Motorola 2004 Annual Report Download - page 127

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MOTOROLA INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS(Dollars in millions, except as noted)
Employee Separation Costs
At January 1, 2003, the Company had an accrual of $336 million for employee separation costs, representing
the severance costs for approximately 5,700 employees, of which 2,000 were direct employees and 3,700 were
indirect employees. The additional charges of $163 million represented the severance costs for approximately
3,200 employees, of which 1,200 were direct employees and 2,000 were indirect employees. The accrual was for
various levels of employees. The adjustments of $125 million represent the severance costs for approximately
1,600 employees previously identiÑed for separation who resigned from the Company and did not receive severance
or were redeployed due to circumstances not foreseen when the original plans were approved.
During 2003, approximately 5,200 employees, of which 2,000 were direct employees and 3,200 were indirect
employees, were separated from the Company. The 2003 amount used of $258 million reÖects $254 million of cash
payments to these separated employees and $4 million of non-cash utilization. The remaining accrual of
$116 million is included in Accrued Liabilities in the Company's consolidated balance sheets. From the remaining
accrual, in 2004, the Company paid out $69, reversed $33 million and expects $14 million of future cash payments
to be paid out to separated employees during the Ñrst quarter of 2005.
For the Year Ended December 31, 2002
For the year ended December 31, 2002, the Company recorded net reorganization of businesses charges of
$673 million, including $68 million in Costs of Sales and $605 million, under Reorganization of Businesses in the
Company's consolidated statements of operations.
Included in the aggregate $673 million charge is $918 million of additional charges and $245 million of
reversals of accruals no longer needed. The additional charges of $918 million were comprised of the following:
(i) $275 million in the Personal Communications segment, primarily related to the shut-down of an engineering
and distribution center in Illinois, (ii) $224 million in the Global Telecom Solutions segment, primarily related to
segment-wide employee separation costs and for exit costs relating to a lease cancellation fee, and (iii) $419 million
for employee separation, Ñxed asset impairments and lease cancellation fees across all other segments. The
$918 million charge was oÅset by $245 million of reversals of previous accruals, consisting of: (i) $108 million
relating to unused accruals of previously expected employee separation costs across all segments, (ii) $77 million,
primarily for exit cost accruals no longer required across all segments, and (iii) $60 million primarily for assets that
the Company intended to use that were previously classiÑed as held-for-sale.
Reorganization of Businesses ChargesÌby Segment
The following table displays the net charges incurred by segment for the year ended December 31, 2002:
Exit Employee Asset
Segment Costs Separations Writedowns Total
Personal Communications $ (5) $ 70 $119 $184
Global Telecom Solutions 56 128 25 209
Commercial, Government and Industrial Solutions (16) 58 3 45
Broadband Communications 4 37 9 50
Integrated Electronic Systems 24 20 23 67
Other Products (8) 19 7 18
55 332 186 573
General Corporate 24 27 49 100
$ 79 $359 $235 $673