Motorola 2010 Annual Report Download - page 88

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for discounts, price protection, product returns, and customer incentives, among others. These estimates and
assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and
assumptions on an ongoing basis using historical experience and other factors, including the current economic
environment, which management believes to be reasonable under the circumstances. We adjust such estimates and
assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity, foreign currency, energy
markets and declines in consumer spending have combined to increase the uncertainty inherent in such estimates
and assumptions. As future events and their effects cannot be determined with precision, actual results could differ
significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic
environment will be reflected in the financial statements in future periods.
Reclassifications: Certain amounts in prior years’ financial statements and related notes have been reclassified
to conform to the 2010 presentation.
2. Discontinued Operations
During the three months ended October 2, 2010, the Company announced an agreement to sell certain assets
and liabilities of its Networks business to Nokia Siemens Networks B.V. (“NSN”). The total assets and total
liabilities included in the Transaction, which are preliminary estimates subject to change, are $1.4 billion and
$1.1 billion, respectively, based on balances as of December 31, 2010. The Transaction is expected to close during
the first quarter of 2011, subject to the satisfaction of closing condition, including receipt of regulatory approvals.
During the three months ended July 3, 2010, the Company completed the sale of its Israel-based wireless
network operator business formerly included as part of the Enterprise Mobility Solutions segment. The Company
received $170 million in net cash and recorded a gain on sale of the business of $20 million before income taxes,
which is included in Earnings from discontinued operations, net of tax, in the Company’s consolidated statements of
operations.
During the three months ended April 4, 2009, the Company completed the sale of: (i) Good Technology, and
(ii) the biometrics business, which includes its Printrak trademark. Collectively, the Company received $163 million
in net cash and recorded a net gain on sale of the businesses of $175 million before income taxes, which is included
in Earnings from discontinued operations, net of tax, in the Company’s consolidated statements of operations.
Beginning in the third quarter of 2010, the results of operations of the portions of the Networks business
included in the transaction with NSN, as well as the results of operations of the previously disposed businesses
discussed above, which were deemed to be immaterial for presentation as discontinued operations at the time of
their disposition, are reported as discontinued operations. All previously reported financial information has been
revised to conform to the current presentation.
The following table displays summarized activity in the Company’s consolidated statements of operations for
discontinued operations during the years ended December 31, 2010, 2009 and 2008.
Years Ended December 31 2010 2009 2008
Net sales $3,541 $3,917 $5,039
Operating earnings 562 333 151
Gains on sales of investments and businesses, net 19 190 6
Earnings before income taxes 586 500 220
Income tax expense (benefit) 207 184 23
Earnings from discontinued operations, net of tax 379 316 197
The assets and liabilities of the Networks business, as well as the assets and liabilities of the previously disposed
businesses recorded by the Company prior to the closing of the underlying transactions, are reported as assets and
liabilities held for sale in the applicable periods presented.