x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE (State of Incorporation) | 36-1115800 (I.R.S. Employer Identification No.) | |
1303 E. Algonquin Road, Schaumburg, Illinois (Address of principal executive offices) | 60196 (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
Class | Number of Shares | |
Common Stock; $.01 Par Value | 166,725,634 |
Page | |
Item 1 Financial Statements | |
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended July 2, 2016 and July 4, 2015 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended July 2, 2016 and July 4, 2015 | |
Condensed Consolidated Balance Sheets as of July 2, 2016 (Unaudited) and December 31, 2015 | |
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Six Months Ended July 2, 2016 | |
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended July 2, 2016 and July 4, 2015 | |
Notes to Condensed Consolidated Financial Statements (Unaudited) | |
Item 4 Mine Safety Disclosures | |
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions, except per share amounts) | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||
Net sales from products | $ | 801 | $ | 867 | $ | 1,503 | $ | 1,626 | |||||||
Net sales from services | 629 | 501 | 1,120 | 965 | |||||||||||
Net sales | 1,430 | 1,368 | 2,623 | 2,591 | |||||||||||
Costs of products sales | 361 | 385 | 726 | 745 | |||||||||||
Costs of services sales | 393 | 335 | 718 | 650 | |||||||||||
Costs of sales | 754 | 720 | 1,444 | 1,395 | |||||||||||
Gross margin | 676 | 648 | 1,179 | 1,196 | |||||||||||
Selling, general and administrative expenses | 240 | 254 | 475 | 510 | |||||||||||
Research and development expenditures | 138 | 156 | 274 | 315 | |||||||||||
Other charges (income) | 74 | (16 | ) | 107 | (2 | ) | |||||||||
Operating earnings | 224 | 254 | 323 | 373 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (54 | ) | (39 | ) | (103 | ) | (79 | ) | |||||||
Gains (losses) on sales of investments and businesses, net | 1 | 4 | (20 | ) | 50 | ||||||||||
Other | (4 | ) | (4 | ) | (11 | ) | (1 | ) | |||||||
Total other expense | (57 | ) | (39 | ) | (134 | ) | (30 | ) | |||||||
Earnings from continuing operations before income taxes | 167 | 215 | 189 | 343 | |||||||||||
Income tax expense | 59 | 64 | 64 | 104 | |||||||||||
Earnings from continuing operations | 108 | 151 | 125 | 239 | |||||||||||
Loss from discontinued operations, net of tax | — | (8 | ) | — | (21 | ) | |||||||||
Net earnings | 108 | 143 | 125 | 218 | |||||||||||
Less: Earnings attributable to noncontrolling interests | 1 | 1 | 1 | 1 | |||||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 107 | $ | 142 | $ | 124 | $ | 217 | |||||||
Amounts attributable to Motorola Solutions, Inc. common stockholders: | |||||||||||||||
Earnings from continuing operations, net of tax | $ | 107 | $ | 150 | $ | 124 | $ | 238 | |||||||
Loss from discontinued operations, net of tax | — | (8 | ) | — | (21 | ) | |||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 107 | $ | 142 | $ | 124 | $ | 217 | |||||||
Earnings (loss) per common share: | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | 0.62 | $ | 0.72 | $ | 0.72 | $ | 1.12 | |||||||
Discontinued operations | — | (0.04 | ) | — | (0.09 | ) | |||||||||
$ | 0.62 | $ | 0.68 | $ | 0.72 | $ | 1.03 | ||||||||
Diluted: | |||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.72 | $ | 0.71 | $ | 1.11 | |||||||
Discontinued operations | — | (0.04 | ) | — | (0.10 | ) | |||||||||
$ | 0.61 | $ | 0.68 | $ | 0.71 | $ | 1.01 | ||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 171.9 | 208.0 | 173.0 | 211.7 | |||||||||||
Diluted | 174.8 | 209.5 | 175.7 | 213.8 | |||||||||||
Dividends declared per share | $ | 0.41 | 0.34 | $ | 0.82 | 0.68 |
Three Months Ended | |||||||
(In millions) | July 2, 2016 | July 4, 2015 | |||||
Net earnings | $ | 108 | $ | 143 | |||
Other comprehensive income (loss), net of tax (Note 3): | |||||||
Foreign currency translation adjustments | (98 | ) | 7 | ||||
Marketable securities | (1 | ) | 4 | ||||
Defined benefit plans | 56 | (83 | ) | ||||
Total other comprehensive loss, net of tax | (43 | ) | (72 | ) | |||
Comprehensive income | 65 | 71 | |||||
Less: Earnings attributable to noncontrolling interest | 1 | 1 | |||||
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ | 64 | $ | 70 |
Six Months Ended | |||||||
(In millions) | July 2, 2016 | July 4, 2015 | |||||
Net earnings | $ | 125 | $ | 218 | |||
Other comprehensive income (loss), net of tax (Note 3): | |||||||
Foreign currency translation adjustments | (85 | ) | (19 | ) | |||
Marketable securities | 3 | (29 | ) | ||||
Defined benefit plans | 60 | (82 | ) | ||||
Total other comprehensive loss, net of tax | (22 | ) | (130 | ) | |||
Comprehensive income | 103 | 88 | |||||
Less: Earnings attributable to noncontrolling interest | 1 | 1 | |||||
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ | 102 | $ | 87 |
(In millions, except par value) | July 2, 2016 | December 31, 2015 | |||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,545 | $ | 1,980 | |||
Accounts receivable, net | 1,083 | 1,362 | |||||
Inventories, net | 284 | 296 | |||||
Other current assets | 635 | 954 | |||||
Current assets held for disposition | — | 27 | |||||
Total current assets | 3,547 | 4,619 | |||||
Property, plant and equipment, net | 778 | 487 | |||||
Investments | 223 | 231 | |||||
Deferred income taxes | 2,261 | 2,278 | |||||
Goodwill | 597 | 420 | |||||
Other assets | 1,061 | 271 | |||||
Non-current assets held for disposition | — | 40 | |||||
Total assets | $ | 8,467 | $ | 8,346 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current portion of long-term debt | $ | 5 | $ | 4 | |||
Accounts payable | 409 | 518 | |||||
Accrued liabilities | 1,631 | 1,671 | |||||
Total current liabilities | 2,045 | 2,193 | |||||
Long-term debt | 5,028 | 4,345 | |||||
Other liabilities | 2,072 | 1,904 | |||||
Stockholders’ Equity | |||||||
Preferred stock, $100 par value | — | — | |||||
Common stock, $.01 par value: | 2 | 2 | |||||
Authorized shares: 600.0 | |||||||
Issued shares: 7/2/16—167.0; 12/31/15—174.5 | |||||||
Outstanding shares: 7/2/16—166.7; 12/31/15—174.3 | |||||||
Additional paid-in capital | 117 | 42 | |||||
Retained earnings | 1,080 | 1,716 | |||||
Accumulated other comprehensive loss | (1,888 | ) | (1,866 | ) | |||
Total Motorola Solutions, Inc. stockholders’ equity (deficit) | (689 | ) | (106 | ) | |||
Noncontrolling interests | 11 | 10 | |||||
Total stockholders’ equity (deficit) | (678 | ) | (96 | ) | |||
Total liabilities and stockholders’ equity | $ | 8,467 | $ | 8,346 |
(In millions) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | |||||||||||||
Balance as of December 31, 2015 | 174.5 | $ | 44 | $ | (1,866 | ) | $ | 1,716 | $ | 10 | ||||||||
Net earnings | 124 | 1 | ||||||||||||||||
Other comprehensive loss | (22 | ) | ||||||||||||||||
Issuance of common stock and stock options exercised | 1.5 | 40 | ||||||||||||||||
Share repurchase program | (9.0 | ) | (619 | ) | ||||||||||||||
Share-based compensation expense | 35 | |||||||||||||||||
Dividends declared | (141 | ) | ||||||||||||||||
Balance as of July 2, 2016 | 167.0 | $ | 119 | $ | (1,888 | ) | $ | 1,080 | $ | 11 |
Six Months Ended | |||||||
(In millions) | July 2, 2016 | July 4, 2015 | |||||
Operating | |||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 124 | $ | 217 | |||
Earnings attributable to noncontrolling interests | 1 | 1 | |||||
Net earnings | 125 | 218 | |||||
Loss from discontinued operations, net of tax | — | (21 | ) | ||||
Earnings from continuing operations, net of tax | 125 | 239 | |||||
Adjustments to reconcile Earnings from continuing operations to Net cash provided by operating activities: | |||||||
Depreciation and amortization | 144 | 81 | |||||
Non-cash other charges | 35 | 5 | |||||
Non-U.S. pension curtailment gain | — | (32 | ) | ||||
Share-based compensation expense | 35 | 40 | |||||
Losses (gains) on sales of investments and businesses, net | 20 | (50 | ) | ||||
Deferred income taxes | 71 | 55 | |||||
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | |||||||
Accounts receivable | 327 | 255 | |||||
Inventories | (2 | ) | (25 | ) | |||
Other current assets | (65 | ) | 28 | ||||
Accounts payable and accrued liabilities | (362 | ) | (248 | ) | |||
Other assets and liabilities | (24 | ) | (42 | ) | |||
Net cash provided by operating activities | 304 | 306 | |||||
Investing | |||||||
Acquisitions and investments, net | (1,120 | ) | (93 | ) | |||
Proceeds from sales of investments and businesses, net | 553 | 111 | |||||
Capital expenditures | (143 | ) | (81 | ) | |||
Proceeds from sales of property, plant and equipment | 46 | 1 | |||||
Net cash used for investing activities | (664 | ) | (62 | ) | |||
Financing | |||||||
Repayment of debt | (2 | ) | (2 | ) | |||
Net proceeds from issuance of debt | 673 | — | |||||
Issuance of common stock | 40 | 37 | |||||
Purchase of common stock | (619 | ) | (939 | ) | |||
Excess tax benefit from share-based compensation | — | 1 | |||||
Payment of dividends | (143 | ) | (148 | ) | |||
Net cash used for financing activities | (51 | ) | (1,051 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (24 | ) | (35 | ) | |||
Net decrease in cash and cash equivalents | (435 | ) | (842 | ) | |||
Cash and cash equivalents, beginning of period | 1,980 | 3,954 | |||||
Cash and cash equivalents, end of period | $ | 1,545 | $ | 3,112 | |||
Supplemental Cash Flow Information | |||||||
Cash paid during the period for: | |||||||
Interest, net | $ | 94 | $ | 81 | |||
Income and withholding taxes, net of refunds | 54 | 71 |
1. | Basis of Presentation |
2. | Discontinued Operations |
3. | Other Financial Data |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Other charges: | |||||||||||||||
Intangibles amortization | $ | 38 | $ | 3 | $ | 52 | $ | 4 | |||||||
Reorganization of business | 19 | 13 | 25 | 26 | |||||||||||
Building impairment | 17 | — | 17 | — | |||||||||||
Non-U.S. pension curtailment gain | — | (32 | ) | — | (32 | ) | |||||||||
Acquisition-related transaction fees | — | — | 13 | — | |||||||||||
$ | 74 | $ | (16 | ) | $ | 107 | $ | (2 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Interest income (expense), net: | |||||||||||||||
Interest expense | $ | (59 | ) | $ | (42 | ) | $ | (111 | ) | $ | (86 | ) | |||
Interest income | 5 | 3 | 8 | 7 | |||||||||||
$ | (54 | ) | $ | (39 | ) | $ | (103 | ) | $ | (79 | ) | ||||
Other: | |||||||||||||||
Investment impairments | — | (3 | ) | — | (3 | ) | |||||||||
Foreign currency gain (loss) | 14 | (11 | ) | $ | 27 | $ | 7 | ||||||||
Gain (loss) on derivative instruments | (18 | ) | 4 | (30 | ) | (12 | ) | ||||||||
Gains on equity method investments | — | 4 | 2 | 4 | |||||||||||
Realized foreign currency loss on acquisition | — | — | (10 | ) | — | ||||||||||
Other | — | 2 | — | 3 | |||||||||||
$ | (4 | ) | $ | (4 | ) | $ | (11 | ) | $ | (1 | ) |
Amounts attributable to Motorola Solutions, Inc. common stockholders | |||||||||||||||
Earnings from Continuing Operations, net of tax | Net Earnings | ||||||||||||||
Three Months Ended | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||
Basic earnings per common share: | |||||||||||||||
Earnings | $ | 107 | $ | 150 | $ | 107 | $ | 142 | |||||||
Weighted average common shares outstanding | 171.9 | 208.0 | 171.9 | 208.0 | |||||||||||
Per share amount | $ | 0.62 | $ | 0.72 | $ | 0.62 | $ | 0.68 | |||||||
Diluted earnings per common share: | |||||||||||||||
Earnings | $ | 107 | $ | 150 | $ | 107 | $ | 142 | |||||||
Weighted average common shares outstanding | 171.9 | 208.0 | 171.9 | 208.0 | |||||||||||
Add effect of dilutive securities: | |||||||||||||||
Share-based awards | 2.4 | 1.5 | 2.4 | 1.5 | |||||||||||
Senior Convertible Notes | 0.5 | — | 0.5 | — | |||||||||||
Diluted weighted average common shares outstanding | 174.8 | 209.5 | 174.8 | 209.5 | |||||||||||
Per share amount | $ | 0.61 | $ | 0.72 | $ | 0.61 | $ | 0.68 |
Amounts attributable to Motorola Solutions, Inc. common stockholders | |||||||||||||||
Earnings from Continuing Operations, net of tax | Net Earnings | ||||||||||||||
Six Months Ended | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||
Basic earnings per common share: | |||||||||||||||
Earnings | $ | 124 | $ | 238 | $ | 124 | $ | 217 | |||||||
Weighted average common shares outstanding | 173.0 | 211.7 | 173.0 | 211.7 | |||||||||||
Per share amount | $ | 0.72 | $ | 1.12 | $ | 0.72 | $ | 1.03 | |||||||
Diluted earnings per common share: | |||||||||||||||
Earnings | $ | 124 | $ | 238 | $ | 124 | $ | 217 | |||||||
Weighted average common shares outstanding | 173.0 | 211.7 | 173.0 | 211.7 | |||||||||||
