Motorola 2006 Annual Report Download - page 109

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adjustment to increase the liability as of year end. Accordingly, the incremental impact of adopting SFAS 158 on
the Postretirement Health Care Benefit Plan is $74 million.
The incremental impact of applying SFAS 158 on individual line items in the Company's consolidated balance
sheet as of December 31, 2006 for the Postretirement Health Care Benefit Plan is as follows:
Before SFAS 158 Adjustment After SFAS 158
Current liability Ì (3) (3)
Non-current liability (55) (159) (214)
Deferred income taxes Ì 88 88
Non-owner changes to equity Ì 74 74
The total amount included in Non-owner changes to equity relating to the Postretirement Health Care Benefit
Plan is $74 million, net of taxes. It is estimated that a pre-tax amount of $6 million will be amortized from this
balance and will be reflected in the net periodic cost for the Postretirement Health Care Benefit Plan in 2007.
In connection with the spin-off of Freescale Semiconductor, post-retirement health care benefit obligations
relating to eligible former and active vested Freescale Semiconductor employees on December 2, 2004 (""Spin-off
Date'') and active Freescale Semiconductor employees who vest within the three year period following the Spin-off
Date were transferred to Freescale Semiconductor. Benefit obligations transferred were $217 million with
$99 million of unrecognized net losses also transferred to Freescale Semiconductor. Such amounts have been
excluded from the Motorola amounts for both periods presented above. Additionally under the terms of the
Employee Matters Agreement entered into between Motorola and Freescale Semiconductor, Motorola is obligated
to transfer to Freescale Semiconductor $68 million in cash or Plan assets plus approximately $17 million of
investment returns earned on these plan assets as of December 31, 2006, as permitted by law without adverse tax
consequences to Motorola. This obligation is included in Accrued liabilities in the Company's consolidated balance
sheets.
The Company has adopted an investment policy for plan assets designed to meet or exceed the expected rate
of return on plan assets assumption. To achieve this, the plan retains professional investment managers that invest
plan assets in equity and fixed income securities and cash. The Company has the following target mixes for these
asset classes, which are readjusted at least quarterly, when an asset class weighting deviates from the target mix,
with the goal of achieving the required return at a reasonable risk level as follows:
Target Mix
Asset Category 2006 2005
Equity securities 75% 75%
Fixed income securities 24% 24%
Cash and other investments 1% 1%
The weighted-average asset allocation for plan assets at December 31, 2006 and 2005 by asset categories were
as follows:
Actual Mix
Asset Category 2006 2005
Equity securities 75% 75%
Fixed income securities 22 22
Cash and other investments 33
100% 100%
Within the equity securities asset class, the investment policy provides for investments in a broad range of
publicly-traded securities including both domestic and international stocks. Within the fixed income securities asset
class, the investment policy provides for investments in a broad range of publicly-traded debt securities ranging
from U.S. Treasury issues, corporate debt securities, mortgages and asset-backed issues, as well as international debt
securities. In the cash asset class, investments may be in cash and cash equivalents.
Cash contributions of $27 million were made to the Postretirement Health Care Benefit Plan in 2006. The
Company expects to make cash contributions of $24 million to the retiree health care plan in 2007.