Motorola 2012 Annual Report Download - page 85

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77
The funded status of the plan is as follows:
2012 2011
Change in benefit obligation:
Benefit obligation at January 1 $ 450 $ 447
Service cost 34
Interest cost 16 22
Plan amendments (151)—
Actuarial gain 24 —
Benefit payments (20)(23)
Benefit obligation at December 31 322 450
Change in plan assets:
Fair value at January 1 155 170
Return on plan assets 20 7
Benefit payments made with plan assets (20)(22)
Fair value at December 31 155 155
Funded status of the plan (167)(295)
Unrecognized net loss 206 202
Unrecognized prior service cost (135)—
Accrued postretirement health care costs $(96)$(93)
Components of accrued postretirement health care cost:
Years ended December 31 2012 2011
Non-current liability $(167)$(295)
Deferred income taxes 26 92
Accumulated other comprehensive income 45 110
Accrued postretirement health care cost $(96)$(93)
During the first quarter of 2010, the Patient Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010 were signed into law, which eliminated the favorable income tax treatment of Medicare Part D
Subsidy receipts effective for tax years starting in 2013. As a result of the tax law change, the Company recorded an $18
million non-cash tax charge in 2010 to reduce its deferred tax asset associated with Medicare Part D subsidies estimated to be
received after 2012.
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 uses long-term historical actual return experience with consideration of the
expected investment mix of the plans’ assets, as well as future estimates of long-term investment returns, to develop its
expected rate of return assumption used in calculating the net periodic cost and the net retirement healthcare expense. The
Company has the following target mixes for these asset classes, which are readjusted periodically, when an asset class
weighting deviates from the target mix, with the goal of achieving the required return at a reasonable risk level:
Target Mix
Asset Category 2012 2011
Equity securities 65% 65%
Fixed income securities 34% 34%
Cash and other investments 1% 1%