Motorola 2008 Annual Report Download - page 100

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2. Discontinued Operations
During the year ended December 31, 2006, the Company completed the sale of its automotive electronics
business to Continental AG for $856 million in net cash received. The Company recorded a gain on sale of
business of $399 million before income taxes, which is included in Earnings (loss) from discontinued operations,
net of tax, in the Company’s consolidated statements of operations.
On December 2, 2004, the Company completed the separation and spin-off of Freescale Semiconductor, Inc.
(“Freescale Semiconductor”). Under the terms of the Master Separation and Distribution Agreement entered into
between Motorola and Freescale Semiconductor, Freescale Semiconductor has agreed to indemnify Motorola for
substantially all past, present and future liabilities associated with the semiconductor business. The spin-off was
effected by way of a pro rata non-cash dividend to Motorola stockholders, which reduced retained earnings by
$2.5 billion. The equity distribution was structured to be tax-free to Motorola stockholders for U.S. tax purposes
(other than with respect to any cash received in lieu of fractional shares).
The financial results of the automotive electronics business and Freescale Semiconductor were reflected as
discontinued operations in the consolidated financial statements and related notes thereto. During the year ended
December 31, 2008, the discontinued operations activity primarily relates to the resolution and payment of certain
indemnifications relating to a divestiture. During the year ended December 31, 2007, the discontinued operations
activity primarily relates to resolutions of certain matters with the tax authorities and payments of post-retiree
medical claims to former employees.
The following table displays summarized activity in the Company’s consolidated statements of operations for
discontinued operations during the years ended December 31, 2007 and 2006. The Company had no such activity
during the year end December 31, 2008.
Years Ended December 31 2007 2006
Net sales $ — $860
Operating earnings 10 87
Gains on sales of investments and businesses, net — 399
Earnings before income taxes 10 482
Income tax expense (benefit) (46) 82
Earnings from discontinued operations, net of tax 56 400
3. Other Financial Data
Statement of Operations Information
Other Charges
Other charges included in Operating earnings (loss) consist of the following:
Years Ended December 31 2008 2007 2006
Other charges (income):
Goodwill impairment $1,619 $— $ —
Intangibles amortization 318 369 100
Reorganization of businesses 248 290 172
Asset impairments 136 89 —
Separation-related transaction costs 59 ——
Legal settlements and related insurance matters, net 14 140 50
In-process research and development charges 196 33
Gain on sale of property, plant and equipment (48) ——
Charitable contribution to Motorola Foundation ——88
Settlements and collections related to Telsim —— (418)
$2,347 $984 $ 25
92