Motorola 2004 Annual Report Download - page 116
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108 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
The funded status of the plan is as follows.
December 31
2004
2003
Change in beneÑt obligation:
BeneÑt obligation at January 1 $ 535 $ 549
Service cost 10 12
Interest cost 46 48
Plan amendments (17) (14)
Curtailment (22) Ì
Actuarial (gain) loss 53 (13)
BeneÑt payments (61) (47)
BeneÑt obligation at December 31 544 535
Change in plan assets:
Fair value at January 1 218 218
Return on plan assets 18 45
Divestitures Ì(4)
BeneÑt payments made with plan assets (48) (41)
Fair value at December 31 188 218
Funded status of the plan (356) (317)
Unrecognized net loss 272 237
Unrecognized prior service cost (16) (10)
Accrued retiree health care cost $(100) $ (90)
In connection with the spin-oÅ of Freescale Semiconductor, post-retirement health care beneÑt obligations
relating to eligible former and active vested Freescale Semiconductor employees on December 2, 2004 (Spin-oÅ
Date) and active Freescale Semiconductor employees who vest within the three year period following the Spin-oÅ
Date, were transferred to Freescale Semiconductor. BeneÑt 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, 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 Ñxed 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:
Asset Category Target Mix
Equity securities 75%
Fixed income securities 24%
Cash and other investments 1%
The weighted-average asset allocation for plan assets at December 31, 2004 and 2003 by asset categories were
as follows:
December 31
Asset Category
2004
2003
Equity securities 76% 77%
Fixed income securities 22 22
Cash and other investments 21
100% 100%