RESTRUCTURING AND INTEGRATION EXPENSE

12 Months Ended

Dec. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring and integration expense consists of costs related to initiatives to drive earnings and cash flow growth and also includes costs related to the consolidation and migration of certain applications and processes, including our financial and sales management systems. These costs consist primarily of consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as costs related to facility closures and consolidations. In addition, we have incurred employee severance costs across functional areas. Restructuring and integration expense is not allocated to our reportable business segments.

We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of these initiatives is to further drive shareholder value by (1) expanding our earnings before interest, taxes, depreciation and amortization ("EBITDA") growth trajectory, (2) increasing cash flow, (3) paying down debt, and (4) improving our leverage ratio. Our various initiatives include a balanced mix of structural cost reductions focused on organizational structure, processes and operational improvements, in addition to workstreams to drive revenue growth. We have already combined like-for-like capabilities, reduced management layers and consolidated core operations to run more efficiently and to create the ability to invest in high impact talent to accelerate our growth businesses of payments and data. The associated expense, which consisted primarily of consulting and severance costs, was approximately $45,000 during 2023, and we anticipate that we will incur.an additional $70,000 to $90,000 of North Star restructuring and integration expense over the next 2 years.

Restructuring and integration expense is reflected on the consolidated statements of income as follows for the years ended December 31:


(in thousands)	2023		2022		2021
Total cost of revenue	$	12,230	$	607	$	4,197
Operating expenses	78,245		62,529		54,750
Restructuring and integration expense	$	90,475	$	63,136	$	58,947

Restructuring and integration expense was comprised of the following for the years ended December 31:


(in thousands)	2023		2022		2021
External consulting and other costs	$	52,290	$	32,067	$	26,676
Employee severance benefits	18,103		12,829		9,076
Internal labor	8,723		7,989		7,948
Other	11,359		10,251		15,247
Restructuring and integration expense	$	90,475	$	63,136	$	58,947

Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets and represent expected cash payments required to satisfy the remaining severance obligations to those employees already terminated and those expected to be terminated under our various initiatives. The majority of the employee reductions, as well as the related severance payments, are expected to be completed by mid-2024.

Changes in our restructuring and integration accruals were as follows:


(in thousands)	Employee severance benefits
Balance, December 31, 2020	$	6,798
Charges	10,897
Reversals	(1,821)
Payments	(10,202)
Balance, December 31, 2021	5,672
Charges	13,782
Reversals	(953)
Payments	(9,973)
Balance, December 31, 2022	8,528
Charges	18,653
Reversals	(550)
Payments	(16,942)
Balance, December 31, 2023	$	9,689

The charges and reversals presented in the rollforward of our restructuring and integration accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued liabilities on the consolidated balance sheets.