Add effect of dilutive securities: | |||||||||||||||
Share-based awards | 2.4 | 2.1 | 2.4 | 2.1 | |||||||||||
Senior Convertible Notes | 0.3 | — | 0.3 | — | |||||||||||
Diluted weighted average common shares outstanding | 175.7 | 213.8 | 175.7 | 213.8 | |||||||||||
Per share amount | $ | 0.71 | $ | 1.11 | $ | 0.71 | $ | 1.01 |
July 2, 2016 | December 31, 2015 | ||||||
Accounts receivable | $ | 1,122 | $ | 1,390 | |||
Less allowance for doubtful accounts | (39 | ) | (28 | ) | |||
$ | 1,083 | $ | 1,362 |
July 2, 2016 | December 31, 2015 | ||||||
Finished goods | $ | 160 | $ | 151 | |||
Work-in-process and production materials | 261 | 287 | |||||
421 | 438 | ||||||
Less inventory reserves | (137 | ) | (142 | ) | |||
$ | 284 | $ | 296 |
July 2, 2016 | December 31, 2015 | ||||||
Available-for-sale securities | $ | 47 | $ | 438 | |||
Costs and earnings in excess of billings | 350 | 374 | |||||
Tax-related refunds receivable | 107 | 44 | |||||
Other | 131 | 98 | |||||
$ | 635 | $ | 954 |
July 2, 2016 | December 31, 2015 | ||||||
Land | $ | 16 | $ | 17 | |||
Building | 543 | 523 | |||||
Machinery and equipment | 1,897 | 1,585 | |||||
2,456 | 2,125 | ||||||
Less accumulated depreciation | (1,678 | ) | (1,638 | ) | |||
$ | 778 | $ | 487 |
July 2, 2016 | Cost Basis | Unrealized Gains | Unrealized Losses | Investments | |||||||||||
Available-for-sale securities: | |||||||||||||||
Government, agency, and government-sponsored enterprise obligations | $ | 52 | $ | — | $ | — | $ | 52 | |||||||
Corporate bonds | 8 | — | — | 8 | |||||||||||
Common stock | — | — | — | — | |||||||||||
60 | — | — | 60 | ||||||||||||
Other investments, at cost | 200 | — | — | 200 | |||||||||||
Equity method investments | 10 | — | — | 10 | |||||||||||
$ | 270 | $ | — | $ | — | $ | 270 | ||||||||
Less: current portion of available-for-sale securities | 47 | ||||||||||||||
$ | 223 |
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 |
July 2, 2016 | December 31, 2015 | ||||||
Intangible assets, net (Note 14) | $ | 824 | $ | 49 | |||
Long-term receivables | 42 | 47 | |||||
Defined benefit plan assets | 143 | 128 | |||||
Other | 52 | 47 | |||||
$ | 1,061 | $ | 271 |
July 2, 2016 | December 31, 2015 | ||||||
Deferred revenue | $ | 361 | $ | 390 | |||
Compensation | 166 | 241 | |||||
Billings in excess of costs and earnings | 291 | 337 | |||||
Tax liabilities | 65 | 48 | |||||
Dividend payable | 70 | 71 | |||||
Trade liabilities | 137 | 135 | |||||
Other | 541 | 449 | |||||
$ | 1,631 | $ | 1,671 |
July 2, 2016 | December 31, 2015 | ||||||
Defined benefit plans | $ | 1,493 | $ | 1,512 | |||
Postretirement Health Care Benefit Plan | — | 49 | |||||
Deferred revenue | 149 | 113 | |||||
Unrecognized tax benefits | 42 | 50 | |||||
Deferred income taxes | 120 | — | |||||
Deferred consideration (Note 14) | 78 | — | |||||
Other | 190 | 180 | |||||
$ | 2,072 | $ | 1,904 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Foreign Currency Translation Adjustments: | |||||||||||||||
Balance at beginning of period | $ | (253 | ) | $ | (230 | ) | $ | (266 | ) | $ | (204 | ) | |||
Other comprehensive income (loss) before reclassification adjustment | (98 | ) | 7 | (84 | ) | (18 | ) | ||||||||
Tax expense | — | — | (1 | ) | (1 | ) | |||||||||
Other comprehensive income (loss), net of tax | (98 | ) | 7 | (85 | ) | (19 | ) | ||||||||
Balance at end of period | $ | (351 | ) | $ | (223 | ) | $ | (351 | ) | $ | (223 | ) | |||
Available-for-Sale Securities: | |||||||||||||||
Balance at beginning of period | $ | 1 | $ | 11 | $ | (3 | ) | $ | 44 | ||||||
Other comprehensive income (loss) before reclassification adjustment | (2 | ) | 6 | (2 | ) | (1 | ) | ||||||||
Tax (expense) benefit | 1 | (2 | ) | 1 | 1 | ||||||||||
Other comprehensive income (loss) before reclassification adjustment, net of tax | (1 | ) | 4 | (1 | ) | — | |||||||||
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 | (1 | ) | 4 | 3 | (29 | ) | |||||||||
Balance at end of period | $ | — | $ | 15 | $ | — | $ | 15 | |||||||
Defined Benefit Plans: | |||||||||||||||
Balance at beginning of period | (1,593 | ) | (1,694 | ) | $ | (1,597 | ) | $ | (1,695 | ) | |||||
Other comprehensive income (loss) before reclassification adjustment | 53 | (53 | ) | 53 | (53 | ) | |||||||||
Tax expense | (16 | ) | — | (16 | ) | — | |||||||||
Other comprehensive income (loss) before reclassification adjustment, net of tax | 37 | (53 | ) | 37 | (53 | ) | |||||||||
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses | 18 | 18 | 28 | 36 | |||||||||||
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses | (7 | ) | (16 | ) | (13 | ) | (32 | ) | |||||||
Reclassification adjustment - Non-U.S. pension curtailment gain into Other charges | — | (32 | ) | — | (32 | ) | |||||||||
Tax expense (benefit) | 8 | — | 8 | (1 | ) | ||||||||||
Reclassification adjustment into Selling, general, and administrative expenses, net of tax | 19 | (30 | ) | 23 | (29 | ) | |||||||||
Other comprehensive income (loss), net of tax | 56 | (83 | ) | 60 | (82 | ) | |||||||||
Balance at end of period | $ | (1,537 | ) | $ | (1,777 | ) | $ | (1,537 | ) | $ | (1,777 | ) | |||
Total Accumulated other comprehensive loss | $ | (1,888 | ) | $ | (1,985 | ) | $ | (1,888 | ) | $ | (1,985 | ) |
4. | Debt and Credit Facilities |
5. | Risk Management |
Notional Amount | |||||||
Net Buy (Sell) by Currency | July 2, 2016 | December 31, 2015 | |||||
Euro | $ | 210 | $ | 99 | |||
British Pound | 168 | 62 | |||||
Chinese Renminbi | (87 | ) | (114 | ) | |||
Australian Dollar | (57 | ) | (60 | ) | |||
Brazilian Real | (57 | ) | (44 | ) |
Fair Values of Derivative Instruments | |||||||||||
Assets | Liabilities | ||||||||||
July 2, 2016 | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | |||||||
Derivatives not designated as hedging instruments: | |||||||||||
Foreign exchange contracts | $ | 1 | Other current assets | $ | 15 | Accrued liabilities | |||||
Interest rate swap | — | Other current assets | 1 | Accrued liabilities | |||||||
Total derivatives | $ | 1 | $ | 16 |
Fair Values of Derivative Instruments | |||||||||
Assets | Liabilities | ||||||||
December 31, 2015 | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | |||||
Derivatives not designated as hedging instruments: | |||||||||
Foreign exchange contracts | 6 | Other current assets | 2 | Accrued liabilities | |||||
Interest rate swap | — | Other current assets | 1 | Accrued liabilities | |||||
Total derivatives | 6 | 3 |
Three Months Ended | Six Months Ended | Statements of Operations Location | |||||||||||||||
Gain (loss) on Derivative Instruments | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||
Interest rate swap | $ | — | $ | — | $ | — | $ | 1 | Other income (expense) | ||||||||
Foreign exchange contracts | (18 | ) | 4 | (30 | ) | (13 | ) | Other income (expense) | |||||||||
Total derivatives | $ | (18 | ) | $ | 4 | $ | (30 | ) | $ | (12 | ) |
6. | Income Taxes |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Earnings from continuing operations before income taxes | $ | 167 | $ | 215 | $ | 189 | $ | 343 | |||||||
Income tax expense | 59 | 64 | 64 | 104 | |||||||||||
Effective tax rate | 35 | % | 30 | % | 34 | % | 30 | % |
7. | Retirement and Other Employee Benefits |
U.S. Pension Benefit Plans | Non U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||
Three Months Ended | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||
Service cost | $ | — | $ | — | $ | 2 | $ | 4 | $ | — | $ | 1 | |||||||||||
Interest cost | 46 | 47 | 14 | 19 | 1 | 2 | |||||||||||||||||
Expected return on plan assets | (55 | ) | (52 | ) | (24 | ) | (31 | ) | (3 | ) | (3 | ) | |||||||||||
Amortization of: | |||||||||||||||||||||||
Unrecognized net loss | 9 | 11 | 3 | 5 | 2 | 2 | |||||||||||||||||
Unrecognized prior service benefit | — | — | — | (1 | ) | (7 | ) | (15 | ) | ||||||||||||||
Curtailment gain | — | — | — | (32 | ) | — | — | ||||||||||||||||
Net periodic pension cost (benefit) | $ | — | $ | 6 | $ | (5 | ) | $ | (36 | ) | $ | (7 | ) | $ | (13 | ) |
U.S. Pension Benefit Plans | Non U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||
Six Months Ended | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||
Service cost | $ | — | $ | — | $ | 4 | $ | 7 | $ | — | $ | 1 | |||||||||||
Interest cost | 91 | 96 | 28 | 35 | 2 | 4 | |||||||||||||||||
Expected return on plan assets | (110 | ) | (106 | ) | (48 | ) | (57 | ) | (5 | ) | (5 | ) | |||||||||||
Amortization of: | |||||||||||||||||||||||
Unrecognized net loss | 19 | 23 | 6 | 9 | 3 | 5 | |||||||||||||||||
Unrecognized prior service benefit | — | — | — | (2 | ) | (13 | ) | (30 | ) | ||||||||||||||
Curtailment gain | — | — | — | (32 | ) | — | — | ||||||||||||||||
Net periodic cost (benefit) | $ | — | $ | 13 | $ | (10 | ) | $ | (40 | ) | $ | (13 | ) | $ | (25 | ) |
8. | Share-Based Compensation Plans |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Share-based compensation expense included in: | |||||||||||||||
Costs of sales | $ | 2 | $ | 2 | $ | 4 | $ | 5 | |||||||
Selling, general and administrative expenses | 12 | 12 | 24 | 25 | |||||||||||
Research and development expenditures | 4 | 5 | 7 | 10 | |||||||||||
Share-based compensation expense included in Operating earnings | 18 | 19 | 35 | 40 | |||||||||||
Tax benefit | 6 | 6 | 11 | 13 | |||||||||||
Share-based compensation expense, net of tax | $ | 12 | $ | 13 | $ | 24 | $ | 27 | |||||||
Decrease in basic earnings per share | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.14 | ) | $ | (0.13 | ) | |||
Decrease in diluted earnings per share | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.14 | ) | $ | (0.13 | ) |
9. | Fair Value Measurements |
July 2, 2016 | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 1 | $ | 1 | |||||
Available-for-sale securities: | |||||||||||
Government, agency, and government-sponsored enterprise obligations | $ | — | $ | 52 | $ | 52 | |||||
Corporate bonds | — | 8 | 8 | ||||||||
Common stock | — | — | — | ||||||||
Liabilities: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 15 | $ | 15 | |||||
Interest rate swap | — | 1 | 1 |
December 31, 2015 | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 6 | $ | 6 | |||||
Available-for-sale securities: | |||||||||||
Government, agency, and government-sponsored enterprise obligations | — | 444 | 444 | ||||||||
Corporate bonds | — | 7 | 7 | ||||||||
Common stock | 6 | — | 6 | ||||||||
Liabilities: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 2 | $ | 2 | |||||
Interest rate swap | — | 1 | 1 |
10. | Long-term Financing and Sales of Receivables |
July 2, 2016 | December 31, 2015 | ||||||
Long-term receivables | $ | 54 | $ | 60 | |||
Less current portion | (12 | ) | (13 | ) | |||
Gross non-current long-term receivables | $ | 42 | $ | 47 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Accounts receivable sales proceeds | $ | 5 | $ | 5 | $ | 7 | $ | 11 | |||||||
Long-term receivables sales proceeds | 70 | 43 | 134 | 108 | |||||||||||
Total proceeds from receivable sales | $ | 75 | $ | 48 | $ | 141 | $ | 119 |
July 2, 2016 | Total Long-term Receivable | Current Billed Due | Past Due Under 90 Days | Past Due Over 90 Days | |||||||||||
Municipal leases secured tax exempt | $ | 12 | $ | — | $ | — | $ | — | |||||||
Commercial loans and leases secured | 43 | — | — | 1 | |||||||||||
Total gross long-term receivables, including current portion | $ | 55 | $ | — | $ | — | $ | 1 |
December 31, 2015 | Total Long-term Receivable | Current Billed Due | Past Due Under 90 Days | Past Due Over 90 Days | |||||||||||
Municipal leases secured tax exempt | $ | 35 | $ | — | $ | — | $ | — | |||||||
Commercial loans and leases secured | 25 | 1 | 1 | 1 | |||||||||||
Total gross long-term receivables, including current portion | $ | 60 | $ | 1 | $ | 1 | $ | 1 |
11. | Commitments and Contingencies |
12. | Segment Information |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Products | $ | 801 | $ | 867 | $ | 1,503 | $ | 1,626 | |||||||
Services | 629 | 501 | 1,120 | 965 | |||||||||||
$ | 1,430 | $ | 1,368 | $ | 2,623 | $ | 2,591 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Products | $ | 129 | $ | 171 | $ | 179 | $ | 235 | |||||||
Services | 95 | 83 | 144 | 138 | |||||||||||
Operating earnings | 224 | 254 | 323 | 373 | |||||||||||
Total other expense | (57 | ) | (39 | ) | (134 | ) | (30 | ) | |||||||
Earnings from continuing operations before income taxes | $ | 167 | $ | 215 | $ | 189 | $ | 343 |
13. | Reorganization of Business |
July 2, 2016 | Three Months Ended | Six Months Ended | |||||
Products | $ | 33 | $ | 54 | |||
Services | 11 | 13 | |||||
$ | 44 | $ | 67 |
