Other Financial Data

Statement of Operations Information

Other Charges

Other charges included in Operating earnings consist of the following:



	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Other charges:
Intangibles amortization	$	8	$	6	$	20	$	18
Reorganization of businesses	24		10		55		30
	$	32	$	16	$	75	$	48

Other Income (Expense)

Interest expense, net, and Other, both included in Other income (expense), consist of the following:



	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Interest income (expense), net:
Interest expense	$	(33	)	$	(29	)	$	(100	)	$	(79	)
Interest income	4			13			15			33
	$	(29	)	$	(16	)	$	(85	)	$	(46	)
Other:
Loss from the extinguishment of long-term debt	$	—		$	—		$	—		$	(6	)
Investment impairments	(1		)	(6		)	(5		)	(8		)
Foreign currency loss	(4		)	—			(8		)	(11		)
Gains on equity method investments	8			2			7			4
Other	2			1			7			3
	$	5		$	(3	)	$	1		$	(18	)

Earnings Per Common Share

The computation of basic and diluted earnings per common share attributable to Motorola Solutions, Inc. common stockholders is as follows:



	Earnings from Continuing Operations				Net Earnings
Three Months Ended	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Basic earnings per common share:
Earnings	$	307	$	206	$	307	$	206
Weighted average common shares outstanding	262.2		283.1		262.2		283.1
Per share amount	$	1.17	$	0.73	$	1.17	$	0.73
Diluted earnings per common share:
Earnings	$	307	$	206	$	307	$	206
Weighted average common shares outstanding	262.2		283.1		262.2		283.1
Add effect of dilutive securities:
Share-based awards	3.1		4.3		3.1		4.3
Diluted weighted average common shares outstanding	265.3		287.4		265.3		287.4
Per share amount	$	1.16	$	0.72	$	1.16	$	0.72



	Earnings from Continuing Operations				Net Earnings
Nine Months Ended	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Basic earnings per common share:
Earnings	$	757	$	542	$	757	$	545
Weighted average common shares outstanding	268.7		296.1		268.7		296.1
Per share amount	$	2.82	$	1.83	$	2.82	$	1.84
Diluted earnings per common share:
Earnings	$	757	$	542	$	757	$	545
Weighted average common shares outstanding	268.7		296.1		268.7		296.1
Add effect of dilutive securities:
Share-based awards	4.8		5.4		4.8		5.4
Diluted weighted average common shares outstanding	273.5		301.5		273.5		301.5
Per share amount	$	2.77	$	1.80	$	2.77	$	1.81

In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three and nine months ended September 28, 2013, the assumed exercise of 5.6 million and 4.8 million stock options, respectively, were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three and nine months ended September 29, 2012, the assumed exercise of 6.1 million and 6.0 million stock options, respectively, were excluded because their inclusion would have been antidilutive.

Balance Sheet Information

Cash and Cash Equivalents

The Company’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) were $1.7 billion at September 28, 2013 and $1.5 billion at December 31, 2012. Of these amounts, $63 million at both September 28, 2013 and December 31, 2012 was restricted.

Sigma Fund

The Sigma Fund consists of the following:



	September 28, 2013		December 31, 2012
Cash	$	261	$	149
U.S. government, agency, and government-sponsored enterprise obligations	906		1,984
	$	1,167	$	2,133

Investments

Investments consist of the following:



	Recorded Value				Less
September 28, 2013	Short-term Investments		Investments		Unrealized Gains		Unrealized Loss			Cost Basis
Available-for-sale securities:
U.S. government, agency and government-sponsored enterprise obligations	$	—	$	17	$	—	$	(1	)	$	18
Corporate bonds	2		6		—		—			8
Mortgage-backed securities	—		2		—		—			2
Common stock and equivalents	—		11		4		—			7
	2		36		4		(1		)	35
Other securities, at cost	—		206		—		—			206
Equity method investments	—		17		—		—			17
	$	2	$	259	$	4	$	(1	)	$	258



	Recorded Value				Less
December 31, 2012	Short-term Investments		Investments		Unrealized Gains		Unrealized Loss		Cost Basis
Available-for-sale securities:
U.S. government, agency and government-sponsored enterprise obligations	$	—	$	15	$	—	$	—	$	15
Corporate bonds	2		11		—		—		13
Mortgage-backed securities	—		2		—		—		2
Common stock and equivalents	—		10		3		—		7
	2		38		3		—		37
Other securities, at cost	—		189		—		—		189
Equity method investments	—		13		—		—		13
	$	2	$	240	$	3	$	—	$	239

The Company reclassified $96 million of cash surrender values of its split-dollar value life insurance plans, as of December 31, 2012, from Other assets to Investments, to conform to the balance sheet presentation as of September 28, 2013.

