L. Other liabilities
| ($ in millions) | ||
| At December 31: | 2007 | 2006* |
|---|---|---|
|
* Reclassified to conform with 2007 presentation as the Deferred income category is now displayed as a separate line on the Consolidated Statement of Financial Position. Also Asset retirement obligations is a separate category in 2007 and the 2006 Other category has been adjusted accordingly. ** Income tax reserve amounts classified as noncurrent as a result of 2007 implementation of FIN 48. See note O, “Taxes,” for additional information. |
||
| Deferred taxes | $ 1,064 | $ 665 |
| Income tax reserves** | 2,107 | — |
| Executive compensation accruals | 1,058 | 934 |
| Restructuring actions | 631 | 640 |
| Workforce reductions | 476 | 435 |
| Disability benefits | 734 | 626 |
| Derivatives liabilities | 534 | 235 |
| Asset retirement obligations | 114 | 106 |
| Noncurrent warranty accruals | 157 | 176 |
| Environmental accruals | 231 | 221 |
| Other | 864 | 764 |
| Total | $ 7,970 | $ 4,801 |
In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity, cost competitiveness and to rebalance skills. The noncurrent contractually obligated future payments associated with these activities are reflected in the Workforce reductions caption in the previous table.
In addition, the company executed certain special actions as follows: (1) the second quarter of 2005 (discussed in note Q, “2005 Actions”), (2) the second quarter of 2002 associated with the Microelectronics Division and rebalancing of both the company’s workforce and leased space resources, (3) the fourth quarter of 2002 associated with the acquisition of the PricewaterhouseCoopers consulting business, (4) the 2002 actions associated with the HDD business for reductions in workforce, manufacturing capacity and space, (5) the actions taken in 1999, and (6) the actions that were executed prior to 1994.
The following table provides a roll forward of the current and noncurrent liabilities associated with these special actions. The current liabilities presented in the table are included in Other accrued expenses and liabilities in the Consolidated Statement of Financial Position.
| ($ in millions) | ||||
| Liability as of Dec. 31, 2006 | Payments | Other Adjustments* | Liability as of Dec. 31, 2007 | |
|---|---|---|---|---|
|
* The Other adjustments column in the table above principally includes the reclassification of noncurrent to current and foreign currency translation adjustments. Also, in 2007, $81 million was included in Other adjustments to record previously unrecognized actuarially calculated gains/losses related to long-term retirement benefits in Europe. |
||||
| Current: | ||||
| Workforce | $ 163 | $ (154) | $ 121 | $ 130 |
| Space | 88 | (99) | 41 | 30 |
| Other | 6 | — | 1 | 7 |
| Total Current | $ 257 | $ (253) | $ 164 | $ 167 |
| Noncurrent: | ||||
| Workforce | $ 531 | $ — | $ 26 | $ 557 |
| Space | 109 | — | (35) | 74 |
| Total Noncurrent | $ 640 | $ — | $ (9) | $ 631 |
The workforce accruals primarily relate to the Global Services business. The remaining liability relates to terminated employees who are no longer working for the company who were granted annual payments to supplement their incomes in certain countries. Depending on the individual country’s legal requirements, these required payments will continue until the former employee begins receiving pension benefits or dies. Included in the December 31, 2007 workforce accruals above is $46 million associated with the HDD divestiture discussed in note A, “Significant Accounting Policies.” The space accruals are for ongoing obligations to pay rent for vacant space that could not be sublet or space that was sublet at rates lower than the committed lease arrangement. The length of these obligations varies by lease with the longest extending through 2020. Other accruals are primarily the remaining liabilities (other than workforce or space) associated with the HDD divestiture.
The company employs extensive internal environmental protection programs that primarily are preventive in nature. The company also participates in environmental assessments and cleanups at a number of locations, including operating facilities, previously owned facilities and Superfund sites. The company’s maximum exposure for all environmental liabilities cannot be estimated and no amounts have been recorded for non-ARO environmental liabilities that are not probable or estimable. The total amounts accrued for non-ARO environmental liabilities, including amounts classified as current in the Consolidated Statement of Financial Position, that do not reflect actual or anticipated insurance recoveries, were $261 million and $252 million at December 31, 2007 and 2006, respectively. Estimated environmental costs are not expected to materially affect the consolidated financial position or consolidated results of the company’s operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation regulations.