January 1, 2016 | Additional Charges | Adjustments | Amount Used | July 2, 2016 | |||||||||||||||
Exit costs | $ | 9 | $ | 5 | $ | — | $ | (3 | ) | $ | 11 | ||||||||
Employee separation costs | 51 | 46 | (4 | ) | (39 | ) | 54 | ||||||||||||
$ | 60 | $ | 51 | $ | (4 | ) | $ | (42 | ) | $ | 65 |
July 4, 2015 | Three Months Ended | Six Months Ended | |||||
Products | $ | 12 | $ | 22 | |||
Services | 4 | 8 | |||||
$ | 16 | $ | 30 |
14. | Intangible Assets and Goodwill |
Cash | $ | 86 | ||
Accounts receivable, net | 55 | |||
Other current assets | 36 | |||
Property, plant and equipment, net | 245 | |||
Deferred income taxes | 78 | |||
Accounts payable | (18 | ) | ||
Accrued liabilities | (181 | ) | ||
Other liabilities | (283 | ) | ||
Goodwill | 189 | |||
Intangible assets | 875 | |||
Total consideration | $ | 1,082 | ||
Net present value of deferred consideration payment to former owners | (82 | ) | ||
Net cash consideration at purchase | $ | 1,000 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Revenues | $ | 1,430 | $ | 1,515 | $ | 2,694 | $ | 2,880 | |||||||
Earnings from continuing operations | 104 | (727 | ) | 148 | (616 | ) | |||||||||
Basic earnings per share | 0.62 | (3.49 | ) | 0.86 | (2.91 | ) | |||||||||
Diluted earnings per share | 0.61 | (3.49 | ) | 0.84 | (2.88 | ) |
July 2, 2016 | December 31, 2015 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Completed technology | $ | 60 | $ | 35 | $ | 60 | $ | 32 | |||||||
Patents | 8 | 6 | 8 | 5 | |||||||||||
Customer-related | 821 | 53 | 23 | 10 | |||||||||||
Other intangibles | 44 | 15 | 20 | 15 | |||||||||||
$ | 933 | $ | 109 | $ | 111 | $ | 62 |
July 2, 2016 | December 31, 2015 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Products | $ | 86 | $ | 61 | $ | 89 | $ | 60 | |||||||
Services | 847 | 48 | 22 | 2 | |||||||||||
$ | 933 | $ | 109 | $ | 111 | $ | 62 |
Products | Services | Total | |||||||||
Balance as of January 1, 2016 | |||||||||||
Aggregate goodwill | $ | 270 | $ | 150 | $ | 420 | |||||
Accumulated impairment losses | — | — | — | ||||||||
Goodwill, net of impairment losses | $ | 270 | $ | 150 | $ | 420 | |||||
Goodwill acquired | — | 170 | 170 | ||||||||
Purchase accounting adjustments | — | 19 | 19 | ||||||||
Foreign currency | — | (12 | ) | (12 | ) | ||||||
Balance as of July 2, 2016 | |||||||||||
Aggregate goodwill | $ | 270 | $ | 327 | $ | 597 | |||||
Accumulated impairment losses | — | — | — | ||||||||
Goodwill, net of impairment losses | $ | 270 | $ | 327 | $ | 597 |
• | Net sales were $1.4 billion in the second quarter of 2016 and 2015, a $62 million, or 5% increase from the second quarter of 2015. |
• | We generated operating earnings of $224 million, or 16% of net sales, in the second quarter of 2016, compared to $254 million, or 19% of net sales, in the second quarter of 2015. Profitability declined primarily as a result of: (i) increased intangible amortization expense as a result of the GDCL acquisition, (ii) a building impairment, and (iii) a gain recorded in the second quarter of 2015 related to a non-U.S. pension curtailment. |
• | We had earnings from continuing operations attributable to Motorola Solutions, Inc. of $107 million, or $0.61 per diluted common share, in the second quarter of 2016, compared to $150 million, or $0.72 per diluted common share, in the second quarter of 2015. |
• | We generated net cash from operating activities of $304 million during the first half of 2016, compared to $306 million in the first half of 2015. |
• | We returned $762 million in capital to shareholders through dividends and share repurchases during the first half of 2016. |
• | Products: Net sales were $801 million in the second quarter of 2016, a decrease of $66 million, or 8% compared to net sales of $867 million during the second quarter of 2015. On a geographic basis, net sales decreased in all regions compared to the year-ago quarter. |
• | Services: Net sales were $629 million in the second quarter of 2016, an increase of $128 million, or 26% compared to net sales of $501 million in the second quarter of 2015. On a geographic basis, net sales increased in EMEA, North America, and AP and decreased in Latin America, compared to the year-ago quarter. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | July 2, 2016 | % of Sales** | July 4, 2015 | % of Sales** | July 2, 2016 | % of Sales** | July 4, 2015 | % of Sales** | |||||||||||||||||||
Net sales from products | $ | 801 | $ | 867 | $ | 1,503 | $ | 1,626 | |||||||||||||||||||
Net sales from services | 629 | 501 | 1,120 | 965 | |||||||||||||||||||||||
Net sales | 1,430 | 1,368 | 2,623 | 2,591 | |||||||||||||||||||||||
Costs of product sales | 361 | 45.1 | % | 385 | 44.4 | % | 726 | 48.3 | % | 745 | 45.8 | % | |||||||||||||||
Costs of services sales | 393 | 62.5 | % | 335 | 66.9 | % | 718 | 64.1 | % | 650 | 67.4 | % | |||||||||||||||
Costs of sales | 754 | 720 | 1,444 | 1,395 | |||||||||||||||||||||||
Gross margin | 676 | 47.3 | % | 648 | 47.4 | % | 1,179 | 44.9 | % | 1,196 | 46.2 | % | |||||||||||||||
Selling, general and administrative expenses | 240 | 16.8 | % | 254 | 18.6 | % | 475 | 18.1 | % | 510 | 19.7 | % | |||||||||||||||
Research and development expenditures | 138 | 9.7 | % | 156 | 11.4 | % | 274 | 10.4 | % | 315 | 12.2 | % | |||||||||||||||
Other charges (income) | 74 | 5.2 | % | (16 | ) | (1.2 | )% | 107 | 4.1 | % | (2 | ) | (0.1 | )% | |||||||||||||
Operating earnings | 224 | 15.7 | % | 254 | 18.6 | % | 323 | 12.3 | % | 373 | 14.4 | % | |||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||
Interest expense, net | (54 | ) | (3.8 | )% | (39 | ) | (2.9 | )% | (103 | ) | (3.9 | )% | (79 | ) | (3.0 | )% | |||||||||||
Gain (loss) on sales of investments and businesses, net | 1 | 0.1 | % | 4 | 0.3 | % | (20 | ) | (0.8 | )% | 50 | 1.9 | % | ||||||||||||||
Other | (4 | ) | (0.3 | )% | (4 | ) | (0.3 | )% | (11 | ) | (0.4 | )% | (1 | ) | — | % | |||||||||||
Total other expense | (57 | ) | (4.0 | )% | (39 | ) | (2.9 | )% | (134 | ) | (5.1 | )% | (30 | ) | (1.2 | )% | |||||||||||
Earnings from continuing operations before income taxes | 167 | 11.7 | % | 215 | 15.7 | % | 189 | 7.2 | % | 343 | 13.2 | % | |||||||||||||||
Income tax expense | 59 | 4.1 | % | 64 | 4.7 | % | 64 | 2.4 | % | 104 | 4.0 | % | |||||||||||||||
Earnings from continuing operations | 108 | 7.6 | % | 151 | 11.0 | % | 125 | 4.8 | % | 239 | 9.2 | % | |||||||||||||||
Less: Earnings attributable to noncontrolling interests | 1 | 0.1 | % | 1 | 0.1 | % | 1 | — | % | 1 | — | % | |||||||||||||||
Earnings from continuing operations* | 107 | 7.5 | % | 150 | 11.0 | % | 124 | 4.7 | % | 238 | 9.2 | % | |||||||||||||||
Loss from discontinued operations, net of tax | — | — | % | (8 | ) | (0.6 | )% | — | — | % | (21 | ) | (0.8 | )% | |||||||||||||
Net earnings* | $ | 107 | 7.5 | % | $ | 142 | 10.4 | % | $ | 124 | 4.7 | % | $ | 217 | 8.4 | % | |||||||||||
Earnings (loss) per diluted common share*: | |||||||||||||||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.72 | $ | 0.71 | $ | 1.11 | |||||||||||||||||||
Discontinued operations | — | (0.04 | ) | — | (0.10 | ) | |||||||||||||||||||||
Earnings per diluted common share* | $ | 0.61 | $ | 0.68 | $ | 0.71 | $ | 1.01 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
July 2, 2016 | July 4, 2015 | % Change | July 2, 2016 | July 4, 2015 | % Change | ||||||||||||||||
Segment net sales | $ | 801 | $ | 867 | (8 | )% | $ | 1,503 | $ | 1,626 | (8 | )% | |||||||||
Operating earnings | 129 | 171 | (25 | )% | 179 | 235 | (24 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
July 2, 2016 | July 4, 2015 | % Change | July 2, 2016 | July 4, 2015 | % Change | ||||||||||||||||
Segment net sales | $ | 629 | $ | 501 | 26 | % | $ | 1,120 | $ | 965 | 16 | % | |||||||||
Operating earnings | 95 | 83 | 14 | % | 144 | 138 | 4 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Products | $ | 33 | $ | 12 | $ | 54 | $ | 22 | |||||||
Services | 11 | 4 | 13 | 8 | |||||||||||
$ | 44 | $ | 16 | $ | 67 | $ | 30 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Accounts receivable sales proceeds | $ | 5 | $ | 5 | $ | 7 | $ | 11 | |||||||
Long-term receivables sales proceeds | 70 | 43 | 134 | 108 | |||||||||||
Total proceeds from sales of accounts receivable | $ | 75 | $ | 48 | $ | 141 | $ | 119 |
Notional Amount | |||||||
Net Buy (Sell) by Currency | July 2, 2016 | December 31, 2015 | |||||
Euro | $ | 210 | $ | 99 | |||
British Pound | 168 | 62 | |||||
Chinese Renminbi | (87 | ) | (114 | ) | |||
Australian Dollar | (57 | ) | (60 | ) | |||
Brazilian Real | (57 | ) | (44 | ) |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share (1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program(2) | |||||||||
3/30/16 to 4/26/16 | — | $ | — | — | $ | 969,403,764 | |||||||
4/27/16 to 5/24/16 | 2,968,171 | $ | 70.02 | 2,968,171 | $ | 761,566,327 | |||||||
5/25/16 to 6/28/16 | 5,143,377 | $ | 67.42 | 5,143,377 | $ | 414,799,800 | |||||||
Total | 8,111,548 | $ | 68.37 | 8,111,548 |
(1) | Average price paid per share of common stock repurchased is the execution price, including commissions paid to brokers. |
(2) | Through actions taken on July 28, 2011, January 30, 2012, July 25, 2012, July 22, 2013, November 3, 2014, and August 3, 2016, the Board of Directors has authorized the Company to repurchase an aggregate amount of up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. As of July 2, 2016, the Company had used approximately $11.6 billion, including transaction costs, to repurchase shares, leaving $415 million of authority available for future repurchases. As of August 3, 2016, subsequent to quarter end, the Board of Directors approved a $2.0 billion increase to the share repurchase program, raising the remaining authority available for future repurchases to $2.4 billion. |
Exhibit No. | Exhibit | |
*31.1 | Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.2 | Certification of Gino A. Bonanotte pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.1 | Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*32.2 | Certification of Gino A. Bonanotte pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Scheme Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith |
MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2016 Motorola Solutions, Inc. All rights reserved. |
MOTOROLA SOLUTIONS, INC. | |||
By: | /S/ JOHN K. WOZNIAK | ||
John K. Wozniak Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer) |
Exhibit No. | Exhibit | |
*31.1 | Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.2 | Certification of Gino A. Bonanotte pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.1 | Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*32.2 | Certification of Gino A. Bonanotte pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Scheme Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith |
1. | I have reviewed the quarterly report on Form 10-Q of Motorola Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ GREGORY Q. BROWN | |
Gregory Q. Brown | |
Chairman and Chief Executive Officer | |
Motorola Solutions, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ GINO A. BONANOTTE | |
Gino A. Bonanotte | |
Executive Vice President and Chief Financial Officer | |
Motorola Solutions, Inc. |
(1) | the quarterly report on Form 10-Q for the period ended July 2, 2016 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc. |
/s/ GREGORY Q. BROWN | |
Gregory Q. Brown | |
Chairman and Chief Executive Officer | |
Motorola Solutions, Inc. |
(1) | the quarterly report on Form 10-Q for the period ended July 2, 2016 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc. |
/s/ GINO A. BONANOTTE | |
Gino A. Bonanotte | |
Executive Vice President and Chief Financial Officer | |
Motorola Solutions, Inc. |
Document And Entity Information |
6 Months Ended |
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Jul. 02, 2016
shares
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Document And Entity Information [Abstract] | |
Entity Registrant Name | Motorola Solutions, Inc. |
Entity Central Index Key | 0000068505 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jul. 02, 2016 |
Document Fiscal Year Focus | 2016 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding (shares) | 166,725,634 |
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 108 | $ 143 | $ 125 | $ 218 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (98) | 7 | (85) | (19) |
Marketable securities | (1) | 4 | 3 | (29) |
Defined benefit plans | 56 | (83) | 60 | (82) |
Total other comprehensive loss, net of tax | (43) | (72) | (22) | (130) |
Comprehensive income | 65 | 71 | 103 | 88 |
