Administration February 12, 2002

Motorola Facing Pension Charge

December 2, 2002 (PLANSPONSOR.com) - Motorola Inc. could face a pension charge to equity of up to $500 million dollars in the fourth quarter, according to a Crain's Chicago report.
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The final amount of the pension charge will not be known until after December 31, when the pension plan’s yearly performance is calculated.   Recent federal filings by Motorola anticipate a $500 million charge.  

Motorola is reporting the charge to cover the gap between pension assets and pension obligations. The charge to equity is a non-cash, after-tax entry that does not affect Motorola’s earnings.  

However, the charge will alter debt-to-equity ratios, making the company appear more highly leveraged.

Motorola is now taking steps to cut pension expenses, including “design changes” to the plan.   Previous announcements included a $215 million pre-tax charge in the fourth quarter as part of the restructuring effort.   Additionally, Motorola has announced plans to increase pension assets by putting between $150 million and $200 million cash into their plan in 2003.

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