Motorola 2007 Annual Report Download - page 116

compensation costs for such options. As a result of adopting SFAS 123R, $50 million and $165 million of excess
tax benefits for the years 2007 and 2006, respectively, 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, 2007, 2006 and
2005 were $190 million, $268 million and $548 million, respectively.
Mid-Range Incentive Plan
The Mid-Range Incentive Plan (“MRIP”) rewarded participating elected officers for the Company’s
achievement of specified business goals during the period, based on two performance objectives measured over
two-year cycles. The provision for MRIP for the year ended December 31, 2005 was $19 million. As of
December 31, 2005, the MRIP was canceled.
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 specified business goals during the period, based on two
performance objectives measured over three-year cycles. The provision for LRIP for the years ended December 31,
2007, 2006 and 2005 was $(8) million, $16 million and $15 million, respectively.
9. Financing Arrangements
Finance receivables consist of the following:
December 31 2007 2006
Gross finance receivables $123 $ 279
Less allowance for losses (5) (10)
118 269
Less current portion (50) (124)
Long-term finance receivables $68 $ 145
Current finance receivables are included in Accounts receivable and long-term finance receivables are included
in Other assets in the Company’s consolidated balance sheets. Interest income recognized on finance receivables for
the years ended December 31, 2007, 2006 and 2005 was $7 million, $9 million and $7 million, respectively.
From time to time, the Company sells short-term receivables, long-term loans and lease receivables under
sales-type leases (collectively, “finance receivables”) to third parties in transactions that qualify as “true-sales.”
Certain of these finance receivables are sold to third parties on a one-time, non-recourse basis, while others are
sold to third parties under committed facilities that involve contractual commitments from these parties to
purchase qualifying receivables up to an outstanding monetary limit. Committed facilities may be revolving in
nature and, typically, must be renewed on an annual basis. Certain sales may be made through separate legal
entities that are also consolidated by the Company. The Company may or may not retain the obligation to service
the sold finance receivables.
In the aggregate, at December 31, 2007, these committed facilities provided for up to $1.4 billion to be
outstanding with the third parties at any time, as compared to up to $1.3 billion provided at December 31, 2006
and up to $1.1 billion provided at December 31, 2005. As of December 31, 2007, $497 million of these
committed facilities were utilized, compared to $817 million utilized at December 31, 2006 and $585 million
utilized at December 31, 2005. Certain events could cause one of these facilities to terminate. In addition, before
receivables can be sold under certain of the committed facilities, they may need to meet contractual requirements,
such as credit quality or insurability.
Total finance receivables sold by the Company were $4.9 billion in 2007 (including $4.7 billion of short-term
receivables), compared to $6.4 billion sold in 2006 (including $6.2 billion of short-term receivables) and
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