Other Financial Data

Statements of Operations Information

Other Charges (Income)

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



	Three Months Ended
	April 2, 2016		April 4, 2015
Other charges:
Intangibles amortization	$	13	$	2
Reorganization of business	7		12
Acquisition related transaction fees	13		—
	$	33	$	14

Other Income (Expense)

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



	Three Months Ended
	April 2, 2016			April 4, 2015
Interest income (expense), net:
Interest expense	$	(53	)	$	(43	)
Interest income	4			3
	$	(49	)	$	(40	)
Other:
Foreign currency gain	$	13		$	18
Loss on derivative instruments	(12		)	(17		)
Gains on equity method investments	1			—
Realized foreign currency loss on acquisition	(10		)	—
Other	—			2
	$	(8	)	$	3

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	April 2, 2016		April 4, 2015		April 2, 2016		April 4, 2015
Basic earnings per common share:
Earnings	$	17	$	87	$	17	$	74
Weighted average common shares outstanding	174.5		215.3		174.5		215.3
Per share amount	$	0.10	$	0.40	$	0.10	$	0.34
Diluted earnings per common share:
Earnings	$	17	$	87	$	17	$	74
Weighted average common shares outstanding	174.5		215.3		174.5		215.3
Add effect of dilutive securities:
Share-based awards	2.5		2.5		2.5		2.5
Diluted weighted average common shares outstanding	177.0		217.8		177.0		217.8
Per share amount	$	0.10	$	0.40	$	0.10	$	0.34

In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three months ended April 2, 2016, the assumed exercise of 4.0 million options and the assumed vesting of 0.6 million restricted stock units ("RSUs") were excluded because their inclusion would have been antidilutive. For the three months ended April 4, 2015, the assumed exercise of 2.2 million stock options and the assumed vesting of 0.5 million RSUs were excluded because their inclusion would have been antidilutive.

On August 25, 2015, the Company issued $1.0 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 upon conversion, 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. In this case, 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 three months ended April 2, 2016, there was no dilutive impact of the Senior Convertible Notes.

Balance Sheet Information

Cash and Cash Equivalents

The Company’s cash and cash equivalents were $1.9 billion at April 2, 2016 and $2.0 billion at December 31, 2015. Of these amounts, $63 million was restricted at both April 2, 2016 and December 31, 2015.

Accounts Receivable, Net

Accounts receivable, net, consists of the following:



	April 2, 2016			December 31, 2015
Accounts receivable	$	1,179		$	1,390
Less allowance for doubtful accounts	(31		)	(28		)
	$	1,148		$	1,362

Inventories, Net

Inventories, net, consist of the following:



	April 2, 2016			December 31, 2015
Finished goods	$	163		$	151
Work-in-process and production materials	271			287
	434			438
Less inventory reserves	(147		)	(142		)
	$	287		$	296

Other Current Assets

Other current assets consist of the following:



	April 2, 2016		December 31, 2015
Available-for-sale securities	$	47	$	438
Costs and earnings in excess of billings	324		374
Tax-related refunds receivable	110		44
Other	145		98
	$	626	$	954

Property, Plant and Equipment, Net

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



	April 2, 2016			December 31, 2015
Land	$	17		$	17
Building	521			523
Machinery and equipment	2,109			1,585
	2,647			2,125
Less accumulated depreciation	(1,650		)	(1,638		)
	$	997		$	487

Depreciation expense for the three months ended April 2, 2016 and April 4, 2015 was $49 million and $39 million, respectively.

On February 1, 2016, the Company completed the sale of its Penang, Malaysia manufacturing operations, including the land, building, equipment, and inventory, as well as the transfer of employees to a contract manufacturer. During the three months ended April 2, 2016, the Company incurred a loss of $7 million on the sale of its Penang, Malaysia facility and manufacturing operations, which is included within Gains (losses) on sales of investments and businesses, net.

Subsequent to the three months ended April 2, 2016, the Company entered into an agreement for the sale of its corporate aircraft. The Company recognized an impairment loss of $3 million within Other charges during the three months ended April 2, 2016 based on the contracted sales price of the aircraft held for sale and has presented the aircraft as assets held for sale in its condensed consolidated balance sheets.

The Company acquired property, plant and equipment, including network assets, of $481 million in the acquisition of GDCL. The valuation of acquired property, plant and equipment is not yet finalized and may be subject to a fair value adjustment. See discussion in Note 14.

