Cost reduction actions

9 Months Ended

Sep. 30, 2015

b. Cost reduction actions. In April 2015, in connection with organizational initiatives to create a more competitive cost structure and rebalance the company’s global skill set, the company announced a plan to recognize a pretax restructuring charge estimated at approximately $300 million over the next several quarters.

During the three months ended September 30, 2015, the company recognized pretax charges of $17.4 million in connection with this plan. The charges related to work-force reductions were $9.8 million, principally related to severance costs, and were comprised of: (a) a charge of $2.7 million for 176 employees in the U.S. and (b) a charge of $7.1 million for 114 employees outside the U.S. In addition, the company recorded pretax charges of $7.6 million for other expenses related to the cost reduction effort.

The pretax charges were recorded in the following statement of income classifications: cost of revenue – services, $7.9 million; cost of revenue – technology, $.1 million; selling, general and administrative expenses, $8.6 million; and research and development expenses, $.8 million.

During the nine months ended September 30, 2015, the company recognized pretax charges of $70.0 million in connection with this plan, principally related to a reduction in employees. The charges related to work-force reductions were $52.3 million, principally related to severance costs, and were comprised of: (a) a charge of $28.1 million for 706 employees in the U.S. and (b) a charge of $24.2 million for 527 employees outside the U.S. In addition, the company recorded pretax charges of $17.7 million, related to asset impairments and other expenses related to the cost reduction effort.

The pretax charges were recorded in the following statement of income classifications: cost of revenue – services, $21.2 million; cost of revenue – technology, $.2 million; selling, general and administrative expenses, $36.1 million; and research and development expenses, $12.5 million.

A breakdown of the individual components of these costs for the nine months ended September 30, 2015 follows (in millions of dollars):


							Work-Force Reductions
	Headcount			Total			U.S.			Int’l.
Charges for work-force reductions		1,233		$	52.3		$	28.1		$	24.2
Utilized		(1,068	)		(28.3	)		(14.2	)		(14.1	)
Translation adjustments		—			(.9	)		—			(.9	)

Balance at Sept. 30, 2015		165		$	23.1		$	13.9		$	9.2

Expected future utilization:
2015 remaining three months		151		$	18.4		$	10.9		$	7.5
Beyond 2015		14			4.7			3.0			1.7