Motorola 2008 Annual Report Download - page 128

Download and view the complete annual report

Please find page 128 of the 2008 Motorola annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

Other: The Company is a defendant in various other suits, claims and investigations that arise in the normal
course of business. In the opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.
Other
Leases: The Company owns most of its major facilities and leases certain office, factory and warehouse
space, land, and information technology and other equipment under principally non-cancelable operating leases.
Rental expense, net of sublease income, for the years ended December 31, 2008, 2007 and 2006 was $181 million,
$231 million and $241 million, respectively. At December 31, 2008, future minimum lease obligations, net of
minimum sublease rentals, for the next five years and beyond are as follows: 2009—$234 million; 2010—
$175 million; 2011—$129 million; 2012—$78 million; 2013—$48 million; beyond—$106 million.
Indemnifications: The Company is also a party to a variety of agreements pursuant to which it is obligated
to indemnify the other party with respect to certain matters. Some of these obligations arise as a result of
divestitures of the Company’s assets or businesses and require the Company to hold the other party harmless
against losses arising from the settlement of these pending obligations. The total amount of indemnification under
these types of provisions is $64 million, of which the Company accrued $47 million as of December 31, 2008 for
potential claims under these provisions.
In addition, the Company may provide indemnifications for losses that result from the breach of general
warranties contained in certain commercial and intellectual property. Historically, the Company has not made
significant payments under these agreements. However, there is an increasing risk in relation to patent indemnities
given the current legal climate.
In indemnification cases, payment by the Company is conditioned on the other party making a claim pursuant
to the procedures specified in the particular contract, which procedures typically allow the Company to challenge
the other party’s claims. Further, the Company’s obligations under these agreements for indemnification based on
breach of representations and warranties are generally limited in terms of duration, and for amounts not in excess
of the contract value, and, in some instances, the Company may have recourse against third parties for certain
payments made by the Company.
Other: During the three months ended September 27, 2008, the Company recorded a $150 million charge
related to the settlement of a purchase commitment. During the three months ended December 31, 2007, the
Company recorded a $277 million charge for a legal settlement.
12. Information by Segment and Geographic Region
The Company reports financial results for the following business segments:
• The Mobile Devices segment designs, manufactures, sells and services wireless handsets with integrated
software and accessory products, and licenses intellectual property.
• The Home and Networks Mobility segment designs, manufactures, sells, installs and services: (i) digital
video, Internet Protocol (“IP”) video and broadcast network interactive set-tops (“digital entertainment
devices”), end-to-end video delivery systems, broadband access infrastructure platforms, and associated
data and voice customer premise equipment (“broadband gateways”) to cable television and telecom
service providers (collectively, referred to as the “home business”), and (ii) wireless access systems
(“wireless networks”), including cellular infrastructure systems and wireless broadband systems, to wireless
service providers (collectively, referred to as the “networks business”).
• The Enterprise Mobility Solutions segment designs, manufactures, sells, installs and services analog and
digital two-way radio, voice and data communications products and systems for private networks, wireless
broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets,
including government and public safety agencies (which, together with all sales to distributors of two-way
communication products, are referred to as the “government and public safety market”), as well as retail,
utility, transportation, manufacturing, health care and other commercial customers (which, collectively, are
referred to as the “commercial enterprise market”).
120