Motorola 2006 Annual Report Download - page 114

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106
respective earnings per share for each period presented as if the Company had applied the fair value recognition
provisions to share-based employee compensation prior to 2006 (in millions, except per share amounts):
Continuing Operations Net Earnings
Years Ended December 31
2006
2005 2004
2006
2005 2004
Earnings:
Earnings, as reported $3,261 $4,519 $2,099 $3,661 $4,578 $1,532
Add: Share-based employee compensation expense
included in reported earnings, net of related tax
effects n/a 915n/a 919
Deduct: Share-based employee compensation expense
determined under fair value-based method for all
awards, net of related tax effects n/a (170) (150) n/a (170) (188)
Pro forma earnings $3,261 $4,358 $1,964 $3,661 $4,417 $1,363
Basic earnings per common share:
As reported $ 1.33 $ 1.83 $ 0.89 $ 1.50 $ 1.85 $ 0.65
Pro forma $ n/a $ 1.76 $ 0.83 $ n/a $ 1.79 $ 0.58
Diluted earnings per common share:
As reported $ 1.30 $ 1.79 $ 0.87 $ 1.46 $ 1.81 $ 0.64
Pro forma $ n/a $ 1.72 $ 0.81 $ n/a $ 1.75 $ 0.57
Prior to adopting SFAS 123R, the Company presented all tax benefits resulting from the exercise of stock
options as operating cash flows in the statements of cash flows. As a result, $210 million and $51 million of excess
tax benefits for 2005 and 2004, respectively, have been classified as an operating cash inflow. SFAS 123R requires
cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities. Excess
tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset
attributable to stock compensation costs for such options. As a result of adopting SFAS 123R, $165 million of
excess tax benefits for 2006 have been classified as a financing cash inflow.
Motorola Incentive Plan
The Motorola Incentive Plan provides eligible employees with an annual payment, calculated as a percentage
of an employee's eligible earnings, in the year after the close of the current calendar year if specified business goals
are met. The provisions for awards under these incentive plans for the years ended December 31, 2006, 2005 and
2004 were $268 million, $548 million and $771 million, respectively.
Mid-Range Incentive Plan
The Mid-Range Incentive Plan (""MRIP'') rewarded participating elected officers for the Company's
achievement of outstanding performance during the period, based on two performance objectives measured over
two-year cycles. The provision for MRIP for the years ended December 31, 2005 and 2004 was $19 million and
$56 million, respectively.
Long-Range Incentive Plan
In 2005, a Long-Range Incentive Plan (""LRIP'') was introduced to replace MRIP. LRIP rewards participating
elected officers for the Company's achievement of outstanding performance during the period, based on two
performance objectives measured over three-year cycles. The provision for LRIP for the years ended December 31,
2006 and 2005 was $16 million and $15 million, respectively.