Motorola 2004 Annual Report Download - page 50

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42 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Year Ended December 31, 2004
For the year ended December 31, 2004, the Company recorded net reversals of $12 million for reserves no
longer needed, including $3 million of charges in Costs of Sales and $15 million of reversals under Reorganization
of Businesses in the Company's consolidated statements of operations.
Included in the aggregate $12 million of net reversals are $59 million of charges for employee separation costs,
$66 million of reversals for employee separation and exit cost reserves no longer needed, and income of $5 million
related to Ñxed asset adjustments. The additional charges of $59 million are a result of the Company's commitment
to productivity improvement plans aimed at improving the Company's ability to meet customer demands and reduce
operating costs. The productivity plans are designed to adjust the Company's workforce to align it with the
Company's focus on seamless mobility and to eliminate positions in its corporate functions in connection with the
separation of the Company's former semiconductor operations into an entirely independent Company, Freescale
Semiconductor. Businesses impacted by these plans include the Commercial, Government and Industrial Solutions
segment, the Integrated Electronic Systems segment and the Broadband Communications segment, as well as various
corporate functions.
Reorganization of Businesses ChargesÌby Segment
The following table displays the net charges (reversals) for employee separation and exit cost reserves by
segment for the year ended December 31, 2004:
Year Ended
December 31,
Segment 2004
Personal Communications $(27)
Global Telecom Solutions (7)
Commercial, Government and Industrial Solutions 6
Integrated Electronic Systems 10
Broadband Communications (4)
Other Products Ì
(22)
General Corporate 15
$ (7)
Reorganization of Businesses Accruals
The following table displays a rollforward of the accruals established for exit costs and employee separation
costs from January 1, 2004 to December 31, 2004:
Accruals at 2004 2004 Accruals at
January 1, Additional 2004(1) Amount December 31,
2004 Charges Adjustments Used 2004
Exit costsÌlease terminations $143 $Ì $(21) $ (38) $ 84
Employee separation costs 116 59 (34) (95) 46
$259 $59 $(55) $(133) $130
(1) Includes translation adjustments.
Exit CostsÌLease Terminations
At January 1, 2004, the Company had an accrual of $143 million for exit costs attributable to lease
terminations. The 2004 adjustments of $21 million represent reversals of $32 million for accruals no longer needed,
partially oÅset by an $11 million translation adjustment. The $38 million used in 2004 reÖects cash payments. The
remaining accrual of $84 million, which is included in Accrued Liabilities in the Company's consolidated balance
sheets, represents future cash payments for lease termination obligations.