Motorola 2010 Annual Report Download - page 31

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The impact of these cost-reduction actions on our sales and profitability may be influenced by many factors,
including, but not limited to: (i) our ability to successfully complete these ongoing efforts; (ii) our ability to generate
the level of cost savings we expect or that are necessary to enable us to effectively compete; (iii) delays in
implementation of anticipated workforce reductions in highly-regulated locations outside the United States,
particularly in Europe and Asia; (iv) decline in employee morale and the potential inability to meet operational
targets due to the loss of employees; and (v) our ability to retain or recruit key employees.
As part of the Distribution of Motorola Mobility we have consolidated or exited certain facilities and our
products are designed and manufactured in fewer facilities than in the past. While we have business continuity and
risk management plans in place in case capacity is significantly reduced or eliminated at a given facility, the reduced
number of alternative facilities could cause the duration of any manufacturing disruption to be longer. As a result,
we could have difficulties fulfilling our orders and our sales and profits could decline.
Following the Distribution of Motorola Mobility we are a smaller, more focused company and may be more
susceptible to market fluctuations, other adverse events, increased costs and less favorable purchasing terms.
As a large company we were able to enjoy certain benefits from operating diversity and purchasing leverage.
Following the Distribution of Motorola Mobility we are a smaller company and operate in more focused industries.
As a result there is a risk that we may be more susceptible to market fluctuations and other adverse events than we
would have otherwise been were we still a part of a larger and more operationally diverse company. In particular,
we are more susceptible to reductions in government and corporate spending as a result of our focus on government
and enterprise customers. We may also experience increased costs and less favorable terms as a result of our
inability to continue to leverage the purchasing spend of our former Mobile Devices and Home businesses. Prior to
the Distribution of Motorola Mobility we negotiated favorable pricing terms with many of our suppliers, some of
which have volume-based pricing. In the future, as we establish new pricing terms, our reduced volume demand
could negatively impact future pricing from suppliers. All of these outcomes may result in our products being more
costly to manufacture and less competitive. Although we cannot predict the extent of any such increased costs, it is
possible that such costs could have a negative impact on our business and results of operations.
Motorola Mobility did not assume any of the liabilities associated with our existing public market debt, any of the
U.S. pension liabilities, a majority of our non-U.S. pension plans or certain corporate litigation matters and we
continue to bear all of the risk for these liabilities following liabilities Separation of Motorola Mobility.
We contributed $3.2 billion of cash and cash equivalents to capitalize Motorola Mobility at the time of the
Separation and have an obligation to fund an additional $300 million, upon receipt of cash distributions as a result
of future capital reductions of an overseas subsidiary. We remain liable for all of our existing public market debt, all
of the U.S. pension liabilities, the majority of our non-U.S. pension liabilities and certain corporate litigation matters
and Motorola Mobility did not provide us with any indemnification for these matters. Although we cannot fully
predict the extent of these liabilities, it is possible that they could be significant and could have a negative impact on
our business and results of operations.
Following the Distribution of Motorola Mobility, a larger percentage of our cash and cash equivalents are held
outside of the United States and we could be subject to repatriation delays and costs which could reduce our
financial flexibility.
A substantial percentage of the cash and cash equivalents that we contributed to Motorola Mobility were paid
in the United States, which reduced the amount of our U.S. cash and cash equivalents and, therefore, increased the
percentage of cash and cash equivalents held by the Company or its subsidiaries in other countries when compared
to the pre-Separation levels. While the Company regularly repatriates funds with minimal adverse financial impact,
repatriation of some of the funds has been and could continue to be subject to delay for local country approvals and
could have potential adverse tax consequences. As a result of having a lower amount of the cash and cash
equivalents in the U.S. post the contribution to Motorola Mobility, our financial flexibility is reduced.