Motorola 2011 Annual Report Download - page 47

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Cash and Cash Equivalents
At December 31, 2011, our cash and cash equivalents (which are highly-liquid investments with an original
maturity of three months or less) were $1.9 billion, a decrease of $2.3 billion compared to $4.2 billion at
December 31, 2010. At December 31, 2011, approximately $400 million of this amount was held in the U.S. and
$1.5 billion was held by us in other countries. At December 31, 2011, restricted cash was $63 million (including $3
million held outside the U.S.), compared to $226 million (including $162 million held outside the U.S.) at
December 31, 2010.
We continue to analyze and review various repatriation strategies to continue to efficiently repatriate cash. In
2011, we repatriated approximately $1.9 billion in cash to the U.S. from international jurisdictions. We have
approximately $1.8 billion of earnings in foreign subsidiaries that are not permanently reinvested and may be
repatriated without an additional income tax charge to our consolidated statements of operations, given the U.S.
federal and foreign income tax provisions accrued on undistributed earnings and the utilization of available foreign
tax credits. On a cash basis, these repatriations from our non-U.S. subsidiaries could require the payment of
additional taxes. Repatriation of some of these funds could be subject to delay for local country approvals and
could have potential adverse tax consequences.
On January 4, 2011, the distribution of Motorola Mobility from Motorola Solutions was completed. As part of
the distribution, we contributed $3.2 billion of cash and cash equivalents to Motorola Mobility. We had an obligation
to fund an additional $300 million, upon receipt of cash distributions as a result of future capital reductions of an
overseas subsidiary, of which $225 million was paid during 2011 and we expect to contribute $75 million during
2012. These contributions are reflected in our consolidated statements of cash flows for the year ended, December 31,
2011.
Operating Activities
Cash provided by operating activities from continuing operations in 2011 was $848 million, compared to $803
million in 2010 and $627 million in 2009. Operating cash flows in 2011, as compared to 2010 and 2009, were
positively impacted by our increased sales and the expansion of our operating margins in both segments.
Additionally in 2011, we sold or collected over $150 million of long-term receivables related to the Networks
divestiture that were retained after the sale. Operating cash flows in 2011, as compared to 2010, were negatively
impacted by timing differences within our working capital accounts as well as an increase of $329 million in
contributions to our pension plans.
We contributed $489 million to our U.S. pension plans during 2011, compared to $157 million contributed in
2010. We contributed $38 million to our non-U.S. pension plans during 2011, compared to $41 million contributed in
2010. In January 2011, the Pension Benefit Guaranty Corporation (“PBGC”) announced an agreement with Motorola
Solutions under which we would contribute $100 million above and beyond our legal requirement to our U.S.
noncontributory pension plan (“Regular Pension Plan”) over the next five years. We and the PBGC entered into the
agreement as we were in the process of separating Motorola Mobility and pursuing the sale of certain assets of the
Networks business. We made an additional $250 million of pension contributions to the Regular Pension Plan over the
amounts required in the fourth quarter 2011, of which $100 million was intended to fulfill the PBGC obligation.
During 2012, we expect to make cash contributions of approximately $340 million to our U.S. pension plans and
approximately $30 million to our non-U.S. pension plans.
The funded status of our pension plans are impacted by the volatility of corporate bond rates which are used to
determine the plan discount rate as well as returns on the pension plan asset portfolio. The discount rate used to
measure the benefit obligation at the end of 2011, was 5.1 percent compared to 5.75 percent in the prior year. As a
result of the decrease in the discount rate, our U.S. pension benefit liability at year end increased to approximately
$2.2 billion. Our planned contribution of $230 million and the incremental $250 million contributed in the fourth
quarter of 2011 helped to partially mitigate the impact of the lower discount rate on our benefit liability and future
pension costs. Based on our current position, we expect an increase of approximately $60 million in operating
expenses in 2012 compared to the 2011 Regular Pension Plan costs of $137 million. As of December 31, 2011,
changing the Regular Pension Plan discount rate by one percentage point would change the Regular Pension Plan
net periodic pension expense as follows:
1% Point
Increase
1% Point
Decrease
Increase (decrease) in:
Regular Pension Plan net periodic pension expense (68) 79