Motorola 2011 Annual Report Download - page 110

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104
During 2010, the Company recorded net reorganization of business charges of $73 million, including
$19 million of charges in Costs of sales and $54 million of charges under Other charges in the Company’s
consolidated statements of operations. Included in the aggregate $73 million are charges of $73 million for
employee separation costs, $16 million for exit costs, partially offset by $16 million of reversals for accruals no
longer needed.
The following table displays the net charges incurred by business segment:
Year Ended December 31, 2010
Government $57
Enterprise 16
$73
The following table displays a rollforward of the reorganization of businesses accruals established for exit costs
and employee separation costs from January 1, 2010 to December 31, 2010:
2010
Accruals at
January 1
Additional
Charges Adjustments
Amount
Used
Accruals at
December 31
Exit costs $16 $16 $ (3) $(12) $17
Employee separation costs 31 73 (13) (41) 50
$47 $89 $(16) $(53) $67
Exit Costs
At January 1, 2010, the Company had an accrual of $16 million for exit costs attributable to lease
terminations. The additional 2010 charges of $16 million are primarily related to the exit of leased facilities and
contractual termination costs. The adjustments of $3 million reflect reversals of accruals no longer needed. The $12
million used in 2010 reflects cash payments. The remaining accrual of $17 million, which is included in Accrued
liabilities in the Company’s consolidated balance sheets at December 31, 2010, represents future cash payments,
primarily for lease termination obligations.
Employee Separation Costs
At January 1, 2010, the Company had an accrual of $31 million for employee separation costs, representing the
severance costs for approximately 1,400 employees. The additional 2010 charges of $73 million represent severance
costs for approximately an additional 1,600 employees, of which 800 are direct employees and 800 are indirect
employees. The adjustments of $13 million reflect accruals no longer required.
During 2010, approximately 1,000 employees, of which 700 were direct employees and 300 were indirect
employees, were separated from the Company. The $41 million used in 2010 reflects cash payments to these
separated employees. The remaining accrual of $50 million, which is included in Accrued liabilities in the
Company’s consolidated balance sheets at December 31, 2010.
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. Both of the Company’s segments were impacted by these plans.
The employees affected are located in all geographic regions.
The Company recorded net reorganization of business charges of $102 million, including $14 million of
charges in Costs of sales and $88 million of charges under Other charges in the Company’s consolidated statements
of operations. Included in the aggregate $102 million are charges of $114 million for employee separation costs, $6
million for exit costs, partially offset by $18 million of reversals for accruals no longer needed.