Motorola 2006 Annual Report Download - page 103

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During the years ended December 31, 2006 and 2005, the Company reached favorable agreements with several
non-U.S. taxing authorities that resulted in net income tax benefits of $44 million and $28 million, respectively. The
Company has several other non-U.S. income tax audits pending and while the final resolution is uncertain, in the
opinion of the Company's management the ultimate disposition of the audits will not have a material adverse effect
on the Company's consolidated financial position, liquidity or results of operations.
7. Retirement Benefits
Pension Benefit Plans
The Company's noncontributory pension plan (the ""Regular Pension Plan'') covers U.S. employees who
became eligible after one year of service. The benefit formula is dependent upon employee earnings and years of
service. Effective January 1, 2005, newly-hired employees were not eligible to participate in the Regular Pension
Plan. On February 20, 2007, the Company passed an amendment to the Regular Pension Plan which changes the
definition of average earnings. Under the current formula, benefits are calculated using the highest annual earnings
in any five years within the last ten calendar years. Beginning in January 2008, the benefit will be based on the
average of the five highest years of earnings within the last ten calendar years prior to December 31, 2007 averaged
with future earnings. The Company also provides defined benefit plans to some of its foreign entities (the
""Non-U.S. Plans'').
The Company also has a noncontributory supplemental retirement benefit plan (the ""Officers' Plan'') for its
elected officers. The Officers' Plan contains provisions for funding the participants' expected retirement benefits
when the participants meet the minimum age and years of service requirements. Elected officers who were not yet
vested in the Officers' Plan as of December 31, 1999 had the option to remain in the Officers' Plan or elect to have
their benefit bought out in restricted stock units. Effective December 31, 1999, newly elected officers are not
eligible to participate in the Officers' Plan. Effective June 30, 2005, salaries were frozen for this plan.
The Company has an additional noncontributory supplemental retirement benefit plan, the Motorola
Supplemental Pension Plan (""MSPP''), which provides supplemental benefits in excess of the limitations imposed
by the Internal Revenue Code on the Regular Pension Plan. Elected officers covered under the Officers' Plan or
who participated in the restricted stock buy-out are not eligible to participate in MSPP. Effective January 1, 2005,
newly hired employees were not eligible to participate in the MSPP. Effective January 1, 2007, eligible
compensation has been capped at the IRS limit plus $175,000 or, for those in excess of this cap at January 1, 2007,
their current eligible compensation is frozen for calculation purposes.
As of December 31, 2006, the Company was required to apply SFAS No. 158, ""Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans'' (""SFAS 158'') to recognize the funded status of its
defined benefit plans on its consolidate balance sheet. SFAS 158 requires that the Company recognize, on a
prospective basis, the funded status of its defined benefit pension and other postretirement plans on its consolidated
balance sheet and recognize as a component of other comprehensive income, net of tax, the gains or losses and
prior service costs or credits that have not been recognized as components of net periodic benefit cost. The
Company is also required to disclose the incremental impact of the implementation of SFAS 158 versus continuing
to record a minimum pension liability as previously required under SFAS No. 87, ""Employers' Accounting for
Pensions'' (""SFAS 87'').
The information below for Non-U.S. plans covers the Company's principal foreign plans; any other plans are
not material to the Company either individually or in the aggregate.