Motorola 2012 Annual Report Download - page 26

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We are subject to a wide range of product regulatory and safety, consumer, worker safety and environmental laws.
Our operations and the products we manufacture and/or sell are subject to a wide range of product regulatory and safety,
consumer, worker safety and environmental laws. Compliance with such existing or future laws could subject us to future costs
or liabilities, impact our production capabilities, constrict our ability to sell, expand or acquire facilities, restrict what products
and services we can offer, and generally impact our financial performance. Some of these laws are environmental and relate to
the use, disposal, clean up of, and exposure to certain substances. For example, in the United States, laws often require parties
to fund remedial studies or actions regardless of fault and often times in response to action or omissions that were legal at the
time they occurred. We continue to incur disposal costs and have ongoing remediation obligations. Changes to environmental
laws or our discovery of additional obligations under these laws could have a negative impact on our financial performance.
Laws focused on: the energy efficiency of electronic products and accessories; recycling of both electronic products and
packaging; reducing or eliminating certain hazardous substances in electronic products; and the transportation of batteries
continue to expand significantly. Laws pertaining to accessibility features of electronic products, standardization of connectors
and power supplies, the transportation of lithium-ion batteries and other aspects are also proliferating. There are also
demanding and rapidly changing laws around the globe related to issues such as product safety, radio interference, radio
frequency radiation exposure, and consumer and social mandates pertaining to use of wireless or electronic equipment. These
laws, and changes to these laws, could have a substantial impact on whether we can offer certain products, solutions and
services, on product costs, and on what capabilities and characteristics our products or services can or must include.
These laws impact our products and negatively affect our ability to manufacture and sell products competitively. We
expect these trends to continue. In addition, we anticipate that we will see increased demand to meet voluntary criteria related
to reduction or elimination of certain constituents from products, increasing energy efficiency, and providing additional
accessibility.
We may be unable to obtain a sufficient supply of components and parts that are verified free of conflict minerals mined from
the Democratic Republic of Congo and adjoining countries, which could result in a shortage of such components and parts or
reputational damages if we are unable to determine that our products are free of such minerals.
The Dodd-Frank Wall Street Reform and Consumer Protection Act included disclosure requirements regarding the use of
“conflict” minerals mined from the Democratic Republic of Congo and adjoining countries (“DRC”) and procedures regarding
a manufacturer's efforts to prevent the sourcing of such “conflict” minerals. 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, and we are not certain that we will be able to obtain products in sufficient
quantities that meet the DRC Conflict Free determination as required by the rule to declare our products DRC Conflict
Free. Also, since our supply chain is complex, we may face reputational challenges with our customers, other stockholders and
the activist community if we are required to publically state that we are unable to sufficiently verify the origins for the defined
“conflict” metals used in our products.
A large 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 large percentage of our cash and cash equivalents is currently held outside the U.S., while many of our liabilities, such
as our public debt, the majority of our pension liabilities and certain other cash payments, such as dividends and share
repurchases, are payable in the U.S. While we regularly repatriate 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., our financial
flexibility may be reduced.
In connection with the distribution of Motorola Mobility, Motorola Mobility indemnified us for certain liabilities and we
indemnified Motorola Mobility for certain liabilities. This indemnity may not be sufficient to insure us against the full amount
of the liabilities assumed by Motorola Mobility and Motorola Mobility may be unable to satisfy its indemnification obligations
to us in the future.
Pursuant to the Master Separation and Distribution Agreement and certain other agreements with Motorola Mobility,
Motorola Mobility agreed to indemnify us for certain liabilities, and we agreed to indemnify Motorola Mobility for certain
liabilities, in each case for uncapped amounts. Motorola Mobility was acquired by Google in May 2012. This indemnity
obligation did not change as a result of the acquisition of Motorola Mobility by Google. There can be no assurance that the
indemnity from Motorola Mobility will be sufficient to protect us against the full amount of such liabilities, or that Motorola
Mobility will be able to fully satisfy its indemnification obligations, even if it continues to be owned by Google. Third-parties
could also seek to hold us responsible for any of the liabilities that Motorola Mobility has agreed to assume. Even if we
ultimately succeed in recovering from Motorola Mobility any amounts for which we are held liable, we may be temporarily
required to bear these losses ourselves. In addition, indemnities that we may be required to provide Motorola Mobility are not
subject to any cap, may be significant and could negatively impact our business. Each of these risks could negatively affect our