Reorganization of Business

6 Months Ended

Jun. 27, 2020

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 Severance Plan includes defined formulas to calculate employees’ termination benefits. In addition to the Involuntary Severance Plan, during the quarter ended June 27, 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 six months of salary, were equalized for all employment level grades and capped at a full year’s salary.

2020 Charges

During the three months ended June 27, 2020, the Company recorded net reorganization of business charges of $41 million including $26 million of charges in Other charges and $15 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $41 million were charges of $46 million related to employee separation, partially offset by $5 million of reversals for accruals no longer needed.

During the six months ended June 27, 2020, the Company recorded net reorganization of business charges of $59 million including $38 million of charges in Other charges and $21 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $59 million were charges of $68 million related to employee separation, partially offset by $9 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:


June 27, 2020	Three Months Ended		Six Months Ended
Products and Systems Integration	$	33	$	47
Software and Services	8		12
	$	41	$	59

The following table displays a rollforward of the reorganization of business accruals established for employee separation costs from January 1, 2020 to June 27, 2020:


	January 1, 2020		Additional Charges		Adjustments		Amount Used		June 27, 2020

Employee separation costs	$	78	$	68	$	(9)	$	(41)	$	96

Employee Separation Costs

At January 1, 2020, the Company had an accrual of $78 million for employee separation costs. The 2020 additional charges of $68 million represent severance costs for approximately 700 employees. The adjustment of $9 million reflects reversals for accruals no longer needed. The $41 million used reflects cash payments to severed employees. The remaining accrual of $96 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at June 27, 2020, is expected to be paid, primarily within one year, to approximately 1,100 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.

2019 Charges

During the three months ended June 29, 2019, the Company recorded net reorganization of business charges of $12 million including $8 million of charges in Other charges and $4 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $12 million were charges of $18 million related to employee separation costs and $6 million of reversals for accruals no longer needed.

During the six months ended June 29, 2019, the Company recorded net reorganization of business charges of $20 million including $12 million of charges in Other charges and $8 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $20 million were charges of $30 million related to employee separation costs and $10 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:


June 29, 2019	Three Months Ended		Six Months Ended
Products and Systems Integration	$	9	$	16
Software and Services	3		4
	$	12	$	20