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Reorganization Of Businesses
3 Months Ended
Mar. 31, 2012
Reorganization Of Businesses [Abstract]  
Reorganization Of Businesses
Reorganization of Businesses
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 future minimum lease payments on vacated facilities and other contractual terminations.
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 initiated. In these cases, the Company reverses accruals through the condensed consolidated statements of operations where the original charges were recorded when it is determined they are no longer needed.
2012 Charges
During the three months ended March 31, 2012, the Company recorded net reorganization of business charges of $9 million, primarily under Other charges in the Company’s condensed consolidated statements of operations. Included in the aggregate $9 million are charges of $12 million for employee separation costs, and $1 million for building impairment charges, partially offset by $4 million of reversals for accruals no longer needed.
The following table displays the net charges incurred by segment: 
March 31, 2012
Three Months Ended
Government
$
7

Enterprise
2

 
$
9


The following table displays a rollforward of the reorganization of businesses accruals established for exit costs and employee separation costs from January 1, 2012 to March 31, 2012: 
 
Accruals at January 1, 2012
 
Additional
Charges
 
Adjustments
 
Amount
Used
 
Accruals at March 31, 2012
Exit costs
$
14

 
$

 
$

 
$
(2
)
 
$
12

Employee separation costs
30

 
12

 
(4
)
 
(13
)
 
25

 
$
44

 
$
12

 
$
(4
)
 
$
(15
)
 
$
37


Exit Costs
At January 1, 2012, the Company had an accrual of $14 million for exit costs attributable to lease terminations. During the three months ended, March 31, 2012, there were no additional charges related to the exit of leased facilities. The $2 million used reflects cash payments. The remaining accrual of $12 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at March 31, 2012, primarily represents future cash payments for lease termination obligations that are expected to be paid over a number of years.
Employee Separation Costs
At January 1, 2012, the Company had an accrual of $30 million for employee separation costs, representing the severance costs for: (i) severed employees who began receiving payments in 2011, and (ii) approximately 100 employees who began receiving payments in 2012. The 2012 additional charges of $12 million represent severance costs for approximately 200 indirect employees. The adjustment of $4 million reflects reversals of accruals no longer needed. The $13 million used reflects cash payments. The remaining accrual of $25 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at March 31, 2012, is expected to be paid, generally, within one year to approximately 600 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.


2011 Charges
During the three months ended April 2, 2011, the Company recorded net reorganization of business charges of $8 million, including $5 million of charges under Other charges and $3 million of charges in Costs of sales in the Company’s condensed consolidated statements of operations. Included in the $8 million are charges of $9 million for employee separation costs, partially offset by $1 million of reversals for accruals no longer needed.
The following table displays the net charges incurred by segment: 
April 2, 2011
Three Months Ended
Government
$
8

Enterprise

 
$
8


The following table displays a rollforward of the reorganization of businesses accruals established for exit costs and employee separation costs from January 1, 2011 to April 2, 2011: 
 
Accruals at January 1, 2011
 
Additional
Charges
 
Adjustments
 
Amount
Used
 
Accruals at April 2, 2011
Exit costs
$
17

 
$

 
$

 
$

 
$
17

Employee separation costs
50

 
9

 
(1
)
 
(14
)
 
44

 
$
67

 
$
9

 
$
(1
)
 
$
(14
)
 
$
61


During the three months ended April 2, 2011, approximately 400 employees, of whom substantially all were indirect employees, were separated from the Company, resulting in charges of $9 million. These charges were offset by adjustments of $1 million, reflecting reversals of accruals no longer needed, and $14 million used for cash payments. At April 2, 2011, the Company had accruals of $17 million and $44 million, for exit costs attributable to lease terminations and employee separation costs, respectively.