Motorola 2009 Annual Report Download - page 123

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115
Corporate bonds held within the pension plan assets are valued based on yields currently available on comparable
securities of issuers with similar credit ratings.
In determining the fair value of the Company’s foreign currency derivatives, the Company uses forward
contract and option valuation models employing market observable inputs, such as spot currency rates, time value
and option volatilities. Since the Company primarily uses observable inputs in its valuation of its derivative assets
and liabilities, they are classified as Level 2 assets.
The fair values of investments in collective trust funds are valued based on their reported net asset value.
Such net asset values are based on the value of the underlying securities. For investments in collective trust funds,
the fair value of underlying securities reflect the unit prices of actual purchase and sale transactions occurring as
of or close to the financial statement date. As such, these assets are valued using Level 2 inputs.
Level 3—Fixed income securities are debt securities that do not have actively traded quotes as of the
financial statement date. Determining the fair value of these securities requires the use of unobservable inputs,
such as indicative quotes from dealers, extrapolated data, proprietary models and qualitative input from
investment advisors. As such, these securities are classified within Level 3. Level 3 assets also include certain
stocks that are not traded on a nationally recognized securities exchange and insurance contracts valued using
proprietary models.
10. Long-term Customer Financing and Sales of Receivables
Long-term Customer Financing
Long-term receivables consist of trade receivables with payment terms greater than twelve months, long-term
loans and lease receivables under sales-type leases. Long-term receivables consist of the following:
December 31 2009 2008
Long-term receivables $154 $ 169
Less allowance for losses (9) (7)
145 162
Less current portion (28) (110)
Non-current long-term receivables, net $117 $52
The current portion of long-term receivables is included in Accounts receivable and the non-current portion
of long-term receivables is included in Other assets in the Company’s consolidated balance sheets. Interest income
recognized on long-term receivables for the years ended December 31, 2009, 2008 and 2007 was $2 million,
$3 million and $7 million, respectively.
Certain purchasers of the Company’s infrastructure equipment may request that the Company provide
long-term financing (defined as financing with terms 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 equipment. The Company’s
obligation to provide long-term financing may be conditioned on the issuance of a letter of credit in favor of the
Company 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 the Company. The Company had outstanding commitments to
provide long-term financing to third parties totaling $406 million at December 31, 2009, compared to
$370 million at December 31, 2008. Of these amounts, $13 million was supported by letters of credit or by bank
commitments to purchase long-term receivables at December 31, 2009, compared to $266 supported at
December 31, 2008. The majority of the outstanding commitments at December 31, 2009 are to a small number
of network operators in the Middle East region. In response to the recent tightening in the credit markets, certain
customers of the Company have requested financing in connection with equipment purchases, and these types of
requests have increased in volume and scope.
In addition to providing direct financing to certain equipment customers, the Company also assists customers
in obtaining financing directly from banks and other sources to fund equipment purchases. The Company had
committed to provide financial guarantees relating to customer financing totaling $31 million at December 31,
2009, compared to $43 million at December 31, 2008 (including $27 million and $23 million at December 31,
2009 and 2008, respectively, relating to the sale of short-term receivables). Customer financing guarantees
outstanding were $4 million at December 31, 2009, compared to $6 million at December 31, 2008 (including