Accounts Receivable, Net

Accounts receivable, net, consists of the following:



	September 28, 2013			December 31, 2012
Accounts receivable	$	1,879		$	1,932
Less allowance for doubtful accounts	(56		)	(51		)
	$	1,823		$	1,881

Inventories, Net

Inventories, net, consist of the following:



	September 28, 2013			December 31, 2012
Finished goods	$	234		$	244
Work-in-process and production materials	462			432
	696			676
Less inventory reserves	(175		)	(163		)
	$	521		$	513

Other Current Assets

Other current assets consist of the following:



	September 28, 2013		December 31, 2012
Costs and earnings in excess of billings	$	413	$	416
Contract-related deferred costs	111		141
Tax-related deposits and refunds receivable	98		95
Other	138		148
	$	760	$	800

Property, Plant and Equipment, Net

Property, plant and equipment, net, consists of the following:



	September 28, 2013			December 31, 2012
Land	$	37		$	38
Building	748			739
Machinery and equipment	1,926			1,932
	2,711			2,709
Less accumulated depreciation	(1,870		)	(1,870		)
	$	841		$	839

Depreciation expense for the three months ended September 28, 2013 and September 29, 2012 was $51 million and $39 million, respectively. Depreciation expense for the nine months ended September 28, 2013 and September 29, 2012 was $148 million and $133 million, respectively.

Other Assets

Other assets consist of the following:



	September 28, 2013		December 31, 2012
Intangible assets	$	92	$	109
Long-term receivables	19		60
Other	92		104
	$	203	$	273

Accrued Liabilities

Accrued liabilities consist of the following:



	September 28, 2013		December 31, 2012
Deferred revenue	$	766	$	820
Compensation	319		424
Billings in excess of costs and earnings	211		387
Tax liabilities	54		95
Customer reserves	126		144
Dividend payable	80		72
Other	647		684
	$	2,203	$	2,626

Other Liabilities

Other liabilities consist of the following:



	September 28, 2013		December 31, 2012
Defined benefit plans, including split dollar life insurance policies	$	3,270	$	3,389
Postretirement health care benefit plan	166		167
Deferred revenue	311		304
Unrecognized tax benefits	99		98
Other	209		237
	$	4,055	$	4,195

Stockholders’ Equity

Share Repurchase Program: The Company paid an aggregate of $1.3 billion during the first nine months of 2013, including transactions costs, to repurchase approximatley 23 million shares at an average price of $58.05 per share. During the first nine months of 2012, the Company paid an aggregate of $2.1 billion, including transaction costs, to repurchase 37.1 million shares at an average price of $48.50 per share. All repurchased shares have been retired.

On July 24, 2013, the Company announced that its Board of Directors authorized up to $2.0 billion in additional funds for share repurchase, bringing the aggregate amount of the share repurchase program to $7.0 billion. As of September 28, 2013, the Company had used approximately $4.9 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $2.1 billion of authority available for future repurchases.

Payment of Dividends: On July 24, 2013, the Company announced that its Board of Directors approved an increase in the quarterly cash dividend from $0.26 per share to $0.31 per share of common stock. During the nine months ended September 28, 2013 and September 29, 2012, the Company paid $212 million and $197 million, respectively, in cash dividends to holders of its common stock.

Accumulated Other Comprehensive Loss

The following table displays the changes in Accumulated other comprehensive loss, net of tax, by component from January 1, 2013 to September 28, 2013:



	Gains and Losses on Cash Flow Hedges			Unrealized Gains and Losses on Available-for-Sale Securities		Retirement Benefit Items			Foreign Currency Translation Adjustments			Total
Balance as of January 1, 2013	$	1		$	2	$	(3,211	)	$	(92	)	$	(3,300	)
Other comprehensive losses before reclassifications	(1		)	—		—			(22		)	(23		)
Amounts reclassified from Accumulated other comprehensive loss	$	(1	)	$	—	$	52		$	—		$	51
Current period change in Other comprehensive income (loss)	(2		)	—		52			(22		)	28
Balance as of September 28, 2013	$	(1	)	$	2	$	(3,159	)	$	(114	)	$	(3,272	)

The following table displays the amounts reclassified from Accumulated other comprehensive loss and the affected line item in the condensed consolidated statement of operations during the three and nine months ended September 28, 2013:



	September 28, 2013
	Three Months Ended			Nine Months Ended
Gains on cash flow hedges:
Foreign exchange contracts	$	—		$	(1	)	Cost of sales
	$	—		$	(1	)	Net of tax
Amortization of Retirement Benefit Items:
Prior-service costs	$	(13	)	$	(38	)	Selling, general, and administrative expenses
Actuarial net losses	39			118			Selling, general, and administrative expenses
	26			80			Total before tax
	(9		)	(28		)	Tax expense
	$	17		$	52		Net of tax

Total reclassifications for the period, net of tax	$	17		$	51