Other Financial Data

Statement of Operations Information

Other Charges (Income)

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



Years ended December 31	2016		2015			2014
Other charges (income):
Intangibles amortization	$	113	$	8		$	4
Reorganization of businesses	77		71			64
Legal settlement	—		—			8
Building impairment	17		6			—
Non-U.S. pension curtailment gain	—		(32		)	—
Settlement of pension plan	26		—			1,917
Impairment of corporate aircraft	3		31			—
Gain on sale of building and land	—		—			(21		)
Acquisition-related transaction fees	$	13	$	—		$	—
	$	249	$	84		$	1,972

Other Income (Expense)

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



Years ended December 31	2016			2015			2014
Interest expense, net:
Interest expense	$	(225	)	$	(186	)	$	(147	)
Interest income	20			13			21
	$	(205	)	$	(173	)	$	(126	)
Other:
Loss from the extinguishment of long-term debt	$	(2	)	$	—		$	(37	)
Investment impairments	(4		)	(6		)	—
Foreign currency gain (loss)	46			(23		)	(3		)
Gain (loss) on derivative instruments	(56		)	7			(4		)
Gains on equity method investments	5			6			16
Realized foreign currency loss on acquisition	(10		)	—			—
Other	9			5			(6		)
	$	(12	)	$	(11	)	$	(34	)

Earnings Per Common Share

Basic and diluted earnings per common share from both continuing operations and net earnings attributable to Motorola Solutions, Inc. is computed as follows:



	Amounts attributable to Motorola Solutions, Inc. common stockholders
	Earnings (loss) from Continuing Operations							Net Earnings
Years ended December 31	2016		2015		2014			2016		2015		2014
Basic earnings per common share:
Earnings (loss)	$	560	$	640	$	(697	)	$	560	$	610	$	1,299
Weighted average common shares outstanding	169.6		199.6		245.6			169.6		199.6		245.6
Per share amount	$	3.30	$	3.21	$	(2.84	)	$	3.30	$	3.06	$	5.29
Diluted earnings per common share:
Earnings (loss)	$	560	$	640	$	(697	)	$	560	$	610	$	1,299
Weighted average common shares outstanding	169.6		199.6		245.6			169.6		199.6		245.6
Add effect of dilutive securities:
Share-based awards	2.7		2.1		—			2.7		2.1		—
Senior Convertible Notes	0.8		0.1		—			0.8		0.1		—
Diluted weighted average common shares outstanding	173.1		201.8		245.6			173.1		201.8		245.6
Per share amount	$	3.24	$	3.17	$	(2.84	)	$	3.24	$	3.02	$	5.29

In the computation of diluted earnings per common share from continuing operations and on a net earnings basis for the year ended December 31, 2016, the assumed exercise of 2.8 million options and the assumed vesting of 0.3 million RSUs were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share from continuing operations and on a net earnings basis for the year ended December 31, 2015, the assumed exercise of 2.7 million stock options and the assumed vesting of 0.3 million RSUs were excluded because their inclusion would have been antidilutive. For the year ended December 31, 2014, the Company recorded a net loss from continuing operations and, accordingly, the basic and diluted weighted average shares outstanding are equal because any increase to the basic shares would be antidilutive, including the assumed exercise of 6.3 million stock options and the assumed vesting of 1.1 million RSUs.

On August 25, 2015, the Company issued $1.0 billion of 2% Senior Convertible Notes (the "Senior Convertible Notes") which mature in September 2020. The notes are convertible based on a conversion rate of 14.5985 per $1,000 principal amount (which is equal to an initial conversion price of $68.50 per share). See discussion in Note 4. In the event of conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash.

Because of the Company’s intention to settle the par value of the Senior Convertible Notes in cash upon conversion, Motorola Solutions does not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price. In this case, only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) will be included, which is based upon the amount by which the average stock price exceeds the conversion price of $68.50. For the year ended December 31, 2016, the dilutive impact of the Senior Convertible Notes was 0.8 million shares and 0.1 million for December 31, 2015.

Balance Sheet Information

Cash and Cash Equivalents

The Company’s cash and cash equivalents were $1.0 billion at December 31, 2016 and $2.0 billion at December 31, 2015. Of these amounts, $63 million was restricted at both December 31, 2016 and December 31, 2015.

