Restructuring

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

On February 12, 2019, the Company committed to a Board-authorized restructuring plan under which the Company plans to refocus its resources on its largest opportunities and to remove unnecessary levels of complexity and duplication from certain parts of the business. More specifically, we are:


•	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 are in process and are largely expected to be completed by the end of 2019, although the timing of cash payments may continue into 2020.

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



	Severance & employee related costs			Other costs			Total
Balance at December 31, 2018	$	—		$	—		$	—
Costs charged to expense	43			14			57
Cash payments	(11		)	(1		)	(12		)
Non-cash charge adjustment (1)	—			(11		)	(11		)
Balance at March 31, 2019	$	32		$	2		$	34


(1)	Adjustment relates to non-cash charges included in “Costs charged to expense” related to the write-downs of assets from canceled projects.

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



	Three Months Ended March 31, 2019
Activision	$	9
Blizzard	26
King	8
Other segments (1)	14
Total	$	57


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

We expect to incur aggregate pre-tax restructuring charges of approximately $150 million in 2019 associated with the restructuring plan. 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 15% of the aggregate charge), and asset write-downs and other costs (approximately 25% 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 be largely incurred throughout 2019.

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):



	Year Ending December 31, 2019
Activision	$	17
Blizzard	60
King	34
Other segments (1)	39
Total	$	150

(1)

Includes charges related to operating segments managed outside the reportable segments, including our studios and distribution businesses. Also includes restructuring charges for our corporate and administrative functions.