Motorola 2011 Annual Report Download - page 89

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The Company had unrecognized tax benefits of $191 million and $198 million at December 31, 2011 and
December 31, 2010, respectively, of which approximately $150 million and $20 million, respectively, if recognized,
would affect the effective tax rate, net of resulting changes to valuation allowances.
A roll-forward of unrecognized tax benefits, including those attributable to discontinued operations, is as
follows:
2011 2010
Balance at January 1 $198 $ 417
Additions based on tax positions related to current year 45 25
Additions for tax positions of prior years 38 59
Reductions for tax positions of prior years (63) (157)
Settlements and agreements (22) (142)
Lapse of statute of limitations (5) (4)
Balance at December 31 $191 $ 198
During 2011, the Company reduced its unrecognized tax benefits by $63 million for facts that indicate the
extent to which certain tax positions are more-likely-than-not of being sustained. The reduction resulted in the
recording of income tax benefits and adjustments to valuation allowances. Additionally, the Company reduced its
unrecognized tax benefits by $22 million for settlements and agreements with tax authorities, of which $14 million
resulted in cash tax payments and the remainder of which reduced tax carryforwards and other deferred tax assets.
The IRS is currently examining the Company’s 2008 and 2009 tax years. The Company also has several state
and non-U.S. audits pending. A summary of open tax years by major jurisdiction is presented below:
Jurisdiction Tax Years
United States 2008—2011
China 2002—2011
France 2004—2011
Germany 2008—2011
India 1996—2011
Israel 2007—2011
Japan 2005—2011
Malaysia 1998—2011
Singapore 2005—2011
United Kingdom 2004—2011
Although the final resolution of the Company’s global tax disputes is uncertain, based on current information,
in the opinion of the Company’s management, the ultimate disposition of these matters will not have a material
adverse effect on the Company’s consolidated financial position, liquidity or results of operations. However, an
unfavorable resolution of the Company’s global tax disputes could have a material adverse effect on the Company’s
consolidated financial position, liquidity or results of operations in the periods in which the matters are ultimately
resolved.
Based on the potential outcome of the Company’s global tax examinations, the expiration of the statute of
limitations for specific jurisdictions, or the continued ability to satisfy tax incentive obligations, it is reasonably
possible that the unrecognized tax benefits will change within the next twelve months. The associated net tax impact
on the effective tax rate, exclusive of valuation allowance changes, is estimated to be in the range of a $50 million
tax charge to a $75 million tax benefit, with cash payments in the range of $0 to $25 million.
At December 31, 2011, the Company had $17 million and $32 million accrued for interest and penalties,
respectively, on unrecognized tax benefits. At December 31, 2010, the Company had $25 million and $20 million
accrued for interest and penalties, respectively, on unrecognized tax benefits.
7. Retirement Benefits
Pension Benefit Plans
The Company’s noncontributory pension plan (the “Regular Pension Plan”) covers U.S. employees who became
eligible after one year of service. The benefit formula is dependent upon employee earnings and years of service.
Effective January 1, 2005, newly-hired employees were not eligible to participate in the Regular Pension Plan. The