Motorola 2011 Annual Report Download - page 109

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103
2011 Charges
During 2011, the Company continued to implement various productivity improvement plans aimed at
achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. Both of the
Company’s segments were impacted by these plans. The employees affected were located in all geographic regions.
During 2011, the Company recorded net reorganization of business charges of $58 million, including
$6 million of charges in Costs of sales and $52 million of charges under Other charges in the Company’s
consolidated statements of operations. Included in the aggregate $58 million are charges of $41 million for
employee separation costs, $19 million for exit costs, partially offset by $2 million of reversals for accruals no
longer needed.
The following table displays the net charges incurred by business segment:
Year Ended December 31, 2011
Government $40
Enterprise 18
$58
The following table displays a rollforward of the reorganization of businesses accruals established for exit costs
and employee separation costs from January 1, 2011 to December 31, 2011:
Accruals at
January 1, 2011
Additional
Charges Adjustments
Amount
Used
Accruals at
December 31, 2011
Exit costs $17 $19 $ 1 $(23) $14
Employee separation costs 50 41 (3) (58) 30
$67 $60 $(2) $(81) $44
Exit Costs
At January 1, 2011, the Company had an accrual of $17 million for exit costs attributable to lease
terminations. The additional 2011 charges were $19 million. The adjustments of $1 million primarily reflects
reversals of accruals no longer needed. The $23 million used in 2011 reflects cash payments. The remaining accrual
of $14 million, which is included in Accrued liabilities in the Company’s consolidated balance sheets at
December 31, 2011, primarily represents future cash payments for lease termination obligations that are expected to
be paid over a number of years.
Employee Separation Costs
At January 1, 2011, the Company had an accrual of $50 million for employee separation costs, representing the
severance costs for: (i) severed employees who began receiving payments in 2010, and (ii) approximately
1,000 employees who began receiving payments in 2011. The 2011 additional charges of $41 million represent
severance costs for approximately an additional 900 employees, of which 300 were direct employees and 600 were
indirect employees. The adjustments of $3 million reflect reversals of accruals no longer needed.
During 2011, approximately 1,300 employees, of which 800 were direct employees and 500 were indirect
employees, were separated from the Company. The $58 million used in 2011 reflects cash payments to separated
employees. The remaining accrual of $30 million, which is included in Accrued liabilities in the Company’s
consolidated balance sheets at December 31, 2011, is expected to be paid, generally, within one year to: (i) severed
employees who have already begun to receive payments, and (ii) approximately 600 employees to be separated in
2012.
2010 Charges
During 2010, the Company continued to implement various productivity improvement plans aimed at
achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. Both of the
Company’s segments were impacted by these plans. The employees affected were located in all geographic regions.