Motorola 2012 Annual Report Download - page 80

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72
The IRS is currently examining the Company's 2010 and 2011 tax years. The Company also has several state and non-
U.S. audits pending. A summary of open tax years by major jurisdiction is presented below:
Jurisdiction Tax Years
United States 2008—2012
China 2002—2012
France 2009—2012
Germany 2008—2012
India 1997—2012
Israel 2007—2012
Japan 2009—2012
Malaysia 2007—2012
Singapore 2007—2012
United Kingdom 2005—2012
Although the final resolution of the Company’s global tax disputes is uncertain, based on current information, in the
opinion of the Company’s management, the ultimate disposition of these matters will not have a material adverse effect on the
Company’s consolidated financial position, liquidity or results of operations. However, an unfavorable resolution of the
Company’s global tax disputes could have a material adverse effect on the Company’s consolidated financial position, liquidity
or results of operations in the periods in which the matters are ultimately resolved.
Based on the potential outcome of the Company’s global tax examinations, the expiration of the statute of limitations for
specific jurisdictions, or the continued ability to satisfy tax incentive obligations, it is reasonably possible that the unrecognized
tax benefits will change within the next twelve months. The associated net tax impact on the effective tax rate, exclusive of
valuation allowance changes, is estimated to be in the range of a $50 million tax charge to a $50 million tax benefit, with cash
payments not to exceed $25 million.
At December 31, 2012, the Company had $24 million and $31 million accrued for interest and penalties, respectively, on
unrecognized tax benefits. At December 31, 2011, the Company had $17 million and $32 million accrued for interest and
penalties, respectively, on unrecognized tax benefits.
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. The Company also provides 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 the Company either individually or in the aggregate.
The Company has a noncontributory supplemental retirement benefit plan (the “Officers’ Plan”) for its officers elected
prior to December 31, 1999. 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 were 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 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 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 closed to new participants unless such participation was required under a prior contractual entitlement.
In February 2007, the Company amended the Regular Pension Plan and the MSPP, modifying the definition of average
earnings. For the years ended prior to December 31, 2007, benefits were calculated using the rolling average of the highest
annual earnings in any five years within the previous ten calendar year period. Beginning in January 2008, the benefit
calculation was based on the set of the five highest years of earnings within the ten calendar years prior to December 31, 2007,