Motorola 2007 Annual Report Download - page 122

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severance costs for approximately 6,700 employees, of which 2,400 were direct employees and 4,300 were indirect
employees.
The adjustments of $64 million reflect $68 million of reversals of accruals no longer needed, partially offset
by $4 million of accruals for severance plans established through purchase accounting for businesses acquired. The
$68 million of reversals represent previously accrued costs for 1,100 employees, and primarily relates to a strategic
change regarding a plant closure and specific employees previously identified for separation who resigned from the
Company and did not receive severance or who were redeployed due to circumstances not foreseen when the
original plans were approved. The $4 million of accruals represents severance plans for approximately
200 employees established through purchase accounting for businesses acquired.
During 2007, approximately 5,300 employees, of which 1,700 were direct employees and 3,600 were indirect
employees, were separated from the Company. The $248 million used in 2007 reflects cash payments to these
separated employees. The remaining accrual of $193 million, which is included in Accrued liabilities in the
Company’s consolidated balance sheets at December 31, 2007, is expected to be paid to approximately 2,800
employees to be separated in 2008.
2006 Charges
During 2006, the Company committed to implement various productivity improvement plans aimed
principally at: (i) reducing costs in its supply-chain activities, (ii) integration synergies, and (iii) reducing other
operating expenses, primarily relating to engineering and development costs. The Company recorded net
reorganization of business charges of $213 million, including $41 million of charges in Costs of sales and
$172 million of charges under Other charges in the Company’s consolidated statement of operations. Included in
the aggregate $213 million are charges of $191 million for employee separation costs, $15 million for fixed asset
impairment charges and $30 million for exit costs, partially offset by $23 million of reversals for accruals no
longer needed. Total employees impacted by the actions committed to in 2006 were 3,900.
The following table displays the net reorganization of business charges by segment:
Year Ended December 31, 2006
Mobile Devices $ (1)
Home and Networks Mobility 124
Enterprise Mobility Solutions 83
206
General Corporate 7
$213
The following table displays a rollforward of the reorganization of business accruals established for exit costs
and employee separation costs from January 1, 2006 to December 31, 2006:
Accruals at
January 1,
2006
2006
Additional
Charges 2006
(1)
Adjustments
2006
Amount
Used
Accruals at
December 31,
2006
Exit costs—lease terminations $ 50 $ 30 $ (7) $ (19) $ 54
Employee separation costs 53 191 (16) (124) 104
$103 $221 $(23) $(143) $158
(1) Includes translation adjustments.
Exit Costs—Lease Terminations
At January 1, 2006, the Company had an accrual of $50 million for exit costs attributable to lease
terminations. The 2006 additional charges of $30 million were primarily related to a lease cancellation by the
Enterprise Mobility Solutions segment. The 2006 adjustments of $7 million represent reversals of accruals no
longer needed. The $19 million used in 2006 reflects cash payments to lessors. The remaining accrual of
$54 million, which is included in Accrued liabilities in the Company’s consolidated balance sheets at December 31,
2006, represented future cash payments for lease termination obligations.
114