Motorola 2012 Annual Report Download - page 50

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Valuation of Sigma Fund and Investment Portfolios
Investments in Sigma Fund primarily consist of fixed income securities with an average maturity of less than one month at
both December 31, 2012 and 2011. These securities are carried at fair value. Investments not held in Sigma Fund generally
consist of equity and fixed income securities, which are classified as available-for-sale and are carried at fair value. Fair value
is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants as of the measurement date. Fair value is determined in accordance with the authoritative guidance for fair
value measurements and disclosures using the prescribed fair value hierarchy.
Publicly traded common stock and equivalents within our investment portfolios where quoted market prices in active
markets are available are classified as Level 1 fair value measurements within the prescribed fair value hierarchy.
The securities classified as Level 2 are primarily those that are professionally managed within the Sigma Fund. Level 2
securities are priced using pricing services, bid/offer, and last trade. Prices may also be obtained from brokers, counterparties,
fund administrators, online securities data services, or investment managers. Fixed income securities, including short-term
instruments, may be priced using pricing models comprised of observable inputs which include, but are not limited to, market
quotations, yields, maturities, call features, and the security's terms and conditions. We review these prices and pricing
procedures as well as amounts realized as a basis for validating our fair value price estimates.
As of December 31, 2012 and December 31, 2011, there are no Level 3 securities within the Sigma Fund or our investment
portfolio.
We cannot predict the occurrence of future events that might have an impact on the fair values of our investments in Sigma
Fund or other investments carried at fair value.
Restructuring Activities
We maintain a formal Involuntary Severance Plan (the “Severance Plan”), which permits us to offer eligible employees
severance benefits based on years of service and employment grade level in the event that employment is involuntarily
terminated as a result of a reduction-in-force or restructuring. We recognize termination benefits based on formulas per the
Severance Plan at the point in time that future settlement is probable and can be reasonably estimated based on estimates
prepared at the time a restructuring plan is approved by management. Exit costs consist of future minimum lease payments on
vacated facilities and other contractual terminations. At each reporting date, we evaluate our accruals for employee separation
and exit costs to ensure the accruals are still appropriate. In certain circumstances, accruals are no longer needed because of
efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and
did not receive severance or were redeployed due to circumstances not foreseen when the original plans were approved. In
these cases, we reverse accruals through the consolidated statements of operations where the original charges were recorded
when it is determined they are no longer needed.
Retirement Benefits
Our 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 are not eligible to participate in the Regular Pension Plan. We also provide defined benefit plans which
cover non-U.S. employees in certain jurisdictions, principally the United Kingdom, Germany and Japan (the “Non-U.S.
Plans”). Other pension plans are not material to us either individually or in the aggregate.
We also have a noncontributory supplemental retirement benefit plan (the “Officers’ Plan”) for our elected officers. The
Officers’ Plan contains provisions for vesting and 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.
We have an additional noncontributory supplemental retirement benefit plan, the Motorola Supplemental Pension Plan
(“MSPP”), which provides supplemental benefits to individuals by replacing the Regular Pension Plan benefits that are lost by
such individuals under the retirement formula due to application of the limitations imposed by the Internal Revenue Code.
However, elected officers who are covered under the Officers’ Plan or who participated in the restricted stock buy-out are not
eligible to participate in the MSPP. Effective January 1, 2007, eligible compensation was capped at the IRS limit plus $175,000
(the “Cap”) or, for those already in excess of the Cap as of January 1, 2007, the eligible compensation used to compute such
employee’s MSPP benefit for all future years will be the greater of: (i) such employee’s eligible compensation as of January 1,
2007 (frozen at that amount), or (ii) the relevant Cap for the given year. Additionally, effective January 1, 2009, the MSPP was
frozen to new participants unless such participation was due to a prior contractual entitlement.