Less: Earnings attributable to noncontrolling interests | 1 | 1 | 1 | 1 |
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ 64 | $ 70 | $ 102 | $ 87 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jul. 02, 2016 |
Dec. 31, 2015 |
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Stockholders’ Equity | ||
Preferred stock par value (US$ per share) | $ 100 | $ 100 |
Common stock par value (US$ per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (shares) | 600,000,000.0 | 600,000,000.0 |
Common stock, issued shares (shares) | 167,000,000 | 174,500,000 |
Common stock, outstanding shares (shares) | 166,700,000 | 174,300,000 |
Basis of Presentation |
6 Months Ended |
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Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements as of July 2, 2016 and for the three and six months ended July 2, 2016 and July 4, 2015 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statement of stockholders' equity, and statements of cash flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015. The results of operations for the three and six months ended July 2, 2016 are not necessarily indicative of the operating results to be expected for the full year. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Recent Developments On February 19, 2016, the Company completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited ("Airwave"), the largest private operator of a public safety network in the world. All of the outstanding equity of GDCL was acquired for the sum of £1, after which the Company invested into GDCL £698 million, net of cash acquired, or approximately $1.0 billion, to settle all third party debt. The Company will make a deferred cash payment of £64 million on November 15, 2018. The Company funded the investment with a $675 million term loan (the “Term Loan”) and approximately $400 million of international cash on hand. The acquisition has been reported within our Services segment, enabling the Company to geographically diversify its global Managed & Support services offerings, while offering a proven service delivery platform to build on for providing innovative, leading, mission-critical communications solutions and services to customers. See discussion in Note 14. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." This new standard will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount it expects to receive for those goods and services. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates and changes in those estimates. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date" that delayed the effective date of ASU 2014-09 by one year to January 1, 2018, as the Company’s annual reporting period begins after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" which clarifies the implementation guidance on principal versus agent considerations and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. In April of 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company is in the process of determining the method of adoption it will elect and is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases," which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. The ASU is effective for the Company January 1, 2019 and interim periods within that reporting period. The ASU requires a modified retrospective method upon adoption. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, "Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting," which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for the Company January 1, 2017 and interim periods within that reporting period. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments," which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for the Company January 1, 2020 and interim periods within that reporting period. The adoption of ASU 2016-13 is not expected to have a material effect on the Company’s consolidated financial statements. The Company elected to adopt ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” as of January 1, 2016. ASU 2016-09, which was issued by the FASB in March 2016, simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The impact of the prospective adoption of the provisions related to the recognition of excess tax benefits in income tax expense was a $3 million income tax benefit during the six months ended July 2, 2016. Additionally, as a result of the adoption of this accounting standard, excess tax benefits on share-based compensation have been reported as a component of operating cash rather than within financing cash flows as previously presented, while the payment of withholding taxes on the settlement of share-based awards has been reported as a component of financing cash flows rather than within operating cash flows as previously presented. The change in presentation of withholding taxes within the condensed consolidated statements of cash flows has been adopted retrospectively, thereby increasing operating cash flows and reducing financing cash flows by $14 million for both the six months ended July 2, 2016 and July 4, 2015. The presentation of excess tax benefits on share-based compensation has been adjusted prospectively within the condensed consolidated statement of cash flows, increasing operating cash flow and decreasing financing cash flow by $3 million for the six months ended July 2, 2016. The Company adopted ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," effective January 1, 2016. Under this guidance, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct reduction from the carrying amount of such debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. We have retrospectively adopted ASU 2015-03 effective January 1, 2016. As a result, debt issuance costs which were previously capitalized in other assets in the condensed consolidated balance sheet have been presented as a reduction to long-term debt. As of July 2, 2016 and December 31, 2015, $35 million and $41 million, respectively, have been presented as a component of long-term debt. |
Discontinued Operations |
6 Months Ended |
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Jul. 02, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On October 27, 2014, the Company completed the sale of its Enterprise business to Zebra Technologies Corporation for $3.45 billion in cash. Certain assets of the Enterprise business were excluded from the transaction and retained by the Company, including the Company’s iDEN business. The historical financial results of the Enterprise business, excluding those assets and liabilities retained in the transaction, are reflected in the Company's condensed consolidated financial statements and footnotes as discontinued operations for all periods presented. During the three and six months ended July 2, 2016, the Company had no activity in the condensed consolidated statements of operations for discontinued operations. During the three and six months ended July 4, 2015, the Company recorded losses from discontinued operations of $8 million and $21 million, respectively. |
Other Financial Data |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data | Other Financial Data Statements of Operations Information Other Charges (Income) Other charges (income) included in Operating earnings consist of the following:
Other Income (Expense) Interest expense, net, and Other, both included in Other income (expense), consist of the following:
Earnings Per Common Share The computation of basic and diluted earnings per common share is as follows:
In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three months ended July 2, 2016, the assumed exercise of 2.3 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 six months ended July 2, 2016, the assumed exercise of 3.2 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 July 4, 2015, the assumed exercise of 1.7 million stock options and the assumed vesting of 0.7 million RSUs were excluded because their inclusion would have been antidilutive. For the six months ended July 4, 2015, the assumed exercise of 3.9 million options and the assumed vesting of 1.2 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). 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 and six months ended July 2, 2016, the dilutive impact of the Senior Convertible Notes was 0.5 million shares and 0.3 million shares, respectively. Balance Sheet Information Cash and Cash Equivalents The Company’s cash and cash equivalents were $1.5 billion at July 2, 2016 and $2.0 billion at December 31, 2015. Of these amounts, $64 million was restricted at July 2, 2016 and $63 million was restricted at December 31, 2015. Accounts Receivable, Net Accounts receivable, net, consists of the following:
Inventories, Net Inventories, net, consist of the following:
Other Current Assets Other current assets consist of the following:
Property, Plant and Equipment, Net Property, plant and equipment, net, consists of the following:
Depreciation expense for the three months ended July 2, 2016 and July 4, 2015 was $44 million and $38 million, respectively. Depreciation expense for the six months ended July 2, 2016 and July 4, 2015 was $92 million and $77 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 six months ended July 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. The Company acquired property, plant and equipment, including network-related assets, with a fair value of $245 million in the acquisition of GDCL on February 19, 2016. The valuation of acquired property, plant and equipment has been finalized during the three months ended July 2, 2016. See discussion in Note 14. During the three months ended July 2, 2016, the Company sold parcels of its Schaumburg, IL headquarters campus and entered into an agreement to sell the remaining buildings and parcels. A building impairment loss of $17 million has been recognized in Other charges during the three months ended July 2, 2016 related to the excess carrying value of the long-lived assets in relation to the selling price. All of the buildings on the Schaumburg campus are classified as assets held and used as of July 2, 2016. Investments Investments consist of the following:
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 six months ended July 2, 2016, the Company realized a loss of $19 million associated with the sale of the treasury securities, of which, $11 million was unrealized as of December 31, 2015. Other Assets Other assets consist of the following:
Accrued Liabilities Accrued liabilities consist of the following:
Other Liabilities Other liabilities consist of the following:
Stockholders’ Equity Share Repurchase Program: Through actions taken on July 28, 2011, January 30, 2012, July 25, 2012, July 22, 2013, November 3, 2014, and August 3, 2016, the Board of Directors has authorized the Company to repurchase in the aggregate up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. During the six months ended July 2, 2016, the Company paid an aggregate of $619 million, including transaction costs, to repurchase approximately 9.0 million shares at an average price of $68.68 per share. As of July 2, 2016, the Company had used approximately $11.6 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $415 million of authority available for future repurchases. Subsequent to quarter end, the Board of Directors approved a $2.0 billion increase to the share repurchase program, raising the remaining authority available for future repurchases to $2.4 billion. Payment of Dividends: During both the three months ended July 2, 2016 and July 4, 2015, the Company paid $72 million in cash dividends to holders of its common stock. During the six months ended July 2, 2016 and July 4, 2015, the Company paid $143 million and $148 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 six months ended July 2, 2016 and July 4, 2015:
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Debt and Credit Facilities |
6 Months Ended |
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Jul. 02, 2016 | |
Debt Disclosure [Abstract] | |
