Restructuring and Restructuring-Related Activities

9 Months Ended

Sep. 30, 2022

Restructuring and Restructuring-Related Activities

(18) Restructuring and Restructuring-Related Activities

On May 3, 2022, the Board of Directors of the Company approved a program (the “2022 Strategic Realignment”) to strategically realign the Company’s resources in order to accelerate and grow the Company’s investments in the Company’s largest growth opportunities while streamlining the Company’s operations. The 2022 Strategic Realignment program includes a targeted realignment and reduction of headcount, facilities and other third-party spend. On November 2, 2022, the Board of Directors of the Company approved an amendment to the 2022 Strategic Realignment program to include additional targeted realignment and reduction of headcount and other third-party spend (see Note 19).

The 2022 Strategic Realignment program is in support of the 2022 strategic initiatives to simplify the Company’s business and accelerate the integration of recent acquisitions, and will help to drive the financial outcomes of sustainable growth and improved profitability and cash flow and is expected to be substantially completed by the end of fiscal 2023.

In addition to restructuring costs, the Company will also incur costs that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as business transformation costs. These costs consist primarily of expenditures directly related to the 2022 Strategic Realignment and include employee retention costs, professional fees and investments in automation and technology. The following table provides a summary of the Company's estimates of total pre-tax charges associated with the 2022 Strategic Realignment, by major type of cost, of which approximately $30 million to $33 million are expected to result in cash outlays (in millions):


	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Workforce	$	9	to	$	9
Facilities-related		5	to		6
Other		—	to		—
Business transformation charges		17	to		19
Total restructuring and business transformation charges	$	31	to	$	34

The following table sets provides a summary of restructuring activities (in thousands):


	Workforce (1)			Facilities- related (2)			Other			Total
Balance at April 1, 2022	$	—		$	—		$	—		$	—
Charges		2,412			4,200			167			6,779
Charges settled in cash		(2,367	)		(3,308	)		(167	)		(5,842	)
Charges settled in non-cash		(3	)		(857	)		—			(860	)
Balance at September 30, 2022	$	42		$	35		$	—		$	77

(1)

Balance at September 30, 2022 is recorded in accrued expenses in the condensed consolidated balance sheet.

(2)

Balance at September 30, 2022 is recorded in accrued expenses in the condensed consolidated balance sheet. Charges settled in non-cash relate to the loss on disposal of assets partially offset by derecognizing the ROU asset and liability for lease terminations.

The following table presents restructuring and business transformation expenses by major type and line item within our accompanying condensed consolidated statement of operations (in thousands):


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Restructuring charges	$	37	$	6,779
Business transformation charges:
Cost of revenue		259		694
Sales and marketing		426		634
Research and development		396		609
General and administrative		106		2,102
Other income (expense), net		3		3
Total business transformation charges		1,190		4,042
Total restructuring and business transformation charges	$	1,227	$	10,821