Motorola 2004 Annual Report Download - page 117

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MOTOROLA INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS(Dollars in millions, except as noted)
Within the equity securities asset class, the investment policy provides for investments in a broad range of
publicly-traded securities including both domestic and international stocks. Within the Ñxed income securities asset
class, the investment policy provides for investments in a broad range of publicly-traded debt securities ranging
from US Treasury issues, corporate debt securities, mortgages and asset-backed issues, as well as international debt
securities. In the cash asset class, investments may be in cash and cash equivalents.
The Company expects to make cash contributions of approximately $50 million to the retiree health care plan
in 2005.
The following beneÑt payments, which reÖect expected future service, as appropriate, are expected to be paid
as follows:
2005 $43
2006 47
2007 45
2008 43
2009 41
2010-2014 191
The health care trend rate used to determine the December 31, 2004 accumulated postretirement beneÑt
obligation is 10.0% for 2005. Beyond 2005 the trend rate is graded down 1.0% per year until it reaches 5.0% by
2010 and then remains Öat. The health care trend rate used to determine the December 31, 2003 accumulated
postretirement beneÑt obligation was 11.0% for 2004 with the trend rate graded down per year until reaching 5.0%
by 2010 and then remaining Öat.
Changing the health care trend rate by one percentage point would change the accumulated postretirement
beneÑt obligation and the net retiree health care expense as follows:
1% Point 1% Point
Increase Decrease
EÅect on:
Accumulated postretirement beneÑt obligation $29 $(31)
Net retiree health care expense 3 (3)
The Company has no signiÑcant postretirement health care beneÑt plans outside the United States.
Stock Compensation Plans
Employee Stock Purchase Plan
The employee stock purchase plan allows eligible participants to purchase shares of the Company's common
stock through payroll deductions of up to 10% of compensation on an after-tax basis. The price an employee pays
per share is 85% of the lower of the fair market value of the Company's stock on the close of the Ñrst trading day
or last trading day of the purchase period. The plan has two purchase periods, the Ñrst one from October 1
through March 31 and the second one from April 1 through September 30. For the years ended December 31,
2004, 2003 and 2002, employees purchased 13.1 million, 20.5 million and 16.1 million shares, respectively, at prices
ranging from $10.31 to $15.33, $7.02 to $7.10 and $8.65 to $12.07, respectively.
Stock Options
Under the Company's stock option plans, options to acquire shares of common stock have been made
available for grant to certain employees, non-employee directors and to existing option holders in connection with
the merging of option plans following an acquisition. Each option granted has an exercise price of 100% of the
market value of the common stock on the date of grant. The majority of the options have a contractual life of
10 years and vest and become exercisable at 25% increments over four years.
Upon the occurrence of a change in control, each stock option outstanding on the date on which the change
in control occurs will immediately become exercisable in full.