Motorola 2012 Annual Report Download - page 93

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Postretirement Health Care Benefits Plan
December 31, 2012 Level 1 Level 2 Total
Common stock and equivalents $ 44 $ — $ 44
Commingled equity funds — 56 56
U.S. government and agency obligations — 9 9
Corporate bonds — 9 9
Mortgage-backed bonds — 1 1
Commingled bond funds — 30 30
Commingled short-term investment funds — 6 6
Fair value plan assets $ 44 $ 111 $ 155
The table above includes securities on loan as part of a securities lending arrangement of $4 million of common stock and
equivalents and $7 million of U.S. government and agency obligations. All securities on loan are fully cash collateralized.
December 31, 2011 Level 1 Level 2 Total
Common stock and equivalents $ 38 $ — $ 38
Commingled equity funds — 54 54
U.S. government and agency obligations — 10 10
Corporate bonds — 11 11
Mortgage-backed bonds — 1 1
Commingled bond funds — 34 34
Commingled short-term investment funds — 7 7
Fair value plan assets $ 38 $ 117 $ 155
The table above includes securities on loan as part of a securities lending arrangement of $6 million of common stock and
equivalents, $6 million of U.S. government and agency obligations, and $1 million of corporate bonds. All securities on loan
are fully cash collateralized.
There were no significant transfers between Level 1 and Level 2 during 2012 or 2011.
Valuation Methodologies
Level 1- Quoted market prices in active markets are available for investments in common and preferred stock and
common stock equivalents. As such, these investments are classified within Level 1.
Level 2- The securities classified as Level 2 are comprised primarily of corporate, government, agency and government
sponsored enterprise fixed income securities. These 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.
In determining the fair value of the Company's foreign currency derivatives, the Company uses forward contract and
option valuation models employing market observable inputs, such as spot currency rates, time value and option volatilities.
Since the Company primarily uses observable inputs in its valuation of its derivative assets and liabilities, they are classified as
Level 2 assets.
Level 3- Securities that do not have actively traded quotes as of the financial statement date. Determining the fair value of
these securities requires the use of unobservable inputs, such as indicative quotes from dealers, extrapolated data, proprietary
models and qualitative input from investment advisors. The Company had no Level 3 assets at December 31, 2012 and 2011.
At December 31, 2012, the Company has $422 million of investments in money market mutual funds classified as Cash
and cash equivalents in its consolidated balance sheet. The money market funds have quoted market prices that are generally
equivalent to par.
Using quoted market prices and market interest rates, the Company determined that the fair value of long-term
debt at December 31, 2012 was $2.1 billion (Level 2), compared to a face value of $1.9 billion. Since considerable judgment
is required in interpreting market information, the fair value of the long-term debt is not necessarily indicative of the amount
which could be realized in a current market exchange.
All other financial instruments are carried at cost, which is not materially different than the instruments’ fair
values.