10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________ 

Form 10-Q

 ____________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended July 1, 2017

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission file number: 1-7221

___________________________________________ 

MOTOROLA SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

____________________________________________ 

DELAWARE (State of Incorporation)	36-1115800 (I.R.S. Employer Identification No.)
500 W. Monroe Street, Chicago, Illinois (Address of principal executive offices)	60661 (Zip Code)

Registrant’s telephone number, including area code:

(847) 576-5000

____________________________________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ¨
	(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No x

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on July 1, 2017:

Class	Number of Shares
Common Stock; $.01 Par Value	162,653,552

	Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements	1
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended July 1, 2017 and July 2, 2016	1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended July 1, 2017 and July 2, 2016	2
Condensed Consolidated Balance Sheets as of July 1, 2017 (Unaudited) and December 31, 2016	3
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Six Months Ended July 1, 2017	4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended July 1, 2017 and July 2, 2016	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3 Quantitative and Qualitative Disclosures About Market Risk	35
Item 4 Controls and Procedures	36
PART II OTHER INFORMATION
Item 1 Legal Proceedings	37
Item 1A Risk Factors	37
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3 Defaults Upon Senior Securities	38
Item 4 Mine Safety Disclosures	38
Item 5 Other Information	38
Item 6 Exhibits	39

Part I—Financial Information

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
(In millions, except per share amounts)	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Net sales from products	$	848		$	801		$	1,551		$	1,503
Net sales from services	649			629			1,226			1,120
Net sales	1,497			1,430			2,777			2,623
Costs of products sales	392			361			739			726
Costs of services sales	415			393			778			718
Costs of sales	807			754			1,517			1,444
Gross margin	690			676			1,260			1,179
Selling, general and administrative expenses	242			240			475			475
Research and development expenditures	138			138			273			274
Other charges	53			74			79			107
Operating earnings	257			224			433			323
Other income (expense):
Interest expense, net	(51		)	(54		)	(102		)	(103		)
Gains (losses) on sales of investments and businesses, net	(1		)	1			2			(20		)
Other	—			(4		)	(9		)	(11		)
Total other expense	(52		)	(57		)	(109		)	(134		)
Net earnings before income taxes	205			167			324			189
Income tax expense	73			59			114			64
Net earnings	132			108			210			125
Less: Earnings attributable to noncontrolling interests	1			1			2			1
Net earnings attributable to Motorola Solutions, Inc.	$	131		$	107		$	208		$	124
Earnings per common share:
Basic	$	0.80		$	0.62		$	1.27		$	0.72
Diluted	$	0.78		$	0.61		$	1.23		$	0.71
Weighted average common shares outstanding:
Basic	163.1			171.9			163.7			173.0
Diluted	169.0			174.8			169.5			175.7
Dividends declared per share	$	0.47		$	0.41		$	0.94		$	0.82

See accompanying notes to condensed consolidated financial statements (unaudited).

1

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
(In millions)	July 1, 2017		July 2, 2016
Net earnings	$	132	$	108
Other comprehensive income (loss), net of tax (Note 2):
Foreign currency translation adjustments	47		(98		)
Marketable securities	4		(1		)
Defined benefit plans	14		56
Total other comprehensive income (loss), net of tax	65		(43		)
Comprehensive income	197		65
Less: Earnings attributable to noncontrolling interest	1		1
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$	196	$	64

	Six Months Ended
(In millions)	July 1, 2017		July 2, 2016
Net earnings	$	210	$	125
Other comprehensive income (loss), net of tax (Note 2):
Foreign currency translation adjustments	81		(85		)
Marketable securities	4		3
Defined benefit plans	33		60
Total other comprehensive income (loss), net of tax	118		(22		)
Comprehensive income	328		103
Less: Earnings attributable to noncontrolling interest	2		1
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$	326	$	102

See accompanying notes to condensed consolidated financial statements (unaudited).

2

Condensed Consolidated Balance Sheets

(In millions, except par value)	July 1, 2017			December 31, 2016
	(Unaudited)
ASSETS
Cash and cash equivalents	$	742		$	967
Restricted cash	63			63
Total cash and cash equivalents	805			1,030
Accounts receivable, net	1,211			1,410
Inventories, net	391			273
Other current assets	804			755
Total current assets	3,211			3,468
Property, plant and equipment, net	859			789
Investments	248			238
Deferred income taxes	2,160			2,219
Goodwill	749			728
Intangible assets	868			821
Other assets	200			200
Total assets	$	8,295		$	8,463
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	46		$	4
Accounts payable	440			553
Accrued liabilities	1,924			2,111
Total current liabilities	2,410			2,668
Long-term debt	4,421			4,392
Other liabilities	2,440			2,355
Stockholders’ Equity
Preferred stock, $100 par value	—			—
Common stock, $.01 par value:	2			2
Authorized shares: 600.0
Issued shares: 7/1/17—163.1; 12/31/16—165.5
Outstanding shares: 7/1/17—162.7; 12/31/16—164.7
Additional paid-in capital	264			203
Retained earnings	945			1,148
Accumulated other comprehensive loss	(2,199		)	(2,317		)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	(988		)	(964		)
Noncontrolling interests	12			12
Total stockholders’ equity (deficit)	(976		)	(952		)
Total liabilities and stockholders’ equity	$	8,295		$	8,463

See accompanying notes to condensed consolidated financial statements (unaudited).

3

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(In millions)	Shares		Common Stock and Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interests
Balance as of December 31, 2016	165.5		$	205	$	(2,317	)	$	1,148		$	12
Net earnings								208			2
Other comprehensive income					118
Issuance of common stock and stock options exercised	0.8		28
Share repurchase program	(3.2	)						(258		)
Share-based compensation expense			33
Dividends declared								(153		)	(2		)
Balance as of July 1, 2017	163.1		$	266	$	(2,199	)	$	945		$	12

See accompanying notes to condensed consolidated financial statements (unaudited).

4

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
(In millions)	July 1, 2017			July 2, 2016
Operating
Net earnings attributable to Motorola Solutions, Inc.	$	208		$	124
Earnings attributable to noncontrolling interests	2			1
Net earnings	210			125
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization	166			144
Non-cash other charges	21			35
Non-U.S. pension settlement loss	25			—
Share-based compensation expense	33			35
Losses (gains) on sales of investments and businesses, net	(2		)	20
Deferred income taxes	63			71
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable	251			327
Inventories	(112		)	(2		)
Other current assets	(21		)	(65		)
Accounts payable and accrued liabilities	(340		)	(362		)
Other assets and liabilities	21			(24		)
Net cash provided by operating activities	315			304
Investing
Acquisitions and investments, net	(140		)	(1,120		)
Proceeds from sales of investments and businesses, net	72			553
Capital expenditures	(121		)	(143		)
Proceeds from sales of property, plant and equipment	—			46
Net cash used for investing activities	(189		)	(664		)
Financing
Repayment of debt	(6		)	(2		)
Net proceeds from issuance of debt	—			673
Proceeds from financing through capital leases	7			—
Issuance of common stock	28			40
Purchase of common stock	(258		)	(619		)
Payment of dividends	(154		)	(143		)
Payment of dividend to non-controlling interest	(2		)	—
Net cash used for financing activities	(385		)	(51		)
Effect of exchange rate changes on cash and cash equivalents	34			(24		)
Net decrease in cash and cash equivalents	(225		)	(435		)
Cash and cash equivalents, beginning of period	1,030			1,980
Cash and cash equivalents, end of period	$	805		$	1,545
Supplemental Cash Flow Information
Cash paid during the period for:
Interest, net	$	88		$	94
Income and withholding taxes, net of refunds	47			54

See accompanying notes to condensed consolidated financial statements (unaudited).

5

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, except as noted)

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements as of July 1, 2017 and for the three and six months endedJuly 1, 2017 and July 2, 2016 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, 2016. The results of operations for the three and six months endedJuly 1, 2017 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 July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1.

On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year.

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 the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity 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.

The Company has continued to analyze the impact of the new standard on its financial results based on an inventory of the Company's current contracts with customers. The Company has obtained an understanding of the new standard and currently believes that it will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of its contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method.

Under the new standard, the Company must identify the distinct promises to transfer goods and/or services within its contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, the Company has considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact the Company's percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's percentage of completion contracts, it will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in the Company's contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services.

In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While the Company may have contracts which fall under these rules in the current standard, it has not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, the Company does not anticipate a significant acceleration of revenue upon applying the new standard to its current contracts under these fact patterns.

The Company continues to evaluate the impact of ASU No. 2014-09 on its financial results and prepare for the adoption of the standard on January 1, 2018, including readying its internal processes and control environment for new requirements,

6

particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. The Company expects to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements.

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 prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The Company intends to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows.

In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The Company intends to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for the Company January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. The Company does not anticipate significant changes to the Company's financial statements and related disclosures from adoption of the ASU.

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. The Company intends to adopt this ASU on January 1, 2018. Upon adoption, the Company plans to update the presentation of net periodic cost (benefit) accordingly, noting all components of the Company's net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively.

7

2. Other Financial Data

Statements of Operations Information

Other Charges (Income)

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

	Three Months Ended					Six Months Ended
	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Other charges:
Intangibles amortization	$	37		$	38	$	73		$	52
Reorganization of business	1			19		16			25
Building impairment	—			17		8			17
Non-U.S. pension settlement loss	16			—		25			—
Legal settlements	(1		)	—		(44		)	—
Acquisition-related transaction fees	—			—		1			13
	$	53		$	74	$	79		$	107

During the six months endedJuly 1, 2017, the Company recognized a net gain of $44 million related to legal settlements. Of this amount, $42 million relates to the recovery, through legal procedures to seize and liquidate assets, of financial receivables owed to the Company by a former customer of its legacy Networks business. 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						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Interest income (expense), net:
Interest expense	$	(55	)	$	(59	)	$	(109	)	$	(111	)
Interest income	4			5			7			8
	$	(51	)	$	(54	)	$	(102	)	$	(103	)
Other:
Foreign currency gain (loss)	$	(20	)	$	14		$	(22	)	$	27
Gain (loss) on derivative instruments	18			(18		)	11			(30		)
Gains on equity method investments	1			—			—			2
Realized foreign currency loss on acquisition	—			—			—			(10		)
Other	1			—			2			—
	$	—		$	(4	)	$	(9	)	$	(11	)

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				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Basic earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Per share amount	$	0.80	$	0.62	$	1.27	$	0.72
Diluted earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Add effect of dilutive securities:
Share-based awards	3.1		2.4		3.2		2.4
Senior Convertible Notes	2.8		0.5		2.6		0.3
Diluted weighted average common shares outstanding	169.0		174.8		169.5		175.7
Per share amount	$	0.78	$	0.61	$	1.23	$	0.71

In the computation of diluted earnings per common share for the three months endedJuly 1, 2017, the assumed exercise of 2.1 million options, including 1.8 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive. For the six months endedJuly 1, 2017, the assumed exercise of 2.4 million options, including 2.0 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive.

For the three months endedJuly 2, 2016, the assumed exercise of 2.3 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. For the six months endedJuly 2, 2016, the assumed exercise of 3.2 million options, including 2.1 million subject to market-based contingent stock agreements, and the assumed vesting of 0.6 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, the Company 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 endedJuly 1, 2017, the dilutive impact of the Senior Convertible Notes was 2.8 million shares and 2.6 million shares, respectively.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	July 1, 2017			December 31, 2016
Accounts receivable	$	1,250		$	1,454
Less allowance for doubtful accounts	(39		)	(44		)
	$	1,211		$	1,410

9

Inventories, Net

Inventories, net, consist of the following: 

	July 1, 2017			December 31, 2016
Finished goods	$	197		$	151
Work-in-process and production materials	321			253
	518			404
Less inventory reserves	(127		)	(131		)
	$	391		$	273

Other Current Assets

Other current assets consist of the following: 

	July 1, 2017		December 31, 2016
Available-for-sale securities	$	50	$	46
Costs and earnings in excess of billings	529		495
Tax-related refunds receivable	110		90
Other	115		124
	$	804	$	755

Property, Plant and Equipment, Net

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

	July 1, 2017			December 31, 2016
Land	$	10		$	12
Building	267			306
Machinery and equipment	2,078			1,921
	2,355			2,239
Less accumulated depreciation	(1,496		)	(1,450		)
	$	859		$	789

Depreciation expense for the three months endedJuly 1, 2017 and July 2, 2016 was $49 million and $44 million, respectively. Depreciation expense for the six months endedJuly 1, 2017 and July 2, 2016 was $93 million and $92 million, respectively.