Debt and Credit Facilities | Debt and Credit Facilities As of July 2, 2016, the Company had a $2.1 billion unsecured syndicated revolving credit facility, which includes a $450 million letter of credit sub-limit, (the “2014 Motorola Solutions Credit Agreement”) scheduled to mature on May 29, 2019. The Company must comply with certain customary covenants, including a maximum leverage ratio as defined in the 2014 Motorola Solutions Credit Agreement. The Company was in compliance with its financial covenants as of July 2, 2016. The Company did not borrow or issue any letters of credit under the 2014 Motorola Solutions Credit Agreement during the six months ended July 2, 2016. In connection with the completion of the acquisition of GDCL, the Company entered into a new term loan credit agreement (the “Term Loan Agreement”), under which the Company borrowed a term loan with an initial principal amount of $675 million and a maturity date of February 18, 2019 (the "Term Loan"). Interest on the Term Loan is variable and indexed to LIBOR. Interest expense on the Term Loan is payable quarterly in February, May, August, and November. No additional borrowings are permitted under the Term Loan Agreement and amounts borrowed and repaid or prepaid may not be re-borrowed. The Company's borrowing capacity under the 2014 Motorola Solutions Credit Agreement may be partially limited during the third quarter of 2016 due to the additional indebtedness incurred in connection with the Term Loan. Effective January 1, 2016, the Company retrospectively adopted ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." Under this guidance, we have revised the presentation of debt issuance costs which were previously capitalized in other assets in the consolidated balance sheet to be presented as a reduction to long-term debt. As of July 2, 2016 and December 31, 2015, $35 million and $41 million, respectively, have been reclassified to be presented as a component of long-term debt. |
Risk Management |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management | Risk Management Foreign Currency Risk As of July 2, 2016, the Company had outstanding foreign exchange contracts with notional amounts totaling $700 million, compared to $494 million outstanding at December 31, 2015. The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions. The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of July 2, 2016, and the corresponding positions as of December 31, 2015:
Interest Rate Risk One of the Company’s European subsidiaries has Euro-denominated loans. The interest on the Euro-denominated loans is variable. The Company has interest rate swap agreements in place which change the characteristics of interest rate payments from variable to maximum fixed-rate payments. The interest rate swaps are not designated as a hedge. As such, changes in the fair value of the interest rate swaps are included in Other income (expense) in the Company’s condensed consolidated statements of operations. The fair value of the interest rate swap was in a liability position of $1 million at both July 2, 2016 and December 31, 2015. Counterparty Risk The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of July 2, 2016, all of the counterparties have investment grade credit ratings. As of July 2, 2016, the Company had $1 million of exposure to aggregate net credit risk with all counterparties. The following tables summarize the fair values and locations in the condensed consolidated balance sheets of all derivative financial instruments held by the Company as of July 2, 2016 and December 31, 2015:
The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated statements of operations for the three and six months ended July 2, 2016 and July 4, 2015:
The Company had no instruments designated as hedging instruments for the three and six months ended July 2, 2016 and July 4, 2015. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods. The following table provides details of income taxes:
The Company recorded $59 million of net tax expense in the second quarter of 2016 resulting in an effective tax rate of 35%, compared to $64 million of net tax expense in the second quarter of 2015 resulting in an effective tax rate of 30%. The effective tax rate in the second quarter of 2016 was equal to the U.S. statutory tax rate of 35% and was impacted by discrete adjustments to deferred tax assets of foreign subsidiaries, offset by excess tax benefits on share-based compensation. The effective tax rate in the second quarter of 2015 was lower than the U.S. statutory tax rate of 35% primarily due to the rate differential for foreign affiliates and the U.S. domestic production tax deduction. The Company recorded $64 million of net tax expense in the first half of 2016 resulting in an effective tax rate of 34%, compared to $104 million of net tax expense resulting in an effective tax rate of 30% in the first half of 2015. The effective tax rate for the first half of 2016 was lower than the U.S. statutory tax rate of 35% partly due to the recognition of excess tax benefits on share-based compensation. The effective tax rate in the first half of 2015 was lower than the U.S. statutory tax rate of 35% primarily due to the rate differential for foreign affiliates and the U.S. domestic production tax deduction. |
Retirement and Other Employee Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement and Other Employee Benefits | Retirement and Other Employee Benefits Pension and Postretirement Health Care Benefits Plans The net periodic costs (benefits) for Pension and Postretirement Health Care Benefits Plans were as follows:
During the six months ended July 2, 2016, the Company made an amendment to the Postretirement Health Care Benefits Plan (the “Amendment”). As a result of the Amendment, all eligible retirees under the age of 65 will be provided an annual subsidy per household, versus per individual, toward the purchase of their own health care coverage from private insurance companies and for the reimbursement of eligible health care expenses. The Amendment to the Postretirement Health Care Benefits Plan required a remeasurement of the plan, resulting in a $53 million reduction in the accumulated Postretirement Benefit Obligation. A substantial portion of the decrease is related to a prior service credit and will be recognized as a credit to the condensed consolidated statements of operations over approximately 5 years, or the period in which the remaining employees eligible for the plan will qualify for benefits under the plan. During the six months ended July 4, 2015, the Company amended its Non U.S. defined benefit plan within the United Kingdom by closing future benefit accruals to all participants effective December 31, 2015. As a result, the Company recorded a curtailment gain of $32 million to Other charges in the Company’s condensed consolidated statements of operations. Effective January 1, 2016, the Company changed the method used to estimate the interest and service cost components of net periodic cost for defined benefit pension and other post-retirement benefit plans. Historically, the interest and service cost components were estimated using a single weighted-average discount rate derived from the yield curve used to measure the projected benefit obligation at the beginning of the period. The Company has elected to use a full yield curve approach in the estimation of these components of net periodic cost by applying the specific spot rates along the yield curve used in the determination of the projected benefit obligation to the relevant projected cash flows. The Company made this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of interest and service costs. This change does not affect the measurement of total benefit obligations as the change in interest and service cost is completely offset in the actuarial loss reported in the period. The Company has concluded that this change is a change in estimate and, therefore, has accounted for it prospectively beginning January 1, 2016. Based on the change in estimate, the Company experienced no reduction in service costs and a $14 million reduction in interest costs for the six months ended July 2, 2016 compared to the prior approach. The overall reduction in the interest cost for the six months ended July 2, 2016 is comprised of $9 million related to the U.S. Pension Benefit Plans, $2 million related to the Postretirement Health Care Benefit Plans, and $3 million related to the Non U.S. Pension Benefits Plan. |
Share-Based Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Plans | Share-Based Compensation Plans Compensation expense for the Company’s share-based compensation plans was as follows:
During the six months ended July 2, 2016, the Company granted 0.7 million RSUs and market stock units ("MSUs") and 0.7 million stock options and performance options ("POs"). The total aggregate compensation expense, net of estimated forfeitures, for these RSUs and MSUs was $40 million and stock options and POs was $10 million, respectively, which will generally be recognized over the vesting period of three years. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Fair value is measured using the fair value hierarchy and related valuation methodologies as defined in the authoritative literature. This guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions about current market conditions. The fair value hierarchy and related valuation methodologies are as follows: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets. Level 3—Valuations derived from valuation techniques, in which one or more significant inputs are unobservable. The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of July 2, 2016 and December 31, 2015 were as follows:
The Company had no Level 3 holdings as of July 2, 2016 or December 31, 2015. At July 2, 2016 and December 31, 2015, the Company had $936 million and $1.3 billion, respectively, of investments in money market mutual funds (Level 2) classified as Cash and cash equivalents in its condensed consolidated balance sheets. The money market funds had quoted market prices that are equivalent to par. Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at July 2, 2016 and December 31, 2015 was $5.1 billion and $4.1 billion (Level 2), respectively. All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values. |
Long-term Financing and Sales of Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Financing and Sales of Receivables | Long-term Financing and Sales of Receivables Long-term Financing Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following:
The current portion of long-term receivables is included in Accounts receivable, net and the non-current portion of long-term receivables is included in Other assets in the Company’s condensed consolidated balance sheets. The Company had outstanding commitments to provide long-term financing to third parties totaling $131 million at July 2, 2016, compared to $112 million at December 31, 2015. Sales of Receivables The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and six months ended July 2, 2016 and July 4, 2015:
At July 2, 2016, the Company had retained servicing obligations for $699 million of long-term receivables, compared to $668 million of long-term receivables at December 31, 2015. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables. Credit Quality of Financing Receivables and Allowance for Credit Losses An aging analysis of financing receivables at July 2, 2016 and December 31, 2015 is as follows:
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Commitments and Contingencies |
