Reorganization of Businesses

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

The Company maintains a formal Involuntary Severance Plan (the “Severance Plan”), which permits the Company to offer eligible employees severance benefits based on years of service and employment grade level in the event that employment is involuntarily terminated as a result of a reduction-in-force or restructuring. The Company recognizes termination benefits based on formulas per the Severance Plan at the point in time that future settlement is probable and can be reasonably estimated based on estimates prepared at the time a restructuring plan is approved by management. Exit costs consist of contractual lease terminations costs. At each reporting date, the Company evaluates its accruals for employee separation and exit costs to ensure the accruals are still appropriate. In certain circumstances, accruals are no longer needed because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance, or were redeployed due to circumstances not foreseen when the original plans were approved. In these cases, the Company reverses accruals through the Consolidated Statements of Operations where the original charges were recorded when it is determined they are no longer needed.

During 2021, 2020, and 2019 the Company continued to implement various productivity improvement plans aimed at achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. During 2020, the Company accepted voluntary applications to its Severance Plan from a defined subset of employees within the United States. Voluntary applicants received termination benefits based on the formulas defined in the Severance Plan. However, termination benefits,

which are normally different based on employment level grade and capped at nine months of salary, were equalized for all employment level grades and capped at a full year’s salary for the voluntary applicants. The remainder of the initiatives impacted both of the Company’s segments and affected employees located in all geographic regions.

2021 Charges

During 2021, the Company recorded net reorganization of business charges of $32 million, including $8 million of charges in Costs of sales and $24 million of charges in Other charges in the Company’s Consolidated Statements of Operations. Included in the $32 million were charges of $42 million for employee separation costs, partially offset by $10 million of reversals of accruals no longer needed.

The following table displays the net charges incurred by segment:


Year ended December 31	2021
Products and Systems Integration	$	25
Software and Services	7
	$	32

Reorganization of Businesses Accruals


Accruals at January 1, 2021		Additional Charges		Adjustments		Amount Used		Accruals at December 31, 2021
$	79	$	42	$	(10)	$	(77)	$	34

Employee Separation Costs

At January 1, 2021, the Company had an accrual of $79 million for employee separation costs. The 2021 additional charges of $42 million include severance costs for approximately 600 employees, of which 400 were direct employees and 200 were indirect employees. The adjustments of $10 million reflect reversals of accruals no longer needed. The $77 million used in 2021 reflects cash payments to severed employees. The remaining accrual of $34 million, which is included in Accrued liabilities in the Company’s Consolidated Balance Sheet at December 31, 2021, is expected to be paid, primarily within one year to: (i) severed employees who have already begun to receive payments and (ii) approximately 100 employees to be separated in 2022.

2020 Charges

During 2020, the Company recorded net reorganization of business charges of $86 million, including $29 million of charges in Costs of sales and $57 million of charges under Other charges in the Company’s Consolidated Statements of Operations. Included in the aggregate $86 million were charges of $100 million for employee separation costs and $2 million for exit costs, partially offset by $16 million of reversals of accruals no longer needed.

The following table displays the net charges incurred by segment:


Year ended December 31	2020
Products and Systems Integration	$	69
Software and Services	17
	$	86

Reorganization of Businesses Accruals


Accruals at January 1, 2020		Additional Charges		Adjustments		Amount Used		Accruals at December 31, 2020
$	78	$	102	$	(16)	$	(85)	$	79

Employee Separation Costs

At January 1, 2020, the Company had an accrual of $78 million for employee separation costs. The additional 2020 charges of $102 million represent severance costs for approximately an additional 1,200 employees, of which 800 were direct employees and 400 were indirect employees. The adjustments of $16 million reflect reversals of accruals no longer needed. The $85 million used in 2020 reflects cash payments to severed employees. The remaining accrual of $79 million was included in Accrued liabilities in the Company’s Consolidated Balance Sheet at December 31, 2020.

2019 Charges

During 2019, the Company recorded net reorganization of business charges of $57 million, including $17 million of charges in Costs of sales and $40 million of charges in Other charges in the Company’s Consolidated Statements of Operations. Included in the aggregate $57 million are charges of $64 million for employee separation costs and $5 million of charges for exit costs, partially offset by $12 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:


Year ended December 31	2019
Products and Systems integration	$	45
Software and Services	12
	$	57