Accounts Receivable, Net

Accounts receivable, net, consist of the following:



December 31	2016			2015
Accounts receivable	$	1,454		$	1,390
Less allowance for doubtful accounts	(44		)	(28		)
	$	1,410		$	1,362

Inventories, Net

Inventories, net, consist of the following:



December 31	2016			2015
Finished goods	$	151		$	151
Work-in-process and production materials	253			287
	404			438
Less inventory reserves	(131		)	(142		)
	$	273		$	296

Other Current Assets

Other current assets consist of the following:



December 31	2016		2015
Available-for-sale securities	$	46	$	438
Costs and earnings in excess of billings	495		374
Tax-related refunds receivable	90		44
Other	124		98
	$	755	$	954

Property, Plant and Equipment, Net

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



December 31	2016			2015
Land	$	12		$	17
Building	306			523
Machinery and equipment	1,921			1,585
	2,239			2,125
Less accumulated depreciation	(1,450		)	(1,638		)
	$	789		$	487

Depreciation expense for the years ended December 31, 2016, 2015, and 2014 was $182 million, $142 million and $169 million, respectively.

During the year ended December 31, 2015, the Company entered into an arrangement to sell its Penang, Malaysia manufacturing operations, including the land, building, equipment, inventory, and the transfer of employees to a contract manufacturer. The Company recognized an impairment loss of $6 million on the building within Other charges in its consolidated statements of operations and presented the assets as held for sale in its consolidated balance sheets as of December 31, 2015. The sale of the Penang, Malaysia facility and manufacturing operations was completed on February 1, 2016. During the year ended December 31, 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.

During the year ended December 31, 2015, the Company entered into an agreement to broker the sale of its corporate aircraft. The Company recognized an impairment loss of $31 million within Other charges based on the indicated market value of the aircraft and presented the aircraft as held for sale in its consolidated balance sheets as of December 31, 2015. During the year ended December 31, 2016, the sale of the corporate aircraft was completed.

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. See discussion in Note 14.

During the year ended December 31, 2016, Motorola Solutions relocated its global headquarters from Schaumburg, Illinois to Chicago, Illinois. The Company sold the remaining buildings and land on its Schaumburg, IL campus, and will continue optimize the Schaumburg campus for current space requirements. A building impairment loss of $17 million has been recognized in Other charges during the year ended December 31, 2016 related to the excess carrying value of the long-lived assets in relation to the selling price.

Investments

Investments consist of the following:




December 31, 2016	Cost Basis		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	51	$	51
Corporate bonds	5		5
	56		56
Other investments	211		211
Equity method investments	17		17
	$	284	$	284
Less: current portion of available-for-sale securities			46
			$	238

The cost basis is equal to the fair value for all of the Company's investments as of December 31, 2016.




December 31, 2015	Cost Basis		Unrealized Gains		Unrealized Loss		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	203		—		—		203
Equity method investments	9		—		—		9
	674		6		(11	)	669
Less: current portion of available-for-sale securities							438
							$	231

In December 2015, the Company invested $401 million in United Kingdom treasury securities in order to partially offset the risk associated with fluctuations in the British Pound Sterling in the period before the closing of the purchase of GDCL. The investments were recorded within Other current assets in the Company's consolidated balance sheets. The Company liquidated these investments in February 2016 to partially fund the acquisition of GDCL. During the year ended December 31, 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.

The Company recognized losses on the sale of investments and businesses of $6 million for the year ended December 31, 2016 compared to gains on the sale of investments and business of $107 million and $5 million for the years ended December 31, 2015 and 2014. During the years ended December 31, 2016 and 2015, the Company recorded investment impairment charges of $4 million and $6 million, respectively, representing other-than-temporary declines in the value of the Company’s equity investment portfolio. There were no investment impairments recorded during the year ended December 31, 2014. Investment impairment charges are included in Other within Other income (expense) in the Company’s consolidated statements of operations.

