Quarterly report pursuant to Section 13 or 15(d)

Restructuring Event

v3.10.0.1
Restructuring Event
9 Months Ended
Sep. 30, 2018
Restructuring and Related Activities [Abstract]  
Restructuring Event

During April 2017, the Company implemented a strategic realignment that included reductions in headcount and the closing or downsizing of market branches and certain corporate offices. The Company has incurred cumulative restructuring costs of $9.0 million related to this event.

 

In May 2018, the Company implemented a strategic integration plan resulting from the Birch Merger and MegaPath Merger. This restructuring plan includes a workforce reduction to rebalance the Company’s resources, closing or consolidation of certain offices and reductions in other operating expenses. The Company has incurred cumulative restructuring costs of $3.7 million related to this event.

 

For the three months ended September 30, 2018 and 2017, the Company incurred restructuring costs in selling and general administrative expense of $1.5 million and $2.3 million, respectively. For the nine months ended September 30, 2018 and 2017, the Company incurred restructuring costs in selling and general administrative expense of $5.2 million and $5.5 million, respectively. The restructuring costs primarily relate to employee severances and benefits, facility exit costs, and revisions to certain sublease assumptions underlying existing accruals. The total additional expense expected to be incurred from the 2018 restructuring event for additional employee severances, benefits and bonuses and facility exit costs is approximately $5.0 million over the next twelve months.

 

The following table summarizes changes to the accrued liability associated with the restructuring for the nine months ended September 30, 2018 and 2017 (in thousands):

 

    Employee Costs(1)     Facility Exit Costs(2)     Other Costs     Total  
Balance, January 1, 2018   $ 107     $ 3,131     $ 24     $ 3,262  
Expenses     4,081       772       316       5,169  
Payments     (3,655 )     (2,169 )     (340 )     (6,164 )
Balance, September 30, 2018   $ 533     $ 1,734     $ -     $ 2,267  
                                 
Balance, January 1, 2017   $ -     $ -     $ -     $ -  
Expenses     1,047       4,499       -       5,546  
Payments     (370 )     (1,012 )     -       (1,382 )
Balance, September 30, 2017   $ 677     $ 3,487     $ -     $ 4,164  

__________

(1) As of September 30, 2018, the remaining employee-related liability approximates fair value due to the short discount period.

 

(2) These charges represent the present value of expected lease payments and direct costs to obtain a sublease, reduced by estimated sublease rental income. The timing and amount of estimated cash flows will continue to be evaluated each reporting period.