Motorola 2012 Annual Report Download - page 98

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90
Exit Costs
At January 1, 2012, the Company had an accrual of $14 million for exit costs attributable to lease terminations. There
were no additional charges in 2012. The net adjustments of $1 million reflect $2 million of reversals of accruals no longer
needed, offset by $3 million of other adjustments. The $11 million used in 2012 reflects cash payments. The remaining accrual
of $4 million, which is included in Accrued liabilities in the Company’s consolidated balance sheets at December 31, 2012,
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, 2012, the Company had an accrual of $30 million for employee separation costs, representing the severance
costs for: (i) severed employees who began receiving payments in 2011, and (ii) approximately 700 employees who began
receiving payments in 2012. The 2012 additional charges of $54 million represent severance costs for approximately an
additional 1,000 employees, of which 300 were direct employees and 700 were indirect employees. The adjustments of $9
million reflect reversals of accruals no longer needed.
During 2012, approximately 1,000 employees, of which 700 were indirect employees and 300 were direct employees,
were separated from the Company. The $44 million used in 2012 reflects cash payments to separated employees. The
remaining accrual of $31 million, which is included in Accrued liabilities in the Company’s consolidated balance sheet at
December 31, 2012, is expected to be paid, generally, within one year to: (i) severed employees who have already begun to
receive payments, and (ii) approximately 700 employees to be separated in 2013.
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 and $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 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:
2011
Accruals at
January 1
Additional
Charges Adjustments
Amount
Used
Accruals at
December 31
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 of $19 million are primarily related to the exit of leased facilities and contractual termination costs. The
$23 million used in 2011 reflects cash payments. The remaining accrual of $14 million, which was included in Accrued
liabilities in the Company’s consolidated balance sheet at December 31, 2011, represents future cash payments, primarily for
lease termination obligations.
Employee Separation Costs
At January 1, 2011, the Company had an accrual of $50 million for employee separation costs, representing the severance
costs for approximately 1,000 employees. The additional 2011 charges of $41 million represent severance costs for
approximately an additional 900 employees, of which 300 are direct employees and 600 are indirect employees. The
adjustments of $3 million reflect accruals no longer required.