Motorola 2005 Annual Report Download - page 34

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27
Compliance with changing regulation of corporate governance and public disclosure may result in additional
expenses.
Compliance with changing laws, regulations and standards relating to corporate governance and public
disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and changes to the New York Stock
Exchange rules, has required us to expend significant resources and incur additional expenses and will continue to
do so. We are committed to maintaining the highest standards of corporate governance and public disclosure. As a
result, we will continue to invest necessary resources to comply with evolving laws, regulations and standards, and
this investment may continue to result in increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities.
The outcome of currently ongoing and future examinations of our income tax returns by the IRS.
We are subject to continued examination of our income tax returns by the Internal Revenue Service and other
tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to
determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from
these continuing examinations will not have an adverse effect on future operating results.
Item 1B: Unresolved Staff Comments
None.
Item 2: Properties
Motorola's principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196.
Motorola also operates manufacturing facilities and sales offices in other U.S. locations and in many other
countries. (See ""Item 1: Business'' for information regarding the location of the principal manufacturing facilities
for each of Motorola's business segments.) Motorola owns 49 facilities (manufacturing, sales, service and office),
28 of which are located in North America and 21 of which are located in other countries. Motorola leases 275
facilities, 91 of which are located in North America and 184 of which are located in other countries.
As compared to 2004, the number of facilities owned or leased was reduced primarily because of the
optimization of space and workplace mobility programs being utilized instead of adding sites and space. In addition,
as part of Motorola's overall strategy to reduce operating costs and improve the financial performance of the
corporation, a number of businesses and facilities have either been sold or are currently for sale. During 2005,
facilities in Tianjin, China; Phoenix, AZ; Harvard, IL; Beijing, China; Elgin, IL and land parcels in Ft. Worth, TX;
Tempe, AZ and Suwanee, GA were sold. Land parcels in Elgin, IL are currently up for sale.
Motorola generally considers the productive capacity of the plants operated by each of its business segments to
be adequate and sufficient for the requirements of each business group. The extent of utilization of such
manufacturing facilities varies from plant to plant and from time to time during the year.
A substantial portion of Motorola's products are manufactured in Asia, primarily China, either in our own
facilities or in the facilities of others who manufacture and assemble products for Motorola. If manufacturing in
the region was disrupted, Motorola's overall productive capacity could be significantly reduced.
Item 3: Legal Proceedings
Personal Injury Cases
Cases relating to Wireless Telephone Usage
Motorola has been the defendant in several cases arising out of its manufacture and sale of wireless telephones.
On May 26, 2000, a purported nationwide class action suit Naquin, et al., v. Nokia Mobile Phones, et al was filed
against Motorola and several other cellular phone manufacturers and carriers in the Civil District Court for the
Parish of Orleans, State of Louisiana. The case alleges that the failure to incorporate a remote headset into cellular
phones rendered the phones defective by exposing users to biological injury and health risks. In the Second
Supplemental and Amending Class Action Complaint, plaintiffs seek compensatory damages and injunctive relief.
Similar state class action suits were filed on April 19, 2001, in the Circuit Court for Baltimore City, Maryland,