2. RESTRUCTURING PLAN

On July 29, 2014, we announced a restructuring plan to strategically reallocate resources so that we can focus on our highest growth, highest margin opportunities in the software-driven consumer transaction technologies industry. The program is centered on ensuring that our people and processes are aligned with our continued transformation and includes: rationalizing our product portfolio to eliminate overlap and redundancy; taking steps to end-of-life older commodity product lines that are costly to maintain and provide low margins; moving lower productivity services positions to our new centers of excellence due to the positive impact of services innovation; and reducing layers of management and organizing around divisions to improve decision-making, accountability and strategic execution.

As a result of the restructuring plan, the Company recorded a total charge of $130 million in the three and nine months ended September 30, 2014. Of the total charge, the Company recorded $55 million for inventory related charges of which $9 million is included in Cost of products and $46 million is included in Cost of services; $65 million for severance and other employee related costs which is included in Restructuring-related charges; $8 million for asset related charges of which $5 million is included in Restructuring-related charges and $3 million is included in Other expense, net; and $2 million for other exit costs which is included in Restructuring-related charges. The Company expects to achieve annualized run-rate savings of approximately $90 million beginning in 2016. The Company expects that it may identify additional restructuring-related opportunities in connection with this restructuring plan, and may incur additional charges through 2015 related to such additional opportunities. Such additional charges are not reasonably estimable at this time as the Company is in the process of defining the nature and scope of these additional opportunities and quantifying the impact thereof.

Severance and other employee related costs Of the $65 million recorded, $61 million was recorded as a discrete cost in accordance with ASC 712, Employers’ Accounting for Postemployment Benefits, when the severance liability was determined to be probable and reasonably estimable. The remaining $4 million of employee related costs was recorded in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company made $7 million and $2 million in severance-related payments under ASC 712 and ASC 420, respectively, related to the restructuring plan in the three and nine months ended September 30, 2014.

Inventory related charges The Company recorded $55 million of inventory related charges for rationalizing its product portfolio to eliminate overlap and redundancy and end-of-lifeing older commodity product lines that are costly to maintain and provide low margins.

Asset related charges The Company recorded $8 million for asset related charges, which includes $5 million for the write-off of certain internal and external use capitalized software for projects where the Company has redirected resources to highest growth opportunities and abandoned certain projects. Additionally, the charge includes a $3 million other than temporary impairment for an investment that is no longer considered strategic. See Note 13, “Fair Value of Assets and Liabilities,” for additional information.

Other exit costs The Company recorded $2 million for lease and other contract termination costs.

The results by segment, as disclosed in Note 14, "Segment Information," exclude the impact of these costs, which is consistent with the manner by which management assesses the performance and evaluates the results of each segment. The following table summarizes the costs recorded in accordance with ASC 420, Exit or Disposal Cost Obligations, and ASC 712, Employers’ Accounting for Postemployment Benefits, and the remaining liabilities as of September 30, 2014, which are included in the consolidated balance sheet in other current liabilities.



In millions	2014
Employee Severance and Other Exist Costs
Beginning balance as of January 1	$—
Cost recognized during the period	67
Utilization	(9)
Ending balance as of September 30	$58