Motorola 2009 Annual Report Download - page 130

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122
Employee Separation Costs
At January 1, 2008, the Company had an accrual of $193 million for employee separation costs, representing
the severance costs for approximately 2,800 employees. The additional 2008 charges of $324 million represent
severance costs for approximately an additional 5,800 employees, of which 2,300 were direct employees and
3,500 were indirect employees.
The adjustments of $60 million reflect $62 million of reversals of accruals no longer needed, partially offset
by $2 million of translation adjustments. The $62 million of reversals represent previously accrued costs for
approximately 600 employees.
During the year ended December 31, 2008, approximately 6,200 employees, of which 3,000 were direct
employees and 3,200 were indirect employees, were separated from the Company. The $287 million used in 2008
reflects cash payments to these separated employees. The remaining accrual of $170 million, was included in
Accrued liabilities in the Company’s consolidated balance sheets at December 31, 2008.
2007 Charges
During the year ended December 31, 2007, 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. The majority of the employees affected are located in North America and Europe. The Company
recorded net reorganization of business charges of $394 million, including $104 million of charges in Costs of
sales and $290 million of charges under Other charges (income) in the Company’s consolidated statements of
operations. Included in the aggregate $394 million are charges of $401 million for employee separation costs,
$42 million for fixed asset impairment charges and $19 million for exit costs, offset by reversals for accruals no
longer needed.
The following table displays the net reorganization of business charges by segment:
Year Ended December 31 2007
Mobile Devices $229
Home and Networks Mobility 71
Enterprise Mobility Solutions 30
330
Corporate 64
$394
The following table displays a rollforward of the reorganization of businesses accruals established for exit
costs and employee separation costs from January 1, 2007 to December 31, 2007:
Accruals at Additional Amount Accruals at
2007 January 1 Charges Adjustments Used December 31
Exit costs $ 54 $ 19 $ 2 $ (33) $ 42
Employee separation costs 104 401 (64) (248) 193
$158 $420 $(62) $(281) $235
Adjustments include translation adjustments and $6 million of accruals established through purchase accounting for businesses acquired,
covering exit costs and separation costs for approximately 200 employees.
Exit Costs
At January 1, 2007, the Company had an accrual of $54 million for exit costs attributable to lease
terminations. The 2007 additional charges of $19 million are primarily related to the exit of certain activities and
leased facilities in Ireland by the Home and Networks Mobility segment. The 2007 adjustments of $2 million
represent accruals for exit costs established through purchase accounting for businesses acquired. The $33 million
used in 2007 reflects cash payments. The remaining accrual of $42 million, which was included in Accrued
liabilities in the Company’s consolidated balance sheets at December 31, 2007, represented future cash payments
for lease termination obligations.