Expenses

12 Months Ended

Dec. 31, 2018

Occupancy Expense and Information Systems and Communications Expense

Occupancy expense and information systems and communications expense include depreciation of buildings, leasehold improvements, computer hardware and software, equipment, and furniture and fixtures. Total depreciation expense in 2018, 2017 and 2016 was $599 million, $526 million and $472 million, respectively.

We lease 810,000 square feet at One Lincoln Street, our headquarters building located in Boston, Massachusetts, and a related underground parking garage, under 20-year, non-cancelable capital leases expiring in September 2023. A portion of the lease payments is offset by subleases for approximately 219,000 square feet of the building. As of December 31, 2018 and 2017, an aggregate net book value of $102 million and $159 million, respectively, related to the above-described capital leases was recorded in premises and equipment, with the related liability recorded in long-term debt, in our consolidated statement of condition.

Capital lease asset amortization is recorded in occupancy expense on a straight-line basis in our consolidated statement of income over the respective lease term. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. In 2018, 2017 and 2016, interest expense related to these capital lease obligations, reflected in NII, was $17 million, $20 million and $22 million, respectively. As of December 31, 2018 and 2017, accumulated amortization of capital lease assets was $352 million and $401 million, respectively.

We have entered into non-cancelable operating leases for premises and equipment. Nearly all of these leases include renewal options. Costs related to operating leases for office space are recorded in occupancy expense. Costs related to operating leases for equipment are recorded in information systems and communications expense. Both are recorded on a straight-line basis.

Total rental expense net of sublease revenue in 2018, 2017 and 2016 amounted to $185 million, $229 million and $194 million, respectively. Total rental expense was reduced by sublease revenue of $5 million in both 2018 and 2017, and $4 million in 2016.

The following table presents a summary of future minimum lease payments under non-cancelable capital and operating leases as of December 31, 2018. Aggregate future minimum rental commitments have been reduced by aggregate sublease rental commitments of $46 million for capital leases and $16 million for operating leases.



(In millions)	Capital Leases			Operating Leases		Total
2019	$	34		$	192	$	226
2020	31			181		212
2021	31			170		201
2022	31			147		178
2023	24			128		152
Thereafter	—			380		380
Total minimum lease payments	151			$	1,198	$	1,349
Less amount representing interest payments	(31		)
Present value of minimum lease payments	$	120

Expenses

The following table presents the components of other expenses for the periods indicated:



	Years Ended December 31,
(In millions)	2018		2017			2016
Professional services	$	357	$	340		$	379
Sales advertising public relations	115		67			52
Insurance	97		118			93
Regulatory fees and assessments	87		106			82
Bank operations	70		80			62
Litigation	7		(15		)	50
Other	443		233			245
Total other expenses	$	1,176	$	929		$	963

Acquisition Costs

We recorded $31 million of acquisition costs in 2018 related to our acquisition of Charles River Development on October 1, 2018. In 2017, we recorded approximately $21 million of acquisition costs primarily related to our acquisition of the GEAM business on July 1, 2016. As we integrate Charles River Development into our business, we expect to incur approximately $200 million, including the $31 million in 2018, of acquisition costs, including merger and integration costs, through 2021. For further information on our acquisition of Charles River Development, refer to Note 1.

Restructuring and Repositioning Charges

Repositioning Charges

In 2018, we initiated a new expense program to accelerate efforts to become a higher-performing organization and help navigate challenging market and industry conditions. As part of that program, expenses for 2018 included a repositioning charge of $300 million, including $259 million of compensation and employee benefits and $41 million of occupancy costs.

Beacon

In 2018, we released $7 million of restructuring accruals related to Beacon. In 2017, we recorded restructuring charges of $245 million primarily related to Beacon.

The following table presents aggregate activity for the periods indicated:



(In millions)	Employee Related Costs			Real Estate Actions			Asset and Other Write-offs			Total
Accrual Balance at December 31, 2015	$	9		$	11		$	3		$	23
Accruals for Business Operations and Information Technology	(2		)	—			—			(2		)
Accruals for Beacon	94			18			30			142
Payments and other adjustments	(64		)	(12		)	(31		)	(107		)
Accrual Balance at December 31, 2016	$	37		$	17		$	2		$	56
Accruals for Beacon	186			32			27			245
Payments and Other Adjustments	(57		)	(17		)	(26		)	(100		)
Accrual Balance at December 31, 2017	$	166		$	32		$	3		$	201
Accruals for Beacon	(7		)	—			—			(7		)
Accruals for Repositioning Charges	259			41			—			300
Payments and Other Adjustments	(115		)	(36		)	(2		)	(153		)
Accrual Balance at December 31, 2018	$	303		$	37		$	1		$	341