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47
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
employees who began receiving payments in 2009, and (ii) approximately 1,200 employees who will begin
receiving payments in 2010.
2008 Charges
During 2008, the Company committed 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, were impacted by these plans, with the majority of
the impact in the Mobile Devices segment. The employees affected were located in all regions. The Company
recorded net reorganization of business charges of $334 million, including $86 million of charges in Costs of
sales and $248 million of charges under Other charges in the Company’s consolidated statements of operations.
Included in the aggregate $334 million are charges of $324 million for employee separation costs, $66 million for
exit costs and $9 million for fixed asset impairment charges, partially offset by $65 million of reversals for
accruals no longer needed.
The following table displays the net charges incurred by business segment:
Year Ended December 31, 2008
Mobile Devices $216
Home and Networks Mobility 53
Enterprise Mobility Solutions 27
296
Corporate 38
$334
The following table displays a rollforward of the reorganization of businesses accruals established for exit
costs and employee separation costs from January 1, 2008 to December 31, 2008:
Accruals at Additional Amount Accruals at
2008 January 1 Charges Adjustments Used December 31
Exit costs $ 42 $ 66 $ 1 $ (29) $ 80
Employee separation costs 193 324 (60) (287) 170
$235 $390 $(59) $(316) $250
Adjustments include translation adjustments.
Exit Costs
At January 1, 2008, the Company had an accrual of $42 million for exit costs attributable to lease
terminations. The 2008 additional charges of $66 million were primarily related to: (i) the exit of leased facilities
in the United Kingdom by the Mobile Devices segment, and (ii) the exit of leased facilities in Mexico by the
Home and Networks Mobility segment. The adjustments of $1 million reflect $4 million of translation
adjustments, partially offset by $3 million of reversals of accruals no longer needed. The $29 million used in
2008 reflected cash payments. The remaining accrual of $80 million, which was included in Accrued liabilities in
the Company’s consolidated balance sheets at December 31, 2008, represented future cash payments, primarily
for lease termination obligations.
Employee Separation Costs
At January 1, 2008, the Company had an accrual of $193 million for employee separation costs, representing
the severance costs for approximately 2,800 employees. The additional 2008 charges of $324 million were
severance costs for approximately an additional 5,800 employees, of which 2,300 were direct employees and
3,500 were indirect employees.
The adjustments of $60 million reflected $62 million of reversals of accruals no longer required, partially
offset by $2 million of translation adjustments. The $62 million of reversals represented previously accrued costs
for approximately 600 employees.
During 2008, approximately 6,200 employees, of which 3,000 were direct employees and 3,200 were indirect
employees, were separated from the Company. The $287 million used in 2008 reflected cash payments to these
separated employees. The remaining accrual of $170 million was included in Accrued liabilities in the Company’s
consolidated balance sheets at December 31, 2008.