Motorola 2014 Annual Report Download - page 71

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In December 2008, the Company amended the Regular Pension Plan, the Officers’ Plan and the MSPP (collectively, the
“U.S. Pension Benefit Plans”) such that, effective March 1, 2009: (i) no participant shall accrue any benefit or additional benefit
on or after March 1, 2009, and (ii) no compensation increases earned by a participant on or after March 1, 2009 shall be used to
compute any accrued benefit.
Certain health care benefits are available to eligible domestic employees meeting certain age and service requirements
upon termination of employment (the “Postretirement Health Care Benefits Plan”). For eligible employees hired prior to
January 1, 2002, the Company offsets a portion of the postretirement medical costs to the retired participant. As of January 1,
2005, the Postretirement Health Care Benefits Plan was closed to new participants. During 2012, the Postretirement Health
Care Benefits Plan was amended ("the Original Amendment"). As of January 1, 2013, benefits under the Postretirement Health
Care Benefits Plan, are paid to a retiree health reimbursement account instead of directly providing health insurance coverage to
certain participants. Covered retirees are now able to use the annual subsidy they receive through this account toward the
purchase of their own health care coverage from private insurance companies and for reimbursement of eligible health care
expenses. The Original Amendment to the Postretirement Health Care Benefits Plan effective January 1, 2013 resulted in a
remeasurement of the plan generating an $87 million decrease in accumulated other comprehensive loss, net of taxes. The
majority of that $87 million decrease will be recognized by the end of 2015.
In September 2014, the Postretirement Health Care Benefits Plan was amended (“the New Amendment”). As a result of
the New Amendment, beginning March 1, 2015, all eligible retirees under the age of 65, will be able to use the annual subsidy
they receive through their retiree health reimbursement account toward the purchase of their own health care coverage from
private insurance companies and for the reimbursement of eligible health care expenses. Additionally, the New Amendment
eliminated dental benefits under the plan. The New Amendment required a remeasurement of the plan, resulting in a $45 million
decrease in Accumulated other comprehensive loss, net of taxes. A substantial portion of the decrease is related to a prior
service credit and will be recognized as a credit to the consolidated statements of operations over almost three years, or the
period in which the remaining employees eligible for the plan will qualify for benefits under the plan.
During the years ended December 31, 2014, 2013, and 2012, $50 million, $43 million, and $16 million of prior service cost
credit, respectively, was recognized into the Company’s consolidated statements of operations for amendments to the
Postretirement Health Care Benefits Plan.
In September 2014, the Company entered into a Definitive Purchase Agreement (the “Agreement”) by and among the
Company, The Prudential Insurance Company of America (“PICA”), Prudential Financial, Inc. and State Street Bank and Trust
Company, as Independent Fiduciary of the Company’s Regular Pension Plan. Under the Agreement, the Regular Pension Plan
planned to purchase from PICA a group annuity contract that requires PICA to pay and administer certain future annuity
payments to approximately 30,000 of the Company’s retirees. In anticipation of the Agreement, the Company established a new
pension plan with substantially the same terms as the Regular Pension Plan (the “New Plan”) to accommodate the Company's
remaining active employees and non-retirees. The establishment of the New Plan resulted in a mid-year remeasurement. On
December 3, 2014, the Regular Pension Plan closed its planned purchase of a group annuity from PICA. The total premium paid
by the Regular Pension Plan to PICA was the transfer of approximately $3.2 billion in plan assets, and is subject to customary
post-closing true-ups. The Regular Pension Plan was then terminated.
Also in September 2014, the Company announced that the New Plan was offering a maximum of $1.0 billion of lump-sum
distributions to certain participants who had accrued a pension benefit, had left the Company prior to June 30, 2014, and had not
yet started receiving pension benefit payments (the “Eligible Participants”). The aggregate amount of lump-sum elections
accepted by Eligible Participants exceeded the maximum of $1.0 billion, and $1.0 billion was paid out from plan assets in
December 2014.
As a result of the actions taken to the Plans, the Company recorded a settlement loss of $1.9 billion in 2014 which is
recorded in "Other charges" within the statement of operations.