Motorola 2006 Annual Report Download - page 59

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financing Activities
The most significant components of the Company's financing activities are: (i) the purchase of the Company's
common stock under its share repurchase program, (ii) proceeds from the issuances of stock due to the exercise of
employee stock options and purchases under the employee stock purchase plan, (iii) the payment of dividends,
(iv) excess tax benefits from share-based compensation, (v) net proceeds from commercial paper and short-term
borrowings, (vi) distributions to discontinued operations, and (vii) repayment of debt.
Net cash used for financing activities from continuing operations was $3.2 billion in 2006, compared to
$907 million of cash used in 2005 and $153 million of cash used in 2004. Cash used for financing activities from
continuing operations in 2006 was primarily: (i) $3.8 billion of cash used for purchases of the Company's common
stock under the share repurchase program, (ii) $443 million of cash used to pay dividends, and (iii) $23 million
paid to discontinued operations for interim funding requirements associated with the automotive electronics
business prior to the sale, partially offset by proceeds of: (i) $918 million received from the issuance of common
stock in connection with the Company's employee stock option plans and employee stock purchase plan,
(ii) $165 million in excess tax benefits from share-based compensation, and (iii) $66 million in net proceeds from
commercial paper and short-term borrowings.
Cash used for financing activities from continuing operations in 2005 was primarily attributable to:
(i) $1.1 billion of cash used to repay debt, (ii) $874 million of cash used for purchases of the Company's common
stock under the share repurchase program, and (iii) $394 million of cash used to pay dividends, partially offset by
proceeds of $1.2 billion received from the issuance of common stock in connection with the Company's employee
stock option plans and employee stock purchase plan.
Short-term Debt: At December 31, 2006, the Company's outstanding notes payable and current portion of
long-term debt was $1.7 billion, compared to $448 million at December 31, 2005. During the fourth quarter of
2006, $1.2 billion of 4.608% Senior Notes due November 16, 2007 (the ""2007 4.608% Notes'') were reclassified to
current portion of long-term debt.
Net cash proceeds from the sale of commercial paper and short-term borrowings were $66 million in 2006,
compared to $11 million in 2005. The Company had $300 million of outstanding commercial paper on both
December 31, 2006 and 2005.
Long-term Debt: At December 31, 2006, the Company had outstanding long-term debt of $2.7 billion,
compared to $3.8 billion at December 31, 2005. The change can be primarily attributed to the reclassification to
current portion of long-term debt of the $1.2 billion of 2007 4.608% Notes.
Redemptions and Repurchases of Outstanding Debt Securities: In January 2007, the Company repaid, at
maturity, all $118 million aggregate principal amount outstanding of its 7.6% Notes due January 1, 2007.
In September 2005, the Company repurchased an aggregate principal amount of $1.0 billion of its outstanding
long-term debt for an aggregate purchase price of $1.1 billion through cash tender offers. Included in the
$1.0 billion of long-term debt repurchased were repurchases of a principal amount of: (i) $86 million of the
$200 million of 6.50% Notes due 2008 outstanding, (ii) $241 million of the $325 million of 5.80% Notes due
2008 outstanding, and (iii) $673 million of the $1.2 billion of 7.625% Notes due 2010 outstanding. In addition, the
Company terminated a notional amount of $1.0 billion fixed-to-floating interest rate swaps associated with the debt
repurchased, resulting in an expense of approximately $22 million. The aggregate charge for the repurchase of the
debt and the termination of the associated interest rate swaps, as presented in Other income (expense), was
$137 million.
On September 1, 2005, the Company retired $1 million of the $398 million of the 2025 Debentures in
connection with the holders of the debentures right to put their debentures back to the Company. The residual put
options expired unexercised and the remaining $397 million of 2025 Debentures were reclassified back to long-term
debt.
The Company may from time to time seek to opportunistically retire certain of its outstanding debt through
open market cash purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will depend on
prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors.
Share Repurchase Program: In May 2005, the Board of Directors authorized the Company to purchase up to
$4.0 billion of its outstanding common stock over a period of up to 36 months ending in May 2008, subject to