Motorola 2004 Annual Report Download - page 48

40 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
income from the reversal of accruals no longer needed due to a settlement with the Company's insurer on items
related to previous environmental claims, (ii) $59 million in income due to the reassessment of remaining reserve
requirements as a result of a litigation settlement agreement with The Chase Manhattan Bank regarding Iridium,
and (iii) $41 million in income from the sale of Iridium-related assets that were previously written down. These
items were partially oÅset by: (i) a $73 million impairment charge relating to goodwill associated with the
infrastructure business of BCS, and (ii) $32 million of in-process research and development charges related to the
acquisition of Winphoria Networks, Inc. by GTSS.
The net charge of $754 million in 2002 was primarily comprised of: (i) a $526 million charge for potentially
uncollectible Ñnance receivables to fully reserve a loan to Telsim, a wireless service provider in Turkey, that
defaulted on a $2.0 billion loan from the Company, (ii) a $325 million intangible asset impairment charge relating
to an intellectual property license that enabled the Company to provide national authorization services for digital
set-top terminals, and (iii) $12 million for acquired in-process research and development charges, primarily related
to the acquisition of Synchronous, Inc. by BCS. These items were partially oÅset by: (i) $63 million of income
from the reduction of accruals, primarily related to termination settlements relating to Iridium, and (ii) $24 million
of income from the reduction of accruals no longer needed due to the settlement with the Company's insurer on
items related to previous environmental claims.
Net Interest Expense
Net interest expense was $294 million in 2003, compared to $355 million in 2002. Net interest expense in
2003 included interest expense of $423 million, partially oÅset by interest income of $129 million. Net interest
expense in 2002 included interest expense of $538 million, partially oÅset by interest income of $183 million. The
decrease in net interest expense in 2003 compared to 2002 reÖects: (i) a reduction in total debt during 2003,
(ii) beneÑts derived from Ñxed-to-Öoating interest rate swaps due to lower interest rates, (iii) lower rates of interest
paid for commercial paper and other short-term borrowings due to the low general interest rate environment during
2003, and (iv) an increase in interest income due to higher average cash balances.
Gains on Sales of Investments and Businesses
Gains on sales of investments and businesses were $539 million in 2003, compared to $81 million in 2002. The
2003 net gains primarily related to: (i) a $255 million gain on the sale of a portion of the Company's shares in
Nextel, (ii) an $80 million gain on the sale of the Company's shares in Symbian Limited, (iii) a $65 million gain
on the sale of the Company's shares in UAB Omnitel of Lithuania, and (iv) a $61 million gain on the sale of a
portion of the Company's shares in Nextel Partners.
The 2002 net gains primarily related to: (i) the sale of equity securities of other companies held for investment
purposes, (ii) the sale of the CodeLink
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bioarray business, and (iii) the reduction of accruals after the settlement
of contingencies associated with the prior sales of certain businesses.
Other
Charges classiÑed as Other, as presented in Other Income (Expense), were $142 million in 2003, compared to
$1.4 billion in 2002. These charges or income primarily include: (i) foreign currency transaction gains (losses),
(ii) equity in net earnings (losses) of aÇliated companies, and (iii) investment impairment charges.
The $142 million of charges classiÑed as Other in 2003 primarily related to: (i) $96 million of investment
impairment charges, partially comprised of a $29 million charge to write down to zero the Company's debt holding
in a European cable operator, and (ii) foreign currency losses of $73 million, partially oÅset by $30 million of
equity in earnings of aÇliated companies.
The $1.4 billion of charges classiÑed as Other in 2002 primarily consisted of $1.2 billion of investment
impairment charges. These impairment charges were primarily comprised of: (i) a $464 million writedown in the
value of the Company's investment in Nextel, (ii) a $321 million writedown of the Company's debt security
holdings and associated warrants in a European cable operator, (iii) a $95 million charge to write the value of the
Company's investment in an Argentine cellular operating company to zero, and (iv) a $73 million writedown of the
Company's investment in Telus Corporation. Other charges included: (i) $98 million of debt redemption charges
paid in 2002 that related to the $825 million of Puttable Reset Securities (PURS) that were redeemed in February
2003, and (ii) foreign currency losses of $36 million.