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Jul. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Matters The Company is a defendant in various lawsuits, claims, and actions, which arise in the normal course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations. However, an unfavorable resolution could have a material adverse effect on the Company's consolidated financial position, liquidity, or results of operations in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition. Other Indemnifications The Company is a party to a variety of agreements pursuant to which it is obligated to indemnify the other party with respect to certain matters. In indemnification cases, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claims. In some instances, the Company may have recourse against third parties for certain payments made by the Company. Some of these obligations arise as a result of divestitures of the Company's assets or businesses and require the Company to indemnify the other party against losses arising from breaches of representations and warranties and covenants and, in some cases, the settlement of pending obligations. The Company's obligations under divestiture agreements for indemnification based on breaches of representations and warranties are generally limited in terms of duration and to amounts not in excess of a percentage of the contract value. The Company had no accruals for any such obligations at July 2, 2016. In addition, the Company may provide indemnifications for losses that result from the breach of general warranties contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these agreements. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company conducts its business globally and manages it through the following two segments: Products: The Products segment is comprised of Devices and Systems. Devices includes two-way portable and vehicle-mounted radios, accessories, software features, and upgrades. Systems includes the radio network core and central processing software, base stations, consoles, repeaters, and software applications and features. The primary customers of the Products segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and manage a mobile workforce. Services: The Services segment provides a full set of offerings for government, public safety and commercial communication networks including: (i) Integration services, (ii) Managed & Support services, and (iii) iDEN services. Integration services includes implementation, optimization, and integration of networks, devices, software, and applications. Managed & Support services includes a continuum of service offerings beginning with repair, technical support and hardware maintenance. More advanced offerings include network monitoring, software maintenance and cyber security services. Managed service offerings range from partial or full operation of customer owned networks to operation of Motorola Solutions owned networks. Services are provided across all radio network technologies, Command Center Consoles and Smart Public Safety Solutions. iDEN services consists primarily of hardware and software maintenance services for our legacy iDEN customers. The following table summarizes Net sales by segment:
The following table summarizes the Operating earnings by segment:
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Reorganization of Business |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization of Businesses | Reorganization of Business 2016 Charges During the three months ended July 2, 2016, the Company recorded net reorganization of business charges of $44 million including $36 million of charges in Other charges and $8 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $44 million were charges of: (i) $22 million of charges related to employee separation costs, (ii) $17 million for a building impairment, and (iii) $5 million for exit costs. During the six months ended July 2, 2016, the Company recorded net reorganization of business charges of $67 million including $42 million of charges in Other charges and $25 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $67 million were charges of: (i) $46 million for employee separation costs, (ii) $20 million for impairments, including $17 million for a building impairment and $3 million for the impairment of the corporate aircraft, and (iii) $5 million for exit costs, partially offset by $4 million of reversals for accruals no longer needed. The following table displays the net charges incurred by segment:
The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2016 to July 2, 2016:
Exit Costs At January 1, 2016, the Company had $9 million of accruals for exit costs. During the six months ended July 2, 2016, there were $5 million additional charges and $3 million of cash payments related to the exit of leased facilities. The remaining accrual of $11 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 2, 2016, primarily represents future cash payments for lease obligations that are expected to be paid over a number of years. Employee Separation Costs At January 1, 2016, the Company had an accrual of $51 million for employee separation costs. The 2016 additional charges of $46 million represent severance costs for approximately 300 employees. The adjustment of $4 million reflects reversals for accruals no longer needed. The $39 million used reflects cash payments to severed employees. The remaining accrual of $54 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 2, 2016, is expected to be paid, primarily within one year, to approximately 400 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments. 2015 Charges During the three months ended July 4, 2015, the Company recorded net reorganization of business charges of $16 million, including $13 million of charges in Other charges and $3 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. The $16 million of charges were all related to employee separation costs. During the six months ended July 4, 2015, the Company recorded net reorganization of business charges of $30 million, including $26 million of charges in Other charges and $4 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the aggregate $30 million were charges of $26 million related to employee separation costs and $4 million related to exit costs. The following table displays the net charges incurred by segment:
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Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill Acquisitions During the year ended December 31, 2015 the Company completed the acquisitions of two providers of public safety software-based solutions for an aggregate purchase price of $50 million, recognizing an additional $31 million of goodwill, $22 million of identifiable intangible assets, and $3 million of acquired liabilities related to these acquisitions. The $22 million of identifiable intangible assets were classified as: (i) $11 million of completed technology, (ii) $8 million of customer-related, and (iii) $3 million of other intangibles. These intangible assets will be amortized over periods ranging from five to ten years. The results of operations for these acquisitions have been included in the Company’s condensed consolidated statements of operations subsequent to the acquisition date. The pro forma effects of these acquisitions are not significant individually or in the aggregate. On February 19, 2016, the Company completed the acquisition of GDCL, a holding company of Airwave, the largest private operator of a public safety network in the world. All of the outstanding equity of GDCL was acquired for the sum of £1, after which the Company invested into GDCL £698 million, net of cash acquired, or approximately $1.0 billion, to settle all third party debt. The Company will make a deferred cash payment of £64 million on November 15, 2018. The acquisition of GDCL enables the Company to geographically diversify its global Managed & Support services offerings, while offering a proven service delivery platform to build on for providing innovative, leading, mission-critical communications solutions and services to customers. During the six months ended July 2, 2016, the Company recorded $207 million within Net sales and $45 million within Net earnings from the operations of Airwave. The acquisition of GDCL has been accounted for at fair value as of the acquisition date, based on the fair value of the total consideration transferred which has been attributed to all identifiable assets acquired and liabilities assumed and measured at fair value. During the three months ended July 2, 2016, the Company finalized its valuation of acquired Property, plant and equipment, recording an adjustment of $236 million to record acquired network-related assets at fair value. As a result, the Company has recorded additional purchase accounting adjustments during the three months ended July 2, 2016, primarily related to the fair value of acquired intangibles and goodwill. The total consideration for the acquisition of GDCL was approximately $1.1 billion, consisting of cash payments of $1.0 billion, net of cash acquired, and deferred consideration valued at fair value on the date of the acquisition of $82 million. The fair value of deferred consideration has been determined based on its net present value, calculated using a discount rate of 4.2%, which is reflective of the credit standing of the combined entity. The following table summarizes fair values of assets acquired and liabilities assumed as of the February 19, 2016 acquisition date:
Acquired intangible assets consist of $846 million of customer relationships and $29 million of trade names. All intangibles have a useful life of 7 years, over which amortization expense will be recognized on a straight line basis. The fair values of trade names and customer relationships were estimated using the income approach. Customer relationships were valued under the excess earnings method which assumes that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable specifically to the intangible asset. Trade names were valued under the relief from royalty method, which assumes value to the extent that the acquired company is relieved of the obligation to pay royalties for the benefits received from them. The fair value of acquired Property, plant and equipment, primarily network-related assets, was valued under the replacement cost method, which determines fair value based on the replacement cost of new property with similar capacity, adjusted for physical deterioration over the remaining useful life. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes. Pro Forma Financial Information The following table presents the unaudited pro forma combined results of operations of the Company and GDCL for the three and six months ended July 2, 2016 and July 4, 2015 as if the acquisition of GDCL had occurred on January 1, 2016 and January 1, 2015, respectively, (in millions, except per share amounts):
The Company did not adjust the effects of an $884 million goodwill impairment charge reported in the historic results of GDCL for the three and six months ended July 4, 2015 on the basis that the goodwill impairment charge was not directly attributable to the acquisition of GDCL by the Company. However, this goodwill impairment charge should be highlighted as unusual and non-recurring. The pro forma results are based on estimates and assumptions, which the Company believes are reasonable. They are not necessarily indicative of its consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented. The pro forma results include adjustments primarily related to amortization of acquired intangible assets, depreciation, interest expense, and transaction costs expensed during the period. Intangible Assets Amortized intangible assets were comprised of the following:
Amortization expense on intangible assets was $38 million for the three months ended July 2, 2016 and $52 million for the six months ended July 2, 2016. Amortization expense on intangible assets was $3 million for the three months ended July 4, 2015 and $4 million for the six months ended July 4, 2015. The increase in amortization expense is due to the acquisition of GDCL, including a cumulative adjustment during the six months ended July 2, 2016 to record incremental intangible amortization expense associated with the final fair value adjustment of intangible assets under purchase accounting. As of July 2, 2016, annual amortization expense is estimated to be $112 million in 2016, $126 million in 2017 and 2018, $125 million in 2019, and $122 million in 2020 and 2021. Amortized intangible assets, excluding goodwill, were comprised of the following by segment:
Goodwill The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2016 to July 2, 2016:
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Basis of Presentation (Policies) |
