Motorola 2010 Annual Report Download - page 120

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112
provisions is $143 million, of which the Company accrued $10 million as of December 31, 2010 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 agreements. 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.
In addition, pursuant to the Master Separation and Distribution Agreement and certain other agreements with
Motorola Mobility, Motorola Mobility agreed to indemnify the Company for certain liabilities, and the Company
agreed to indemnify Motorola Mobility for certain liabilities, in each case for uncapped amounts.
Intellectual Property Matters: During 2010, the Company entered into a settlement and license agreement
with another company, which resolves all outstanding litigation between the two companies. The agreement
includes provisions for an upfront payment of $175 million from the other company to the Company, future
royalties to be paid by the other company to the Company for the license of certain intellectual property, and the
transfer of certain patents between the companies. As a result of this agreement and the valuation of the patents
exchanged, the Company recorded a pre-tax gain of $228 million during the year ended December 31, 2010, related
to the settlement of the outstanding litigation between the parties. The rights to these future royalties transferred to
Motorola Mobility as part of the Separation on January 4, 2011.
During 2010, the Company entered into another settlement agreement with another company to resolve certain
intellectual property disputes between the two companies. As a result of the settlement agreement, the Company
received $65 million in cash and was assigned certain patent properties. As a result of this agreement, the Company
recorded a pre-tax gain of $94 million during the year ended December 31, 2010, related to the settlement of the
outstanding litigation between the parties.
Other: During the three months ended September 27, 2008, the Company recorded a $150 million charge
related to the settlement of a purchase commitment.
12. Information by Segment and Geographic Region
Through December 31, 2010, the Company reported financial results for the following business segments,
which comprised of two main business units. Following the Separation of Motorola Mobility on January 4, 2011,
only the Enterprise Mobility Solutions segment remains part of the Company.
Motorola Solutions
• The Enterprise Mobility Solutions segment designs, manufactures, sells, installs and services analog and
digital two-way radios, wireless LAN and security products, voice and data communications products and
systems primarily for private networks, wireless broadband systems and end-to-end enterprise mobility
solutions to a wide range of customers, 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, energy and utilities, transportation, manufacturing, healthcare and
other commercial customers (which, collectively, are referred to as the “commercial enterprise market”).
Motorola Mobility
• The Mobile Devices segment designs, manufactures, sells and services wireless mobile devices, including
smartphones, with integrated software and accessory products, and licenses intellectual property.
• The Home segment designs, manufactures, sells, installs and services set-top boxes for digital video, Internet
Protocol (“IP”) video, satellite and terrestrial broadcast networks, end-to-end digital video and Internet