Motorola 2012 Annual Report Download - page 46

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The following table summarizes the proceeds received from non-recourse sales of accounts receivable and long-term
receivables for the years ended December 31, 2012, 2011, and 2010:
Years Ended December 31 2012 2011 2010
Cumulative annual proceeds received from one-time sales:
Accounts receivable sales proceeds $12
$8$30
Long-term receivables sales proceeds 178 224 67
Total proceeds from one-time sales 190 232 97
Cumulative annual proceeds received from sales under committed
facilities ——70
Total proceeds from receivables sales $ 190 $ 232 $ 167
At December 31, 2012, the Company had retained servicing obligations for $375 million of long-term receivables,
compared to $263 million of long-term receivables at December 31, 2011. Servicing obligations are limited to collection
activities of the non-recourse sales of accounts receivables and long-term receivables.
Adequate Internal Funding Resources
We believe that we have adequate internal resources available to fund expected working capital and capital expenditure
requirements for the next twelve months as supported by the level of cash, cash equivalents, short-term investments and Sigma
Fund balances in the U.S. and the ability to repatriate funds from foreign jurisdictions.
Other Contingencies
Potential Contractual Damage Claims in Excess of Underlying Contract Value: In certain circumstances, our businesses
may enter into contracts with customers pursuant to which the damages that could be claimed by the other party for failed
performance might exceed the revenue we receive from the contract. Contracts with these types of uncapped damage
provisions are fairly rare, but individual contracts could still represent meaningful risk. There is a possibility that a damage
claim by a counterparty to one of these contracts could result in expenses to us that are far in excess of the revenue received
from the counterparty in connection with the contract.
Indemnification Provisions: In addition, we may provide indemnifications for losses that result from the breach of
general warranties contained in certain commercial, intellectual property and divestiture agreements. Historically, we have not
made significant payments under these agreements, nor have there been significant claims asserted against us. However, there
is an increasing risk in relation to intellectual property indemnities given the current legal climate. In indemnification cases,
payment by us is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract,
which procedures typically allow us to challenge the other party’s claims. In some instances we may have recourse against
third-parties for certain payments made by us. Further, our obligations under divestiture agreements for indemnification based
on breach of representations and warranties are generally limited in terms of duration, typically not more than 24 months, and
for amounts not in excess of a percentage of the contract value.
Intellectual Property Matters: During 2010, we entered into a settlement agreement with another company to resolve
certain intellectual property disputes between the two companies. As a result of the settlement agreement, we received $65
million in cash and were assigned certain patent properties. As a result of this agreement, we recorded a pre-tax gain of $39
million (and $55 million was allocated to discontinued operations) during the year ended December 31, 2010, related to the
settlement of the outstanding litigation between the parties.
Legal Matters: We are a defendant in various lawsuits, claims and actions, which arise in the normal course of business.
In the opinion of management, the ultimate disposition of these matters 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.
Significant Accounting Policies
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated
financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting period.
Management bases its estimates and judgments on historical experience, current economic and industry conditions and on
various other factors that are believed to be reasonable under the circumstances. This forms the basis for making judgments