Other Assets

Other assets consist of the following:



December 31	2016		2015
Intangible assets, net (Note 14)	$	821	$	49
Non-current long-term receivables	49		47
Defined benefit plan assets	102		128
Other	49		47
	$	1,021	$	271

Accrued Liabilities

Accrued liabilities consist of the following:



December 31	2016		2015
Deferred revenue	$	439	$	390
Compensation	250		241
Billings in excess of costs and earnings	434		337
Tax liabilities	111		48
Dividend payable	77		71
Trade liabilities	180		135
Other	620		449
	$	2,111	$	1,671

Other Liabilities

Other liabilities consist of the following:



December 31	2016		2015
Defined benefit plans	$	1,799	$	1,512
Postretirement Health Care Benefit Plan	—		49
Deferred revenue	115		113
Unrecognized tax benefits	39		50
Deferred income taxes	121		12
Deferred consideration (Note 14)	72		—
Other	209		168
	$	2,355	$	1,904

Stockholders’ Equity Information

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. As of December 31, 2016, the Company had used approximately $11.8 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $2.2 billion of authority available for future repurchases.

During 2016, the Company paid an aggregate of $842 million, including transaction costs, to repurchase 12.0 million shares at an average price of $70.28 per share. During 2015, the Company paid an aggregate of $3.2 billion, including transaction costs, to repurchase 48.0 million shares at an average price of $66.22. Shares repurchased in 2015 include 30.1 million shares repurchased under a modified "Dutch auction" tender offer at a tender price of $66.50 for an aggregate of $2.0 billion, including transaction costs. During 2014, the Company paid an aggregate of $2.5 billion, including transaction costs, to repurchase 39.4 million shares at an average price of $64.63.

Payment of Dividends: On November 3, 2016, the Company announced that its Board of Directors approved an increase in the quarterly cash dividend from $0.41 per share to $0.47 per share of common stock. During the years ended December 31, 2016, 2015, and 2014 the Company paid $280 million, $277 million, and $318 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 consolidated statements of operations during the years ended December 31, 2016, 2015, and 2014:



	Years ended December 31
	2016			2015			2014
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(266	)	$	(204	)	$	(96	)
Other comprehensive loss before reclassification adjustment	(227		)	(82		)	(58		)
Tax benefit (expense)	(1		)	20			9
Other comprehensive income before reclassification adjustment, net of tax	(228		)	(62		)	(49		)
Reclassification adjustment into Earnings from discontinued operations	—			—			(75		)
Tax expense	—			—			16
Reclassification adjustment into Earnings from discontinued operations, net of tax	—			—			(59		)
Other comprehensive loss, net of tax	(228		)	(62		)	(108		)
Balance at end of period	$	(494	)	$	(266	)	$	(204	)
Derivative instruments:
Balance at beginning of period	$	—		$	—		$	(1	)
Reclassification adjustment into Cost of sales	—			—			1
Reclassification adjustment into Cost of sales, net of tax	—			—			1
Other comprehensive income, net of tax	—			—			1
Balance at end of period	$	—		$	—		$	—
Available-for-Sale Securities:
Balance at beginning of period	$	(3	)	$	44		$	(2	)
Other comprehensive income before reclassification adjustment	—			(15		)	72
Tax benefit (expense)	—			5			(26		)
Other comprehensive income (loss) before reclassification adjustment, net of tax	—			(10		)	46
Reclassification adjustment into Losses (Gains) on sales of investments and businesses	5			(61		)	—
Tax expense (benefit)	(2		)	24			—
Reclassification adjustment into Earnings from continuing operations, net of tax	3			(37		)	—
Other comprehensive income, net of tax	3			(47		)	46
Balance at end of period	$	—		$	(3	)	$	44
Defined Benefit Plans:
Balance at beginning of period	$	(1,597	)	$	(1,695	)	$	(2,188	)
Other comprehensive income (loss) before reclassification adjustment	(368		)	108			(1,165		)
Tax benefit	98			12			447
Other comprehensive income (loss) before reclassification adjustment, net of tax	(270		)	120			(718		)
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	53			71			118
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(27		)	(62		)	(57		)
Reclassification adjustment - Non-U.S. pension curtailment gain into Other charges	—			(32		)	—
Reclassification adjustment - Pension settlement loss into Other charges	26			—			1,883
Disposition of the Enterprise business retirement benefits into Earnings from discontinued operations, net of tax	—			—			(1		)
Tax expense (benefit)	(8		)	1			(732		)
Reclassification adjustment into Net earnings	44			(22		)	1,211
Other comprehensive income (loss), net of tax	(226		)	98			493
Balance at end of period	$	(1,823	)	$	(1,597	)	$	(1,695	)

Total Accumulated other comprehensive loss	$	(2,317	)	$	(1,866	)	$	(1,855	)