Restructuring

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

During 2019, we began implementing our previously announced 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:

•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 as we continue to focus on these goals and execute against our plan in 2020.

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


	Severance and employee-related costs		Facilities and related costs		Other costs		Total
Balance at December 31, 2019	$	32	$	—	$	3	$	35
Costs charged to expense	23		—		—		23
Cash payments	(6)		—		(2)		(8)

Balance at March 31, 2020	$	49	$	—	$	1	$	50
Costs charged to expense	3		—		1		4
Cash payments	(3)		—		(2)		(5)

Balance at June 30, 2020	$	49	$	—	$	—	$	49

Cumulative charges incurred through June 30, 2020	$	102	$	29	$	33	$	164

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Activision	$	2	$	2	$	4	$	11
Blizzard	2		13		23		39
King	(1)		6		(2)		13
Other segments (1)	1		1		2		16
Total	$	4	$	22	$	27	$	79

(1) Includes charges related to operating segments managed outside the reportable segments, including our Distribution business. Also includes restructuring charges for our corporate and administrative functions.

During the three months ended June 30, 2020 we incurred additional restructuring charges that are not included in the restructuring plan discussed above. Such amounts were not material.

We expect to incur aggregate pre-tax restructuring charges of approximately $190 million associated with the restructuring plan, of which $50 million are expected to be incurred in 2020 as we complete the execution of the plan. The charges associated with the restructuring plan will primarily relate to severance and employee-related costs (approximately 60% of the aggregate charge), including, in many cases, amounts above those that are legally required, facilities and related costs (approximately 20% of the aggregate charge), and other costs (approximately 20% of the aggregate charge), including charges for restructuring related fees and the write-down of assets. A majority of the total pre-tax charge associated with the restructuring will be paid in cash using amounts on hand and such cash outlays are largely expected to have been completed by the end of 2020, with a smaller portion continuing into 2021.

The total charges incurred through June 30, 2020 and 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 Charges Incurred Through June 30, 2020		Total Expected Charges
Activision	$	23	$	25
Blizzard	96		105
King	18		20
Other segments (1)	27		40
Total	$	164	$	190