Motorola 2011 Annual Report Download - page 52

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46
Long-term Customer Financing Commitments
Outstanding Commitments: Certain purchasers of our products and services may request that we provide
long-term financing (defined as financing with a term of greater than one year) in connection with the sale of our
systems. These requests may include all or a portion of the purchase price of the equipment. Our obligation to
provide long-term financing may be conditioned on the issuance of a letter of credit in favor of us by a reputable
bank to support the purchaser’s credit or a pre-existing commitment from a reputable bank to purchase the long-
term receivables from us. We had outstanding commitments to provide long-term financing to third parties totaling
$138 million at December 31, 2011, compared to $333 million at December 31, 2010 (including $168 million at
December 31, 2010, relating to discontinued operations). Of the $333 million at December 31, 2010, $27 million
was supported by letters of credit or by bank commitments to purchase long-term receivables, (including $25
million at December 31, 2010, related to the discontinued operations). The majority of the outstanding
commitments at December 31, 2011 are related to a variety of U.S. state and local government customers.
We have retained the funded portion of the financing arrangements related to the Networks business following
the sale to NSN, which totaled a net amount of $127 million at December 31, 2011. These receivables have an
allowance for uncollectable accounts of $10 million. As of December 31, 2011, $37 million of net receivables are
classified as long-term.
Outstanding Long-Term Receivables: We had net non-current long-term receivables of $37 million, (net of
allowances for losses of $10 million) at December 31, 2011, compared to net non-current long-term receivables of
$251 million, (net of allowances for losses of $1 million) at December 31, 2010. These long-term receivables are
generally interest bearing, with interest rates ranging from 0% to 13%.
Sales of Receivables
From time to time, we sell accounts receivable and long-term receivables on a non-recourse basis to third
parties under one-time arrangement while others have been sold to third parties under committed facilities that
involve contractual commitments from these parties to purchase qualifying receivables up to an outstanding
monetary limit. Committed facilities may be revolving in nature and, typically, must be renewed annually. We may
retain the obligation to service the sold accounts receivable and long-term receivables.
We had no revolving sales facilities as of December 31, 2011. At December 31, 2010, we had a $200 million
committed revolving credit facility for the sale of accounts receivable, which was fully available. The $200 million
facility matured in December 2011 and was not renewed. We had no significant committed facilities for the sale of
long-term receivables at December 31, 2011 and 2010, respectively.
The following table summarizes the proceeds received from non-recourse sales of accounts receivable and long-
term receivables for the years ended December 31, 2011, 2010 and 2009:
Years Ended December 31 2011 2010 2009
Cumulative annual proceeds received from one-time sales:
Accounts receivable sales proceeds $8$30 $46
Long-term receivables sales proceeds 224 67 72
Total proceeds from one-time sales 232 97 118
Cumulative annual proceeds received from sales under committed facilities —70 234
Total proceeds from receivables sales $232 $167 $352
At December 31, 2011, we retained servicing obligations for $263 million of long-term receivables, compared
to $329 million of sold accounts receivables and $277 million of long-term receivables at December 31, 2010.
Servicing obligations are limited to collection activities of the non-recourse sales related to accounts receivables and
long-term receivables.
Under certain arrangements, the value of accounts receivable sold is supported by credit insurance purchased
from third-party insurance companies, less deductibles or self-insurance requirements under the insurance policies.
Under these arrangements, our total credit exposure, less insurance coverage, to outstanding accounts receivable
that have been sold was de minimus at both December 31, 2011 and 2010.