Network Optimization

6 Months Ended

Jun. 30, 2013

In the second quarter of 2013, our YRC Freight reporting segment commenced its plan to optimize its freight network. This optimization reduced the number of handling and relay locations in an effort to improve customer service, increase linehaul density and load average, reduce linehaul miles and improve our ability to direct load with less handling. Costs associated with this plan, which consist of employee separation costs and contract termination and other costs, are recorded at either their contractual amounts or their fair value. We estimate that these costs will total between $8.0 million and $12.0 million, of which we have recorded $7.8 million during the three months ended June 30, 2013 in the YRC Freight reporting segment. The projected timing and range of remaining costs is an estimate and may vary depending upon the actual exit transactions.

Charges for the network optimization are included in "Salaries, wages and employees' benefits" as it relates to employee separation costs and "Operating expenses and supplies" as is relates to contract termination and other costs in the accompanying statements of consolidated comprehensive loss. In addition to the charges detailed below, we have recorded impairment charges on facilities that are part of the network optimization totaling $1.5 million during the three months ended June 30, 2013. These charges are included in "(Gains) losses on property disposals, net" in the accompanying statements of consolidated comprehensive loss. A rollforward of the accrual is as follows:



(in millions)	Employee Separation			Contract Termination and Other Costs			Total
Balance at December 31, 2012	$	—		$	0.5		$	0.5
Network optimization charges	1.3			5.0			6.3
Payments	(0.4		)	(3.9		)	(4.3		)
Balance at June 30, 2013	$	0.9		$	1.6		$	2.5

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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