Restructuring

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

During 2019, we implemented a restructuring plan aimed at refocusing our resources on our largest opportunities and removing unnecessary levels of complexity from certain parts of our business. We have been, and will continue:


•	increasing our investment in development for our largest, internally-owned franchises—across upfront releases, in-game content, mobile, and geographic expansion;


•	reducing certain non-development and administrative-related costs across our business; and


•	integrating our global and regional sales and “go-to-market,” partnerships, and sponsorships capabilities across the business, which we believe will enable us to provide better opportunities for talent, and greater expertise and scale on behalf of our business units.

The restructuring actions remain in progress and will continue into 2020 as we execute against our plan. During implementation, we expanded the scope of certain actions within our plan aimed at integrating our global and regional sales and “go-to-market” functions, along with certain of our administrative-related functions.

The following table summarizes accrued restructuring and related costs included in “Accrued expenses and other liabilities” in our consolidated balance sheet (amounts in millions):



	Severance and employee related costs			Facilities and related costs			Other costs			Total
Balance at December 31, 2018	$	—		$	—		$	—		$	—
Costs charged to expense	76			29			27			132
Cash payments	(44		)	—			(12		)	(56		)
Non-cash charge adjustment (1)	—			(29		)	(12		)	(41		)
Balance at December 31, 2019	$	32		$	—		$	3		$	35


(1)	Adjustments relate to non-cash charges included in “Costs charged to expense” for the write-down of assets from canceled projects and the write-down of assets for our lease facilities, inclusive of lease right-of-use assets and associated fixed assets, that were vacated.

Total restructuring and related costs by segment are (amounts in millions):



	Year Ended December 31, 2019
Activision	$	19
Blizzard	68
King	20
Other segments (1)	25
Total	$	132


(1)	Includes charges for operating segments managed outside the reportable segments and our corporate and administrative functions.

During the year ended December 31, 2019, we also recorded $5 million to write-down inventory as a result of changes to certain of our consumer product activities as part of our restructuring actions, whereby those activities will now operate under a licensing business model rather than being direct sales. This write-down is recorded within “Cost of revenues—product sales: Product costs” in our consolidated statement of operations.

We expect to incur aggregate pre-tax restructuring charges of approximately $190 million associated with the restructuring plan, which includes the inventory write-down discussed above. Approximately $50 million of these charges are expected to be incurred in 2020 as we complete the execution of the restructuring plan, as discussed above. These charges will primarily relate to severance (approximately 60% of the aggregate charge), including, in many cases, amounts above those that are legally required, facilities costs (approximately 20% of the aggregate charge), and other asset write-downs and costs (approximately 20% of the aggregate charge). A majority of the total pre-tax charge associated with the restructuring will be paid in cash using amounts on hand and the outlays are expected to continue into 2020.

The total expected pre-tax restructuring charges related to the restructuring plan by segment, inclusive of amounts already incurred, are presented below (amounts in millions):



	Total Expected Charges
Activision	$	25
Blizzard	105
King	20
Other segments (1)	40
Total	$	190

(1)

Includes charges for operating segments managed outside the reportable segments and our corporate and administrative functions.