Motorola 2013 Annual Report Download - page 23

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21
must disclose the measures it has taken to exercise due diligence and chain of custody to prevent the sourcing of such minerals
that have been found to be financing conflict in the DRC. The final rules implementing these requirements were released in
August 2012. The short implementation time frame may limit the pool of suppliers who can provide us verifiable DRC
Conflict Free components and parts, particularly since our supply chain is complex. As a result, we may be required to publicly
disclose that we are not currently able to determine if our products are DRC Conflict Free during the two year implementation
period. After the end of such two year period, if the industry systems that we are relying on are not mature enough for us to
make a definitive Conflict Free determination, we will have to declare our products as “not found to be DRC conflict free” and
we may face reputational challenges with our customers, other stockholders and the activist community as a result.
We contributed a significant portfolio of intellectual property rights, including patents, to Motorola Mobility and we are unable
to leverage these intellectual property rights as we did prior to the distribution of Motorola Mobility.
We contributed approximately 17,200 granted patents and approximately 8,000 pending patent applications worldwide to
Motorola Mobility in connection with the distribution. Although we have a perpetual, royalty free license to these patents and
other intellectual property rights, which survived the acquisition of Motorola Mobility by Google and will survive the
acquisition of Motorola Mobility by Lenovo, we no longer own them. As a result we are unable to leverage these intellectual
property rights for purposes of generating licensing revenue or entering into favorable licensing arrangements with third-
parties. As a result we may incur increased license fees or litigation costs. Although we cannot predict the extent of such
unanticipated costs, it is possible such costs could negatively impact our financial results.
Item 1B: Unresolved Staff Comments
None.
Item 2: Properties
Motorola Solutions' principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196.
Motorola Solutions also operates manufacturing facilities and sales offices in other U.S. locations and in many other countries.
As of December 31, 2013, we owned 16 facilities (manufacturing, sales, service and office), 12 of which were located in
North America and four of which were located in other countries. As of December 31, 2013, the Company leased 227 facilities,
97 of which were located in North and South America and 130 of which were located in other countries. As of December 31,
2013, we primarily utilized four major facilities for the manufacturing and distribution of our products, and these facilities were
located in: Penang, Malaysia; Reynosa, Mexico; Schaumburg, Illinois; and Berlin, Germany.
We generally consider the productive capacity of the plants to be adequate and sufficient for our requirements. The extent
of utilization of each manufacturing facility varies throughout the year.
In 2013, a substantial portion of our products were manufactured in facilities in Mexico and Malaysia. Approximately
33% of our manufacturing, based on volume, is done by a small number of non-affiliated electronics manufacturing suppliers
and distribution and logistics services providers, most of which are outside the U.S. We rely on these third-party providers in
order to enhance our ability to lower costs and deliver products that meet consumer demands. If manufacturing in Mexico,
Malaysia, or by third-parties were disrupted, our overall productive capacity could be significantly reduced.
Item 3: Legal Proceedings
We are a defendant in various suits, claims and investigations that arise in the normal course of business. In the opinion of
management, the ultimate disposition of our pending legal proceedings will not have a material adverse effect on our
consolidated financial position, liquidity or results of operations. However, an unfavorable resolution could have a material
adverse effect on our consolidated financial position, liquidity or results of operations in the periods in which the matters are
ultimately resolved, or in the periods in which more information obtained changes management's opinion of the ultimate
disposition.
Item 4: Mine Safety Disclosures
Not applicable.