17. RESTRUCTURING PLAN

In the second quarter of 2018, we announced a hardware transformation initiative to streamline our manufacturing operations that will help us reduce our exposure to variable hardware demand as well as increase global utilization rates and optimize our supply chain network. As a part of this initiative, we plan to reduce the number of manufacturing plants and move the manufacturing operations at those plants to other existing NCR facilities and current third party suppliers.

As a result of the restructuring plan, the Company recorded a total charge of $24 million in the three and six months ended June 30, 2018. The Company expects that it may incur additional charges during 2018 related to this restructuring program. Such additional charges will be expensed as incurred. The restructuring program is scheduled to be completed by the end of 2019.

Severance and other employee related costs Of the $5 million recorded, $3 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 $2 million of employee related costs was recorded in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company made zero and $2 million in severance-related payments under ASC 712 and ASC 420, respectively, related to the restructuring plan in the three and six months ended June 30, 2018.

Inventory related charges The Company recorded $17 million of inventory related charges for rationalizing its product portfolio and writing down inventory to be sold to third party suppliers to the lower of cost or net realizable value.

Other exit costs The Company recorded $2 million for costs primarily related to moving inventory and fixed assets from the plant locations that will be closed, $1 million of which is included in selling, general and administrative expenses and $1 million, which is included in cost of products.

The results by segment, as disclosed in Note 15. Segment Information and Concentrations, 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 June 30, 2018, which are included in the Condensed Consolidated Balance Sheet in Other Current Liabilities.



In millions	June 30, 2018
Employee Severance and Other Exit Costs
Beginning balance as of January 1	$	—
Cost recognized during the period	7
Utilization	(4		)
Ending balance as of June 30	$	3