Restructuring and integration expense

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring and integration expense consists of costs related to the consolidation and migration of certain applications and processes, including our financial, sales and human resources management systems. It also includes costs related to the integration of acquired businesses into our systems and processes. These costs consist primarily of information technology consulting, project management services and internal labor, as well as other miscellaneous costs associated with our initiatives, such as training, travel and relocation. In addition, we recorded employee severance costs related to these initiatives, as well as our ongoing cost reduction initiatives, across functional areas. Our restructuring and integration activities have increased, as we are currently pursuing several initiatives designed to focus our business behind our growth strategies and to increase our efficiency. Restructuring and integration expense is not allocated to our reportable business segments.

Restructuring and integration expense is reflected on the consolidated statements of comprehensive (loss) income as follows:



	Quarter Ended March 31,
(in thousands)	2020		2019
Total cost of revenue	$	829	$	791
Operating expenses	17,654		5,492
Restructuring and integration expense	$	18,483	$	6,283

Restructuring and integration expense for each period was comprised of the following:



	Quarter Ended March 31,
(in thousands)	2020		2019
External consulting fees	$	10,901	$	2,146
Employee severance benefits	5,083		2,064
Internal labor	1,853		2,061
Other	646		12
Restructuring and integration expense	$	18,483	$	6,283

Our restructuring and integration accruals 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. These accruals are included in accrued liabilities on the consolidated balance sheets. The majority of the related employee reductions are expected to be completed in the second quarter of 2020, and we expect most of the related severance payments to be paid by the third quarter of 2020, utilizing cash from operations.

Changes in our restructuring and integration accruals were as follows:



(in thousands)	Employee severance benefits
Balance, December 31, 2019	$	3,459
Charges	5,318
Reversals	(235		)
Payments	(2,703		)
Balance, March 31, 2020	$	5,839

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.