Motorola 2014 Annual Report Download - page 39

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substantially less than the remaining annual contract payments. We would also be required to find another source for these
services, including the possibility of performing them in-house.
As is customary in bidding for and completing certain projects and pursuant to a practice we have followed for many years,
we have a number of performance/bid bonds, standby letters of credit and surety bonds outstanding (collectively, referred to as
“Performance Bonds”), primarily relating to projects with our government customers. These Performance Bonds normally have
maturities of multiple years and are standard in the industry as a way to give customers a convenient mechanism to seek
resolution if a contractor does not satisfy certain requirements under a contract. Typically, a customer can draw on the
Performance Bond only if we do not fulfill all terms of a project contract. If such an occasion occurred, we would be obligated to
reimburse the institution that issued the Performance Bond for the amounts paid. In our long history, it has been rare for us to
have a Performance Bond drawn upon. At December 31, 2014, outstanding Performance Bonds totaled approximately $1.6
billion, compared to $1.8 billion at December 31, 2013. Any future disruptions, uncertainty, or volatility in bank, insurance or
capital markets, or a change in our credit ratings could adversely affect our ability to obtain Performance Bonds and may result
in higher funding costs to obtain such Performance Bonds.
Off-Balance Sheet Arrangements: Under the definition contained in Item 303(a)(4)(ii) of Regulation S-K, we do not have
any off-balance sheet arrangements.
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 equipment. These requests
may include all or a portion of the purchase price of the products and services. 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 $293 million at December 31, 2014, compared to $50 million at December 31,
2013.
Outstanding Long-Term Receivables: We had net non-current long-term receivables of $31 million at December 31,
2014, compared to net non-current long-term receivables of $1 million (net of allowances for losses of $14 million) at
December 31, 2013. 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 to third-parties under one-time arrangements
while others have been sold to third-parties. We may or may not retain the obligation to service the sold accounts receivable and
long-term receivables.
The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the
years ended December 31, 2014, 2013, and 2012:
Years ended December 31 2014 2013 2012
Accounts receivable sales proceeds $ 50 $ 14 $ 12
Long-term receivables sales proceeds 124 131 178
Total proceeds from receivable sales $ 174 $ 145 $ 190
At December 31, 2014, the Company had retained servicing obligations for $496 million of long-term receivables,
compared to $434 million of long-term receivables at December 31, 2013. Servicing obligations are limited to collection activities
for sold 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 and cash equivalents 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: 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-