10

Investments

Investments consist of the following:

July 1, 2017	Cost   Basis		Unrealized   Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	56	$	—	$	56
Corporate bonds	5		—		5
Common stock	5		7		12
	66		7		73
Other investments	210		—		210
Equity method investments	15		—		15
	$	291	$	7	$	298
Less: current portion of available-for-sale securities					50
					$	248

December 31, 2016	Cost   Basis		Unrealized   Gains		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

Other investments include strategic investments in non-public technology-driven startup companies recorded at cost of $74 million and $76 million, and insurance policies recorded at their cash surrender value of $136 million and $135 million, at July 1, 2017 and December 31, 2016.

During the three months endedJuly 1, 2017, the Company recognized a loss on the sale of investments and businesses of $1 million, compared to a gain of $1 million during the three months endedJuly 2, 2016. During the six months endedJuly 1, 2017, the Company recognized a gain on the sale of investments and businesses of $2 million, compared to a loss of $20 million during the six months endedJuly 2, 2016, of which, $19 million was associated with the sale of United Kingdom treasury securities.

Other Assets

Other assets consist of the following: 

	July 1, 2017		December 31, 2016
Long-term receivables	35		49
Defined benefit plan assets	125		102
Other	40		49
	$	200	200

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Accrued Liabilities

Accrued liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Deferred revenue	$	427	$	439
Compensation	171		250
Billings in excess of costs and earnings	387		434
Tax liabilities	134		111
Dividend payable	76		77
Trade liabilities	174		180
Other	555		620
	$	1,924	$	2,111

Other Liabilities

Other liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Defined benefit plans	$	1,800	$	1,799
Deferred revenue	164		115
Unrecognized tax benefits	39		39
Deferred income taxes	139		121
Deferred consideration (Note 13)	78		72
Other	220		209
	$	2,440	$	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 six months endedJuly 1, 2017, the Company paid an aggregate of $258 million, including transaction costs, to repurchase approximately 3.2 million shares at an average price of $81.66 per share. As of July 1, 2017, the Company had used approximately $12.1 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.9 billion of authority available for future repurchases.

Payment of Dividends: During the three months endedJuly 1, 2017 and July 2, 2016, the Company paid $77 million and $72 million, respectively, in cash dividends to holders of its common stock. During the six months endedJuly 1, 2017 and July 2, 2016, the Company paid $154 million and $143 million, respectively, in cash dividends to holders of its common stock.

12

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 endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(460	)	$	(253	)	$	(494	)	$	(266	)
Other comprehensive income (loss) before reclassification adjustment	47			(98		)	84			(84		)
Tax expense	—			—			(3		)	(1		)
Other comprehensive income (loss), net of tax	47			(98		)	81			(85		)
Balance at end of period	$	(413	)	$	(351	)	$	(413	)	$	(351	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	1		$	—		$	(3	)
Other comprehensive income (loss) before reclassification adjustment	7			(2		)	7			(2		)
Tax (expense) benefit	(3		)	1			(3		)	1
Other comprehensive income (loss) before reclassification adjustment, net of tax	4			(1		)	4			(1		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net	—			—			—			6
Tax benefit	—			—			—			(2		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			—			4
Other comprehensive income (loss), net of tax	4			(1		)	4			3
Balance at end of period	$	4		$	—		$	4		$	—
Defined Benefit Plans:
Balance at beginning of period	(1,804		)	(1,593		)	$	(1,823	)	$	(1,597	)
Other comprehensive income (loss) before reclassification adjustment	(11		)	53			(11		)	53
Tax expense	—			(16		)	—			(16		)
Other comprehensive income (loss) before reclassification adjustment, net of tax	(11		)	37			(11		)	37
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	16			18			32			28
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(4		)	(7		)	(8		)	(13		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges	16			—			25			—
Tax expense (benefit)	(3		)	8			(5		)	8
Reclassification adjustment into Operating earnings, net of tax	25			19			44			23
Other comprehensive income, net of tax	14			56			33			60
Balance at end of period	$	(1,790	)	$	(1,537	)	$	(1,790	)	$	(1,537	)
Total Accumulated other comprehensive loss	$	(2,199	)	$	(1,888	)	$	(2,199	)	$	(1,888	)

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3. Debt and Credit Facilities

On April 25, 2017, the Company entered into a $2.2 billion syndicated, unsecured revolving credit facility expiring April 2022, which can be used for borrowing and letters of credit (the "2017 Motorola Solutions Credit Agreement"). The 2017 Motorola Solutions Credit Agreement replaces the 2014 Motorola Solutions Credit Agreement.

The 2017 Motorola Solutions Credit Agreement has a $500 million letter of credit sub-limit with $450 million of fronting commitments. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate, at the Company's option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes.

Under the 2017 Motorola Solutions Credit Agreement, the Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2017 Motorola Solutions Credit Agreement. The Company was in compliance with it financial covenants as of July 1, 2017. The Company did not borrow or issue any letters of credit under the 2017 Motorola Solutions Credit Agreement during the three months ended July 1, 2017.

On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2% Senior Convertible Notes which mature in September 2020. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances including, for example, if the volume weighted average price of the Company's stock exceeds $85 for ten consecutive trading days, then up to 20% of the notes may be transferred, and then subsequently converted to shares of Company stock by such transferee. 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).  During the three months ended July 1, 2017, the volume weighted average price of the Company's stock exceeded $85 for ten consecutive trading days, making 20% of Senior Convertible Notes convertible. In the event of conversion, the notes may be settled in either cash or stock, at the Company's discretion. The Company intends to settle the principal amount of the Senior Convertible Notes in cash.

4. Risk Management

Foreign Currency Risk

As of July 1, 2017, the Company had outstanding foreign exchange contracts with notional amounts totaling $590 million, compared to $717 million outstanding at December 31, 2016. 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 1, 2017, and the corresponding positions as of December 31, 2016: 

	Notional Amount
Net Buy (Sell) by Currency	July 1, 2017			December 31, 2016
Euro	$	161		$	122
British Pound	149			246
Chinese Renminbi	(81		)	(108		)
Australian Dollar	(50		)	(51		)
Brazilian Real	(45		)	(56		)

During the six months endedJuly 1, 2017, the Company entered into forward contracts to sell £50 million, expiring in December 2017. The forward contracts have been designated as a net investment hedge which is in place to partially hedge the Company's British Pound foreign currency exposure on its net investment in Airwave Solutions Limited. The gains and losses on the Company's net investment in pound-denominated foreign operations, driven by changes in foreign exchange rates, are economically offset by movements in the fair values of the forward contracts designated as net investment hedges. Any changes in fair value of the net investment hedges are reflected as a component of Accumulated other comprehensive loss. As of July 1, 2017, the fair value of the derivative contract was $2 million.

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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 swaps liability was de minimus at both July 1, 2017 and December 31, 2016.

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 1, 2017, all of the counterparties have investment grade credit ratings. As of July 1, 2017, the Company had $6 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 1, 2017 and December 31, 2016:

	Fair Values of Derivative Instruments
	Assets			Liabilities
July 1, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	2	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	4	Accrued liabilities
Total derivatives	$	6		$	6

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2016	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	9	Other current assets	$	32	Accrued liabilities

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended					Six Months Ended					Balance Sheet Location
Derivatives Designated as Hedging Instruments	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Foreign exchange contracts	$	(2	)	$	—	$	(2	)	$	—	Other comprehensive income (loss)

The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended			Six Months Ended			Statements of Operations Location
Gain (loss) on Derivative Instruments	July 1, 2017	July 2, 2016		July 1, 2017	July 2, 2016
Foreign exchange contracts	18	(18	)	11	(30	)	Other income (expense)

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5. 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:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Net earnings before income taxes	$	205		$	167		$	324		$	189
Income tax expense	73			59			114			64
Effective tax rate	36		%	35		%	35		%	34		%

The Company recorded $73 million of net tax expense during the three months endedJuly 1, 2017, resulting in an effective tax rate of 36%, compared to $59 million of net tax expense during the three months endedJuly 2, 2016, resulting in an effective tax rate of 35%. The effective tax rate in the second quarter of 2017 was greater than the U.S. statutory tax rate of 35% partly due to change of estimates between provision and the filing of tax returns in foreign jurisdictions. The effective tax rate in the second quarter of 2016 was equal to the U.S. statutory tax rate of 35%.

The Company recorded $114 million of net tax expense during the six months endedJuly 1, 2017, resulting in an effective tax rate of 35%, compared to $64 million of net tax expense during the six months endedJuly 2, 2016, resulting in an effective tax rate of 34%. The effective tax rate in the first half of 2017 was equal to the U.S. statutory tax rate of 35%. The effective tax rate in 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.

6. 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:

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Three Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	1		$	2		$	—		$	—
Interest cost	46			46			10			14			1			1
Expected return on plan assets	(57		)	(55		)	(24		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	11			9			4			3			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(7		)
Settlement loss	—			—			16			—			—			—
Net periodic pension cost (benefit)	$	—		$	—		$	7		$	(5	)	$	(5	)	$	(7	)

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Six Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	2		$	4		$	—		$	—
Interest cost	92			91			20			28			2			2
Expected return on plan assets	(115		)	(110		)	(47		)	(48		)	(6		)	(5		)
Amortization of:
Unrecognized net loss	22			19			8			6			2			3
Unrecognized prior service benefit	—			—			—			—			(8		)	(13		)
Settlement loss	—			—			25			—			—			—
Net periodic cost (benefit)	$	(1	)	$	—		$	8		$	(10	)	$	(10	)	$	(13	)

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During the six months endedJuly 1, 2017, the Company offered lump-sum settlements to certain participants in the Non-US defined benefit plan within the United Kingdom. The lump-sum settlements were targeted to certain participants who had accrued a pension benefit, but had not yet started receiving pension benefit payments. As of June 30, 2017, the window for the participant registration in the program has closed. However, the Company expects to account for continuing settlements through the third quarter of 2017, as remaining lump-sum settlements are paid to participants. As a result of the actions taken through the first half of 2017, the Company recorded a settlement loss of $16 million and $25 million during the three and six months endedJuly 1, 2017, which is recorded within Other Charges within the condensed consolidated statement of operations.

During the six months endedJuly 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 five years, or the period in which the remaining employees eligible for the plan will qualify for benefits under the plan.

7. Share-Based Compensation Plans

Compensation expense for the Company’s share-based compensation plans was as follows: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Share-based compensation expense included in:
Costs of sales	$	2		$	2		$	4		$	4
Selling, general and administrative expenses	11			12			22			24
Research and development expenditures	3			4			7			7
Share-based compensation expense included in Operating earnings	16			18			33			35
Tax benefit	5			6			11			11
Share-based compensation expense, net of tax	$	11		$	12		$	22		$	24
Decrease in basic earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)
Decrease in diluted earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)

During the six months endedJuly 1, 2017, the Company granted 0.5 million RSUs and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $39 million and $6 million, respectively, and 0.3 million stock options and 0.6 million performance options ("POs") with an aggregate grant-date fair value of $5 million and $9 million, respectively. Share-based compensation expense will generally be recognized over the vesting period of three years.

8. 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.

17

The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of July 1, 2017 and December 31, 2016 were as follows: 

July 1, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	—	$	56	$	56
Corporate bonds	—		5		5
Common stock	12		—		12
Liabilities:
Foreign exchange derivative contracts	$	—	$	6	$	6

December 31, 2016	Level 2		Total
Assets:
Foreign exchange derivative contracts	$	9	$	9
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	51		51
Corporate bonds	5		5
Liabilities:
Foreign exchange derivative contracts	$	32	$	32

The Company had no Level 3 holdings as of July 1, 2017 or December 31, 2016.

At July 1, 2017 and December 31, 2016, the Company had $298 million and $309 million, respectively, of investments in money market prime and government funds (Level 1) 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 1, 2017 and December 31, 2016 was $4.6 billion and $4.5 billion (Level 2), respectively.

All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.

9. 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: 

	July 1, 2017			December 31, 2016
Long-term receivables	$	48		$	63
Less current portion	(13		)	(14		)
Non-current long-term receivables	$	35		$	49

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 $209 million at July 1, 2017, compared to $125 million at December 31, 2016. During the six months endedJuly 1, 2017, the Company agreed to provide long-term financing to one customer in the amount of $75 million.

