Motorola 2009 Annual Report Download - page 131

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Employee Separation Costs
At January 1, 2007, the Company had an accrual of $104 million for employee separation costs, representing
the severance costs for approximately 2,300 employees. The additional 2007 charges of $401 million represent
severance costs for approximately 6,700 employees, of which 2,400 were direct employees and 4,300 were
indirect employees.
The adjustments of $64 million reflect $68 million of reversals of accruals no longer needed, partially offset
by $4 million of accruals for severance plans established through purchase accounting for businesses acquired.
The $68 million of reversals represent previously accrued costs for 1,100 employees, and primarily relates to a
strategic change regarding a plant closure and specific employees previously identified for separation who resigned
from the Company and did not receive severance or who were redeployed due to circumstances not foreseen
when the original plans were approved. The $4 million of accruals represents severance plans for approximately
200 employees established through purchase accounting for businesses acquired.
During the year ended December 31, 2007, approximately 5,300 employees, of which 1,700 were direct
employees and 3,600 were indirect employees, were separated from the Company. The $248 million used in 2007
reflects cash payments to these separated employees. The remaining accrual of $193 million was included in
Accrued liabilities in the Company’s consolidated balance sheets at December 31, 2007.
14. Intangible Assets and Goodwill
The Company accounts for acquisitions using purchase accounting with the results of operations for each
acquiree included in the Company’s consolidated financial statements for the period subsequent to the date of
acquisition. The pro forma effects of these acquisitions on the Company’s consolidated financial statements were
not significant individually nor in the aggregate.
The allocation of value to in-process research and development was determined using expected future cash
flows discounted at average risk adjusted rates reflecting both technological and market risk as well as the time
value of money. Historical pricing, margins and expense levels, where applicable, were used in the valuation of
the in-process products. The in-process research and development acquired will have no alternative future uses if
the products are not feasible.
The developmental products for the companies acquired have varying degrees of timing, technology,
costs-to-complete and market risks throughout final development. If the products fail to become viable, the
Company will unlikely be able to realize any value from the sale of incomplete technology to another party or
through internal re-use. The risks of market acceptance for the products under development and potential
reductions in projected sales volumes and related profits in the event of delayed market availability for any of the
products exist. Efforts to complete all developmental products continue and there are no known delays to
forecasted plans except as disclosed.
The Company did not have any significant acquisitions during the years ended December 31, 2009 and
2008. The following is a summary of significant acquisitions during the year ended December 31, 2007:
In-Process
Research and
Quarter Form of Development
Acquired Consideration, net Consideration Charge
2007 Acquisitions
Symbol Technologies, Inc. Q1 $3,528 Cash $95
Good Technology, Inc. Q1 $ 438 Cash —
Netopia, Inc. Q1 $ 183 Cash —
Terayon Communication Systems, Inc. Q3 $ 137 Cash —