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Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." This new standard will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount it expects to receive for those goods and services. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates and changes in those estimates. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date" that delayed the effective date of ASU 2014-09 by one year to January 1, 2018, as the Company’s annual reporting period begins after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" which clarifies the implementation guidance on principal versus agent considerations and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. In April of 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company is in the process of determining the method of adoption it will elect and is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases," which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. The ASU is effective for the Company January 1, 2019 and interim periods within that reporting period. The ASU requires a modified retrospective method upon adoption. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, "Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting," which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for the Company January 1, 2017 and interim periods within that reporting period. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments," which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for the Company January 1, 2020 and interim periods within that reporting period. The adoption of ASU 2016-13 is not expected to have a material effect on the Company’s consolidated financial statements. The Company elected to adopt ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” as of January 1, 2016. ASU 2016-09, which was issued by the FASB in March 2016, simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The impact of the prospective adoption of the provisions related to the recognition of excess tax benefits in income tax expense was a $3 million income tax benefit during the six months ended July 2, 2016. Additionally, as a result of the adoption of this accounting standard, excess tax benefits on share-based compensation have been reported as a component of operating cash rather than within financing cash flows as previously presented, while the payment of withholding taxes on the settlement of share-based awards has been reported as a component of financing cash flows rather than within operating cash flows as previously presented. The change in presentation of withholding taxes within the condensed consolidated statements of cash flows has been adopted retrospectively, thereby increasing operating cash flows and reducing financing cash flows by $14 million for both the six months ended July 2, 2016 and July 4, 2015. The presentation of excess tax benefits on share-based compensation has been adjusted prospectively within the condensed consolidated statement of cash flows, increasing operating cash flow and decreasing financing cash flow by $3 million for the six months ended July 2, 2016. The Company adopted ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," effective January 1, 2016. Under this guidance, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct reduction from the carrying amount of such debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. We have retrospectively adopted ASU 2015-03 effective January 1, 2016. As a result, debt issuance costs which were previously capitalized in other assets in the condensed consolidated balance sheet have been presented as a reduction to long-term debt. As of July 2, 2016 and December 31, 2015, $35 million and $41 million, respectively, have been presented as a component of long-term debt. |
Other Financial Data (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Charges (Income) | Other charges (income) included in Operating earnings consist of the following:
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Other Income (Expense) | Interest expense, net, and Other, both included in Other income (expense), consist of the following:
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Earnings Per Common Share | The computation of basic and diluted earnings per common share is as follows:
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Accounts Receivable, Net | Accounts receivable, net, consists of the following:
Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following:
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Inventories, Net | Inventories, net, consist of the following:
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Other Current Assets | Other current assets consist of the following:
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Property, Plant And Equipment, Net | Property, plant and equipment, net, consists of the following:
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Investments | Investments Investments consist of the following:
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Other Assets | Other assets consist of the following:
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Accrued Liabilities | Accrued liabilities consist of the following:
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Other Liabilities | Other liabilities consist of the following:
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Changes in 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 six months ended July 2, 2016 and July 4, 2015:
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Risk Management (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Largest Net Notional Amounts of The Positions to Buy or Sell Foreign Currency | The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of July 2, 2016, and the corresponding positions as of December 31, 2015:
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Summary of Fair Values and Location In Condensed Consolidated Balance Sheet | The following tables summarize the fair values and locations in the condensed consolidated balance sheets of all derivative financial instruments held by the Company as of July 2, 2016 and December 31, 2015:
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Summary of Derivative Instruments and The Effect on the Condensed Consolidated Statements Of Operations | The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated statements of operations for the three and six months ended July 2, 2016 and July 4, 2015:
The Company had no instruments designated as hedging instruments for the three and six months ended July 2, 2016 and July 4, 2015. |
Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The following table provides details of income taxes:
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Retirement and Other Employee Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Plan Costs | The net periodic costs (benefits) for Pension and Postretirement Health Care Benefits Plans were as follows:
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Share-Based Compensation Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Expense | Compensation expense for the Company’s share-based compensation plans was as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Company's Financial Assets And Liabilities | The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of July 2, 2016 and December 31, 2015 were as follows:
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Long-term Financing and Sales of Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Customer Financing | Accounts receivable, net, consists of the following:
Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following:
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Proceeds Received From Non-Recourse Sales Of Accounts Receivable And Long-Term Receivables | The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and six months ended July 2, 2016 and July 4, 2015:
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Financing Receivables Aging Analysis | An aging analysis of financing receivables at July 2, 2016 and December 31, 2015 is as follows:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales and Operating Earnings by Segment | The following table summarizes Net sales by segment:
The following table summarizes the Operating earnings by segment:
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Reorganization of Business (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Reportable Segment | The following table displays the net charges incurred by segment:
The following table displays the net charges incurred by segment:
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Reorganization of Businesses Accruals | The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2016 to July 2, 2016:
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Intangible Assets and Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes fair values of assets acquired and liabilities assumed as of the February 19, 2016 acquisition date:
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Results of Operations of the Company and GDCL as if the Acquisition has occurred on January 1, 2016 | The following table presents the unaudited pro forma combined results of operations of the Company and GDCL for the three and six months ended July 2, 2016 and July 4, 2015 as if the acquisition of GDCL had occurred on January 1, 2016 and January 1, 2015, respectively, (in millions, except per share amounts):
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Intangible Assets | Amortized intangible assets were comprised of the following:
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Amortized Intangible Assets, Excluding Goodwill, By Business Segment | Amortized intangible assets, excluding goodwill, were comprised of the following by segment:
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Goodwill | The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2016 to July 2, 2016:
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Basis of Presentation (Recent Developments) (Details) - Feb. 19, 2016 - Guardian Digital Communications Limited (GDCL) |
USD ($) |
GBP (£) |
---|---|---|
Business Acquisition [Line Items] | ||
Consideration transfered | £ | £ 1 | |
Aggregate purchase price | $ 1,000,000,000 | 698,000,000 |
Deferred cash payment | £ | £ 64,000,000 | |
International cash on hand used to fund investment | $ | 400,000,000 | |
Term Loan | Term Loan Agreement | ||
Business Acquisition [Line Items] | ||
Debt instrument face amount | $ | $ 675,000,000 |
Discontinued Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Oct. 27, 2014 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Gain (Loss) from discontinued operations, net of tax | $ 0 | $ (8) | $ 0 | $ (21) | |
Zebra Technologies Corporation | Enterprise | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash sale price of Enterprise business | $ 3,450 |
Other Financial Data (Other Charges (Income)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Other charges: | ||||
Intangibles amortization | $ 38 | $ 3 | $ 52 | $ 4 |
Reorganization of business | 19 | 13 | 25 | 26 |
Building impairment | 17 | 0 | 17 | 0 |
Non-U.S. pension curtailment gain | 0 | (32) | 0 | (32) |
Acquisition-related transaction fees | 0 | 0 | 13 | 0 |
Other charges | $ 74 | $ (16) | $ 107 | $ (2) |
Other Financial Data (Other Income (Expense)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Interest income (expense), net: | ||||
Interest expense | $ (59) | $ (42) | $ (111) | $ (86) |
Interest income | 5 | 3 | 8 | 7 |
Interest income (expense), net: | (54) | (39) | (103) | (79) |
Other: | ||||
Investment impairments | 0 | (3) | 0 | (3) |
Foreign currency gain (loss) | 14 | (11) | 27 | 7 |
Gain (loss) on derivative instruments | (18) | 4 | (30) | (12) |
Gains on equity method investments | 0 | 4 | 2 | 4 |
Realized foreign currency loss on acquisition | 0 | 0 | (10) | 0 |
Other | 0 | 2 | 0 | 3 |
Total Other Income (Expense) | $ (4) | $ (4) | $ (11) | $ (1) |
Other Financial Data (Cash and Cash Equivalents) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
Jul. 04, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 1,545 | $ 1,980 | $ 3,112 | $ 3,954 |
Restricted cash and cash equivalents | $ 64 | $ 63 |
Other Financial Data (Accounts Receivable, Net) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 1,122 | $ 1,390 |
Less allowance for doubtful accounts | (39) | (28) |
Accounts receivable, net | $ 1,083 | $ 1,362 |
Other Financial Data (Inventories, Net) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished goods | $ 160 | $ 151 |
Work-in-process and production materials | 261 | 287 |
Inventories, gross | 421 | 438 |
Less inventory reserves | (137) | (142) |
Inventories, net | $ 284 | $ 296 |
Other Financial Data (Other Current Assets) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Current Assets [Abstract] | ||
Available-for-sale securities | $ 47 | $ 438 |
Costs and earnings in excess of billings | 350 | 374 |
Tax-related refunds receivable | 107 | 44 |
Other | 131 | 98 |
Other current assets | $ 635 | $ 954 |
Other Financial Data (Property, Plant And Equipment, Net) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Feb. 19, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment, Net [Abstract] | ||||||
Land | $ 16 | $ 16 | $ 17 | |||
Building | 543 | 543 | 523 | |||
Machinery and equipment | 1,897 | 1,897 | 1,585 | |||
Property, plant and equipment, gross | 2,456 | 2,456 | 2,125 | |||
Less accumulated depreciation | (1,678) | (1,678) | (1,638) | |||
Property, plant and equipment, net | 778 | 778 | $ 487 | |||
Depreciation expense | 44 | $ 38 | 92 | $ 77 | ||
Building impairment | 17 | $ 0 | 17 | $ 0 | ||
