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44 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reorganization of Businesses Accruals
The following table displays a rollforward of the accruals established for exit costs and employee separation
costs from January 1, 2003 to December 31, 2003:
Accruals at 2003 Accruals at
January 1, Additional 2003(1) 2003 Amount December 31,
2003 Charges Adjustments Used 2003
Exit costs Ì lease terminations $209 $ 11 $ (20) $ (57) $143
Employee separation costs 336 163 (125) (258) 116
$545 $174 $(145) $(315) $259
(1) Includes translation adjustments.
Exit Costs Ì Lease Terminations
The 2003 additional charges of $11 million were primarily related to the exit of certain manufacturing activities
in Germany by the Personal Communications segment. The adjustments of $20 million represent exit cost accruals
across all segments which were no longer needed. The 2003 amount used of $57 million reÖects cash payments of
$52 million and non-cash utilization of $5 million. The remaining accrual of $143 million, is included in Accrued
Liabilities in the Company's consolidated balance sheets. From this remaining accrual, in 2004, the Company paid
out $38 million and reversed $32 million. The remaining accrual represents future cash payments, primarily for lease
termination obligations.
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 this remaining
accrual, in 2004, the Company paid out $69 million, 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.