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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 endedJuly 1, 2017 and July 2, 2016: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Accounts receivable sales proceeds	$	61	$	5	$	80	$	7
Long-term receivables sales proceeds	22		70		68		134
Total proceeds from receivable sales	$	83	$	75	$	148	$	141

At July 1, 2017, the Company had retained servicing obligations for $775 million of long-term receivables, compared to $774 million at December 31, 2016. 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 1, 2017 and December 31, 2016 is as follows: 

July 1, 2017	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	1	$	2
Commercial loans and leases secured	27		—		—
Long-term receivables, including current portion	$	48	$	1	$	2

December 31, 2016	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—
Commercial loans and leases secured	43		—		2
Long-term receivables, including current portion	$	63	$	—	$	2

10. 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 1, 2017.

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.

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11. 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 services 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: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Products	$	848	$	801	$	1,551	$	1,503
Services	649		629		1,226		1,120
	$	1,497	$	1,430	$	2,777	$	2,623

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Products	$	168		$	129		$	257		$	179
Services	89			95			176			144
Operating earnings	257			224			433			323
Total other expense	(52		)	(57		)	(109		)	(134		)
Earnings before income taxes	$	205		$	167		$	324		$	189

12. Reorganization of Business

2017 Charges

During the three months endedJuly 1, 2017, the Company recorded net reorganization of business charges of $3 million including $1 million of charges in Other charges and $2 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $3 million were charges of $8 million related to employee separation costs, partially offset by $5 million of reversals for accruals no longer needed.

During the six months endedJuly 1, 2017, the Company recorded net reorganization of business charges of $22 million including $16 million of charges in Other charges and $6 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $22 million were charges of $23 million for employee separation costs and $4 million for exit costs, partially offset by $5 million of reversals for accruals no longer needed.

20

The following table displays the net charges incurred by segment: 

July 1, 2017	Three Months Ended		Six Months Ended
Products	$	3	$	16
Services	—		6
	$	3	$	22

The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2017 to July 1, 2017:

	January 1, 2017		Additional Charges		Adjustments			Amount Used			July 1, 2017
Exit costs	$	7	$	4	$	—		$	(1	)	$	10
Employee separation costs	95		23		(5		)	(55		)	58
	$	102	$	27	$	(5	)	$	(56	)	$	68

Exit Costs

At January 1, 2017, the Company had $7 million of accruals for exit costs. During the six months endedJuly 1, 2017, there were $4 million of additional charges and $1 million of cash payments related to the exit of leased facilities. The remaining accrual of $10 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017, 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, 2017, the Company had an accrual of $95 million for employee separation costs. The 2017 additional charges of $23 million represent severance costs for approximately 300 employees. The adjustment of $5 million reflects reversals for accruals no longer needed. The $55 million used reflects cash payments to severed employees. The remaining accrual of $58 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017, is expected to be paid, primarily within one year, to approximately 500 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.

2016 Charges

During the three months endedJuly 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 endedJuly 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 related to 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: 

July 2, 2016	Three Months Ended		Six Months Ended
Products	$	33	$	54
Services	11		13
	$	44	$	67

13. Intangible Assets and Goodwill

The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company's condensed consolidated financial statements for the period subsequent to the date of acquisition.

Guardian Digital Communications Limited

On February 19, 2016, the Company completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited (collectively referred to as "Airwave"), the largest private operator of a public safety network in the world. All of the outstanding equity of Airwave was acquired for the sum of £1, after which the Company

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invested into Airwave £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 Airwave 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.

The acquisition of Airwave 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.

The total consideration for the acquisition of Airwave 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:

Cash	$	86
Accounts receivable, net	55
Other current assets	36
Property, plant and equipment, net	245
Deferred income taxes	82
Accounts payable	(18		)
Accrued liabilities	(181		)
Other liabilities	(289		)
Goodwill	191
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

Acquired intangible assets consist of $846 million of customer relationships and $29 million of trade names. All intangibles have a useful life of seven years, over which amortization expense will be recognized on a straight line basis. Acquired goodwill of $191 million 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.

Other Acquisitions

On July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1.

On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year.

On March 13, 2017, the Company completed the acquisition of Interexport, a company that provides Managed & Support services for communications systems to public safety and commercial customers in Chile, for a gross purchase price of $98 billion Chilean Pesos, or approximately $147 million U.S. Dollars based on cash proceeds of $55 million, net of cash acquired, and assumed liabilities of $92 million, primarily related to capital leases. As a result of the acquisition, the Company recognized $7 million of goodwill, $61 million of identifiable intangible assets, $70 million of acquired property, plant and equipment and $9 million of net other tangible assets. The estimated identifiable intangible assets were classified as $56 million of customer-related intangibles and $5 million of other intangibles and will be amortized over a period of seven years.

On November 10, 2016, the Company completed the acquisition of Spillman Technologies, Inc., a provider of comprehensive law enforcement and public safety software solutions, for a gross purchase price of $221 million. As a result of the acquisition, the Company recognized $144 million of goodwill, $115 million of identifiable intangible assets, and $38 million of acquired liabilities. The identifiable intangible assets were classified as $49 million of completed technology, $59 million of customer-related intangibles, and $7 million of other intangibles and will be amortized over a period of seven to ten years.

During the year ended December 31, 2016, the Company completed the acquisition of several software and service-based providers for a total of $30 million, recognizing $6 million of goodwill, $15 million of intangible assets, and $9 million of tangible net assets related to these acquisitions. Under the preliminary purchase accounting, the $15 million of identifiable intangible assets were classified as: (i) $7 million of completed technology and (ii) $8 million of customer-related intangibles and will be

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amortized over a period of five years. During the first quarter of 2017, the Company completed the purchase accounting and recorded an additional $11 million completed technology intangible asset that will be amortized over a period of eight years.

Intangible Assets

Amortized intangible assets were comprised of the following: 

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	128	$	46	$	116	$	38
Patents	8		7		8		6
Customer-related	918		167		810		101
Other intangibles	54		20		49		17
	$	1,108	$	240	$	983	$	162

Amortization expense on intangible assets was $37 million for the three months endedJuly 1, 2017 and $73 million for the six months endedJuly 1, 2017. Amortization expense on intangible assets was $38 million for the three months endedJuly 2, 2016 and $52 million for the six months endedJuly 2, 2016. The increase in amortization expense is primarily due to the acquisition of Airwave, Spillman Technologies, Inc. and Interexport. As of July 1, 2017, annual amortization expense is estimated to be $144 million in 2017, $148 million in 2018, $147 million in 2019, $144 million in 2020, $143 million in 2021, and $140 million in 2022.

Amortized intangible assets, excluding goodwill, were comprised of the following by segment:

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products	$	178	$	73	$	178	$	63
Services	930		167		805		99
	$	1,108	$	240	$	983	$	162

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2017 to July 1, 2017: 

	Products		Services		Total
Balance as of January 1, 2017
Goodwill, net of impairment losses	$	316	$	412	$	728
Goodwill acquired	—		7		7
Purchase accounting adjustments	1		3		4
Foreign currency	—		10		10
Balance as of July 1, 2017
Goodwill, net of impairment losses	$	317	$	432	$	749

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company,” “we,” “our,” or “us”) for the three and six months endedJuly 1, 2017 and July 2, 2016, as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2016.

Executive Overview

Our Business

We are a leading global provider of mission-critical communication infrastructure, devices, accessories, software, and services. Our products and services help government, public safety and commercial customers improve their operations through increased effectiveness, efficiency, and safety of their mobile workforces. We serve our customers with a global footprint of sales in more than 100 countries and 14,000 employees worldwide, based on our industry leading innovation and a deep portfolio of products and services.

We conduct our business globally and manage it by two segments:

Products: The Products segment is comprised of Devices and Systems. Devices includes two-way portable and vehicle mounted radios, accessories, and 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. In the second quarter of 2017, the segment’s net sales were $848 million, representing 57% of our consolidated net sales.

Services: The Services segment provides a full set of service offerings for government, public safety, and commercial communication networks including: (i) Integration services, (ii) Managed & Support services, and (iii) iDEN services. Integration services includes the implementation, optimization, and integration of systems, 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. In the second quarter of 2017, the segment’s net sales were $649 million, representing 43% of our consolidated net sales.

Trends Affecting Our Business

Impact of Macroeconomic Conditions:The stronger U.S. dollar and weakening economic conditions had a negative impact on sales throughout 2015 and 2016, particularly in Latin America, parts of Europe, and China. During that time, the strengthening dollar reduced the purchasing power of our customers, and economic challenges negatively impacted government and commercial budgets in these regions. While economic conditions in parts of the world are stabilizing in 2017 in contrast to the prior year, we expect continued political and economic uncertainty, in particular with the United Kingdom’s planned exit from the European Union (commonly referred to as “Brexit”), and in parts of Latin America and Europe.

Focus on Managed & Support Services and Software:Services continues to grow at a faster rate than the Products segment, driven by acquisitions and core growth in Managed & Support services. While Services generally experiences lower gross margins than our Products segment, we expect revenue growth will continue to drive operating margin expansion. During the six months endedJuly 1, 2017, we experienced revenue growth of 9% with higher operating margins in our Services segment.

In addition, we continue to invest in software through internal development and strategic acquisitions, as our customers increasingly demand expanded technology solutions that are delivered via software and related services. This includes mobile applications and software in the Command Center that provide enhanced capabilities such as analytics and predictive intelligence. In some cases, government funding or mandates help drive this software expansion such as Next Generation 9-1-1 funding in the United States, and Public Safety LTE investment in the United States, United Kingdom, and other countries. This evolving trend provides a growth opportunity for us.

Recent Developments

On July 28, 2017, we announced our intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand our software portfolio in the Command Center with additional solutions for Next Gen 9-1-1.

On May 1, 2017, we announced our intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects our strategy to build our communications and collaboration software portfolio. The acquisition is expected to be completed later this year.

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Second Quarter Summary

• Net sales were $1.5 billion in the second quarter of 2017, up$67 million, or 5%, from the second quarter of 2016.

• We generated operating earnings of $257 million, or 17% of net sales, in the second quarter of 2017, compared to $224 million, or 16% of net sales, in the second quarter of 2016. Profitability increased as a result of higher revenue in both the Products and Services segments and lower Other charges.

• We had net earnings attributable to Motorola Solutions, Inc. of $131 million, or $0.78 per diluted common share, in the second quarter of 2017, compared to $107 million, or $0.61 per diluted common share, in the second quarter of 2016.

• We generated net cash from operating activities of $315 million during the first half of 2017, compared to $304 million in the first half of 2016.

• We returned $412 million in capital to shareholders through dividends and share repurchases during the first half of 2017.

A summary of our segment results is as follows:

• Products: Net sales were $848 million in the second quarter of 2017, an increase of $47 million, or 6% compared to net sales of $801 million during the second quarter of 2016. On a geographic basis, net sales increased in every region, compared to the year-ago quarter.

• Services: Net sales were $649 million in the second quarter of 2017, an increase of $20 million, or 3% compared to net sales of $629 million in the second quarter of 2016. On a geographic basis, net sales increased in the Americas and decreased in EMEA and AP, compared to the year-ago quarter.

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Results of Operations

	Three Months Ended										Six Months Ended
(Dollars in millions, except per share amounts)	July 1, 2017			% of Sales*		July 2, 2016			% of Sales*		July 1, 2017			% of Sales*		July 2, 2016			% of Sales*
Net sales from products	$	848				$	801				$	1,551				$	1,503
Net sales from services	649					629					1,226					1,120
Net sales	1,497					1,430					2,777					2,623
Costs of products sales	392			46.2	%	361			45.1	%	739			47.6	%	726			48.3	%
Costs of services sales	415			63.9	%	393			62.5	%	778			63.5	%	718			64.1	%
Costs of sales	807					754					1,517					1,444
Gross margin	690			46.1	%	676			47.3	%	1,260			45.4	%	1,179			44.9	%
Selling, general and administrative expenses	242			16.2	%	240			16.8	%	475			17.1	%	475			18.1	%
Research and development expenditures	138			9.2	%	138			9.7	%	273			9.8	%	274			10.4	%
Other charges	53			3.5	%	74			5.2	%	79			2.8	%	107			4.1	%
Operating earnings	257			17.2	%	224			15.7	%	433			15.6	%	323			12.3	%
Other income (expense):
Interest expense, net	(51		)	(3.4	)%	(54		)	(3.8	)%	(102		)	(3.7	)%	(103		)	(3.9	)%
Gains (losses) on sales of investments and businesses, net	(1		)	(0.1	)%	1			0.1	%	2			0.1	%	(20		)	(0.8	)%
Other	—			—	%	(4		)	(0.3	)%	(9		)	(0.3	)%	(11		)	(0.4	)%
Total other expense	(52		)	(3.5	)%	(57		)	(4.0	)%	(109		)	(3.9	)%	(134		)	(5.1	)%
Earnings before income taxes	205			13.7	%	167			11.7	%	324			11.7	%	189			7.2	%
Income tax expense	73			4.9	%	59			4.1	%	114			4.1	%	64			2.4	%
Net earnings	132			8.8	%	108			7.6	%	210			7.6	%	125			4.8	%
Less: Earnings attributable to noncontrolling interests	1			0.1	%	1			0.1	%	2			0.1	%	1			—	%
Net earnings attributable to Motorola Solutions, Inc.	$	131		8.8	%	$	107		7.5	%	$	208		7.5	%	$	124		4.7	%
Earnings per diluted common share	$	0.78				$	0.61				$	1.23				$	0.71

* Percentages may not add due to rounding

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Results of Operations—Three months endedJuly 1, 2017 compared to three months endedJuly 2, 2016

The results of operations for the second quarter of 2017 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.

