8-KOther Events

Motorola Solutions, Inc. 8-K Report, Corporate Update (Dec 3, 2014)

Filed December 3, 2014For Securities:MSI

Summary

Motorola Solutions, Inc. (MSI) filed an 8-K on December 3, 2014, to report on significant actions taken regarding its pension plan. The company announced the closure of a purchase from The Prudential Insurance Company of America (PICA) for a group annuity contract. This contract transfers the responsibility of paying and administering certain future pension payments to approximately 30,000 former employees to PICA. This transaction involved the transfer of approximately $3.2 billion in plan assets to PICA. Additionally, MSI established a new pension plan and offered lump-sum distributions, capped at $1.0 billion, to eligible former employees who had not yet started receiving benefits. Due to exceeding the cap, lump-sum payments will be disbursed sequentially starting with the smallest amounts until the $1.0 billion limit is met. The company expects to account for these combined transactions as a settlement of approximately $4.3 billion in pension obligations.

Key Highlights

  • 1Motorola Solutions purchased a group annuity contract from Prudential Insurance Company of America (PICA) to transfer pension obligations for ~30,000 retirees.
  • 2The transaction involved the transfer of approximately $3.2 billion in Motorola Solutions Pension Plan assets to PICA.
  • 3A new pension plan was established by the company.
  • 4Eligible former employees were offered lump-sum distributions, capped at a total of $1.0 billion.
  • 5Due to exceeding the lump-sum offer cap, distributions will be prioritized from smallest to largest amounts.
  • 6The company anticipates accounting for these transactions as a settlement of approximately $4.3 billion in pension obligations.

Frequently Asked Questions

This 8-K filing announces the completion of a significant transaction where Motorola Solutions transferred its pension obligations for a large group of retirees to The Prudential Insurance Company of America (PICA) through the purchase of a group annuity contract and offered lump-sum buyouts to certain former employees.

The company transferred approximately $3.2 billion in plan assets to PICA for the annuity contract. Additionally, up to $1.0 billion was allocated for lump-sum distributions to eligible former employees. The company expects to recognize a total settlement of approximately $4.3 billion in pension obligations.

Approximately 30,000 retirees who were receiving pension payments from the Motorola Solutions Pension Plan will now have their future annuity payments paid and administered by PICA. The terms of their pension benefits remain substantially the same.

There was a cap of $1.0 billion for the lump-sum distributions. Because the total amount accepted by eligible participants exceeded this cap, the company will prioritize payments starting with the smallest accepted lump-sum amounts until the $1.0 billion limit is reached. Not all eligible participants may receive their full lump-sum offer if the aggregate demand exceeds the cap.