Motorola 2010 Annual Report Download - page 50

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The Company’s effective tax rate will change from period to period based on non-recurring events, such as the
settlement of income tax audits, changes in valuation allowances and the tax impact of significant unusual or
extraordinary items, as well as recurring factors including changes in the geographic mix of income before taxes and
effects of various global income tax strategies.
Loss from Continuing Operations
The Company incurred a net loss from continuing operations before income taxes of $503 million in 2009,
compared with a net loss from continuing operations before income taxes of $2.9 billion in 2008. After taxes, and
excluding Earnings attributable to noncontrolling interests, the Company incurred a net loss from continuing
operations of $367 million, or $0.16 per diluted share, in 2009, compared to a net loss from continuing operations
of $4.4 billion, or $1.96 per diluted share, in 2008.
The improvement in the loss from continuing operations before income taxes in 2009 compared to 2008 was
primarily attributed to: (i) a $1.6 billion decrease in Other charges, (ii) a $854 million decrease in SG&A expenses,
(iii) a $801 million decrease in R&D expenditures, and (iv) a $472 million increase in income classified as Other, as
presented in Other income (expense). These factors were partially offset by: (i) a $1.2 billion decrease in gross
margin, and (ii) a $170 million increase in net interest expense.
Earnings from Discontinued Operations
During the third quarter of 2010, the Company announced that NSN would acquire the majority of our
Networks infrastructure assets, subject to the satisfaction of closing conditions, including receipt of regulatory
approvals. During the second quarter of 2010, the Company completed the sale of our Israel-based wireless network
operator. During the first quarter of 2009, the Company completed the sales of: (i) Good Technology, and (ii) the
Company’s former biometrics business unit, which included its Printrak trademark.
After taxes, the Company had earnings from discontinued operations of $316 million, or $0.96 per diluted
share, in 2009, compared to earnings from discontinued operations of $197 million, or $0.61 per diluted share, in
2008.
Reorganization of Businesses
During 2010, the Company implemented various productivity improvement plans aimed at achieving long
term, sustainable profitability by driving efficiencies and reducing operating costs. In 2010, The Company recorded
net reorganization of business charges of $138 million, relating to the separation of 2,200 employees, of which
900 were direct employees and 1,300 were indirect employees. These charges included $38 million of Costs of sales
and $100 million of charges under Other charges in the Company’s consolidated statements of operations. Included
in the aggregate $138 million are charges of $150 million for employee separation costs, $21 million for exit costs,
and $6 million for fixed asset impairment charges, partially offset by $39 million of reversals for accruals no longer
needed.
The Company realized cost-saving benefits of approximately $73 million in 2010 from the plans that were
initiated during 2010, representing: (i) $34 million of savings in R&D expenditures, (ii) $23 million of savings in
SG&A expenses, and (iii) $16 million of savings in Costs of sales. Beyond 2010, the Company expects the
reorganization plans initiated during 2010 to provide annualized cost savings of approximately $250 million.
During 2009, the Company recorded net reorganization of business charges of $298 million, including $320
million for employee separation costs, $36 million for exit costs, and $18 million for fixed asset impairment
charges, partially offset by $76 million for reversals of accruals no longer needed. During 2008, the Company
recorded net reorganization of business charges of $300 million, including $283 million for employee separation
costs, $66 million for exit costs, partially offset by $49 million of reversals of accruals no longer needed.