Other Financial Data

Statements of Operations Information

Other Charges (Income)

Other charges (income) included in Operating earnings consist of the following:



	Three Months Ended				Nine Months Ended
	October 3, 2015		September 27, 2014		October 3, 2015			September 27, 2014
Other charges (income):
Intangibles amortization	$	2	$	1	$	6		$	3
Reorganization of business	14		13		39			48
Legal settlement	—		—		—			8
Non-U.S. pension curtailment gain	—		—		(32		)	—
Pension-related transaction fees	—		11		—			11
Impairment of corporate aircraft	26		—		26			—
Gain on sale of building and land	—		—		—			(21		)
	$	42	$	25	$	39		$	49

Other Income (Expense)

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



	Three Months Ended						Nine Months Ended
	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Interest income (expense), net:
Interest expense	$	(47	)	$	(38	)	$	(132	)	$	(102	)
Interest income	4			7			10			17
	$	(43	)	$	(31	)	$	(122	)	$	(85	)
Other:
Loss from the extinguishment of long-term debt	$	—		$	(37	)	$	—		$	(37	)
Investment impairments	—			—			(3		)	—
Foreign currency gain (loss)	(29		)	10			$	(23	)	$	2
Gain (loss) on derivative instruments	25			(6		)	13			(8		)
Gains on equity method investments	2			11			6			13
Other	1			(4		)	4			(4		)
	$	(1	)	$	(26	)	$	(3	)	$	(34	)

Earnings Per Common Share

The computation of basic and diluted earnings per common share is as follows:



	Amounts attributable to Motorola Solutions, Inc. common stockholders
	Earnings from Continuing Operations, net of tax				Net Earnings
Three Months Ended	October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014
Basic earnings per common share:
Earnings	$	126	$	66	$	115	$	147
Weighted average common shares outstanding	199.2		246.3		199.2		246.3
Per share amount	$	0.63	$	0.27	$	0.58	$	0.60
Diluted earnings per common share:
Earnings	$	126	$	66	$	115	$	147
Weighted average common shares outstanding	199.2		246.3		199.2		246.3
Add effect of dilutive securities:
Share-based awards	2.1		1.9		2.1		1.9
Diluted weighted average common shares outstanding	201.3		248.2		201.3		248.2
Per share amount	$	0.63	$	0.27	$	0.57	$	0.59



	Amounts attributable to Motorola Solutions, Inc. common stockholders
	Earnings from Continuing Operations, net of tax				Net Earnings
Nine Months Ended	October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014
Basic earnings per common share:
Earnings	$	363	$	229	$	331	$	1,098
Weighted average common shares outstanding	207.2		251.1		207.2		251.1
Per share amount	$	1.75	$	0.91	$	1.60	$	4.37
Diluted earnings per common share:
Earnings	$	363	$	229	$	331	$	1,098
Weighted average common shares outstanding	207.2		251.1		207.2		251.1
Add effect of dilutive securities:
Share-based awards	2.0		2.9		2.0		2.9
Diluted weighted average common shares outstanding	209.2		254.0		209.2		254.0
Per share amount	$	1.74	$	0.90	$	1.58	$	4.32

In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three months ended October 3, 2015, the assumed exercise of 3.9 million options were excluded because their inclusion would have been antidilutive. For the nine months ended October 3, 2015, the assumed exercise of 2.6 million options were excluded because their inclusion would have been antidilutive.

For the three and nine months ended September 27, 2014, the assumed exercise of 4.9 million and 4.8 million stock options, respectively, were excluded because their inclusion would have been antidilutive.

On August 25, 2015, the Company issued $1 billion of 2% Senior Convertible Notes which mature in September 2020 (the "Senior Convertible Notes"). The notes are convertible based on a conversion rate of 14.5985 per $1,000 principal amount (which is equal to an initial conversion price of $68.50 per share). See discussion in Note 4. In the event of conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash.

Because of the Company’s intention to settle the par value of the Senior Convertible Notes in cash, Motorola Solutions does not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price. Only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) will be included, which is based upon the amount by which the average stock price exceeds the conversion price of $68.50. For the period ended October 3, 2015, there was no dilutive effect of the Senior Convertible Notes on diluted earnings per share attributable to Motorola Solutions, Inc. as the average stock price for the period outstanding was below the conversion price.