Guardian Digital Communications Limited (GDCL) | ||||||
Property, Plant and Equipment, Net [Abstract] | ||||||
Property, plant and equipment, net | $ 245 | |||||
Disposal Group, Not Discontinued Operations | Penang, Malaysia Manufacturing Operations | ||||||
Property, Plant and Equipment, Net [Abstract] | ||||||
Loss on sale of manufacturing operations | $ 7 | |||||
ILLINOIS | ||||||
Property, Plant and Equipment, Net [Abstract] | ||||||
Building impairment | $ 17 |
Other Financial Data (Other Assets) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Assets [Abstract] | ||
Intangible assets, net | $ 824 | $ 49 |
Long-term receivables | 42 | 47 |
Defined benefit plan assets | 143 | 128 |
Other | 52 | 47 |
Other assets, total | $ 1,061 | $ 271 |
Other Financial Data (Accrued Liabilities) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Accrued Liabilities [Abstract] | ||
Deferred revenue | $ 361 | $ 390 |
Compensation | 166 | 241 |
Billings in excess of costs and earnings | 291 | 337 |
Tax liabilities | 65 | 48 |
Dividend payable | 70 | 71 |
Trade liabilities | 137 | 135 |
Other | 541 | 449 |
Accrued liabilities | $ 1,631 | $ 1,671 |
Other Financial Data (Other Liabilities) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Liabilities [Abstract] | ||
Defined benefit plans | $ 1,493 | $ 1,512 |
Postretirement Health Care Benefit Plan | 0 | 49 |
Deferred revenue | 149 | 113 |
Unrecognized tax benefits | 42 | 50 |
Deferred income taxes | 120 | 0 |
Deferred consideration | 78 | 0 |
Other | 190 | 180 |
Other liabilities | $ 2,072 | $ 1,904 |
Other Financial Data (Stockholders' Equity) (Details) - USD ($) $ / shares in Units, shares in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Aug. 03, 2016 |
|
Stockholders' Equity [Abstract] | |||||
Payments for repurchased shares | $ 619,000,000 | $ 939,000,000 | |||
Number of shares repurchased (in shares) | 9.0 | ||||
Repurchase of common shares, average cost (in US$ per share) | $ 68.68 | ||||
Share repurchase authority utilized during period | $ 11,600,000,000 | ||||
Amount available for future share repurchase | $ 415,000,000 | 415,000,000 | |||
Cash dividends paid | $ 72,000,000 | $ 72,000,000 | $ 143,000,000 | $ 148,000,000 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Increase to authorized share repurchase amount | $ 2,000,000,000 | ||||
Stockholders' Equity [Abstract] | |||||
Amount available for future share repurchase | 2,400,000,000 | ||||
Maximum | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Stock repurchase program, authorized amount | $ 14,000,000,000 |
Debt and Credit Facilities (Credit Facility) (Narrative) (Details) - 2014 Motorola Solutions Credit Agreement |
6 Months Ended |
---|---|
Jul. 02, 2016
USD ($)
| |
Revolving Credit Facility | |
Line of Credit Facility [Line Items] | |
Unsecured syndicated revolving credit facility | $ 2,100,000,000.0 |
Borrowings outstanding | 0 |
Letter of Credit | |
Line of Credit Facility [Line Items] | |
Unsecured syndicated revolving credit facility | $ 450,000,000 |
Debt and Credit Facilities (Convertible Notes) (Details) - USD ($) |
Jul. 02, 2016 |
Feb. 19, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Airwave | Term Loan Agreement | Term Loan | |||
Debt Instrument [Line Items] | |||
Term Loan | $ 675,000,000 | ||
Accounting Standards Update 2015-03 | Long-term Debt | |||
Debt Instrument [Line Items] | |||
Debt issuance costs presented as a component of long-term debt | $ 35,000,000 | $ 41,000,000 |
Risk Management (Interest Rate Risk) (Details) - Not Designated As Hedging Instruments - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative [Line Items] | ||
Fair value of derivative liabilities | $ 16 | $ 3 |
Interest Rate Swap | Accrued liabilities | ||
Derivative [Line Items] | ||
Fair value of derivative liabilities | $ 1 | $ 1 |
Risk Management (Counterparty Risk) (Details) $ in Millions |
Jul. 02, 2016
USD ($)
|
---|---|
Credit Concentration Risk | |
Derivative [Line Items] | |
Net credit risk with all counterparties | $ 1 |
Risk Management (Summary Of Fair Values And Location In Condensed Consolidated Balance Sheet) (Details) - Not Designated As Hedging Instruments - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | $ 1 | $ 6 |
Fair value of derivative liabilities | 16 | 3 |
Foreign exchange contracts | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 1 | 6 |
Foreign exchange contracts | Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | 15 | 2 |
Interest rate swap | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 0 | 0 |
Interest rate swap | Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | $ 1 | $ 1 |
Risk Management (Summary Of Derivative Instruments And The Effect On The Condensed Consolidated Statements Of Operations) (Details) - Not Designated As Hedging Instruments - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on Derivative Instruments | $ (18) | $ 4 | $ (30) | $ (12) |
Interest rate swap | Other income (expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on Derivative Instruments | 0 | 0 | 0 | 1 |
Foreign exchange contracts | Other income (expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on Derivative Instruments | $ (18) | $ 4 | $ (30) | $ (13) |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Earnings from continuing operations before income taxes | $ 167 | $ 215 | $ 189 | $ 343 |
Income tax expense | $ 59 | $ 64 | $ 64 | $ 104 |
Effective tax rate | 35.00% | 30.00% | 34.00% | 30.00% |
Federal income tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
Share-Based Compensation Plans (Narrative) (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 18 | $ 19 | $ 35 | $ 40 |
Restricted Stock Units and Market Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units granted in period (in shares) | 0.7 | |||
Compensation expense | $ 40 | |||
Stock Options and Performance Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted in period (in shares) | 0.7 | |||
Compensation expense | $ 10 | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market mutual funds classified as cash and cash equivalents | $ 936 | $ 1,300 |
Estimate of Fair Value, Fair Value Disclosure | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long term debt | $ 5,100 | $ 4,100 |
Long-term Financing and Sales of Receivables (Long-Term Customer Financing) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Long-term receivables | $ 54 | $ 60 |
Less current portion | (12) | (13) |
Gross non-current long-term receivables | 42 | 47 |
Outstanding commitment to provide long-term financing to third parties | $ 131 | $ 112 |
Long-term Financing and Sales of Receivables (Sales Receivables) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Dec. 31, 2015 |
|
Receivables [Abstract] | |||||
Accounts receivable sales proceeds | $ 5 | $ 5 | $ 7 | $ 11 | |
Long-term receivables sales proceeds | 70 | 43 | 134 | 108 | |
Total proceeds from receivable sales | 75 | $ 48 | 141 | $ 119 | |
Servicing obligations for long-term receivables | $ 699 | $ 699 | $ 668 |
Long-term Financing and Sales of Receivables (Credit Quality Of Financing Receivables And Allowance For Credit Losses) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | $ 55 | $ 60 |
Current Billed Due | 0 | 1 |
Past Due Under 90 Days | 0 | 1 |
Past Due Over 90 Days | 1 | 1 |
Municipal leases secured tax exempt | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | 12 | 35 |
Current Billed Due | 0 | 0 |
Past Due Under 90 Days | 0 | 0 |
Past Due Over 90 Days | 0 | 0 |
Commercial loans and leases secured | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | 43 | 25 |
Current Billed Due | 0 | 1 |
Past Due Under 90 Days | 0 | 1 |
Past Due Over 90 Days | $ 1 | $ 1 |
Commitments and Contingencies (Narrative) (Details) |
Jul. 02, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Accrual for obligations of divestitures | $ 0 |
Segment Information (Operating Business Segment) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016
USD ($)
|
Jul. 04, 2015
USD ($)
|
Jul. 02, 2016
USD ($)
segment
|
Jul. 04, 2015
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Number of segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 1,430 | $ 1,368 | $ 2,623 | $ 2,591 |
Business Segments Information | ||||
Operating earnings | 224 | 254 | 323 | 373 |
Total other expense | (57) | (39) | (134) | (30) |
Earnings from continuing operations before income taxes | 167 | 215 | 189 | 343 |
Products | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 801 | 867 | 1,503 | 1,626 |
Business Segments Information | ||||
Operating earnings | 129 | 171 | 179 | 235 |
Services | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 629 | 501 | 1,120 | 965 |
Business Segments Information | ||||
Operating earnings | $ 95 | $ 83 | $ 144 | $ 138 |
Reorganization of Business (Net Charges Incurred By Business Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | $ 44 | $ 16 | $ 67 | $ 30 |
Products | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | 33 | 12 | 54 | 22 |
Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | $ 11 | $ 4 | $ 13 | $ 8 |
Reorganization of Business (Reorganization Of Businesses Accruals) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Restructuring Reserve [Roll Forward] | ||||
January 1, 2016 | $ 60 | |||
Additional Charges | 51 | |||
Adjustments | (4) | |||
Amount Used | (42) | |||
July 2, 2016 | $ 65 | 65 | ||
Exit costs | ||||
Restructuring Reserve [Roll Forward] | ||||
January 1, 2016 | 9 | |||
Additional Charges | 5 | 5 | $ 4 | |
Adjustments | 0 | |||
Amount Used | (3) | |||
July 2, 2016 | 11 | 11 | ||
Employee separation costs | ||||
Restructuring Reserve [Roll Forward] | ||||
January 1, 2016 | 51 | |||
Additional Charges | 22 | $ 16 | 46 | $ 26 |
Adjustments | (4) | |||
Amount Used | (39) | |||
July 2, 2016 | $ 54 | $ 54 |
Intangible Assets and Goodwill (Fair Value of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Millions |
Feb. 19, 2016 |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Goodwill | $ 597 | $ 420 | |
Guardian Digital Communications Limited (GDCL) | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Cash | $ 86 | ||
Accounts receivable, net | 55 | ||
Other current assets | 36 | ||
Property, plant and equipment, net | 245 | ||
Deferred income taxes | 78 | ||
Accounts payable | (18) | ||
Accrued liabilities | (181) | ||
Other liabilities | (283) | ||
Goodwill | 189 | ||
Intangible assets | 875 | ||
Total consideration | 1,082 | ||
Net present value of deferred consideration payment to former owners | (82) | ||
Net cash consideration at purchase | $ 1,000 |
Intangible Assets and Goodwill (Pro Forma Financial Information) (Details) - Guardian Digital Communications Limited (GDCL) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Business Acquisition, Pro Forma Information [Abstract] | ||||
Revenues | $ 1,430 | $ 1,515 | $ 2,694 | $ 2,880 |
Earnings from continuing operations | $ 104 | $ (727) | $ 148 | $ (616) |
Basic earnings per share (in $ per share) | $ 0.62 | $ (3.49) | $ 0.86 | $ (2.91) |
Diluted earnings per share (in $ per share) | $ 0.61 | $ (3.49) | $ 0.84 | $ (2.88) |
Goodwill impairment charge | $ 884 | $ 884 |
Intangible Assets And Goodwill (Amortized Intangible Assets, Excluding Goodwill, By Business Segment) (Details) - USD ($) $ in Millions |
Jul. 02, 2016 |
Dec. 31, 2015 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 933 | $ 111 |
Accumulated Amortization | 109 | 62 |
Products | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 86 | 89 |
Accumulated Amortization | 61 | 60 |
Services | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 847 | 22 |
Accumulated Amortization | $ 48 | $ 2 |
Intangible Assets and Goodwill (Carrying Amount of Goodwill) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Dec. 31, 2015 |
|
Goodwill Activity | ||
Aggregate goodwill | $ 597 | $ 420 |
Accumulated impairment losses | 0 | 0 |
Goodwill, net of impairment losses | 597 | 420 |
Goodwill acquired | 170 | |
Purchase accounting adjustments | 19 | |
Foreign currency | (12) | |
Products | ||
Goodwill Activity | ||
Aggregate goodwill | 270 | 270 |
Accumulated impairment losses | 0 | 0 |
Goodwill, net of impairment losses | 270 | 270 |
Goodwill acquired | 0 | |
Purchase accounting adjustments | 0 | |
Foreign currency | 0 | |
Services | ||
Goodwill Activity | ||
Aggregate goodwill | 327 | 150 |
Accumulated impairment losses | 0 | 0 |
Goodwill, net of impairment losses | 327 | $ 150 |
Goodwill acquired | 170 | |
Purchase accounting adjustments | 19 | |
Foreign currency | $ (12) |
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