Motorola 2009 Annual Report Download - page 54

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46 MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2009 Charges
During 2009, in light of the macroeconomic decline that adversely affected sales, the Company continued 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 geographic regions.
During 2009, the Company recorded net reorganization of business charges of $336 million, including
$78 million of charges in Costs of sales and $258 million of charges under Other charges in the Company’s
consolidated statements of operations. Included in the aggregate $336 million are charges of $363 million for
employee separation costs, $36 million for exit costs and $20 million for fixed asset impairment charges, partially
offset by $83 million of reversals for accruals no longer needed.
The following table displays the net charges incurred by business segment:
Year Ended December 31, 2009
Mobile Devices $184
Home and Networks Mobility 52
Enterprise Mobility Solutions 70
306
Corporate 30
$336
The following table displays a rollforward of the reorganization of businesses accruals established for exit
costs and employee separation costs from January 1, 2009 to December 31, 2009:
Accruals at Additional Amount Accruals at
2009 January 1 Charges Adjustments Used December 31
Exit costs $ 80 $ 36 $ (9) $ (49) $ 58
Employee separation costs 170 363 (70) (383) 80
$250 $399 $(79) $(432) $138
Adjustments include translation adjustments.
Exit Costs
At January 1, 2009, the Company had an accrual of $80 million for exit costs attributable to lease
terminations. The additional 2009 charges of $36 million are primarily related to the exit of leased facilities and
contractual termination costs. The adjustments of $9 million reflect: (i) $8 million of reversals of accruals no
longer needed, and (ii) $1 million of translation adjustments. The $49 million used in 2009 reflects cash
payments. The remaining accrual of $58 million, which is included in Accrued liabilities in the Company’s
consolidated balance sheets at December 31, 2009, represents future cash payments, primarily for lease
termination obligations.
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 required, partially offset
by $5 million of translation adjustments.
During 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