Motorola 2006 Annual Report Download - page 106

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98
The incremental impact of applying SFAS 158 on individual line items in the Company's consolidated balance
sheet as of December 31, 2006 for all defined benefit plans is as follows:
Before SFAS 158 Adjustment After SFAS 158
Prepaid benefit cost 20 (7) 13
Intangible asset 4 (4) Ì
Current liability Ì (6) (6)
Non-current liability (1,267) (615) (1,882)
Deferred income taxes 416 192 608
Non-owner changes to equity 1,063 440 1,503
The total amount included in Non-owner changes to equity relating to defined benefit plans was $1.5 billion,
net of taxes, as of December 31, 2006. It is estimated that pre-tax amounts of $110 million, $4 million, and
$23 million will be amortized from this balance and will be reflected in the net periodic cost for the Regular Plan,
Officers' and MSPP Plan, and Non-U.S. Plans, respectively, for 2007.
The Company uses a five-year, market-related asset value method of amortizing asset-related gains and losses.
Prior service costs are being amortized over periods ranging from 11 to 12 years. The benefit obligation and plan
assets have been measured as of December 31, 2006 for all U.S. plans and as of October 1, 2006 for all
Non-U.S. plans. Benefits under all pension plans are valued based upon the projected unit credit cost method.
Certain actuarial assumptions such as the discount rate and the long-term rate of return on plan assets have a
significant effect on the amounts reported for net periodic cost and benefit obligation. The assumed discount rates
reflect the prevailing market rates of a large universe of high-quality, non-callable, corporate bonds currently
available that, if the obligation were settled at the measurement date, would provide the necessary future cash flows
to pay the benefit obligation when due. The long-term rates of return on plan assets represents an estimate of long-
term returns on an investment portfolio consisting of a mixture of equities, fixed income, cash and other
investments similar to the actual investment mix. In determining the long-term return on plan assets, the Company
considers long-term rates of return on the asset classes (both historical and forecasted) in which the Company
expects the plan funds to be invested.
Weighted average actuarial assumptions used to determine costs for the plans were as follows:
2006
2005
December 31
U.S. Non U.S.
U.S. Non U.S.
Discount rate for obligations 6.00% 4.62% 6.00% 5.46%
Investment return assumption (Regular Plan) 8.50% 6.27% 8.50% 6.94%
Investment return assumption (Officers' Plan) 6.00% N/A 6.00% N/A
Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:
2006
2005
December 31
U.S. Non U.S.
U.S. Non U.S.
Discount rate for obligations 6.00% 4.81% 6.00% 4.60%
Future compensation increase rate (Regular Plan) 4.00% 4.18% 4.00% 4.14%
Future compensation increase rate (Officers' Plan) 0.00% N/A 0.00% N/A
The accumulated benefit obligations for the plans were as follows:
2006
2005
Officers'
Officers'
and Non
and Non
December 31
Regular MSPP U.S.
Regular MSPP U.S.
Accumulated benefit obligation $4,969 $125 $1,690 $4,759 $149 $1,429
The Company has adopted a pension investment policy designed to meet or exceed the expected rate of return
on plan assets assumption. To achieve this, the pension plans retain professional investment managers that invest