Motorola 2005 Annual Report Download - page 56

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49
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2004 Charges
During the year ended December 31, 2004, the Company recorded net reorganization of business reversals of
$12 million, including $3 million of charges in Costs of sales and $15 million of reversals under Other charges in
the Company's consolidated statement of operations. Included in the aggregate $12 million are charges of
$59 million for employee separation costs and $5 million for fixed asset adjustment income, partially offset by
$66 million of reversals for accruals no longer needed. Total employees impacted by these actions were
approximately 900.
The following table displays the net reorganization of business charges by segment for employee separation and
exit cost reserves:
Year Ended
December 31,
Segment 2004
Mobile Devices $(27)
Government and Enterprise Mobility Solutions 9
Networks Ì
Connected Home Solutions (4)
(22)
General Corporate 15
$ (7)
The following table displays a rollforward of the reorganization of business accruals established for exit costs
and employee separation costs from January 1, 2004 to December 31, 2004:
Accruals at 2004 Accruals at
January 1, Additional 2004(1) 2004 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 offset by an $11 million translation adjustment. The $38 million used in 2004 reflects cash payments to
lessors. The remaining accrual of $84 million, which is included in Accrued liabilities in the Company's
consolidated balance sheet at December 31, 2004, represents future cash payments for lease termination obligations.
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 employees and 1,100 were
indirect employees. The 2004 additional charges of $59 million represented the severance costs for approximately
900 employees, of which 100 were direct employees and 800 were indirect 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 employees and 1,500 were indirect
employees, were separated from the Company. The $95 million used in 2004 reflects cash payments to these
separated employees. The remaining accrual of $46 million, was included in Accrued liabilities in the Company's
consolidated balance sheet at December 31, 2004.