In 2019, the Company, under the direction of the Board of Directors, evaluated the cost structure and executed on certain cost saving initiatives at each segment. As a result, the Company incurred restructuring and other charges of $118.1 million. These charges included restructuring and other exit activities related to reductions in force, terminations of certain product lines, reduction or closure of certain leased office space, asset impairments, changes in management structure and fundamental reorganizations that affect the nature and focus of operations. Restructuring and other charges incurred at the Corporate segment of $37.9 million were recorded to general and administrative expense in the Company’s consolidated statements of income. Restructuring and other charges incurred in the LoyaltyOne and Card Services segments of $50.8 million and $29.4 million, respectively, were recorded to cost of operations in the Company’s consolidated statements of income. These charges are not expected to continue in 2020.

In the first quarter of 2019, BrandLoyalty incurred $7.9 million in restructuring charges associated with the wind-down of Merison, a retail marketing division included in the LoyaltyOne segment. The restructuring charges consisted of inventory impairment charges of $3.4 million, contract termination costs of $2.1 million, fixed asset impairment charges of $1.2 million and termination benefits of $1.2 million. In the third quarter of 2019, asset impairment charges of $33.5 million were recorded related to the discontinuance of certain product lines within inventory and the impairment of certain prepaid assets and fixed assets, and termination benefits of $8.1 million were incurred, primarily related to changes in management structure. LoyaltyOne also incurred lease termination costs of $0.2 million related to the closure of leased office space and contract termination costs of $0.2 million. In the fourth quarter of 2019, as a result of certain changes in estimates, LoyaltyOne incurred an additional $2.6 million of impairment charges and decreased its termination benefits accrual by $1.7 million.

Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4.4 billion in cash, subject to certain specified adjustments. Due to the pending sale of Epsilon, in the second quarter of 2019, the Company incurred restructuring charges at Corporate as a result of efforts to realign the organization, including termination benefits of $11.3 million and asset impairment charges of $11.1 million related to assets primarily utilized to support the Epsilon segment. Subsequent to the sale of Epsilon, the Company further sought to eliminate redundancies and executed a second reduction in force with further management changes and incurred $3.3 million and $4.0 million in termination benefits in the third and fourth quarters of 2019, respectively. Additionally, the Company incurred lease termination costs of $7.0 million related to the reduction of its leased office space, as well as other exit costs of $1.2 million.

In the fourth quarter of 2019, the Company executed a significant reduction in force in its Card Services segment and incurred $27.3 million in termination benefits. For the year ended December 31, 2019, Card Services also incurred lease termination costs of $1.9 million related to the reduction of its leased office space as well as the related impairment of certain assets of $0.2 million.

Restructuring and other charges incurred by reportable segment for all restructuring activities for the year ended December 31, 2019 are as follows:

The Company’s liability for restructuring and other charges is recognized in accrued expenses and other liabilities in its consolidated balance sheets. The following table summarizes the activities related to the restructuring and other charges, as discussed above, for the year ended December 31, 2019:

(1)

Adjustments for non-cash charges primarily relate to asset impairments. For the year ended December 31, 2019, lease termination costs were netted against a $0.7 million gain upon derecognition of right-of-use assets and related liabilities.

The Company’s outstanding liability related to restructuring and other charges is expected to be settled by the end of 2021, with the majority settled in 2020.