Investments

Investments consist of the following:



April 2, 2016	Cost Basis		Unrealized Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	52	$	—	$	52
Corporate bonds	7		—		7
Common stock	—		2		2
	59		2		61
Other investments, at cost	204		—		204
Equity method investments	10		—		10
	$	273	$	2	$	275
Less: current portion of available-for-sale securities					47
					$	228



December 31, 2015	Cost Basis		Unrealized Gains		Unrealized Losses			Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	455	$	—	$	(11	)	$	444
Corporate bonds	7		—		—			7
Common stock	—		6		—			6
	462		6		(11		)	457
Other investments, at cost	203		—		—			203
Equity method investments	9		—		—			9
	674		6		(11		)	669
Less: current portion of available-for-sale securities								438
								$	231

In December 2015, the Company invested $401 million in United Kingdom treasury securities in order to partially offset the risk associated with fluctuations in the British Pound Sterling in the period before the closing of the purchase of GDCL. The investments were recorded within Other current assets in the Company's consolidated balance sheets. The Company liquidated these investments in February 2016 to partially fund the acquisition of GDCL. During the three months ended April 2, 2016, the Company realized a loss of $19 million associated with the sale, of which, $11 million was unrealized as of December 31, 2015.

Other Assets

Other assets consist of the following:



	April 2, 2016		December 31, 2015
Intangible assets, net	$	669	$	49
Long-term receivables	29		47
Defined benefit plan assets	135		128
Other	51		47
	$	884	$	271

Accrued Liabilities

Accrued liabilities consist of the following:



	April 2, 2016		December 31, 2015
Deferred revenue	$	399	$	390
Compensation	167		241
Billings in excess of costs and earnings	301		337
Tax liabilities	49		48
Dividend payable	72		71
Trade liabilities	133		135
Other	483		449
	$	1,604	$	1,671

Other Liabilities

Other liabilities consist of the following:



	April 2, 2016		December 31, 2015
Defined benefit plans	$	1,511	$	1,512
Postretirement Health Care Benefit Plan	46		49
Deferred revenue	113		113
Unrecognized tax benefits	42		50
Deferred income taxes	141		—
Deferred consideration (Note 14)	82		—
Other	196		180
	$	2,131	$	1,904

During the three months ended April 2, 2016, the Company recorded an increase to its deferred income tax liability as a result of the acquisition of GDCL, as well as a liability of $82 million in the accounting for the acquisition of GDCL related to a payment of deferred consideration due on November 15, 2018 to the former owners. See discussion in Note 14.

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.

During the three months ended April 2, 2016, the Company paid an aggregate of $64 million, including transaction costs, to repurchase approximately 0.9 million shares at an average price of $71.41 per share. As of April 2, 2016, the Company had used approximately $11.0 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.0 billion of authority available for future repurchases.

Payment of Dividends: During the three months ended April 2, 2016 and April 4, 2015, the Company paid $71 million and $75 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 months ended April 2, 2016 and April 4, 2015:



	Three Months Ended
	April 2, 2016			April 4, 2015
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(266	)	$	(204	)
Other comprehensive income (loss) before reclassification adjustment	14			(27		)
Tax (expense) benefit	(1		)	1
Other comprehensive income (loss), net of tax	13			(26		)
Balance at end of period	$	(253	)	$	(230	)
Available-for-Sale Securities:
Balance at beginning of period	$	(3	)	$	44
Other comprehensive loss before reclassification adjustment	—			(7		)
Tax benefit	—			3
Other comprehensive loss before reclassification adjustment, net of tax	—			(4		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net	6			(46		)
Tax expense (benefit)	(2		)	17
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	4			(29		)
Other comprehensive income (loss), net of tax	4			(33		)
Balance at end of period	$	1		$	11
Defined Benefit Plans:
Balance at beginning of period	$	(1,597	)	$	(1,695	)
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	10			19
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(5		)	(17		)
Tax benefit	(1		)	(1		)
Reclassification adjustment into Selling, general, and administrative expenses, net of tax	4			1
Other comprehensive income, net of tax	4			1
Balance at end of period	$	(1,593	)	$	(1,694	)

Total Accumulated other comprehensive loss	$	(1,845	)	$	(1,913	)