Motorola 2005 Annual Report Download - page 57

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50 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2003 Charges
During the year ended December 31, 2003, the Company recorded net reorganization of business charges of
$39 million, including $16 million of charges in Costs of sales and $23 million of charges under Other charges in
the Company's consolidated statement of operations. Included in the aggregate $39 million are charges of
$212 million, partially offset by $173 million of reversals for accruals no longer needed. The charges primarily
consisted of: (i) $85 million in the Mobile Devices 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 Government and Enterprise Mobility Solutions segment for segment-wide employee
separation costs, and (iii) $39 million in General Corporate, primarily for the impairment of assets classified as
held-for-sale and employee separation costs. The $212 million of charges were partially offset 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 classified as held-for-sale, and (iii) $20 million for exit cost accruals no longer required
across all segments.
The following table displays the net reorganization of business charges by segment:
Year Ended
December 31,
Segment 2003
Mobile Devices $51
Government and Enterprise Mobility Solutions 32
Networks (40)
Connected Home Solutions (7)
Other Products 4
40
General Corporate (1)
$39
The following table displays a rollforward of the reorganization of business 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 CostsÌLease Terminations
At January 1, 2003, the Company had an accrual of $209 million for exit costs attributable to lease
terminations. The 2003 additional charges of $11 million were primarily related to the exit of certain manufacturing
activities in Germany by the Mobile Devices segment. The 2003 adjustments of $20 million represent reversals for
accruals no longer needed. The $57 million used in 2003 reflects cash payments to lessors. The remaining accrual
of $143 million, which is included in Accrued liabilities in the Company's consolidated balance sheet at
December 31, 2003, represents future cash payments 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 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