Net Sales

Net sales were $1.5 billion in the second quarter of 2017, a $67 million, or 5%, increase compared to the second quarter of 2016, reflecting solid demand across the globe for our core products and services. The increase in net sales is reflective of growth in the Americas and AP, partially offset by a decrease in EMEA. Systems and Devices sales within the Products segment both increased in each region. The Services segment increased in the Americas, partially offset by decreases in EMEA and AP. The Services segment net sales increase in the Americas was driven by the acquisition of Interexport and Spillman Technologies, Inc. and core growth in both Managed & Support services and Integration services. The Services segment net sales decrease in EMEA was due to a decrease in Airwave related to unfavorable foreign exchange rates in the second quarter of 2017, partially offset by core growth in Integration services. The Services segment net sales decrease in AP was due to lower Integration sales.

Gross Margin

Gross margin was $690 million, or 46.1% of net sales, in the second quarter of 2017, compared to $676 million, or 47.3% of net sales, in the second quarter of 2016. The decrease in gross margin percentage was driven by a decrease in margins within both the Products and Services segments. The decrease in gross margin percentage in the Products segment was driven by product mix primarily in North America, with higher Systems sales in the quarter which have lower gross margins than Devices. The decrease in gross margin percentage in the Services segment was driven by Airwave due to unfavorable foreign exchange rates in the second quarter of 2017.

Selling, General and Administrative Expenses

SG&A expenses increased1% to $242 million, or 16.2% of net sales, in the second quarter of 2017, compared to $240 million, or 16.8% of net sales, in the second quarter of 2016. The increase in SG&A expenditures is primarily due to increased expenses associated with acquisitions.

Research and Development Expenditures

R&D expenditures were $138 million, or 9.2% of net sales, in the second quarter of 2017 and $138 million, or 9.7% of net sales, in the second quarter of 2016. R&D expenditures have remained flat, or decreased as a percentage of sales, due to ongoing leverage of employees located in lower cost areas, combined with growth in net sales.

Other Charges

We recorded net charges of $53 million in the second quarter of 2017, compared to net charges of $74 million in the second quarter of 2016. The net Other charges in the second quarter of 2017 included: (i) $37 million of charges relating to the amortization of intangibles, (ii) $16 million of charges relating to the Non-U.S. pension settlement loss, and (iii) $1 million of net reorganization of business charges, partially offset by a $1 million gain on a legal settlement. The net charges in the second quarter of 2016 of $74 million included: (i) $38 million of charges relating to the amortization of intangibles, and (ii) $36 million of net reorganization of business charges, including a $17 million building impairment. The net reorganization of business charges are discussed in further detail in the Reorganization of Businesses section.

Net Interest Expense

Net interest expense was $51 million in the second quarter of 2017 and $54 million in the second quarter of 2016. The decrease in net interest expense in the second quarter of 2017 as compared to the second quarter of 2016 was a result of lower outstanding debt, due to the repayment of $675 million of a term loan at the end of 2016.

Gains (losses) on Sales of Investments and Businesses, net

Net loss on sales of investments and businesses was $1 million in the second quarter of 2017 compared to a gain of $1 million in the second quarter of 2016. The net loss in the second quarter of 2017 was related to the sale of a business. The net gains in the second quarter of 2016 were related to sales of equity investments.

Other

Net Other expense was de minimus in the second quarter of 2017, compared to $4 million in the second quarter of 2016. The net other expense in the second quarter of 2017 was comprised of: a $20 million foreign currency loss, offset by: (i) a $18 million gain on derivative instruments, (ii) a $1 million gain on equity method investments, and (iii) $1 million of other non-operating income. The net Other expense in the second quarter of 2016 was comprised of an $18 millionloss on derivative instruments offset by a $14 million foreign currency gain.

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Effective Tax Rate

We recorded $73 million of net tax expense in the second quarter of 2017, resulting in an effective tax rate of 36%, compared to $59 million of net tax expense in the second quarter of 2016, resulting in an effective tax rate of 35%. Our effective tax rate in the second quarter of 2017 was greater than the U.S. statutory tax rate of 35% partly due to change of estimates between provision and the filing of tax returns in foreign jurisdictions. Our effective tax rate in the second quarter of 2016 was equal to the U.S. statutory tax rate of 35%.

Net Earnings Attributable to Motorola Solutions, Inc.

After taxes, we had net earnings attributable to Motorola Solutions, Inc. of $131 million, or $0.78 per diluted share, in the second quarter of 2017, compared to net earnings attributable to Motorola Solutions, Inc. of $107 million, or $0.61 per diluted share, in the second quarter of 2016.

The increase in net earnings in the second quarter of 2017, as compared to the second quarter of 2016, was primarily driven by an increase in sales in both the Products and Services segments and lower Other charges. The increase in net earnings per diluted share was driven by an increase in net earnings and lower shares outstanding as a result of repurchases made through our ongoing share repurchase program.

Results of Operations—Six months endedJuly 1, 2017 compared to six months endedJuly 2, 2016

Net Sales

Net sales were $2.8 billion in the first half of 2017, a $154 million, or 6%, increase compared to the first half of 2016. The increase in net sales is reflective of growth in every region. Within the Products segment, Devices net sales increased in each region while Systems net sales increased in the Americas and EMEA. The Services segment increased in the Americas and EMEA, partially offset by a decrease in AP. The Services segment net sales increase in the Americas was driven by the acquisition of Interexport and Spillman Technologies, Inc. and core growth in both Managed & Support services and Integration services. The Services segment net sales increase in EMEA was driven by Airwave and core growth in Integration services. The Services segment net sales decrease in AP was due to lower Integration sales.

Gross Margin

Gross margin was $1.3 billion, or 45.4% of net sales, in the first half of 2017, compared to $1.2 billion, or 44.9% of net sales, in the first half of 2016. The increase in gross margin percentage was driven by an increase in margins within both the Products and Services segments. The increase in gross margin percentage in the Products segment was driven by a favorable mix. The increase in gross margin percentage in the Services segment was driven by the expansion of our Managed & Support services portfolio, primarily due to the acquisition of Airwave, which historically has had higher margins than our legacy portfolio.

Selling, General and Administrative Expenses

SG&A expenses were $475 million, or 17.1% of net sales, in the first half of 2017, compared to $475 million, or 18.1% of net sales, in the first half of 2016. SG&A expenditures were flat, or decreased as percentage of sales, due to higher sales, offset by increased expenses associated with acquisitions.

Research and Development Expenditures

R&D expenditures were $273 million, or 9.8% of net sales, in the first half of 2017 and $274 million, or 10.4% of net sales, in the first half of 2016. R&D expenditures decreased as a percentage of sales, due to ongoing leverage of employees located in lower cost areas, combined with growth in net sales.

Other Charges

We recorded net charges of $79 million in the first half of 2017, compared to net charges of $107 million in the first half of 2016. The net Other charges in the first half of 2017 included: (i) $73 million of charges relating to the amortization of intangibles, (ii) $25 million of charges relating to the Non-U.S. pension settlement loss, (iii) $16 million of net reorganization of business charges, (iv) $8 million of charges related a building impairment, and (v) $1 million of transaction fees on the acquisition of Interexport, partially offset by a net gain of $44 million, related to legal settlements, including the $42 million legal settlement related to the recovery, through legal procedures to seize and liquidate assets, of financial receivables owed to us by a former customer of our legacy Networks business. The net charges in the first half of 2016 of $107 million included: (i) $52 million of charges relating to the amortization of intangibles, (ii) $42 million of net reorganization of business charges, including a $17 million building impairment and a $3 million impairment of the corporate aircraft, and (iii) $13 million of transaction fees on the acquisition of Airwave. The net reorganization of business charges are discussed in further detail in the Reorganization of Businesses section.

Net Interest Expense

Net interest expense was $102 million in the first half of 2017 and $103 million in the first half of 2016. The decrease in net interest expense in the first half of 2017 as compared to the first half of 2016 was a result of lower outstanding debt, due to the repayment of $675 million of a term loan at the end of 2016.

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Gains (losses) on Sales of Investments and Businesses, net

Net gains on sales of investments and businesses were $2 million in the first half of 2017 compared to net losses of $20 million in the first half of 2016. The net gains in the first half of 2017 were primarily related to the sales of various equity investments. The net losses in the first half of 2016 consisted of: (i) a $19 million loss on the sale of an investment in United Kingdom treasury securities, (ii) a $7 million loss from the sale of our Malaysia manufacturing operations, partially offset by $6 million of gains on the sale of an equity investment.

Other

Net Other expense was $9 million in the first half of 2017, compared to $11 million in the first half of 2016. The net Other expense in the first half of 2017 was comprised of a $22 million foreign currency loss offset by a $11 milliongain on derivative investments and $2 million of other non-operating income. The net Other expense in the first half of 2016 was comprised of: (i) a $30 millionloss on derivative instruments, (ii) a $10 million foreign currency loss on currency purchased and held in anticipation of the acquisition of Airwave, partially offset by: (i) a $27 million foreign currency gain and (ii) a $2 million gain on equity method investments.

Effective Tax Rate

We recorded $114 million of net tax expense in the first half of 2017, resulting in an effective tax rate of 35%, compared to $64 million of net tax expense in the first half of 2016, resulting in an effective tax rate of 34%. Our effective tax rate in the first half of 2017 was equal to the U.S. statutory tax rate of 35%. Our effective tax rate in the first half of 2016 was lower than the U.S. statutory tax rate of 35% primarily due to the recognition of excess tax benefits on share-based compensation.

Net Earnings Attributable to Motorola Solutions, Inc.

After taxes, we had net earnings attributable to Motorola Solutions, Inc. of $208 million, or $1.23 per diluted share, in the first half of 2017, compared to net earnings attributable to Motorola Solutions, Inc. of $124 million, or $0.71 per diluted share, in the first half of 2016.

The increase in net earnings in the first half of 2017, as compared to the first half of 2016, was primarily driven by an increase in sales in both the Products and Services segments and lower Other charges. The increase in net earnings per diluted share was driven by an increase in net earnings and lower shares outstanding as a result of repurchases made through our ongoing share repurchase program.

Segment Information

The following commentary should be read in conjunction with the financial results of each reporting segment for the three and six months endedJuly 1, 2017 and July 2, 2016, as detailed in Note 11, “Segment Information,” of our condensed consolidated financial statements.

Products Segment

For the second quarter of 2017, the segment’s net sales represented 57% of our consolidated net sales, compared to 56% of our consolidated net sales for the second quarter of 2016. For the first half of 2017, the segment’s net sales represented 56% of our consolidated net sales, compared to 57% of our consolidated net sales for the first half of 2016.

	Three Months Ended						Six Months Ended
	July 1, 2017		July 2, 2016		% Change		July 1, 2017		July 2, 2016		% Change
Segment net sales	$	848	$	801	6	%	$	1,551	$	1,503	3	%
Operating earnings	168		129		30	%	257		179		44	%

Three months endedJuly 1, 2017 compared to three months endedJuly 2, 2016

The segment’s net sales increased$47 million, to $848 million in the second quarter of 2017, as compared to $801 million during the second quarter of 2016. The increase in the segment's net sales was driven by an increase in both Systems and Devices sales in all regions.

Net sales in the Americas continued to comprise a significant portion of the segment’s business, accounting for approximately 73% of the segment’s net sales in the second quarter of 2017 and 74% in the second quarter of 2016.

The segment had operating earnings of $168 million in the second quarter of 2017, compared to $129 million in the second quarter of 2016. The increase in operating earnings was primarily driven by: (i) higher sales, (ii) lower R&D expenditures, and (iii) lower Other charges.

