Motorola 2006 Annual Report Download - page 121
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113
The following table displays the net reorganization of business charges by segment:
Year Ended December 31, 2005
Mobile Devices $27
Networks and Enterprise 52
Connected Home Solutions 4
83
General Corporate 8
$91
The following table displays a rollforward of the reorganization of business accruals established for exit costs
and employee separation costs from January 1, 2005 to December 31, 2005:
Accruals at 2005 2005 Accruals at
January 1, Additional 2005(1) Amount December 31,
2005 Charges Adjustments Used 2005
Exit costs Ì lease terminations $ 73 $ 5 $ (7) $(21) $ 50
Employee separation costs 41 86 (14) (60) 53
$114 $91 $(21) $(81) $103
(1) Includes translation adjustments.
Exit Costs Ì Lease Terminations
At January 1, 2005, the Company had an accrual of $73 million for exit costs attributable to lease
terminations. The 2005 additional charges of $5 million were primarily related to a lease cancellation by the
Networks and Enterprise segment. The 2005 adjustments of $7 million represented reversals of $1 million for
accruals no longer needed and $6 million of translation adjustments. The $21 million used in 2005 reflected cash
payments to lessors. The remaining accrual of $50 million, which was included in Accrued liabilities in the
Company's consolidated balance sheet at December 31, 2005, represents future cash payments for lease termination
obligations.
Employee Separation Costs
At January 1, 2005, the Company had an accrual of $41 million for employee separation costs, representing the
severance costs for approximately 400 employees, of which 50 were direct employees and 350 were indirect
employees. The 2005 additional charges of $86 million represented the severance costs for approximately 2,600
employees, of which 1,300 were direct employees and 1,300 were indirect employees. The adjustments of
$14 million represented reversals of accruals no longer needed.
During 2005, approximately 1,400 employees, of which 300 were direct employees and 1,100 were indirect
employees, were separated from the Company. The $60 million used in 2005 reflected cash payments to these
separated employees. The remaining accrual of $53 million was included in Accrued liabilities in the Company's
consolidated balance sheet at December 31, 2005.
2004 Charges
During the year ended December 31, 2004, the Company recorded net reorganization of business reversals of
$15 million, including $4 million of reversals in Costs of sales and $11 million of reversals under Other charges in
the Company's consolidated statement of operations. Included in the aggregate $15 million are charges of
$54 million for employee separation costs, partially offset by $63 million of reversals for accruals no longer needed
and $6 million for fixed asset adjustment income. Total employees impacted by these actions were approximately
800.