Summary
Motorola Solutions, Inc. (MSI) filed an 8-K on April 6, 2009, reporting on significant cost-reduction initiatives. The company announced plans approved on April 4, 2009, that will lead to workforce reductions of approximately 2,800 employees and an estimated pre-tax charge of $110 million in the first quarter of 2009 for severance costs. These new plans also include an additional $13 million in pre-tax charges for other exit-related activities such as contract terminations and asset impairments. Cumulatively, when combined with prior actions disclosed in a January 21, 2009 filing, the total pre-tax charge for the first quarter of 2009 is approximately $229 million. This includes $216 million for severance affecting around 5,600 employees and $13 million for other exit costs. The majority of the cash outflows related to these reductions occurred in Q1 2009, with the remainder expected in subsequent quarters of 2009. These actions impact all of Motorola's business segments and corporate functions, indicating a broad restructuring effort.
Key Highlights
- 1Motorola announced new cost-reduction plans impacting approximately 2,800 employees.
- 2An estimated pre-tax charge of $110 million is expected in Q1 2009 for severance costs related to these new workforce reductions.
- 3Additional pre-tax charges of approximately $13 million are anticipated in Q1 2009 for other exit-related activities, including contract terminations and asset impairments.
- 4The total pre-tax charge for Q1 2009, including previously disclosed actions, is now approximately $229 million.
- 5The cumulative workforce reduction impacts about 5,600 employees, with $216 million allocated for severance costs.
- 6The majority of cash payments for these reductions were made in Q1 2009, with the rest spread over future quarters in 2009.
- 7These cost-saving measures affect all business segments and corporate functions of Motorola.