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Restructuring and Other Charges | 9 Months Ended
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Sep. 30, 2020
Restructuring and Related Activities [Abstract] |
Restructuring and Other Charges | Restructuring and Other Charges In connection with the acquisition of First Data, the Company continues to implement certain integration plans focused on reducing the Company’s overall cost structure, including reducing vendor spend and eliminating duplicate costs. The Company recorded restructuring charges related to certain of these integration activities of $41 million and $181 million, primarily reported in cost of processing and services and selling, general and administrative expenses within the consolidated statements of income, based upon committed actions during the three and nine months ended September 30, 2020, respectively. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in connection with these activities but is unable to estimate those amounts at this time as such plans are not yet finalized. Employee Termination Costs The Company recorded $28 million and $105 million of employee termination costs related to severance and other separation costs for terminated employees in connection with the acquisition of First Data during the three and nine months ended September 30, 2020, respectively. The following table summarizes the changes in the reserve related to the Company’s employee severance and other separation costs during the nine months ended September 30, 2020:
(In millions) |
Balance at December 31, 2019 | $ | 14 |
Severance and other separation costs | 105 |
Non-cash adjustments | (6) |
Cash payments | (88) |
Balance at September 30, 2020 | $ | 25 |
The employee severance and other separation costs accrual balance of $25 million at September 30, 2020 is expected to be paid within the next twelve months. In addition, the Company recorded share-based compensation costs of $9 million and $32 million during the three and nine months ended September 30, 2020, respectively, related to the accelerated vesting of equity awards for terminated employees. The Company expects to incur additional employee termination costs as a result of finalizing and executing further integration activities in 2020. Facility Exit Costs The Company has identified certain leased facilities that have been or will be exited in the future as part of the Company’s efforts to reduce facility costs. During the first nine months of 2020, the Company permanently vacated certain of these leased facilities in advance of the non-cancellable lease terms. In conjunction with the exit of these leased facilities, the Company assessed the respective operating lease ROU assets for impairment by comparing the carrying values of the ROU assets to the discounted cash flows from estimated sublease payments (Level 3 of the fair value hierarchy). In addition, the Company assessed certain property and equipment associated with the leased facilities for impairment. As a result, the Company recorded non-cash impairment charges of $4 million and $44 million, reported in selling, general and administrative expense within the consolidated statements of income during the three and nine months ended September 30, 2020, respectively, associated with the early exit of these leased facilities. Other Costs During the first quarter of 2020, in connection with initiatives to reduce the Company’s overall cost structure following the acquisition of First Data, the Company terminated certain of its existing lease agreements to upgrade and consolidate its computing infrastructure. The Company upgraded or replaced certain leased hardware under separate, new lease agreements, resulting in the early termination and disposal of existing hardware under the current lease agreements. As such, the Company has adjusted the amortization period for these existing lease agreements to coincide with the modified remaining term. Finance lease expense during the three and nine months ended September 30, 2020 includes $17 million and $62 million, respectively, of accelerated amortization associated with the termination of these vendor contracts. In addition, the Company executed similar terminations to certain of its existing software financing agreements. Amortization expense during the three and nine months ended September 30, 2020 includes $18 million and $53 million, respectively, of accelerated amortization associated with the termination of these vendor contracts.

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- Definition The entire disclosure of costs incurred for restructuring including, but not limited to, exit and disposal activities, remediation, implementation, integration, asset impairment, and charges against earnings from the write-down of assets. + References No definition available. + Details
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