Motorola 2004 Annual Report Download - page 51

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Employee Separation Costs
At January 1, 2004, the Company had an accrual of $116 million for employee separation costs, representing
the severance costs for approximately 2,100 employees, of which 1,000 were direct and 1,100 were indirect. Direct
employees are primarily non-supervisory production employees and indirect employees are primarily non-production
employees and production managers. The 2004 additional charges of $59 million represent additional costs for
approximately an additional 900 employees. The adjustments of $34 million represent reversals of accruals no
longer needed.
During 2004, approximately 2,500 employees, of which 1,000 were direct and 1,500 were indirect employees,
were separated from the Company. The $95 million used in 2004 reÖects cash payments to these separated
employees. The remaining accrual of $46 million, which is included in Accrued Liabilities in the Company's
consolidated balance sheets, is expected to be paid to approximately 500 separated employees.
For the Year Ended December 31, 2003
For the year ended December 31, 2003, the Company recorded net reorganization of businesses charges of
$39 million, including $16 million in Costs of Sales and $23 million under Reorganization of Businesses in the
Company's consolidated statements of operations.
Included in the aggregate $39 million net charge are $212 million of charges and $173 million of reversals of
accruals no longer needed. The charges primarily consisted of: (i) $85 million in the Personal Communications
segment, primarily related to the exit of certain manufacturing activities in Flensburg, Germany and the closure of
an engineering center in Boynton Beach, Florida, (ii) $50 million in the Commercial, Government and Industrial
Solutions segment for segment-wide employee separation costs, and (iii) $39 million in General Corporate,
primarily for the impairment of assets classiÑed as held-for-sale and employee separation costs. The $212 million of
charges were partially oÅset by reversals of previous accruals of $173 million, consisting of: (i) $125 million
relating to unused accruals of previously-expected employee separation costs across all segments, (ii) $28 million,
primarily for assets that the Company intended to use that were previously classiÑed as held-for-sale, and
(iii) $20 million for exit cost accruals no longer required across all segments.
Reorganization of Businesses ChargesÌby Segment
The following table displays the net charges incurred by segment for the year ended December 31, 2003:
Exit Employee Asset
Segment Costs Separations Writedowns Total
Personal Communications $ 6 $43 $ 2 $51
Global Telecom Solutions (3) (30) (6) (39)
Commercial, Government and Industrial Solutions (3) 35 Ì 32
Integrated Electronic Systems (1) Ì Ì (1)
Broadband Communications 1 (4) (4) (7)
Other Products (3) 7 Ì 4
(3) 51 (8) 40
General Corporate (6) (13) 18 (1)
$(9) $38 $10 $39