Six months endedJuly 1, 2017 compared to six months endedJuly 2, 2016

The segment’s net sales increased$48 million, to $1.6 billion in the first half of 2017, as compared to $1.5 billion during the first half of 2016. The increase in the segment's net sales was primarily driven by an increase in Devices sales in all regions. On a geographic basis, net sales increased in all regions for the first half of 2017, compared to the first half of 2016.

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Net sales in the Americas continued to comprise a significant portion of the segment’s business, accounting for approximately 74% of the segment’s net sales in the first half of 2017 and 75% in the first half of 2016.

The segment had operating earnings of $257 million in the first half of 2017, compared to $179 million in the first half of 2016. The increase in operating earnings was primarily driven by: (i) higher gross margin due to product mix, (ii) lower SG&A and R&D expenditures, and (iii) lower Other charges.

Services Segment

For the second quarter of 2017, the segment’s net sales represented 43% of our consolidated net sales, compared to 44% of our consolidated net sales for the second quarter of 2016. For the first half of 2017, the segment’s net sales represented 44% of our consolidated net sales, compared to 43% of our consolidated net sales for the first half of 2016.

	Three Months Ended						Six Months Ended
	July 1, 2017		July 2, 2016		% Change		July 1, 2017		July 2, 2016		% Change
Segment net sales	$	649	$	629	3	%	$	1,226	$	1,120	9	%
Operating earnings	89		95		(6	)%	176		144		22	%

Three months endedJuly 1, 2017 compared to three months endedJuly 2, 2016

The segment’s net sales increased$20 million, or 3%, to $649 million in the second quarter of 2017, as compared to $629 million in the second quarter of 2016. The increase in the segment's net sales was driven by the Interexport and Spillman Technologies, Inc. acquisitions as well as core growth in Managed & Support services and Integration services. The acquisition of Interexport and Spillman Technologies, Inc. provided increases within the Americas, compared to the first quarter of 2016, while the core Managed & Support services business grew in the Americas and the core Integration services grew in both the Americas and EMEA. On a geographic basis, net sales for the second quarter of 2017 increased in the Americas and decreased in EMEA and AP, compared to the second quarter of 2016. The decrease in EMEA was due to a decrease in Airwave related to unfavorable foreign exchange rates during the quarter. The decrease in AP was due to lower sales in Integration services.

Net sales in the Americas continued to comprise a significant portion of the segment’s business, accounting for approximately 58% of the segment’s net sales in the second quarter of 2017, compared to 54% of the segment’s net sales in the second quarter of 2016.

The segment had operating earnings of $89 million in the second quarter of 2017, compared to $95 million in the second quarter of 2016. The decrease in operating earnings in the second quarter of 2017 compared to the second quarter of 2016 was primarily driven by lower gross margin associated with unfavorable exchange rates related to Airwave and higher SG&A and R&D expenditures, partially offset by a decrease in Other charges.

Six months endedJuly 1, 2017 compared to six months endedJuly 2, 2016

The segment’s net sales increased$106 million, or 9%, to $1.2 billion in the first half of 2017, as compared to $1.1 billion in the first half of 2016. The increase in the segment's net sales was primarily driven by higher Managed & Support services sales from the Airwave, Interexport, and Spillman Technologies, Inc. acquisitions, as well as core growth. The acquisition of Airwave provided an increase of net sales within EMEA, compared to the first half of 2016, while the acquisitions of Interexport and Spillman Technologies, Inc. and the core Managed & Support services business increased in the Americas. On a geographic basis, net sales for the first half of 2017 increased in the Americas and EMEA and decreased in AP, compared to the first half of 2016.

Net sales in the Americas continued to comprise a significant portion of the segment’s business, accounting for approximately 58% of the segment’s net sales in both the first half of 2017 and 2016.

The segment had operating earnings of $176 million in the first half of 2017, compared to $144 million in the first half of 2016. The increase in operating earnings in the first half of 2017 compared to the first half of 2016 was primarily driven by higher gross margin, partially offset by an increase in SG&A and R&D expenditures.

Reorganization of Business

During the second quarter of 2017, we recorded net reorganization of business charges of $3 million including $1 million of charges recorded within Other charges and $2 million in Cost of sales in our condensed consolidated statements of operations. Included in the $3 million were charges of $8 million related to employee separation costs, partially offset by $5 million of reversals for accruals no longer needed.

During the first half of 2017, we recorded net reorganization of business charges of $22 million including $16 million of charges recorded within Other charges and $6 million in Cost of sales in our condensed consolidated statements of operations. Included in the $22 million were charges of $23 million related to employee separation costs and $4 million for exit costs, partially offset by $5 million of reversals for accruals no longer needed.

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During the second quarter of 2016, we recorded net reorganization of business charges of $44 million including $36 million of charges recorded within Other charges and $8 million in Cost of sales in our condensed consolidated statements of operations. Included in the $44 million were charges of: (i) $22 million related to employee separation costs, (ii) a $17 million charge related to a building impairment, and (iii) $5 million for exit costs.

During the first half of 2016, we implemented various productivity improvement plans aimed at continuing operating margin improvements by driving efficiencies and reducing operating costs. During the first half of 2016, we recorded net reorganization of business charges of $67 million including charges of $42 million recorded in Other charges and $25 million in Cost of sales in our condensed consolidated statements of operations. Included in the $67 million were charges of: (i) $46 million related to employee separation costs, (ii) $20 million for impairments, including $17 million for a building impairment and $3 million for the impairment of 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 business segment:

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Products	$	3	$	33	$	16	$	54
Services	—		11		6		13
	$	3	$	44	$	22	$	67

Cash payments for employee severance and exit costs in connection with the reorganization of business plans were $56 million in the first half of 2017 and $42 million in the first half of 2016. The reorganization of business accruals at July 1, 2017 were $68 million, of which $58 million relate to employee separation costs that are expected to be paid within one year and $10 million of accruals related primarily to lease termination obligations that are expected to be paid over a number of years.

Liquidity and Capital Resources

We decreased the aggregate of our cash and cash equivalent balances by $225 million from $1.0 billion as of December 31, 2016 to $805 million as of July 1, 2017. The decrease is primarily due to: (i) $412 million of capital returned to shareholders through share repurchases and dividends paid and (ii) $189 million used for investing activities, offset by $315 million of cash generated by operating activities.

As highlighted in the condensed consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: (i) cash and cash equivalents, (ii) operating activities, (iii) investing activities, and (iv) financing activities.

Cash and Cash Equivalents

At July 1, 2017, $368 million of the $805 million cash and cash equivalents balance was held in the U.S. and approximately $437 million was held by us or our subsidiaries in other countries, with approximately $142 million held in the United Kingdom. Restricted cash was $63 million at both July 1, 2017 and December 31, 2016.

Operating Activities

Net cash provided by operating activities in the first half of 2017 was $315 million, as compared to $304 million in the first half of 2016. Operating cash flows in the first half of 2017, as compared to the first half of 2016, were positively impacted by higher earnings, offset by a temporary increase in working capital as a result of managing our Enterprise Resource Planning ("ERP") system implementation.

Investing Activities

Net cash used by investing activities was $189 million in the first half of 2017, compared to $664 million in the first half of 2016. The $189 million cash used in the first half of 2017 included: (i) $140 million cash used for acquisitions and investments, including the acquisition of Interexport for $55 million, net of cash acquired and (ii) $121 million in capital expenditures, partially offset by $72 million of proceeds from sales of investments and businesses. The cash usage of $664 million in the first half of 2016 consisted primarily of: (i) $1.1 billion cash used for acquisitions and investments, including $1.0 billion paid for the acquisition of Airwave, and (ii) $143 million in capital expenditures, partially offset by $553 million of proceeds from the sale of investments and businesses and $46 million of proceeds from the sale of property, plant and equipment.

Acquisition and Investments: We used net cash for acquisitions and investments of $140 million during the first half of 2017 compared to $1.1 billion in the first half of 2016. The cash used during the first half of 2017 was used for several debt and equity investments, and the acquisition of Interexport for $55 million, net of cash acquired. The cash used during the first half of 2016 consisted primarily of $1.0 billion related to the acquisition of Airwave. The remainder of the cash was used for several debt and equity investments.

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Sales of Investments and Businesses: We received $72 million of proceeds related to the sales of investments and businesses in the first half of 2017 compared to $553 million in the first half of 2016. The proceeds in the first half of 2017 primarily consisted of the sales of various debt and equity investments.The proceeds in the first half of 2016 were comprised of: (i) $382 million from the sale of United Kingdom treasury securities used to finance the acquisition of Airwave, (ii) $125 million from the sales of various debt and equity securities, and (iii) $46 million from the sale of our Penang, Malaysia facility and manufacturing operations.

Capital Expenditures: Capital expenditures decreased in the first half of 2017 to $121 million, compared to $143 million in the first half of 2016. The decrease in capital expenditures was primarily related to lower facilities spend and lower revenue-generating network expenditures, partially offset by an increase in information technology spend.

Sales of Property, Plant, and Equipment: We had $46 million of proceeds related to the sale of property, plant, and equipment in the first half of 2016. The proceeds in the first half of 2016 were comprised of $27 million from the sale of buildings and land on our Schaumburg, IL campus and $19 million received from the sale of corporate aircraft.

Financing Activities

Net cash used for financing activities was $385 million in the first half of 2017, compared to $51 million used in the first half of 2016. Cash used for financing activities in the first half of 2017 was primarily comprised of: (i) $258 million used for purchases of our common stock under our share repurchase program and (ii) $154 million of cash used for the payment of dividends, partially offset by $28 million of net proceeds from the issuance of common stock in connection with our employee stock option plans and employee stock purchase plan. Net cash used for financing activities in the first half of 2016 was primarily comprised of: (i) $619 million used for purchases of our common stock under our share repurchase program and (ii) $143 million of cash used for the payment of dividends, partially offset by: (i) $673 million of net proceeds from the issuance of a term loan and (ii) $40 million of net proceeds from the issuance of common stock in connection with our employee stock option plans and employee stock purchase plan.

Long-Term Debt: We had outstanding long-term debt of $4.5 billion and $4.4 billion, including the current portions of $46 million and $4 million at July 1, 2017 and December 31, 2016, respectively. In the acquisition of Interexport, we assumed $92 million of debt, including a current portion of $40 million, primarily related to capital leases.

On August 25, 2015, we entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2% Senior Convertible Notes which mature in September 2020. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances including, for example, if the volume weighted average price of our stock exceeds $85 for ten consecutive trading days, then up to 20% of the notes may be transferred, and then subsequently converted to shares of our stock by such transferee. 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). During the three months ended July 1, 2017, the volume weighted average price of our stock exceeded $85 for ten consecutive trading days, making 20% of Senior Convertible Notes convertible. In the event of conversion, the notes may be settled in either cash or stock, at our discretion. We intend to settle the principal amount of the Senior Convertible Notes in cash.

We have investment grade ratings on our senior unsecured long-term debt from the three largest U.S. national rating agencies. We continue to believe that we will be able to maintain sufficient access to the capital markets. Any future disruptions, uncertainty, or volatility in the capital markets or deterioration in our credit ratings may result in higher funding costs for us and adversely affect our ability to access funds.

Share Repurchase Program: During the six months endedJuly 1, 2017, we paid an aggregate of $258 million, including transaction costs, to repurchase approximately 3.2 million shares at an average price of $81.66 per share. As of July 1, 2017, the Company had used approximately $12.1 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.9 billion of authority available for future repurchases.

Payment of Dividends: During the second quarter of 2017, we paid $77 million in cash dividends to holders of our common stock. During the first half of 2017, we paid $154 million in cash dividends to holders of our common stock. Subsequent to quarter end, we paid an additional $76 million in cash dividends to holders of our common stock.

Credit Facilities

As of July 1, 2017, we had a $2.2 billion unsecured syndicated revolving credit facility, which includes a $500 million letter of credit sub-limit with $450 million of fronting commitments, (the “2017 Motorola Solutions Credit Agreement”) scheduled to mature on April 25, 2022. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate, at our option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if our credit rating changes. We must comply with certain customary covenants, including maximum leverage ratio as defined in the 2017 Motorola Solutions Credit Agreement. We were in compliance with our financial covenants as of July 1, 2017. We did not borrow or issue any letters of credit under the 2017 Motorola Solutions Credit Agreement during the first half of 2017.

Long-Term Customer Financing Commitments

Outstanding Commitments:We had outstanding commitments to provide long-term financing to third parties totaling $209 million at July 1, 2017, compared to $125 million at December 31, 2016. During the six months endedJuly 1, 2017, we agreed to provide long-term financing to one customer in the amount of $75 million.

