RESTRUCTURING

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

On July 29, 2020, the chief executive officer of Moody’s approved a restructuring program (the “2020 Restructuring Program”) primarily in response to the COVID-19 pandemic which revolves around the rationalization and exit of certain real estate leases. The exit from certain leased office space began in the third quarter of 2020 and is anticipated to be substantially completed during the first half of 2021. The 2020 Restructuring Program is estimated to result in total pre-tax charges of $25 to $35 million, which primarily reflect non-cash charges related to the impairment of operating lease right-of-use assets and leasehold improvements. Approximately $25 to $30 million of this amount is expected to be recorded in the second half of 2020. The 2020 Restructuring Program is expected to result in an estimated annualized savings of approximately $5 to $6 million a year.

On October 26, 2018, the chief executive officer of Moody’s approved a restructuring program (the “2018 Restructuring Program”) that the Company estimates will result in annualized savings of approximately $60 million per year. The 2018 Restructuring Program, the scope of which was expanded in the second quarter of 2019, is estimated to result in total pre-tax charges of $105 to $110 million. The 2018 Restructuring Program included relocation of certain functions from high-cost to lower-cost jurisdictions, a reduction of staff, including from acquisitions and pursuant to a review of the business criticality of certain positions, and the rationalization and exit of certain real estate leases due to consolidation of various business activities. The exit from certain leased office space began in the fourth quarter of 2018 and resulted in approximately $50 million of the charges to either terminate or sublease the affected real estate leases. The 2018 Restructuring Program also included approximately $60 million of personnel-related restructuring charges, an amount that includes severance and related costs primarily determined under the Company’s existing severance plans. Cash outlays associated with the employee termination cost component of the 2018 Restructuring Program are anticipated to be approximately $60 million, which will be paid through 2021. The remaining restructuring liability relating to the 2018 Restructuring Program was not material as of September 30, 2020.

Total expenses included in the accompanying consolidated statements of operations relating to the 2018 Restructuring Program and 2020 Restructuring Program are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
2018 Restructuring Program	$	—	$	(1)	$	(3)	$	58
2020 Restructuring Program (1)	23		—		23		—
Total Restructuring	$	23	$	(1)	$	20	$	58

(1) Consists of a non-cash charge relating to the impairment of leasehold improvements and ROU Assets. The fair value of the impaired ROU Assets was determined by utilizing the present value of the estimated future cash flows attributable to the assets. The fair value of these ROU assets immediately subsequent to the impairment was $10 million, and is categorized as Level 3 within the ASC Topic 820 fair value hierarchy.