Balance Sheet Information

Cash and Cash Equivalents

The Company’s cash and cash equivalents were $2.2 billion at October 3, 2015 and $4.0 billion at December 31, 2014. Of these amounts, $63 million was restricted at both October 3, 2015 and December 31, 2014.

Investments

Investments consist of the following:



October 3, 2015	Cost Basis		Unrealized Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	58	$	1	$	59
Corporate bonds	9		—		9
Common stock	—		15		15
	67		16		83
Other investments, at cost	201		—		201
Equity method investments	8		—		8
	$	276	$	16	$	292



December 31, 2014	Cost Basis		Unrealized Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	14	$	—	$	14
Corporate bonds	16		—		16
Mutual funds	2		—		2
Common stock	1		70		71
	33		70		103
Other investments, at cost	191		—		191
Equity method investments	22		—		22
	$	246	$	70	$	316

During the three months ended October 3, 2015, the Company sold various cost method investments recognizing a gain of $10 million. During the nine months ended October 3, 2015, the Company recorded Gains on sales of investments, net of $60 million, primarily related to the sale of one individual investment which represented $54 million of the total gain.

Accounts Receivable, Net

Accounts receivable, net, consists of the following:



	October 3, 2015			December 31, 2014
Accounts receivable	$	1,247		$	1,444
Less allowance for doubtful accounts	(25		)	(35		)
	$	1,222		$	1,409

Inventories, Net

Inventories, net, consist of the following:



	October 3, 2015			December 31, 2014
Finished goods	$	153		$	163
Work-in-process and production materials	323			313
	476			476
Less inventory reserves	(142		)	(131		)
	$	334		$	345

Other Current Assets

Other current assets consist of the following:



	October 3, 2015		December 31, 2014
Costs and earnings in excess of billings	$	397	$	417
Tax-related refunds receivable	77		103
Zebra receivable for cash transferred	—		49
Other	100		171
	$	574	$	740

In conjunction with the sale of the Enterprise business to Zebra Technologies, the Company transferred legal entities which maintained cash balances. During the nine months ended October 3, 2015, approximately $49 million of transferred cash balances were reimbursed by Zebra in accordance with the sales agreement.

Property, Plant and Equipment, Net

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



	October 3, 2015			December 31, 2014
Land	$	18		$	18
Building	528			559
Machinery and equipment	1,536			1,672
	2,082			2,249
Less accumulated depreciation	(1,615		)	(1,700		)
	$	467		$	549

Depreciation expense for the three months ended October 3, 2015 and September 27, 2014 was $30 million and $44 million, respectively. Depreciation expense for the nine months ended October 3, 2015 and September 27, 2014 was $107 million and $128 million, respectively.

Subsequent to the three months ended October 3, 2015, the Company entered into an arrangement to transfer its Penang, Malaysia manufacturing operations, including the land, building, equipment, inventory, and employees to a contract manufacturer. In the three months ended October 3, 2015, the Company recognized an impairment loss of $6 million on the building that is held for sale within Other charges, in its condensed consolidated statements of operations, and presented the assets as held for sale in its condensed consolidated balance sheets.

During the three months ended October 3, 2015, the Company entered into an agreement to broker the sale of its corporate aircraft. In the three months ended October 3, 2015, the Company recognized an impairment loss of $26 million within Other charges based on the indicated market value of the aircraft held for sale and has presented the aircraft as assets held for sale in its condensed consolidated balance sheets.

Other Assets

Other assets consist of the following:



	October 3, 2015		December 31, 2014
Intangible assets, net	$	50	$	23
Long-term receivables	16		31
Other	117		91
	$	183	$	145

Accrued Liabilities

Accrued liabilities consist of the following:



	October 3, 2015		December 31, 2014
Deferred revenue	$	363	$	355
Compensation	216		190
Billings in excess of costs and earnings	357		358
Tax liabilities	59		91
Dividend payable	60		75
Other	527		637
	$	1,582	$	1,706

Other Liabilities

Other liabilities consist of the following:



	October 3, 2015		December 31, 2014
Defined benefit plans	$	1,590	$	1,611
Postretirement Health Care Benefit Plan	47		49
Deferred revenue	116		139
Unrecognized tax benefits	50		54
Other	166		158
	$	1,969	$	2,011

Stockholders’ Equity

Share Repurchase Program: Through actions taken on July 28, 2011, January 30, 2012, July 25, 2012, July 22, 2013, and November 3, 2014, the Board of Directors has authorized the Company to repurchase in the aggregate up to $12.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date.

