What is Motorola Solutions' primary strategy for managing foreign currency risk?

Motorola Solutions uses financial instruments, such as forward contracts and options, to hedge against currency fluctuations. The company's policy is to offset gains and losses on these hedging instruments against the gains and losses on the underlying operational cash flows or investments, rather than speculating for profit. Most non-functional currency receivables and payables denominated in major currencies are hedged.

What are the significant legal risks facing Motorola Solutions?

The company is involved in several significant legal proceedings. These include substantial claims related to Iridium, where the unsecured creditors are seeking over $4 billion, and Telsim, where Motorola is owed approximately $2 billion and has secured an affirmed $2.13 billion judgment for compensatory damages. Additionally, an appeals court recently reversed the dismissal of cases alleging health risks from wireless telephone usage, remanding them for further proceedings, which could increase legal exposure.

What is the company's exposure to interest rate risk?

Motorola Solutions' short-term debt consists primarily of $300 million in commercial paper, which is priced at short-term interest rates. The company also has $4.6 billion in long-term debt, including current maturities, which is predominantly priced at long-term, fixed interest rates. This structure indicates a moderate exposure to short-term interest rate fluctuations on its commercial paper, while the majority of its debt is insulated from rate changes.

MSI 10-Q Quarterly Report Q2 FY2005 — Revenue, Net Income, EPS

Summary

Motorola Solutions, Inc. (MSI) filed its 10-Q for the period ending April 1, 2005. The filing primarily focuses on the company's risk management practices, particularly concerning foreign currency and interest rate exposures. MSI utilizes financial instruments like forward contracts and options to hedge against currency fluctuations, aiming to offset gains and losses on these instruments against underlying operational cash flows. The company actively manages its exposure to major currencies, though less liquid currencies present a greater challenge. A significant portion of the report details ongoing legal proceedings, including the Iridium and Telsim-related cases, which pose potential material adverse effects on the company's financial position and results of operations. Management asserts that disclosure controls and procedures are effective, and no material changes to internal controls were noted during the quarter.

Key Highlights

1Motorola Solutions actively manages foreign currency risk using financial instruments, with net outstanding foreign exchange contracts totaling $3.1 billion as of April 2, 2005, down from $3.9 billion at year-end 2004.
2The company is exposed to credit-related losses from financial instrument counterparties but expects no failures due to their high credit ratings.
3Motorola has $300 million in short-term commercial paper debt and $4.6 billion in long-term debt, primarily at fixed interest rates.
4The company's disclosure controls and procedures were deemed effective by senior management as of the evaluation date.
5Significant ongoing legal proceedings include substantial claims related to Iridium (seeking over $4 billion) and Telsim (Motorola is owed approximately $2 billion, with a $2.13 billion judgment affirmed for compensatory damages).
6An appeals court reversed a lower court's dismissal of wireless telephone usage cases, remanding them for further proceedings, potentially increasing legal exposure.
7The company repurchased 1,181 shares of its common stock during the quarter primarily to satisfy tax withholding obligations related to employee stock grants.

Motorola Solutions, Inc. Quarterly Report for Q2 Ended Apr 2, 2005

Summary

Key Highlights

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