Motorola 2009 Annual Report Download - page 61

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53
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
6.50% Debentures due 2025, (iii) $14 million of the $299 million then outstanding of 6.50% Debentures due
2028, and (iv) $154 million of the $600 million then outstanding of 6.625% Senior Notes due 2037. The
Company recognized a gain of approximately $67 million related to these open market purchases in Other within
Other income (expense) in the consolidated statements of operations.
In December 2008, the Company completed the open market purchase of $42 million of the $400 million
then outstanding of the 2025 Debentures. The $42 million principal amount of 2025 Debentures was purchased
for an aggregate purchase price of approximately $28 million, including accrued interest. During 2008, the
Company recognized a gain of approximately $14 million related to this open market purchase in Other within
Other income (expense) in the consolidated statements of operations.
The Company believes that it will be able to maintain sufficient access to the capital markets, though there
may be periods of time when access to the capital markets is limited for all issuers. As a ‘‘split rated credit’’, the
Company’s ability to issue long-term debt may be limited. The market into which split rated debt is offered can
be very volatile and can be unavailable for periods of time. As a result, it may be more difficult for the Company
to quickly access the long-term debt market and any debt issued may be more costly, which may impact the
Company’s operating and financial flexibility.
The Company may from time to time seek to 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: During 2009, the Company did not repurchase any of its common shares.
During 2008, the Company paid an aggregate of $138 million, including transaction costs, to repurchase
9.0 million shares of the Company’s common stock at an average price of $15.32, all of which shares were
repurchased during the first quarter. Through actions taken in July 2006 and March 2007, the Board of Directors
had authorized the Company to repurchase an aggregate amount of up to $7.5 billion of its outstanding shares of
common stock over a period of time. This authorization expired in June 2009 and was not renewed. The
Company has not repurchased any shares since the first quarter of 2008. All repurchased shares have been
retired.
Payment of Dividends: During 2009, the Company paid $114 million in cash dividends to holders of its
common stock, all of which was paid during the first quarter of 2009, related to the payment of a dividend
declared in November 2008. In February 2009, the Company announced that its Board of Directors suspended
the declaration of quarterly dividends on the Company’s common stock.
Credit Ratings: Three independent credit rating agencies, Fitch Ratings (‘‘Fitch’’), Moody’s Investors Service
(‘‘Moody’s’’) and Standard & Poor’s (‘‘S&P’’), assign ratings to the Company’s public market debt. The following
chart reflects the current ratings assigned to the Company’s senior unsecured non-credit enhanced long-term debt
and the Company’s commercial paper by each of these agencies.
Name of Long-Term Commercial
Rating Agency Debt Rating Paper Rating Date and Recent Actions Taken
Fitch BBB- F-3 February 3, 2009, downgraded long-term debt to BBB- (negative
outlook) from BBB (negative outlook) and downgraded
short-term debt to F-3 (negative outlook) from F-2 (negative
outlook).
Moody’s Baa3 P-3 February 3, 2009, downgraded long-term debt to Baa3 (negative
outlook) from Baa2 (review for downgrade) and downgraded
short-term debt to P-3 (negative outlook) from P-2 (review for
downgrade).
S&P BB+ — December 5, 2008, downgraded long-term debt to BB+ (stable
outlook) from BBB (credit watch negative) and withdrew the
rating on commercial paper.
Since the Company has investment grade ratings from Fitch and Moody’s and a non-investment grade rating
from S&P, it is referred to as a ‘‘split-rated credit.’’