Motorola 2004 Annual Report Download - page 55

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reorganization of Businesses: The Company has implemented substantial reorganization of businesses plans.
Cash payments for exit costs and employee separations in connection with these plans were $133 million in 2004,
as compared to $306 million in 2003. Of the $130 million reorganization of businesses accrual at December 31,
2004, $46 million relates to employee separation costs and is expected to be paid in 2005. The remaining
$84 million in accruals relate to lease termination obligations.
Pension Plan Contributions: The Company contributed $652 million to its pension plans during 2004,
compared to $275 million in 2003. The Company expects to make cash contributions of approximately
$195 million to its pension plans during 2005. Retirement-related beneÑts are further discussed below in the
""SigniÑcant Accounting PoliciesÌRetirement-Related BeneÑts'' section.
Investing Activities
The most signiÑcant components of the Company's investing activities are: (i) capital expenditures,
(ii) strategic acquisitions of, or investments in, other companies, and (iii) proceeds from dispositions of
investments and businesses.
Net cash used for investing activities was $163 million in 2004, as compared to net cash provided of
$64 million in 2003 and net cash used of $251 million in 2002. The $227 million increase in cash used for investing
activities in 2004 compared to 2003 was due to: (i) a $197 million increase in cash used for acquisitions and
investments, net of cash assumed, and (ii) a $150 million increase in capital expenditures. These items of cash use
were partially oÅset by: (i) a $69 million decrease in purchases of short-term investments, (ii) a $34 million
increase in proceeds received from the dispositions of property, plant and equipment, and (iii) a $17 million
increase in proceeds received from the sale of investments and businesses.
Strategic Acquisitions and Investments: The Company used cash for acquisitions and new investment
activities of $476 million in 2004, compared to cash used of $279 million in 2003 and $79 million in 2002. The
largest components of the $476 million in 2004 expenditures were: (i) $169 million for the acquisition of
MeshNetworks, Inc., a leading developer of mobile mesh networking and position-location technologies by the
Commercial, Government and Industrial Solutions segment (""CGISS''), (ii) $121 million, net of cash assumed, for
the acquisition of Force Computers, a worldwide designer and supplier of open, standards-based and custom
embedded computing solutions, by IESS, (iii) the acquisition of Quantum Bridge Communications, Inc., a leading
provider of Ñber-to-the-premises solutions, by BCS, and (iv) the acquisition of the remaining interest of Appeal
Telecom of Korea, a leading designer of CDMA handsets for the global market, by PCS. The largest components
of the $279 million in 2003 expenditures were: (i) $179 million for the acquisition of Winphoria Networks, Inc., a
core infrastructure provider of next-generation, packet-based mobile switching centers for wireless networks, by
GTSS, and (ii) the acquisition of the remaining outstanding shares of Next Level Communications, Inc.
Capital Expenditures: Capital expenditures were $494 million in 2004, compared to $344 million in 2003 and
$387 million in 2002. The increase in capital expenditures was primarily due to an increase by CGISS, driven by
investment in large systems what will be built, owned and operated by the Company. Capital expenditures increased
in each of the Company's Ñve major segments in 2004 compared to 2003. The Company's emphasis in making
capital expenditures is to focus on strategic investments driven by customer demand and new design capability.
Sales of Investments and Businesses: The Company received $682 million in proceeds from the sales of
investments and businesses in 2004, compared to proceeds of $665 million in 2003 and $94 million in 2002. The
$682 million of proceeds in 2004 were primarily comprised of: (i) $216 million from the sale of the Company's
remaining shares in Broadcom Corporation, (ii) $141 million from the sale of a portion of the Company's
remaining shares in Nextel Communications, Inc. (""Nextel''), (iii) $117 million from the sale of the Company's
remaining shares in Telus Corporation, and (iv) $77 million from the sale of a portion of the Company's shares in
Nextel Partners, Inc. (""Nextel Partners''). The $665 million of proceeds in 2003 were primarily comprised of:
(i) $335 million from the sale of a portion of the Company's shares in Nextel, (ii) $117 million from the sale of
the Company's shares in UAB Omnitel of Lithuania, (iii) $94 million from the sale of the Company's shares in
Symbian Limited, and (iv) $73 million from the sale of a portion of the Company's shares in Nextel Partners.
Short-Term Investments: At December 31, 2004, the Company had $152 million in short-term investments
(which are highly-liquid Ñxed-income investments with an original maturity greater than three months but less than
one year), compared to $139 million of short-term investments at December 31, 2003.