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Outstanding Long-Term Receivables:We had non-current long-term receivables of $35 million at July 1, 2017, compared to $49 million at December 31, 2016.

Sales of Receivables

The following table summarizes the proceeds received from sales of accounts receivable and long-term customer financing receivables for the three and six months endedJuly 1, 2017 and July 2, 2016: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Accounts receivable sales proceeds	$	61	$	5	$	80	$	7
Long-term receivables sales proceeds	22		70		68		134
Total proceeds from sales of accounts receivable	$	83	$	75	$	148	$	141

At July 1, 2017, the Company had retained servicing obligations for $775 million of long-term receivables, compared to $774 million at December 31, 2016. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables.

Other Contingencies

Potential Contractual Damage Claims in Excess of Underlying Contract Value: In certain circumstances, we may enter into contracts with customers pursuant to which the damages that could be claimed by the other party for failed performance might exceed the revenue we receive from the contract. Contracts with these types of uncapped damage provisions are fairly rare, but individual contracts could still represent meaningful risk. There is a possibility that a damage claim by a counterparty to one of these contracts could result in expenses to us that are far in excess of the revenue received from the counterparty in connection with the contract.

Indemnification Provisions:We are a party to a variety of agreements pursuant to which we are obligated to indemnify the other party with respect to certain matters. In indemnification cases, payment by us is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow us to challenge the other party's claims. In some instances, we may have recourse against third parties for certain payments made by us.

Some of these obligations arise as a result of divestitures of our assets or businesses and require us 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. Our obligations under divestiture agreements for indemnification based on breaches of representations and warranties are generally limited in terms of duration, and for amounts for breaches of such representations and warranties in connection with prior divestitures not in excess of a percentage of the contract value. We had no accruals for any such obligations at July 1, 2017.

Legal Matters:We are 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 our condensed consolidated financial position, liquidity, or results of operations. However, an unfavorable resolution could have a material adverse effect on our 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.

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 the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity 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 our annual reporting period begins after December 15, 2017.

We continue to analyze the impact of the new standard on our financial results based on an inventory of our current contracts with customers. We have obtained an understanding of the new standard and currently believe that we will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of our contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method.

Under the new standard, we must identify the distinct promises to transfer goods and/or services within our contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, we have considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact our percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather

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than over time. For the remaining promised goods and services within our percentage of completion contracts, we will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in our contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services.

In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While we may have contracts which fall under these rules in the current standard, we have not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, we do not anticipate a significant acceleration of revenue upon applying the new standard to our current contracts under these fact patterns.

We continue to evaluate the impact of ASU No. 2014-09 on our financial results and prepare for the adoption of the standard on January 1, 2018, including readying our internal processes and control environment for new requirements, particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. We expect to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements.

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 our January 1, 2019 and interim periods within that reporting period. The ASU prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. We are in the process of assessing the impact of this ASU on our consolidated financial statements and footnote disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for us January 1, 2018 with early adoption permitted. We intend to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, we do not anticipate significant changes to our existing accounting policies or presentation of the Statement of Cash Flows.

In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for us on January 1, 2018 and interim periods within that reporting period; early adoption permitted. We intend to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. We are currently assessing the impact of this ASU on our consolidated financial statements and footnote disclosures.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for us January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. We do not anticipate significant changes to our financial statements and related disclosures from adoption of the ASU.

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for us on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. We intend to adopt this ASU on January 1, 2018. Upon adoption, we plan to update the presentation of net periodic cost (benefit) accordingly, noting all components of our net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Derivative Financial Instruments

As of July 1, 2017, we had outstanding foreign exchange contracts with notional amounts totaling $590 million, compared to $717 million outstanding as of December 31, 2016. Management believes that these financial instruments should not subject us 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 1, 2017, and the corresponding positions as of December 31, 2016: 

	Notional Amount
Net Buy (Sell) by Currency	July 1, 2017			December 31, 2016
Euro	$	161		$	122
British Pound	149			246
Chinese Renminbi	(81		)	(108		)
Australian Dollar	(50		)	(51		)
Brazilian Real	(45		)	(56		)

Forward-Looking Statements

Except for historical matters, the matters discussed in this Form 10-Q are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “aims,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Forward-looking statements include, but are not limited to, statements included in: (1) “Management's Discussion and Analysis,” about: (a) trends affecting our business, including: (i) the impact of global economic and political conditions (ii) the impact of acquisitions on our business, (iii) the impact of cost savings initiatives on operating expenses, (iv) the growth of our Services segment and the resulting impact on operating margin, (v) the focus on Managed & Support Services and Software and our expected growth opportunities, (b) our business strategies and expected results, (c) future payments, charges, use of accruals and expected cost-saving benefits associated with our productivity improvement plans, reorganization of business programs, and employee separation costs, (d) our ability and cost to repatriate funds, (e) our ability to settle the principal amount of the Senior Convertible Notes in cash, (f) our ability and cost to access the capital markets at our current ratings, (g) our ability to borrow and the amount available under our credit facilities, (h) our plans with respect to the level of outstanding debt, (i) the return of capital to shareholders through dividends and/or repurchasing shares, (j) the adequacy of our cash balances to meet current operating requirements, (k) potential contractual damages claims, and (l) the outcome and effect of ongoing and future legal proceedings, (2) “Quantitative and Qualitative Disclosures about Market Risk,” about the impact of foreign currency exchange risks, (3) “Legal Proceedings,” about the ultimate disposition of pending legal matters, and (4) "Controls and Procedures," about the implementation of our enterprise resource planning systems. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

Some of the risk factors that affect our business and financial results are discussed within this document and in Part I, “Item 1A: Risk Factors” on pages 9 through 21 of our 2016 Annual Report on Form 10-K and in our other SEC filings available for free on the SEC's website at www.sec.gov and on Motorola Solutions' website at www.motorolasolutions.com. We wish to caution the reader that the risk factors discussed in each of these documents and those described in our other Securities and Exchange Commission filings, could cause our actual results to differ materially from those stated in the forward-looking statements.

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Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to Motorola Solutions, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Motorola Solutions’ management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended July 1, 2017, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, other than the implementation of our new ERP system.

We are in the process of a multi-year phased upgrade and consolidation of our ERP systems into a single global platform across our businesses. In April 2017, we implemented our new ERP system which is functioning as designed and continuing to support our business. Our new ERP system includes the replacement of regional systems supporting our product based business and back end finance processes including our general ledger. The system also includes the replacement of our current indirect procurement and service contract systems. We have made appropriate changes to our internal controls over financial reporting as we have implemented the new system. We plan to continue to migrate the remaining parts of the business off regional systems throughout 2017 as we work towards a single global platform. We will continue to modify our internal controls in response to changes in the underlying ERP on future phases as needed.

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Part II—Other Information

Item 1. Legal Proceedings

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 condensed 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.

Item 1A. Risk Factors

The reader should carefully consider, in connection with the other information in this report, the factors discussed below and in Part I, “Item 1A: Risk Factors” on pages 9 through 22 of the Company’s 2016 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.

We have implemented a new ERP system. Any system or network disruption could have a negative impact on our operations, sales and operating results.

Implementation of a new ERP system involves risks and uncertainties. Any disruptions, delays, or deficiencies in the design or implementation of a new system, could result in increased costs, and disruptions in operations.

We rely extensively on our information systems to manage our business operations. Our systems are subject to damage or interruption from various sources, including power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events, terrorism, and human error, and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and operating results.

We also currently rely on a number of older legacy information systems that are harder to maintain and that we now have fewer resources to maintain since implementing our new ERP system. A system failure could negatively impact our operations and financial results.

In addition, as we have outsourced more of our business operations we have increased our dependence on the IT systems of our outsourced business partners which are not under our direct management or control. Any disruption to either those outsourced systems or the communication links between Motorola Solutions and the outsourced supplier, may negatively impact our ability to manufacture, distribute, or repair products. We may incur additional costs to remedy the damages caused by these disruptions.

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to acquisitions by the Company of shares of its common stock during the quarter ended July 1, 2017.

ISSUER PURCHASES OF EQUITY SECURITIES

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)
3/29/17 to 4/25/17	—	N/A		—	$	2,013,032,044
4/26/17 to 5/23/17	670,847	$	83.48	670,847	$	1,957,032,460
5/24/17 to 6/27/17	281,077	$	83.85	281,077	$	1,933,464,276
Total	951,924	$	83.59	951,924

(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 1, 2017, the Company had used approximately $12.1 billion, including transaction costs, to repurchase shares, leaving $1.9 billion of authority available for future repurchases.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

38

Item 6. Exhibits

Exhibit No.	Exhibit
10.1	Revolving Credit Agreement dated as of April 25, 2017 among Motorola Solutions, Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders and agents party thereto (incorporated by reference to Exhibit 10.1 to Motorola Solutions Current Report on Form 8-K filed on April 27, 2017 (File No. 1-7221)).
*10.2	Description of Insurance covering non-employee directors and their spouses (including a description incorporated by reference from the information under the caption "Director Retirement Plan and Insurance Coverage" of the Motorola Solutions' Proxy Statement filed March 27, 2017 (File No. 1-7221))
*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. ©2017 Motorola Solutions, Inc. All rights reserved.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MOTOROLA SOLUTIONS, INC.
By:	/S/ JOHN K. WOZNIAK
	John K. Wozniak Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer)

August 3, 2017

40

EXHIBIT INDEX

Exhibit No.	Exhibit
10.1	Revolving Credit Agreement dated as of April 25, 2017 among Motorola Solutions, Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders and agents party thereto (incorporated by reference to Exhibit 10.1 to Motorola Solutions Current Report on Form 8-K filed on April 27, 2017 (File No. 1-7221)).
*10.2	Description of Insurance covering non-employee directors and their spouses (including a description incorporated by reference from the information under the caption "Director Retirement Plan and Insurance Coverage" of the Motorola Solutions' Proxy Statement filed March 27, 2017 (File No. 1-7221))
*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

41

EX-10.2

CHUBB                                             Exhibit 10.2

Summary of Benefits

Accident Benefits for Motorola Solutions, Inc.

You are a Covered Person and eligible for coverage under the plan, if you are in the eligible class defined below. For benefits to be payable the Policy must be in force, the required premium must be paid and you must be engaging in one of the Covered Activities described below. If you are not in Active Service on the date your insurance would otherwise be effective, it will go into effect on the date you return to Active Service.

Class Description: All non-employee directors of the Policyholder who are in Active Service

Your Dependents (your lawful spouse and unmarried children, subject to the age limits shown in the Policy) are also covered, if they are traveling with you.

Period of Coverage: You will be insured on the later of the Policy Effective Date or the date that you become eligible. Your coverage will end on the earliest of the date: 1) the Policy terminates; 2) you are no longer eligible; or 3) the period ends for which the required premium is paid. Dependents coverage will end on the earliest of the date: 1) he or she is no longer a Dependent; 2) your coverage ends; or 3) the period ends for which the required premium is paid.

Covered Activities

Exposure & Disappearance - Coverage includes exposure to the elements after the forced landing, stranding, sinking, or wrecking of a vehicle in which you were traveling. You are presumed dead if you are in a vehicle that disappears, sinks, or is stranded or wrecked on a trip covered by the Policy; and the body is not found within one year of the Covered Accident.

24-Hour Coverage - We will pay the benefits described in the Policy when you suffer a Covered Accident any time while insured by the Policy. Unless otherwise specified, We will pay benefits only once for a Covered Accident.

Business Travel - The Covered Accident must take place while traveling: 1) on business for the Policyholder; and 2) in the course of the Policyholder’s business. This coverage does not include commuting between home and the place of work.

This coverage will start at the actual start of the trip. It does not matter whether the trip starts at your home, place of work, or other place. It will end on the first of the following dates to occur: 1) the date you return to your home; 2) the date you return to your place of work; or 3) the date your Personal Deviation is more than 14 day(s). “Personal Deviation” means: 1) an activity that is not reasonably related to the Policyholder’s business; and 2) not incidental to the purpose of the trip.

Hijacking and Air Piracy - The Covered Accident must: 1) take place during the: a) hijacking of an Aircraft; b) air piracy; or

c) unlawful seizure or attempted seizure of an Aircraft; and 2) take place while you are in the course of the Policyholder’s business. Coverage begins with the onset of the hijacking or air piracy and continues while you are subject to the control of the person or persons responsible for the hijacking/air piracy and during travel directly to your home or scheduled destinations. “Hijacking” or “Air Piracy,” as used here, means the unlawful seizure or wrongful exercise of control of an aircraft or conveyance, or the crew thereof, in which you are traveling solely as a passenger.

