Motorola 2004 Annual Report Download - page 132

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124 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
January 1, December 31,
Segment 2003 Acquired Adjustments 2003
Personal Communications $ 23 $ Ì $ (6) $ 17
Global Telecom Solutions 4 93 Ì 97
Commercial, Government and Industrial Solutions 123 Ì Ì 123
Integrated Electronic Systems 63 8 Ì 71
Broadband Communications 836 24 (78) 782
Other Products 125 Ì Ì 125
$1,174 $125 $(84) $1,215
The goodwill impairment test is performed at the reporting unit level and is a two-step analysis. First, the fair
value (FV) of the reporting unit is compared to its book value. If the FV of the reporting unit is less than its book
value, the Company performs a hypothetical purchase price allocation based on the reporting unit's fair value to
determine the fair value of the reporting unit's goodwill. Fair value is determined with the help of independent
appraisal Ñrms using a combination of present value techniques and quoted market prices of comparable businesses.
For the year ended December 31, 2004 the Company determined that goodwill related to a sensor group within the
Other Products segment was impaired by a total of $125 million. For the year ended December 31, 2003 the
Company determined that goodwill at the infrastructure reporting unit of the Broadband Communications segment
was impaired by $73 million. No impairment charges were required for the year ended December 31, 2002.
14. Valuation and Qualifying Accounts
The following table presents the valuation and qualifying account activity for the years ended December 31,
2004, 2003 and 2002:
Balance at Charged to Balance at
January 1 Expense Used Adjustments(1)December 31
2004
Reorganization of Businesses $ 259 $ 59 $(133) $ (55) $ 130
Allowance for Doubtful Accounts 224 47 (28) (61) 182
Allowance for Losses on Finance Receivables 2,095 2 (69) (62) 1,966
Warranty Reserves 359 648 (387) (120) 500
Customer Reserves 584 2,594 (2,036) (318) 824
2003
Reorganization of Businesses 545 174 (315) (145) 259
Allowance for Doubtful Accounts 234 51 (23) (38) 224
Allowance for Losses on Finance Receivables 2,251 33 (160) (29) 2,095
Warranty Reserves 309 319 (178) (91) 359
Customer Reserves 539 844 (731) (68) 584
2002
Reorganization of Businesses 652 623 (545) (185) 545
Allowance for Doubtful Accounts 214 82 (34) (28) 234
Allowance for Losses on Finance Receivables 1,647 642 (38) Ì 2,251
Warranty Reserves 306 311 (289) (19) 309
Customer Reserves 400 737 (475) (123) 539
(1) Includes translation adjustments.