Motorola 2005 Annual Report Download - page 63

56 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Share Repurchase Program: On May 18, 2005, the Company announced that its Board of Directors
authorized the Company to purchase up to $4 billion of its outstanding common stock over a 36-month period
ending on May 31, 2008, subject to market conditions. During 2005, the Company has paid $874 million to
repurchase 41.7 million shares at an average price of $20.94 per share; all shares repurchased have been retired.
Credit Ratings: Three independent credit rating agencies, Fitch Investors Service (""Fitch''), Moody's Investor
Services (""Moody's''), and Standard & Poor's (""S&P''), assign ratings to the Company's short-term and long-term
debt. The following chart reflects the current ratings assigned to the Company's senior unsecured non-credit
enhanced long-term debt and the Company's commercial paper by each of these agencies.
Long-Term Debt Commercial
Name of Rating Agency Rating Outlook Paper Date of Last Action
Moody's Baa2 stable P-2 June 2, 2005 (upgrade)
S&P BBB° stable A-2 May 31, 2005 (upgrade)
Fitch BBB° positive F-2 January 20, 2005 (upgrade)
In June 2005, Moody's upgraded the Company's long-term debt rating to ""Baa2'' with a ""stable'' outlook from
""Baa3'' with a ""positive'' outlook. Moody's also upgraded the Company's short-term debt rating to ""P-2'' from
""P-3''. In May 2005, S&P upgraded the Company's long-term debt rating to ""BBB°'' with a ""stable'' outlook from
""BBB'' with a ""positive'' outlook. There was no change in the short-term rating of ""A-2''. In January 2005, Fitch
upgraded the Company's long-term debt rating to ""BBB°'' with a ""positive'' outlook from ""BBB'' with a ""positive''
outlook. There was no change in the short-term rating of ""F-2''.
The Company's debt ratings are considered ""investment grade.'' If the Company's senior long-term debt were
rated lower than ""BBB-'' by S&P or Fitch or ""Baa3'' by Moody's (which would be a decline of two levels from
current Moody's ratings), the Company's long-term debt would no longer be considered ""investment grade.'' If this
were to occur, the terms on which the Company could borrow money would become more onerous. The Company
would also have to pay higher fees related to its domestic revolving credit facility. The Company has never
borrowed under its domestic revolving credit facilities.
The Company continues to have access to the commercial paper and long-term debt markets. However, the
Company generally has had to pay a higher interest rate to borrow money than it would have if its credit ratings
were higher. The Company has maintained commercial paper balances of between $300 million and $500 million
for the past four years. This reflects the fact that the market for commercial paper rated ""A-2/P-2/F-2'' is smaller
than that for commercial paper rated ""A-1/P-1/F-1'' and commercial paper or other short-term borrowings may be
of limited availability to participants in the ""A-2/P-2/F-2'' market from time-to-time or for extended periods.
As further described under ""Customer Financing Arrangements'' below, for many years the Company has
utilized a number of receivables programs to sell a broadly-diversified group of short-term receivables to third
parties. Certain of the short-term receivables are sold to a multi-seller commercial paper conduit. This program
provides for up to $300 million of short-term receivables to be outstanding with the conduit at any time. The
obligations of the conduit to continue to purchase receivables under this short-term receivables program could be
terminated if the Company's long-term debt was rated lower than ""BB°'' by S&P or ""Ba1'' by Moody's (which
would be a decline of three levels from the current Moody's rating). If this short-term receivables program were
terminated, the Company would no longer be able to sell its short-term receivables to the conduit in this manner,
but it would not have to repurchase previously-sold receivables.
Credit Facilities
At December 31, 2005, the Company's total domestic and non-U.S. credit facilities totaled $2.9 billion, of
which $95 million was considered utilized. These facilities are principally comprised of: (i) a $1.0 billion three-year
revolving domestic credit facility maturing in May 2007 (the ""3-Year Credit Facility'') which is not utilized, and
(ii) $1.9 billion of non-U.S. credit facilities (of which $95 million was considered utilized at December 31, 2005).
Unused availability under the existing credit facilities, together with available cash, cash equivalents, Sigma Funds
balances and other sources of liquidity, are generally available to support outstanding commercial paper, which was
$300 million at December 31, 2005.
In order to borrow funds under the 3-Year Credit Facility, the Company must be in compliance with various
conditions, covenants and representations contained in the agreements. Important terms of the 3-Year Credit