Motorola 2005 Annual Report Download - page 124

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117
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 2003 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 adjustments of
$125 million represent the severance costs for approximately 1,600 employees previously identified 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 $258 million used in 2003 reflects $254 million of cash
payments to these separated employees and $4 million of non-cash utilization. The remaining accrual of
$116 million was included in Accrued Liabilities in the Company's consolidated balance sheet at December 31,
2003.
13. Acquisitions and Related Intangibles
The Company accounts for acquisitions using purchase accounting with the results of operations for each
acquiree included in the Company's consolidated financial statements for the period subsequent to the date of
acquisition. The pro forma effects of these acquisitions on the Company's consolidated financial statements were
not significant individually nor in the aggregate.
The allocation of value to in-process research and development was determined using expected future cash
flows discounted at average risk adjusted rates reflecting both technological and market risk as well as the time
value of money. Historical pricing, margins and expense levels, where applicable, were used in the valuation of the
in-process products. The in-process research and development acquired will have no alternative future uses if the
products are not feasible.
The developmental products for the companies acquired have varying degrees of timing, technology, costs-to-
complete and market risks throughout final development. If the products fail to become viable, the Company will
unlikely be able to realize any value from the sale of incomplete technology to another party or through internal
re-use. The risks of market acceptance for the products under development and potential reductions in projected
sales volumes and related profits in the event of delayed market availability for any of the products exist. Efforts to
complete all developmental products continue and there are no known delays to forecasted plans.
The Company did not have any significant acquisitions in 2005. The following is a summary of significant
acquisitions in 2004 and 2003: In-Process
Research and
Quarter Development
Acquired Consideration Form of Consideration Charge
2004 Acquisitions
MeshNetworks, Inc. Q4 $169 Cash $16
Force Computers Q3 $121 Cash $ 2
2003 Acquisitions
Winphoria Networks, Inc. Q2 $179 Cash $32