Owned, Leased, or Controlled Aircraft - The Covered Accident must take place while: 1) you are riding in, or getting on or off of, a covered aircraft; or 2) as a result of you being struck by a covered aircraft. 3) away from the Policyholder's prem ises in your city of permanent assignment; 4) on business for the Policyholder; and 5) in the course of the Policyholder's business.

This coverage will start at the actual start of the trip. It does not matter whether the trip starts at your home, place of work, or other place. It will end on the first of the following dates to occur: 1) the date you return to your home; 2) the date you return to your place of work; or 3) the date your Personal Deviation is more than 14 day(s). “Personal Deviation” means: 1) an activity that is not reasonably related to the Policyholder's business; and 2) not incidental to the purpose of the trip. An aircraft will be deemed “controlled” by the Policyholder if the Policyholder may use it for more than 10 straight da ys, or more than 15 days in any year.

Aircraft Restrictions - If the Covered Accident happens while you are riding in, or getting on or off of, an aircraft, We will pay benefits, but only if: 1) you are riding as a passenger only, and not as a pilot or member of the crew (except as provided by the Policy); and 2) the aircraft has a valid certificate of airworthiness; and 3) the aircraft is flown by a pilot with a valid license; and 4) the aircraft is not being used for: (i) crop dusting, spraying, or seeding; firefighting; skywriting; skydiving or hang gliding; pipeline or power line inspection; aerial photography or exploration; racing, endurance tests, stunt or acrobatic flying; or (ii) any operation which requires a special permit from the FAA, even if it is granted (this does not apply if the permit is required only because of the territory flown over or landed on). 5) the aircraft is a military transport aircraft flown by the U.S. Military Airlift Command (MAC), or similar air transport service of another country.

Description of Benefits

Aggregate Limit - We will not pay more than $15,000,000 per Covered Accident for all losses. If, in the absence of this provision, We would pay more than this amount for all losses under the policy, then the benefits payable to each person with a valid claim will be reduced proportionately.

Accidental Death and Dismemberment Benefits - If your Injury results, within 365 days from the date of a Covered Accident, in any one of the losses shown below, We will pay the Benefit Amount shown below for that loss. Your Principal Sum is $500,000. Your spouse’s Principal Sum is $50,000. Your child’s Principal Sum is $25,000. If multiple losses occur, only one Benefit Amount, the largest, will be paid for all losses due to the same Covered Accident.

     Schedule of Covered Losses

Covered LossBenefit Amount

Life .......................................................................................................................100% of the Principal Sum

Two or more Members.........................................................................................100% of the Principal Sum

Quadriplegia..........................................................................................................100% of the Principal Sum

One Member ........................................................................................................... 50% of the Principal Sum

Hemiplegia .............................................................................................................. 75% of the Principal Sum

Paraplegia............................................................................................................... 75% of the Principal Sum

Thumb and Index Finger of the Same Hand .......................................................... 25% of the Principal Sum

“Quadriplegia” means total Paralysis of both upper and lower limbs. “Hemiplegia” means total Paralysis of the upper and lower limbs on one side of the body. “Paraplegia” means total Paralysis of both lower limbs or both upper limbs. “Paralysis” means total loss of use. A Doctor must determine the loss of use to be complete and not reversible at the time the claim is submitted.

“Member” means Loss of Hand or Foot, Loss of Sight, Loss of Speech and Loss of Hearing. “Loss of Hand or Foot” means complete Severance through or above the wrist or ankle joint. “Loss of Sight” means the total, permanent Loss of Sight of one eye. “Loss of Speech” means total and permanent loss of audible communication that is irrecoverable by natural, surgical or artificial means. “Loss of Hearing” means total and permanent Loss of Hearing in both ears that is irrecoverable and cannot be corrected by any means. “Loss of a Thumb and Index Finger of the Same Hand” means complete Severance through or above the metacarpophalangeal joints of the same hand (the joints between the fingers and the hand). “Severance” means the complete separation and dismemberment of the part from the body.

Coma Benefit - We will pay 1% of the Principal Sum per month up to 11 months and thereafter in a lump sum of 100% of the Principal Sum if you become Comatose within 31 days of a Covered Accident and remain in a Coma for at least 31 days. We reserve the right, at the end of the first 31 days of Coma, to require proof that you remain Comatose. This proof may include, but is not limited to, requiring an independent medical examination at Our expense. Monthly payments will end on the first of the following dates: 1) the end of the month in which you die; 2) the end of the 11th month for which this benefit is payable; 3) the end of the month in which you recover from the Coma.

You are deemed “Comatose” or in a “Coma” if you are in a profound stupor or state of complete and total unconsciousness, as the result of a Covered Accident.

Disability Benefit (Permanent Total Disability) - We will pay 100% of the Principal Sum if you are under age 70 and Permanently Totally Disabled as a direct result of, and from no other cause but, a Covered Accident. Permanent Total Disability must begin within 365 days from the date of your Covered Accident. Disability Benefits will begin when: 1) the applicable Benefit Waiting Period of 365 days is satisfied; and 2) you provide satisfactory proof of Permanent Total Disability to Us.

“Total Disability” or “Totally Disabled” means, due to an Injury from a Covered Accident, you: 1) if employed, cannot do any work for which you are, or may become, qualified by reason of education, experience or training; and 2) if not employed, cannot perform the normal and customary activities of a healthy person of like age and sex. “Permanent Total Disability” or “Permanently Totally Disabled” means you are Totally Disabled and are expected to remain so disabled, as certified by a Doctor, for the rest of your life. Permanent Total Disability must be the result of the same Covered Accident that caused the Total Disability.

Emergency Medical Benefits - We will pay up to $10,000 for Covered Expenses incurred for emergency medical services to treat you if you: 1) suffer a Medical Emergency during the course of a Trip; and 2) are traveling 100 miles or more away from your place of permanent residence. Covered Expenses include expenses for guarantee of payment to a medical provider, Hospital or treatment facility. Benefits for these Covered Expenses will not be payable unless the charges incurred: 1) are Medically Necessary and do not exceed the charges for similar treatment, services or supplies in the locality where the expense is incurred; and 2) do not include charges that would not have been made if there were no insurance. Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider.

Emergency Medical Evacuation Benefit - We will pay 100% of Covered Expenses incurred for your medical evacuation if you: 1) suffer a Medical Emergency during the course of the Trip; 2) require Emergency Medical Evacuation; and 3) are traveling 100 miles or more away from your place of permanent residence. Covered Expenses; 1) Medical Transport: expenses for transportation under medical supervision to a different hospital, treatment facility or to your place of residence for Medically Necessary treatment in the event of your Medical Emergency and upon the request of the Doctor designated by Our assistance provider in consultation with the local attending Doctor. 2) Dispatch of a Doctor or Specialist: the Doctor’s or specialist’s travel expenses and the medical services provided on location, if, based on the information available, your condition cannot be adequately assessed to evaluate the need for transport or evacuation and a doctor or specialist is dispatched by Our service provider to your location to make the assessment. 3) Return of Dependent Child(ren): expenses to return each Dependent child who is under age 18 to his or her principal residence if a) you are age 18 or older; and b) you are the only person traveling with the minor Dependent child(ren); and c) you suffer a Medical Emergency and must be confined in a Hospital. 4) Escort Services: expenses for an Immediate Family Member or companion who is traveling with you to join you during your emergency medical evacuation to a different hospital, treatment facility or your place of residence.

Benefits for these Covered Expenses will not be payable unless: 1) the Doctor ordering the Emergency Medical Evacuation certifies the severity of your Medical Emergency requires an Emergency Medical Evacuation; 2) all transportation arrangements made for the Emergency Medical Evacuation are by the most direct and economical conveyance and route possible; 3) the charges incurred are Medically Necessary and do not exceed the Usual and Customary Charges for similar transportation, treatment, services or supplies in the locality where the expense is incurred; and 4) do not include charges that would not have been made if there were no insurance.

Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider. In the event you refuse to be medically evacuated, we will not be liable for any medical expenses incurred after the date medical evacuation is recommended.

Rehabilitation Benefit - We will pay $50,000 if you suffer an Accidental Dismemberment covered under the Policy and you are participating in a Rehabilitation Program that is prescribed by a Doctor. Benefits are payable for: 1) the facility providing the Rehabilitation Program in which you are participating; and 2) Immediate Family Members who incur expenses for travel to and from the location at which you are participating in a Rehabilitation Program provided actual receipts are submitted with the claim.

Benefits will end when the first of the following events occur: 1) the date you complete the Rehabilitation Program; and 2) the date you die.

“Immediate Family Member” means your parent, grandparent, spouse, child, brother, sister, or in-laws. “Rehabilitation Program” means a specialized, intensive program for rehabilitation or assimilation at an accredited medical facility specializing in research, surgery, and training of persons with Accidental Dismemberment Covered Losses as outlined in the Schedule of Covered Losses.

Repatriation of Remains Benefit - We will pay 100% of Covered Expenses for preparation and return of your body to your home if you die as a result of a Medical Emergency while traveling 100 miles or more away from your place of permanent residence. Covered expenses include: 1) expenses for embalming or cremation; 2) the least costly coffin or receptacle adequate for transporting the remains; 3) transporting the remains; and 4) Escort Services which include expenses for an

Immediate Family Member or companion who is traveling with you to join your body during the repatriation to your place of residence.

All transportation arrangements must be made by the most direct and economical route and conveyance possible and may not exceed the Usual and Customary Charges for similar transportation in the locality where the expense is incurred. Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider.

Seatbelt and Airbag Benefit - We will pay $25,000 when you die or are dismembered directly and independently from Injuries sustained while wearing a seatbelt and operating or riding as a passenger in an Automobile. An additional $10,000 if you were also positioned in a seat protected by a properly-functioning and properly deployed Supplemental Restraint System (Airbag). Verification of proper use of the seatbelt at the time of the Covered Accident and that the Supplemental Restraint System properly inflated upon impact must be a part of an official police report of the Covered Accident or be certified, in writing, by the investigating officer(s) and submitted with your claim to Us. If such certification or police report is not available or it is unclear whether you were wearing a seatbelt or positioned in a seat protected by a properly functioning and properly deployed Supplemental Restraint System, We will pay $1,000 to your beneficiary.

In the case of a child, seatbelt means a child restraint, as required by state law and approved by the National Highway Traffic Safety Administration, properly secured and being used as recommended by its manufacturer for children of like age and weight at the time of the Covered Accident. "Supplemental Restraint System" means an airbag that inflates upon impact for added protection to the head and chest areas. "Automobile" means a self-propelled, private passenger motor vehicle with four or more wheels that is a type both designed and required to be licensed for use on the highway of any state or coun try. Automobile includes, but is not limited to, a sedan, station wagon, sport utility vehicle, or a motor vehicle of the pickup, van, camper, or motor-home type. Automobile does not include a mobile home or any motor vehicle that is used in mass or public transit.

Special Adaptation Benefit - We will pay 10% of the Principal Sum up to $10,000, if you suffer a “Presumptive Disability” and require a special housing adaptation or a special Vehicle to accommodate the disability. Benefits will not be payable unless your Doctor certifies them as necessary. “Presumptive Disability” means We will presume you are Totally Disabled if you suffer the complete and irrecoverable loss of sight of both eyes, speech, hearing in both ears, or of any two limbs, hands or feet, provided the loss occurs within one year of the Covered Accident. “Vehicle” means a private passenger land motor vehicle. It includes automobiles, vans, and four wheel drive vehicles. It does not include a vehicle used for farming, commercial business, racing or any type of competitive speed event.

Special Counseling Benefit - We will pay $100 per session for up to 10 counseling sessions for mental health counseling to assist you in dealing with a Covered Loss, if you suffer an Injury that results in a loss as outlined in the Schedule of Covered Losses for which the Accidental Death and Dismemberment Benefit is payable; and obtain mental health counseling. The Maximum Amount for this benefit is $1,000 per Covered Loss.

Exclusions and Limitations: We will not pay benefits for any loss or Injury that is caused by, or results from:

• intentionally self-inflicted Injury.

• suicide or attempted suicide.

• war or any act of war, whether declared or not (except as provided by the Policy).

• a Covered Accident that occurs while on active duty service in the military, naval or air force of any country or international organization. Upon Our receipt of proof of service, We will refund any premium paid for this time. Reserve or National Guard active duty training is not excluded unless it extends beyond 31 days.

• sickness, disease, bodily or mental infirmity, bacterial infections, except infections which occur as a result of accidental injury or accidental involuntary or unintentional ingestion of a contaminated substance.

