Motorola 2009 Annual Report Download - page 84

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76
were $(4) million and $(2) million, respectively. The fair value of the Interest Agreements would hypothetically
remain approximately $(4) million if EURIBOR rates were to change unfavorably by 10% from current levels.
Counterparty Risk
The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of
nonperformance by counterparties. However, the Company’s risk is limited to the fair value of the instruments
when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. At present
time, all of the counterparties have investment grade credit ratings. The Company is not exposed to material
credit risk with any single counterparty. As of December 31, 2009, the Company was exposed to an aggregate
credit risk of $8 million with all counterparties.
Net Investment in Foreign Operations Hedge
At December 31, 2009 and 2008, the Company did not have any hedges of foreign currency exposure of net
investments in foreign operations.
Fair Value of Financial Instruments
The Company’s financial instruments include cash equivalents, Sigma Fund investments, short-term
investments, accounts receivable, long-term receivables, accounts payable, accrued liabilities, derivative financial
instruments and other financing commitments. The Company’s Sigma Fund, available-for-sale investment
portfolios and derivative financial instruments are recorded in the Company’s consolidated balance sheets at fair
value. All other financial instruments, with the exception of long-term debt, are carried at cost, which is not
materially different than the instruments’ fair values.
Using quoted market prices and market interest rates, the Company determined that the fair value of
long-term debt at December 31, 2009 was $3.7 billion, compared to a face value of $3.9 billion. Since
considerable judgment is required in interpreting market information, the fair value of the long-term debt is not
necessarily indicative of the amount that could be realized in a current market exchange.
Equity Price Market Risk
At December 31, 2009, the Company’s available-for-sale equity securities portfolio had an approximate fair
market value of $147 million, comprised of a cost basis of $37 million and a net unrealized gains of
$110 million. The value of the available-for-sale equity securities would change by $15 million as of
December 31, 2009 if the price of the stock in each of the publicly-traded companies were to change by 10%.
These equity securities are held for purposes other than trading.
Reg. U.S. Patent & Trademark Office.
‘‘MOTOROLA’’ and the ‘‘Stylized M Logo’’ are registered in the U.S. Patent & Trademark Office, and in
various countries around the world. DROID is a trademark of Lucasfilm, Ltd. and its related companies. All
other products or service names are the property of their respective owners.