Motorola 2004 Annual Report Download - page 106

98 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
In July 2004, the Company called for the redemption of the $1.4 billion aggregate principal amount
outstanding of its 6.75% Debentures due 2006 (the ""2006 Debentures''). All of the 2006 Debentures were
redeemed in August 2004 for an aggregate purchase price of approximately $1.5 billion. This debt was redeemed
partially with proceeds distributed to the Company by Freescale Semiconductor and partially with available cash
balances.
In June 2004, the Company repaid, at maturity, all $500 million aggregate principal amount outstanding of its
6.75% Debentures due 2004.
In March 2004, Motorola Capital Trust I, a Delaware statutory business trust and wholly-owned subsidiary of
the Company (the ""Trust''), redeemed all outstanding Trust Originated Preferred Securities
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(""TOPrS''). In
February 1999, the Trust sold 20 million TOPrS to the public for an aggregate oÅering price of $500 million. The
Trust used the proceeds from that sale, together with the proceeds from its sale of common stock to the Company,
to buy a series of 6.68% Deferrable Interest Junior Subordinated Debentures due March 31, 2039 (the
""Subordinated Debentures'') from the Company with the same payment terms as the TOPrS. The sole assets of the
Trust were the Subordinated Debentures. Historically, the TOPrS have been reÖected as ""Company-Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Company-Guaranteed Debentures''
in the Company's consolidated balance sheets. On March 26, 2004, all outstanding TOPrS were redeemed for an
aggregate redemption price of $500 million plus accrued interest. No TOPrS or Subordinated Debentures remain
outstanding.
In March 2004, the Company also redeemed all outstanding Liquid Yield Option Notes due September 7, 2009
(the ""2009 LYONs'') and all outstanding Liquid Yield Option Notes due September 27, 2013 (the ""2013
LYONs''). On March 26, 2004, all then-outstanding 2009 LYONs and 2013 LYONs, not validly exchanged for
stock, were redeemed for an aggregate redemption price of approximately $4 million. No 2009 LYONs or 2013
LYONs remain outstanding.
In September 2003, the Company announced the conclusion of its oÅer to purchase its 2013 LYONs. Pursuant
to the indenture under which the 2013 LYONs were issued in September 1993, the holders' option to surrender the
2013 LYONs for repurchase that began on August 29, 2003 expired on September 29, 2003. 2013 LYONs with an
aggregate principal amount at maturity of approximately $98 million were validly tendered and repurchased by
Motorola. This left an aggregate principal amount of approximately $4 million of 2013 LYONs outstanding. The
purchase price for the LYONs was $799.52 per $1,000 principal amount at maturity. Accordingly, the aggregate
purchase price for all of the LYONs that were validly tendered was approximately $78 million. Motorola paid the
purchase price with available cash.
In December 2002, the Company entered into an agreement with Goldman, Sachs & Co. (""Goldman'') to
repurchase all of the Company's $825 million of Puttable Reset Securities (PURS)
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due February 1, 2011 from
Goldman. At that time, the Company paid Goldman $106 million to terminate Goldman's annual remarketing rights
associated with the PURS. This charge was included in Other within Other Income (Expense) in the Company's
consolidated statements of operations. In February 2003, the Company purchased the $825 million of PURS from
Goldman with cash on hand.
Aggregate requirements for long-term debt maturities (assuming earliest put date) during the next Ñve years are
as follows: 2005-$400 million; 2006-$2 million; 2007-$1.3 billion; 2008-$527 million; 2009-$2 million.
In May 2004, the Company signed a new 3 year revolving credit agreement for $1 billion, replacing two
existing facilities totaling $1.6 billion. At December 31, 2004, the commitment fee assessed against the daily average
amounts unused was 17.5 basis points. Important terms of the credit agreement include covenants relating to net
interest coverage and total debt to book capitalization ratios. The Company was in compliance with the terms of
the credit agreement at December 31, 2004. The Company's current corporate credit ratings are ""BBB'' with a
""positive'' outlook by S&P, ""Baa3'' with a ""positive'' outlook by Moody's, and ""BBB°'' with a ""positive'' outlook
by Fitch. The Company has never borrowed under its domestic revolving credit facilities. The Company also has
$1.9 billion of non-U.S. credit facilities with interest rates on borrowings varying from country to country
depending upon local market conditions. At December 31, 2004, the Company's total domestic and non-U.S. credit
facilities totaled $2.9 billion, of which $76 million was considered utilized.
LYONs is a trademark of Merrill Lynch & Co., Inc.
SM ""Trust Originated Preferred Securities'' and ""TOPrS'' are service marks of Merrill Lynch & Co., Inc.
SM ""Puttable Reset Securities PURS'' is a service mark of Goldman, Sachs & Co