Motorola 2008 Annual Report Download - page 133

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2006 Charges
During the year ended December 31, 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 statements 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.
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 $ 50 $ 30 $ (7) $ (19) $ 54
Employee separation costs 53 191 (16) (124) 104
$103 $221 $(23) $(143) $158
(1) Includes translation adjustments.
Exit Costs
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 was included in Accrued liabilities in the Company’s consolidated balance sheets at
December 31, 2006, represented future cash payments for lease termination obligations.
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 the year ended December 31, 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.
125