Motorola 2007 Annual Report Download - page 63

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revolving credit facilities. Utilization of the non-U.S. credit facilities may also be dependent on the Company’s
ability to meet certain conditions at the time a borrowing is requested.
Contractual Obligations and Other Purchase Commitments
Summarized in the table below are the Company’s obligations and commitments to make future payments
under debt obligations (assuming earliest possible exercise of put rights by holders), purchase obligations, lease
payment obligations, and tax obligations as of December 31, 2007.
(in millions) Total 2008 2009 2010 2011 2012 Uncertain
Timeframe Thereafter
Payments Due by Period
(1)
Long-Term Debt Obligations $4,221 $ 198 $ 4 $534 $607 $409 $ — $2,469
Purchase Obligations 2,153 1,160 418 30 18 4 — 523
Lease Obligations 1,419 355 268 253 169 162 — 212
Tax Obligations 1,400 40 — — — — 1,360 —
Total Contractual Obligations $9,193 $1,753 $690 $817 $794 $575 $1,360 $3,204
(1) Amounts included represent firm, non-cancelable commitments.
Debt Obligations: At December 31, 2007, the Company’s long-term debt obligations, including current
maturities and unamortized discount and issue costs, totaled $4.2 billion, as compared to $4.1 billion at
December 31, 2006. A table of all outstanding long-term debt securities can be found in Note 4, “Debt and Credit
Facilities,” to the Company’s consolidated financial statements.
Purchase Obligations: The Company has entered into agreements for the purchase of inventory, license of
software, promotional activities, and research and development, which are firm commitments and are not
cancelable. The longest of these agreements extends through 2015. Total payments expected to be made under
these agreements total $2.2 billion.
The Company enters into a number of arrangements for the sourcing of supplies and materials with take-or-
pay obligations. The Company’s obligations with these suppliers run through 2011 and total a minimum purchase
obligation of $1.2 billion during that period. The $1.2 billion reflects an amended agreement that was completed
subsequent to December 31, 2007 with one supplier that reduced the Company’s minimum purchase obligation by
approximately $200 million. Subsequent to the end of 2007, the Company entered into new take-or-pay
arrangements with suppliers that extend through 2009 with minimum purchase obligations of $63 million. The
Company does not anticipate the cancellation of any of these agreements in the future and estimates that purchases
from these suppliers will exceed the minimum obligations during the agreement periods.
Lease Obligations: The Company owns most of its major facilities, but does lease certain office, factory and
warehouse space, land, and information technology and other equipment under principally non-cancelable
operating leases. At December 31, 2007, future minimum lease obligations, net of minimum sublease rentals,
totaled $1.4 billion. Rental expense, net of sublease income, was $231 million in 2007, $241 million in 2006 and
$250 million in 2005.
Tax Obligations: The Company has approximately $1.4 billion of unrecognized income tax benefits relating
to multiple tax jurisdictions and tax years. A significant portion of the unrecognized tax benefits, if settled, would
not result in current or future payments as tax carry forwards are available for utilization. The Company
anticipates that it is reasonably possible that $40 million of unrecognized tax benefits could be settled in 2008.
However, it is not possible to estimate the timing of any other potential settlements.
Commitments Under Other Long-Term Agreements: The Company has entered into certain long-term
agreements to purchase software, components, supplies and materials from suppliers. Most of the agreements
extend for periods of one to three years (three to five years for software). However, generally these agreements do
not obligate the Company to make any purchases, and many permit the Company to terminate the agreement with
advance notice (usually ranging from 60 to 180 days). If the Company were to terminate these agreements, it
generally would be liable for certain termination charges, typically based on work performed and supplier on-hand
inventory and raw materials attributable to canceled orders. The Company’s liability would only arise in the event
it terminates the agreements for reasons other than “cause.”
55
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS