Other Financial Data

Statements of Operations Information

Other Charges (Income)

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



	Three Months Ended
	April 1, 2017			April 2, 2016
Other charges:
Intangibles amortization	$	36		$	13
Reorganization of business	15			7
Building impairment	8			—
Non-U.S. pension settlement loss	9			—
Gain on legal settlement	(42		)	—
Acquisition-related transaction fees	1			13
	$	27		$	33

During the three months ended April 1, 2017, the Company recognized a net gain of $42 million related to a legal settlement. The legal settlement relates to the recovery, through legal procedures to seize and liquidate assets, of financial receivables owed to the Company by a former customer. The net gain of $42 million was based on $52 million of proceeds received, net $10 million of fees owed to third parties for their involvement in the recovery.

Other Income (Expense)

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



	Three Months Ended
	April 1, 2017			April 2, 2016
Interest income (expense), net:
Interest expense	$	(54	)	$	(53	)
Interest income	3			4
	$	(51	)	$	(49	)
Other:
Foreign currency gain (loss)	(2		)	13
Loss on derivative instruments	(7		)	(12		)
Gains (losses) on equity method investments	(1		)	1
Realized foreign currency loss on acquisition	—			(10		)
Other	2			—
	$	(8	)	$	(8	)

Earnings Per Common Share

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



	Amounts attributable to Motorola Solutions, Inc. common stockholders
Three Months Ended	April 1, 2017		April 2, 2016
Basic earnings per common share:
Earnings	$	77	$	17
Weighted average common shares outstanding	164.2		174.5
Per share amount	$	0.47	$	0.10
Diluted earnings per common share:
Earnings	$	77	$	17
Weighted average common shares outstanding	164.2		174.5
Add effect of dilutive securities:
Share-based awards	3.3		2.5
Senior Convertible Notes	2.4		—
Diluted weighted average common shares outstanding	169.9		177.0
Per share amount	$	0.45	$	0.10

In the computation of diluted earnings per common share for the three months ended April 1, 2017, the assumed exercise of 2.7 million options, including 2.3 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive. For the three months ended April 2, 2016, the assumed exercise of 4.0 million options, including 2.1 million subject to market-based contingent stock agreements, and the assumed vesting of 0.6 million restricted stock units ("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 months ended April 1, 2017, the dilutive impact of the Senior Convertible Notes was 2.4 million shares.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following:



	April 1, 2017			December 31, 2016
Accounts receivable	$	1,109		$	1,454
Less allowance for doubtful accounts	(39		)	(44		)
	$	1,070		$	1,410

Inventories, Net

Inventories, net, consist of the following:



	April 1, 2017			December 31, 2016
Finished goods	$	175		$	151
Work-in-process and production materials	298			253
	473			404
Less inventory reserves	(128		)	(131		)
	$	345		$	273

Other Current Assets

Other current assets consist of the following:



	April 1, 2017		December 31, 2016
Available-for-sale securities	$	45	$	46
Costs and earnings in excess of billings	550		495
Tax-related refunds receivable	94		90
Other	140		124
	$	829	$	755

Property, Plant and Equipment, Net

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



	April 1, 2017			December 31, 2016
Land	$	12		$	12
Building	391			306
Machinery and equipment	1,924			1,921
	2,327			2,239
Less accumulated depreciation	(1,507		)	(1,450		)
	$	820		$	789

Depreciation expense for the three months ended April 1, 2017 and April 2, 2016 was $44 million and $49 million, respectively.

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

The Company acquired property, plant and equipment, including network-related assets, with a fair value of $245 million in the acquisition of Airwave on February 19, 2016 and $70 million in the acquisition of Quorum II S.A. and its three subsidiaries - Interexport Telecomunicaciones Y Servicios S.A., Interexport Telecomunicaciones E Integracion De Sistemas S.A. and Mobilink S.A. (collectively "Interexport") on March 13, 2017. See discussion in Note 13.

Investments

Investments consist of the following:



April 1, 2017
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	50
Corporate bonds	5
	55
Other investments	213
Equity method investments	14
	$	282
Less: current portion of available-for-sale securities	45
	$	237



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

Cost basis was equal to fair value for available-for-sale securities at April 1, 2017 and December 31, 2016. Other investments include strategic investments in technology-driven startup companies recorded at cost of $77 million and $76 million, and insurance policies recorded at their cash surrender value of $136 million and $135 million, at April 1, 2017 and December 31, 2016.

The Company recognized gains on the sale of investments and businesses of $3 million in the first quarter of 2017. The Company recognized losses on the sale of investments and businesses of $21 million in the first quarter of 2016, primarily driven by a realized loss of $19 million associated with the sale of United Kingdom treasury securities.

Other Assets

Other assets consist of the following:



	April 1, 2017		December 31, 2016
Non-current long-term receivables	30		49
Defined benefit plan assets	118		102
Other	49		49
	$	197	200

Accrued Liabilities

Accrued liabilities consist of the following:



	April 1, 2017		December 31, 2016
Deferred revenue	$	473	$	439
Compensation	176		250
Billings in excess of costs and earnings	391		434
Tax liabilities	93		111
Dividend payable	77		77
Trade liabilities	154		180
Other	544		620
	$	1,908	$	2,111

Other Liabilities

Other liabilities consist of the following:



	April 1, 2017		December 31, 2016
Defined benefit plans	$	1,795	$	1,799
Deferred revenue	115		115
Unrecognized tax benefits	39		39
Deferred income taxes	140		121
Deferred consideration (Note 13)	74		72
Other	215		209
	$	2,378	$	2,355

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 three months ended April 1, 2017, the Company paid an aggregate of $178 million, including transaction costs, to repurchase approximately 2.2 million shares at an average price of $80.82 per share. As of April 1, 2017, the Company had used approximately $12.0 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $2.0 billion of authority available for future repurchases.

Payment of Dividends: During the three months ended April 1, 2017 and April 2, 2016, the Company paid $77 million and $71 million, respectively, in cash dividends to holders of its common stock.

Accumulated Other Comprehensive Loss

The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the condensed consolidated statements of operations during the three months ended April 1, 2017 and April 2, 2016:



	Three Months Ended
	April 1, 2017			April 2, 2016
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(494	)	$	(266	)
Other comprehensive income before reclassification adjustment	37			14
Tax expense	(3		)	(1		)
Other comprehensive income, net of tax	34			13
Balance at end of period	$	(460	)	$	(253	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	(3	)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net	—			6
Tax benefit	—			(2		)
Other comprehensive income, net of tax	—			4
Balance at end of period	$	—		$	1
Defined Benefit Plans:
Balance at beginning of period	(1,823		)	(1,597		)
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	16			10
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(4		)	(5		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges	9			—
Tax benefit	(2		)	(1		)
Other comprehensive income, net of tax	19			4
Balance at end of period	$	(1,804	)	$	(1,593	)

Total Accumulated other comprehensive loss	$	(2,264	)	$	(1,845	)