Thank you for the opportunity to share some additional information about our decision to discontinue retiree life insurance coverage. This was not a decision we entered into lightly as we know it was valued by a number of retirees.
As you're already aware, this was a benefit promised to these individuals through their former employer, Arcata Graphics. Through a series of acquisitions, Arcata Graphics came to be owned by Worldcolor. In July 2010, Quad/Graphics acquired Worldcolor.
It's important to understand that when Quad/Graphics acquired Worldcolor, Worldcolor had recently emerged from bankruptcy and was facing a series of serious financial challenges, including nearly $547 million in underfunded pension liabilities. It was necessary for us to set priorities for addressing Worldcolor's financial challenges, and we felt strongly that no retiree's pension payments should be at risk. To that end, we decided to focus on funding Worldcolor's underfunded pensions so that monies would continue to flow to retirees. This decision directly impacted the Arcata Graphics retirees such as those with whom you spoke; they are participants in these underfunded pensions.
Whenever you bring together two large organizations, change is inevitable. As we've integrated the two companies' operations, at a time when we're experiencing a lackluster economy and myriad industry challenges, we have had to make hard choices. Both current employees as well as retirees have been impacted. We know people may struggle to understand the necessity of these changes. We are attempting to do the greatest good for the greatest number of people, and the decisions aren't always easy. In light of the large and complex integration we have been undergoing for the past two years, maintaining retiree life insurance coverage became cost prohibitive, as was paying out the face value of these policies.
Thank you for this opportunity to explain how we came to this difficult but necessary decision. Again, providing retirement income security is a priority for us. We have heard from a number of retirees who appreciate our focus on funding the underfunded pensions on which they depend for daily living expenses.
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