Motorola 2009 Annual Report Download - page 125

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117
extinguished Motorola’s financial exposure and concluded Motorola’s involvement in the Iridium bankruptcy
proceedings.
Telsim Class Action Securities: In April 2007, the Company entered into a settlement agreement in regards
to In re Motorola Securities Litigation, a class action lawsuit relating to the Company’s disclosure of its
relationship with Telsim Mobil Telekomunikasyon Hizmetleri A.S. Pursuant to the settlement, Motorola paid
$190 million to the class and all claims against Motorola by the class have been dismissed and released.
During the three months ended March 31, 2007, the Company recorded a charge of $190 million for the
legal settlement, partially offset by $75 million of estimated insurance recoveries, of which $50 million had been
tendered by certain insurance carriers. During the three months ended June 30, 2007, the Company commenced
actions against the non-tendering insurance carriers. In response to these actions, each insurance carrier who has
responded denied coverage citing various policy provisions. As a result of this denial of coverage and related
actions, the Company recorded a reserve of $25 million in the three months ended June 30, 2007 against the
receivable from insurance carriers. During the three months ended September 27, 2008, the Company received the
$50 million tendered by the insurance carriers. During the three months ended December 31, 2008, the Company
received a net $43 million tendered by other insurance carriers.
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, 2009, 2008, and 2007 was
$153 million, $181 million, and $231 million, respectively. At December 31, 2009, future minimum lease
obligations, net of minimum sublease rentals, for the next five years and beyond are as follows: 2010—
$208 million; 2011—$161 million; 2012—$109 million; 2013—$59 million; 2014—$38 million; beyond—
$93 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 $141 million, of which the Company accrued $53 million as of December 31, 2009
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.