	8,794		$	105,366
Restructuring reversals		(2,530	)		(1,503	)		(5,887	)		(1,670	)		(1,322	)		(611	)		(13,523	)
Payments		(38,577	)		(5,678	)		(21,658	)		(9,170	)		(7,612	)		(3,116	)		(85,811	)
Balance, December 31, 2011	$	-		$	-		$	-		$	184		$	781		$	5,067		$	6,032

The components of our restructuring accruals, by segment, were as follows:

				Employee severance benefits									Operating lease obligations
	Small Business Services			Financial Services			Direct Checks			Corporate(1)			Small Business Services			Direct Checks			Total
Balance, December 31, 2008	$	3,974		$	3,617		$	151		$	12,409		$	228		$	-		$	20,379
Restructuring charges		5,310			1,063			134			4,118			1,177			-			11,802
Restructuring reversals		(672	)		(674	)		(7	)		(2,170	)		(32	)		-			(3,555	)
Inter-segment transfer		1,174			-			-			(1,174	)		-			-			-
Payments		(5,041	)		(2,953	)		(162	)		(8,402	)		(576	)		-			(17,134	)
Balance, December 31, 2009		4,745			1,053			116			4,781			797			-			11,492
Restructuring charges		1,807			2,134			2,344			3,046			424			509			10,264
Restructuring reversals		(875	)		(206	)		(116	)		(1,201	)		(380	)		-			(2,778	)
Payments		(4,429	)		(1,027	)		(2,092	)		(4,010	)		(605	)		(17	)		(12,180	)
Balance, December 31, 2010		1,248			1,954			252			2,616			236			492			6,798
Restructuring charges		1,897			2,640			823			3,466			52			-			8,878
Restructuring reversals		(767	)		(517	)		(76	)		(377	)		(6	)		-			(1,743	)
Inter-segment transfer		125			234			2			(361	)		-			-			-
Payments		(1,616	)		(2,914	)		(257	)		(2,697	)		(213	)		(204	)		(7,901	)
Balance, December 31, 2011	$	887		$	1,397		$	744		$	2,647		$	69		$	288		$	6,032

Cumulative amounts:
Restructuring charges	$	48,403		$	13,726		$	3,770		$	34,178		$	4,780		$	509		$	105,366
Restructuring reversals		(3,371	)		(2,438	)		(343	)		(6,401	)		(970	)		-			(13,523	)
Inter-segment transfer		2,310			1,351			95			(3,756	)		-			-			-
Payments		(46,455	)		(11,242	)		(2,778	)		(21,374	)		(3,741	)		(221	)		(85,811	)
Balance, December 31, 2011	$	887		$	1,397		$	744		$	2,647		$	69		$	288		$	6,032

(1) As discussed in Note 16: Business segment information, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology.