Motorola 2007 Annual Report Download - page 123

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Employee Separation Costs
At January 1, 2006, the Company had an accrual of $53 million for employee separation costs, representing
the severance costs for approximately 1,600 employees, of which 1,100 were direct employees and 500 were
indirect employees. The 2006 additional charges of $191 million represented costs for an additional
3,900 employees, of which 1,700 were direct employees and 2,200 were indirect employees. The adjustments of
$16 million represented reversals of accruals no longer needed.
During 2006, approximately 3,200 employees, of which 1,400 were direct employees and 1,800 were indirect
employees, were separated from the Company. The $124 million used in 2006 reflects cash payments to these
separated employees. The remaining accrual of $104 million, was included in Accrued liabilities in the Company’s
consolidated balance sheets at December 31, 2006.
2005 Charges
During 2005, the Company recorded net reorganization of business charges of $91 million, including
$37 million of charges in Costs of sales and $54 million of charges under Other charges in the Company’s
consolidated statements of operations. Included in the aggregate $91 million are charges of $86 million for
employee separation costs and $15 million for fixed asset impairment charges and $5 million for exit costs,
partially offset by $15 million of reversals for accruals no longer needed. Total employees impacted by these action
were approximately 2,600.
The following table displays the net reorganization of business charges by segment:
Year Ended December 31, 2005
Mobile Devices $27
Home and Networks Mobility 7
Enterprise Mobility Solutions 49
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
January 1,
2005
2005
Additional
Charges 2005
(1)
Adjustments
2005
Amount
Used
Accruals at
December 31,
2005
Exit costs—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—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
Enterprise Mobility Solutions 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 sheets at December 31, 2005, represented 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
115