Motorola 2014 Annual Report Download - page 70

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The IRS is currently examining the Company's 2012 and 2013 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 2008-2014
China 2002-2014
France 2010-2014
Germany 2008-2014
India 1997-2014
Israel 2012-2014
Japan 2011-2014
Malaysia 2009-2014
Singapore 2010-2014
United Kingdom 2008-2014
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 $50 million tax benefit, with cash
payments not to exceed $25 million.
At December 31, 2014, the Company had $26 million accrued for interest and $26 million accrued for penalties on
unrecognized tax benefits. At December 31, 2013, the Company had $25 million and $27 million accrued for interest and
penalties, respectively, on unrecognized tax benefits.
7. Retirement Benefits
Pension and Postretirement Health Care Benefits Plans
The Company’s noncontributory pension plan (the “Regular Pension Plan”) covered U.S. employees hired prior to January
1, 2005, who became eligible after one year of service. The benefit formula was dependent upon employee earnings and years
of service. During 2014, the Company terminated this plan. The Company also provides defined benefit plans which cover non-
U.S. employees in certain jurisdictions, principally the United Kingdom and Germany (the “Non U.S. Pension Benefit Plans”).
Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate.
The Company had a noncontributory supplemental retirement benefit plan (the “Officers’ Plan”) for its officers elected prior
to December 31, 1999. The Officers’ Plan contained provisions for vesting and funding the participants’ expected retirement
benefits when the participants met the minimum age and years of service requirements. Elected officers who were not yet
vested in the Officers’ Plan as of December 31, 1999 had the option to remain in the Officers’ Plan or elect to have their benefit
bought out in restricted stock units. Effective December 31, 1999, newly elected officers were not eligible to participate in the
Officers’ Plan. Effective June 30, 2005, salaries were frozen for this plan. During 2013, the Company settled and terminated the
Officers' Plan.
The Company has an additional noncontributory supplemental retirement benefit plan, the Motorola Supplemental Pension
Plan (“MSPP”), which provides supplemental benefits to individuals by replacing the Regular Pension Plan benefits that are lost
by such individuals under the retirement formula due to application of the limitations imposed by the Internal Revenue Code.
However, elected officers who were covered under the Officers’ Plan were not eligible to participate in the MSPP. Effective
January 1, 2007, eligible compensation was capped at the IRS limit plus $175,000 (the “Cap”) or, for those already in excess of
the Cap as of January 1, 2007, the eligible compensation used to compute such employee’s MSPP benefit for all future years is
the greater of: (i) such employee’s eligible compensation as of January 1, 2007 (frozen at that amount) or (ii) the relevant Cap
for the given year. Effective January 1, 2009, the MSPP was closed to new participants unless such participation was required
under a prior contractual entitlement.
In February 2007, the Company amended the Regular Pension Plan and the MSPP, modifying the definition of average
earnings. For the years ended prior to December 31, 2007, benefits were calculated using the rolling average of the highest
annual earnings in any five years within the previous ten calendar year period. Beginning in January 2008, the benefit calculation
was based on the set of the five highest years of earnings within the ten calendar years prior to December 31, 2007, averaged
with earnings from each year after 2007. In addition, effective January 2008, the Company amended the Regular Pension Plan,
modifying the vesting period from five years to three years.