Motorola 2008 Annual Report Download - page 57

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original plans were initiated. In these cases, the Company reverses accruals through the consolidated statements of
operations where the original charges were recorded when it is determined they are no longer needed.
The Company realized cost-saving benefits of approximately $103 million in 2008 from the plans that were
initiated during 2008, representing: (i) $76 million of savings in R&D expenditures, (ii) $18 million of savings in
SG&A expenses, and (iii) $9 million of savings in Costs of sales. Beyond 2008, the Company expects the
reorganization plans initiated during 2008 to provide annualized cost savings of approximately $426 million,
representing: (i) $222 million of savings in R&D expenditures, (ii) $93 million of savings in SG&A expenses, and
(iii) $111 million of savings in Cost of sales.
2008 Charges
During 2008, the Company committed to implement various productivity improvement plans aimed at
achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. All three of the
Company’s business segments, as well as corporate functions, are impacted by these plans, with the majority of the
impact in the Mobile Devices segment. The employees affected are located in all regions. The Company recorded
net reorganization of business charges of $334 million, including $86 million of charges in Costs of sales and
$248 million of charges under Other charges in the Company’s consolidated statements of operations. Included in
the aggregate $334 million are charges of $324 million for employee separation costs, $66 million for exit costs
and $9 million for fixed asset impairment charges, partially offset by $65 million of reversals for accruals no
longer needed.
The following table displays the net charges incurred by business segment:
Year Ended December 31, 2008
Mobile Devices $216
Home and Networks Mobility 53
Enterprise Mobility Solutions 27
296
Corporate 38
$334
The following table displays a rollforward of the reorganization of businesses accruals established for exit
costs and employee separation costs from January 1, 2008 to December 31, 2008:
Accruals at
January 1,
2008
2008
Additional
Charges 2008
(1)
Adjustments
2008
Amount
Used
Accruals at
December 31,
2008
Exit costs $ 42 $ 66 $ 1 $ (29) $ 80
Employee separation costs 193 324 (60) (287) 170
$235 $390 $(59) $(316) $250
(1) Includes translation adjustments.
Exit Costs
At January 1, 2008, the Company had an accrual of $42 million for exit costs attributable to lease
terminations. The 2008 additional charges of $66 million are primarily related to: (i) the exit of leased facilities in
the United Kingdom by the Mobile Devices segment, and (ii) the exit of leased facilities in Mexico by the Home
and Networks Mobility segment. The adjustments of $1 million reflect $4 million of translation adjustments,
partially offset by $3 million of reversals of accruals no longer needed. The $29 million used in 2008 reflects cash
payments. The remaining accrual of $80 million, which is included in Accrued liabilities in the Company’s
consolidated balance sheets at December 31, 2008, represents future cash payments, primarily for lease termination
obligations.
49
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS