Restructuring Costs

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring Costs

Note 6 — Restructuring Costs

In the fourth quarter of 2021, the Company initiated a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. During the third quarter of 2022, we revised the expected costs and savings under the program and we now expect the program to generate annual cost savings in excess of $360 million by the end of 2024. The program is expected to incur cumulative costs of approximately $630 million and capital expenditures of approximately $270 million, for a total investment of $900 million. The main categories of charges will be in the following four areas:

•Real estate rationalization — includes costs to align the real estate footprint to the new ways of working (hybrid work) and includes breakage fees and the impairment of right-of-use assets and other related leasehold assets.

•Technology modernization — these charges are incurred in moving to common platforms and technologies, including migrating certain platforms and applications to the cloud. This category will include the impairment of technology assets that are duplicative or no longer revenue-producing, as well as costs for technology investments that do not qualify for capitalization.

•Process optimization — these costs will be incurred in the right-shoring strategy and automation of our operations, which will include optimizing resource deployment and appropriate colleague alignment. These costs will include process and organizational design costs, severance and separation-related costs and temporary retention costs.

•Other — other costs not included above including fees for professional services, other contract terminations not related to the above categories and supplier migration costs.

Certain costs under the Transformation program are accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. Other costs incurred under the Transformation program are included in transaction and transformation, net and were $42 million and $73 million for the three and nine months ended September 30, 2022, respectively. An analysis of total restructuring costs incurred under the Transformation program by category and by segment and corporate functions, from commencement to September 30, 2022, is as follows:

	HWC		R&B		Corporate		Total
2021
Real estate rationalization	$	—	$	—	$	19	$	19
Technology modernization		—		5		—		5
Process optimization		—		—		—		—
Other		—		—		2		2
2022
Real estate rationalization		—		—		53		53
Technology modernization		—		1		16		17
Process optimization		1		—		—		1
Other		—		—		—		—
Total
Real estate rationalization		—		—		72		72
Technology modernization		—		6		16		22
Process optimization		1		—		—		1
Other		—		—		2		2
Total	$	1	$	6	$	90	$	97

A rollforward of the liability associated with cash-based charges related to restructuring costs associated with the Transformation program is as follows:

	Real estate rationalization			Technology modernization		Process optimization			Other			Total
Balance at October 1, 2021	$	—		$	—	$	—		$	—		$	—
Charges incurred		—			—		—			2			2
Cash payments		—			—		—			(1	)		(1	)
Balance at December 31, 2021		—			—		—			1			1
Charges incurred		15			—		1			—			16
Cash payments		(12	)		—		(1	)		(1	)		(14	)
Balance at September 30, 2022	$	3		$	—	$	—		$	—		$	3