On August 4, 2015, the Board of Directors authorized the Company to commence a modified "Dutch auction" tender offer to repurchase up to $2 billion of its outstanding shares of common stock. The repurchase of these shares was authorized under the existing share repurchase authority, as outlined above. The tender offer commenced on August 7, 2015 and expired on September 3, 2015. The Company paid $2 billion, including transaction costs, to repurchase approximately 30.1 million shares at a tender price of $66.50 per share.

In addition, excluding shares repurchased under the tender offer mentioned above, the Company paid an aggregate of $55 million during the three months ended October 3, 2015, including transaction costs, to repurchase approximately 0.8 million shares at an average price of $67.62 per share.

During the nine months ended October 3, 2015, the Company paid an aggregate of $3.0 billion, including transaction costs, to repurchase approximately 45.4 million shares at an average price of $66.04 per share. As of October 3, 2015, the Company had used approximately $10.8 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.2 billion of authority available for future repurchases.

Payment of Dividends: During the three months ended October 3, 2015 and September 27, 2014, the Company paid $70 million and $78 million, respectively, in cash dividends to holders of its common stock. During the nine months ended October 3, 2015 and September 27, 2014, the Company paid $218 million and $236 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, including amounts reclassified into income, and the affected line items in the condensed consolidated statements of operations during the three and nine months ended October 3, 2015 and September 27, 2014:



	Three Months Ended						Nine Months Ended
	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(223	)	$	(81	)	$	(204	)	$	(96	)
Other comprehensive loss before reclassification adjustment	(17		)	(35		)	(35		)	(24		)
Tax benefit	1			1			—			5
Other comprehensive loss, net of tax	(16		)	(34		)	(35		)	(19		)
Balance at end of period	$	(239	)	$	(115	)	$	(239	)	$	(115	)
Derivative instruments:
Balance at beginning of period	$	—		$	—		$	—		$	(1	)
Reclassification adjustment into Cost of sales	—			—			—			1
Tax expense	—			—			—			—
Reclassification adjustment into Cost of sales, net of tax	—			—			—			1
Other comprehensive income, net of tax	—			—			—			1
Balance at end of period	$	—		$	—		$	—		$	—
Unrealized Gains and Losses on Available-for-Sale Securities:
Balance at beginning of period	$	15		$	—		$	44		$	(2	)
Other comprehensive loss before reclassification adjustment	—			—			(2		)	—
Tax benefit	—			—			1			2
Other comprehensive income (loss) before reclassification adjustment, net of tax	—			—			(1		)	2
Reclassification adjustment into Gains on sales of investments and businesses, net	(8		)	—			(54		)	—
Tax expense	3			—			21			—
Reclassification adjustment into Gains on sales of investments and businesses, net of tax	(5		)	—			(33		)	—
Other comprehensive income (loss), net of tax	(5		)	—			(34		)	2
Balance at end of period	$	10		$	—		$	10		$	—
Defined Benefit Plans:
Balance at beginning of period	(1,777		)	(2,164		)	(1,695		)	(2,188		)
Other comprehensive loss before reclassification adjustment	—			(647		)	(53		)	(647		)
Tax benefit	—			294			—			294
Other comprehensive loss before reclassification adjustment, net of tax	—			(353		)	(53		)	(353		)
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	20			27			56			84
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(20		)	(16		)	(52		)	(39		)
Reclassification adjustment - Non-U.S. pension curtailment gain into Selling, general, and administrative expenses	—			—			(32		)	—
Tax benefit	—			(4		)	(1		)	(14		)
Reclassification adjustment into Selling, general, and administrative expenses, net of tax	—			7			(29		)	31
Other comprehensive loss, net of tax	—			(346		)	(82		)	(322		)
Balance at end of period	$	(1,777	)	$	(2,510	)	$	(1,777	)	$	(2,510	)

Total Accumulated other comprehensive loss	$	(2,006	)	$	(2,625	)	$	(2,006	)	$	(2,625	)