Motorola 2004 Annual Report Download - page 53

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45
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reorganization of Businesses ChargesÌby Segment
The following table displays the net charges incurred by segment for the year ended December 31, 2002:
Exit Employee Asset
Segment Costs Separations Writedowns Total
Personal Communications $(5) $ 70 $119 $184
Global Telecom Solutions 56 128 25 209
Commercial, Government and Industrial Solutions (16) 58 3 45
Broadband Communications 4 37 9 50
Integrated Electronic Systems 24 20 23 67
Other Products (8) 19 7 18
55 332 186 573
General Corporate 24 27 49 100
$79 $359 $235 $673
Reorganization of Businesses Accruals
The following table displays a rollforward of the accruals established for exit costs and employee separation
costs from January 1, 2002 to December 31, 2002:
Accruals at 2002 Accruals at
January 1, Additional 2002(1) 2002 Amount December 31,
2002 Charges Adjustments Used 2002
Exit costsÌlease terminations $294 $156 $ (77) $(164) $209
Employee separation costs 358 467 (108) (381) 336
$652 $623 $(185) $(545) $545
(1) Includes translation adjustments.
Exit CostsÌLease Terminations
The 2002 additional charges of $156 million were related to lease cancellation fees, primarily in Global
Telecom Solutions segment. The adjustments of $77 million represented exit costs accruals across all segments
which were no longer needed. The 2002 amount used of $164 million reÖects cash payments of $161 million and
non-cash utilization of $3 million. In 2003 and 2004, the Company utilized $87 million of the $209 million
remaining accrual and reversed $51 million. The remaining accrual represents future cash payments, primarily for
lease termination obligations.
Employee Separation Costs
At January 1, 2002, the Company had an accrual of $358 million for employee separation costs, representing
the severance costs for approximately 6,500 employees, of which 3,200 were direct employees and 3,300 were
indirect employees. The 2002 additional charges of $467 million represented the severance costs for approximately
8,900 employees, of which 2,600 were direct employees and 6,300 were indirect employees. The accrual was for
various levels of employees. The reversals into income of $108 million represent the severance costs for
approximately 900 employees previously identiÑed for separation who resigned from the Company and did not
receive severance or were redeployed due to circumstances not foreseen when the original plans were approved.
During 2002, approximately 8,800 employees, of which 3,200 were direct employees and 5,600 were indirect
employees, were separated from the Company. The 2002 amount used of $381 million reÖects $368 million of cash
payments to these separated employees and $13 million of non-cash utilization. In 2003 and 2004, the Company
utilized $214 million of the $336 million remaining accrual and reversed $122 million.