Motorola 2009 Annual Report Download - page 129

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121
Employee Separation Costs
At January 1, 2009, the Company had an accrual of $170 million for employee separation costs, representing
the severance costs for approximately 2,000 employees. The additional 2009 charges of $363 million represent
severance costs for approximately an additional 9,000 employees, of which 3,400 are direct employees and 5,600
are indirect employees.
The adjustments of $70 million reflect $75 million of reversals of accruals no longer needed, partially offset
by $5 million of translation adjustments.
During the year ended December 31, 2009, approximately 9,600 employees, of which 4,100 were direct
employees and 5,500 were indirect employees, were separated from the Company. The $383 million used in 2009
reflects cash payments to these separated employees. The remaining accrual of $80 million, which is included in
Accrued liabilities in the Company’s consolidated balance sheets at December 31, 2009, is expected to be paid in
2010 to: (i) severed employees who began receiving payments in 2009, and (ii) approximately 1,200 employees
who will begin receiving payments in 2010.
2008 Charges
During the year ended December 31, 2008, the Company implemented 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, were impacted by these plans, with
the majority of the impact in the Mobile Devices segment. The employees affected were 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 Additional Amount Accruals at
2008 January 1 Charges Adjustments Used December 31
Exit costs $ 42 $ 66 $ 1 $ (29) $ 80
Employee separation costs 193 324 (60) (287) 170
$235 $390 $(59) $(316) $250
Adjustments include 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 were 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 was included in Accrued liabilities in
the Company’s consolidated balance sheets at December 31, 2008, represented cash payments, primarily for lease
termination obligations.