• piloting or serving as a crewmember in any aircraft (except as provided by the Policy).

• commission of, or attempt to commit, a felony.

This insurance does not apply to the extent that trade or economic sanctions or other laws or regulations prohibit Us from providing insurance, including, but not limited to, the payment of claims.

War Risk Coverage: We will pay benefits for Covered Losses due to Covered Accidents resulting from war or acts of war anywhere in the world, except the following countries:

• the United States

• The Covered Person’s Home Country

• The Covered Person’s Country of Permanent Assignment

The war exclusion is deleted to the extent coverage is provide by the terms and conditions of War Risk Coverage.

“Home Country” means a country from which you hold a passport. If you hold passports from more than one Country, your Home Country will be the country that you declared to Us in writing as your Home Country.

“Country of Permanent Assignment” means a country, other than your Home Country, in which the Policyholder requires you to work for a period of time that exceeds 180 continuous days.

We will not pay more than $15,000,000 per occurrence for war risk benefits. This limit shall apply to Injuries sustained from all acts of war in a consecutive 72-hour period. If but for this limit We would pay more than $15,000,000, then the benefits We will pay to each Covered Person will be reduced in the same proportion, so that the total amount We will pay for war risk coverage is $15,000,000.

Out-of-Country Medical Expense Benefit

In addition to the accident benefits provided by your business travel plan, we will pay the additional benefits listed below if you are injured as the result of a Covered Accident or become sick while traveling on business outside your Home Country or Country of Permanent Assignment provided the trip does not exceed 180 days.

This coverage will begin on the later of the scheduled departure date or the date you leave your Home Country or Country of Permanent Assignment on a trip authorized by the Participating Organization. Coverage will end on the earliest of your scheduled return date, the date you return to your Home Country or Country of Permanent Assignment, or the date your Personal Deviation is more than 14 days.

Medical Expense Benefits - We will pay for Covered Expenses that result directly from a Covered Accident or Sickness. These benefits are payable to the earlier of the date you return to your Home Country or Country of Permanent Assignment, or 26 weeks from the date of a Covered Accident or Sickness provided the first Covered Expense was incurred within 30 days after the date of Covered Accident or Sickness.

The Maximum Benefit for all Accident and Sickness benefits for you is $250,000; for your spouse is $250,000; and for your children is $250,000, subject to a Deductible of $0 per Covered Accident or Sickness.

The following limits also apply: The maximum for Dental Treatment (Injury only) is $1,000. The maximum for Emergency Medical Treatment of Pregnancy is treated as any other medical condition. The maximum for Room & Board charges is the average semi-private room rate. The maximum for ICU Room & Board Charges is two (2) times the average semi-private room rate.

Medical Expense Benefits are only payable: 1) for 100% of the Usual and Customary Charges incurred after the Deductible, if any, has been met; 2) for those Medically Necessary Covered Expenses that the Covered Person incurs; and 3) for charges incurred for services rendered to you while traveling outside of your Home Country or Country of Permanent Assignment.

Emergency Medical, Emergency Medical Evacuation and Repatriation of Remains Benefits are extended to include travel outside of your Home Country or Country of Permanent Assignment.

In addition to the exclusions above, We will not pay benefits for any loss, treatment, or services resulting from:

• Routine physicals and care of any kind.

• Routine dental care and treatment.

• Cosmetic surgery, except for reconstructive surgery needed as the result of an Injury.

• Routine nursery care.

• Eye refractions or eye examinations for the purpose of prescribing corrective lenses or for the fitting thereof; eyeglasses, contact lenses, and hearing aids.

• Services, supplies, or treatment including any period of Hospital confinement which is not recommended, approved, and certified as medically necessary and reasonable by a Doctor, or expenses which are non-medical in nature.

• Treatment or service provided by a private duty nurse.

• Treatment by any Immediate Family Member or member of the Insured’s household.

• Expenses incurred during holiday travel, or travel for purposes of seeking medical care or treatment, or for any other travel that is not in the course of the Policyholder’s business (unless Personal Deviations are specifically covered).

• Covered medical expenses for which the Covered Person would not be responsible for in the absence of the Policy.

• Any expense paid or payable by any other valid and collectible group insurance plan.

• Injury or sickness for which benefits are paid or payable under any workers’ compensation or occupational disease law or act, or similar legislation, whether United States federal or foreign law.

If we determine the benefits paid under the Out-of-Country Medical Plan are eligible benefits under any other benefit plan, We may seek to recover any expenses covered by another plan to the extent that the Insured is eligible for reimbursement.

IMPORTANT NOTICE

This policy provides travel insurance benefits for individuals traveling outside of their home country. This policy does not constitute comprehensive health insurance coverage (often referred to as “major medical coverage”) and does not satisfy a person’s individual obligation to secure the requirement of minimum essential coverage under the Affordable Care Act (ACA).

For more information about the ACA, please refer to www.HealthCare.gov.

Definitions: “Covered Accident” means an accident that occurs while coverage is in force for you and results directly in a loss or Injury covered by the Policy for which benefits are payable. “Covered Person” means any eligible person for whom the required premium is paid. “Injury” means accidental bodily harm sustained by you that results directly from a Covered Accident. All injuries sustained by one person in any one Accident, including all related conditions and recurrent symptoms of these injuries, are considered a single Injury. Medical Emergency” means a condition caused by an Injury or Sickness that manifests itself by symptoms of sufficient severity that a prudent lay person possessing an average knowledge of health and medicine would reasonably expect that failure to receive immediate medical attention would place the health of the person in serious jeopardy. “Sickness” means an illness, disease or condition that causes a loss for which you incur medical expenses while covered under this

Policy. All related conditions and recurrent symptoms of the same or similar condition will be considered one Sickness. “Trip” means travel by air, land, or sea from your Home Country. “We, Our, Us” means the insurance company underwriting this insurance or its authorized agent.

You must provide notification of a claim within 90 days of an Accident or Loss. If notice cannot be given within that time, it must be given as soon as reasonably possible. This notice should identify you, the Policyholder, and the Policy Number.

Policy Number: ADD N04156870, Underwritten by ACE American Insurance Company, 436 Walnut Street, Philadelphia, PA 19106

Contact Information: For customer service, eligibility verification, plan information, or to file a claim, contact: Chubb NA at 800-336-0627 (from inside the U.S.) or 302-476-6194 (from outside the U.S.); fax 302-476-6154 for claims or inquiries or e-mail diane.basa@chubb.comor aceaandhclaims@chubb.com. Mail claims to: Chubb Accident & Health, PO Box 5124, Scranton, PA 18505-0556.

Travel Assistance Services: Please contact the Policyholder for information about your travel assistance services and how to contact the assistance provider when you are traveling.

This Description of Coverage is a brief description of the important features of the insurance plan. It is not a contract of insurance. The terms and conditions of coverage are set forth in the Policy issued to your employer. The Policy is subject to the laws of the state in which it was issued. Coverage may not be available in all states or certain terms or conditions may be different if required by state law. Please keep this information as a reference.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify that:

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.

Date: August 3, 2017

/s/ GREGORY Q. BROWN

Gregory Q. Brown

Chairman and Chief Executive Officer

Motorola Solutions, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Gino A. Bonanotte, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify that:

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.

Date: August 3, 2017

/s/ GINO A. BONANOTTE

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

Motorola Solutions, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION

I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

(1) the quarterly report on Form 10-Q for the period ended July 1, 2017 (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.

This certificate is being furnished solely for purposes of Section 906.

Dated: August 3, 2017

/s/ GREGORY Q. BROWN

Gregory Q. Brown

Chairman and Chief Executive Officer

Motorola Solutions, Inc.

EX-32.2

Exhibit 32.2

CERTIFICATION

I, Gino A. Bonanotte, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

(1) the quarterly report on Form 10-Q for the period ended July 1, 2017 (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.

This certificate is being furnished solely for purposes of Section 906.

Dated: August 3, 2017

/s/ GINO A. BONANOTTE

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

Motorola Solutions, Inc.

XML

Document And Entity Information	6 Months Ended
	Jul. 01, 2017 shares
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. 01, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding	162,653,552

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Income Statement [Abstract]
Net sales from products	$ 848	$ 801	$ 1,551	$ 1,503
Net sales from services	649	629	1,226	1,120
Net sales	1,497	1,430	2,777	2,623
Costs of products sales	392	361	739	726
Costs of services sales	415	393	778	718
Costs of sales	807	754	1,517	1,444
Gross margin	690	676	1,260	1,179
Selling, general and administrative expenses	242	240	475	475
Research and development expenditures	138	138	273	274
Other charges	53	74	79	107
Operating earnings	257	224	433	323
Other income (expense):
Interest expense, net	(51)	(54)	(102)	(103)
Gains (losses) on sales of investments and businesses, net	(1)	1	2	(20)
Other	0	(4)	(9)	(11)
Total other expense	(52)	(57)	(109)	(134)
Net earnings before income taxes	205	167	324	189
Income tax expense	73	59	114	64
Net earnings	132	108	210	125
Less: Earnings attributable to noncontrolling interests	1	1	2	1
Net earnings attributable to Motorola Solutions, Inc.	$ 131	$ 107	$ 208	$ 124
Earnings per common share:
Basic (in US$ per share)	$ 0.80	$ 0.62	$ 1.27	$ 0.72
Diluted (in US$ per share)	$ 0.78	$ 0.61	$ 1.23	$ 0.71
Weighted average common shares outstanding:
Basic (in shares)	163.1	171.9	163.7	173.0
Diluted (in shares)	169.0	174.8	169.5	175.7
Dividends declared per share (in US$ per share)	$ 0.47	$ 0.41	$ 0.94	$ 0.82

XML

Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Statement of Comprehensive Income [Abstract]
Net earnings	$ 132	$ 108	$ 210	$ 125
Other comprehensive income (loss), net of tax (Note 2):
Foreign currency translation adjustments	47	(98)	81	(85)
Marketable securities	4	(1)	4	3
Defined benefit plans	14	56	33	60
Total other comprehensive income (loss), net of tax	65	(43)	118	(22)
Comprehensive income	197	65	328	103
Less: Earnings attributable to noncontrolling interests	1	1	2	1
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$ 196	$ 64	$ 326	$ 102

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 742	$ 967
Restricted cash	63	63
Total cash and cash equivalents	805	1,030
Accounts receivable, net	1,211	1,410
Inventories, net	391	273
Other current assets	804	755
Total current assets	3,211	3,468
Property, plant and equipment, net	859	789
Investments	248	238
Deferred income taxes	2,160	2,219
Goodwill	749	728
Intangible assets	868	821
Other assets	200	200
Total assets	8,295	8,463
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	46	4
Accounts payable	440	553
Accrued liabilities	1,924	2,111
Total current liabilities	2,410	2,668
Long-term debt	4,421	4,392
Other liabilities	2,440	2,355
Stockholders’ Equity
Preferred stock, $100 par value	0	0
Common stock, $.01 par value: Authorized shares: 600.0; Issued shares: 7/1/17—163.1; 12/31/16—165.5; Outstanding shares: 7/1/17—162.7; 12/31/16—164.7	2	2
Additional paid-in capital	264	203
Retained earnings	945	1,148
Accumulated other comprehensive loss	(2,199)	(2,317)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	(988)	(964)
Noncontrolling interests	12	12
Total stockholders’ equity (deficit)	(976)	(952)
Total liabilities and stockholders’ equity	$ 8,295	$ 8,463

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jul. 01, 2017	Dec. 31, 2016
Stockholders’ Equity
Preferred stock par value (in US$ per share)	$ 100	$ 100
Common stock par value (in US$ per share)	$ 0.01	$ 0.01
Common stock authorized (in shares)	600,000,000	600,000,000
Common stock issued (in shares)	163,100,000	165,500,000
Common stock outstanding (in shares)	162,700,000	164,700,000

XML

Condensed Consolidated Statement of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock and Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	$ 125
Other comprehensive income	(22)
Balance at end of period at Jul. 02, 2016			$ (1,888)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	108
Other comprehensive income	(43)
Balance at end of period at Jul. 02, 2016			(1,888)
Balance (in shares) at Dec. 31, 2016		165.5
Balance at beginning of period at Dec. 31, 2016	(952)	$ 205	(2,317)	$ 1,148	$ 12
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	210			208	2
Other comprehensive income	$ 118		118
Issuance of common stock and stock options exercised (in shares)		0.8
Issuance of common stock and stock options exercised		$ 28
Share repurchase program (in shares)	(3.2)	(3.2)
Share repurchase program				(258)
Share-based compensation expense		$ 33
Dividends declared				(153)	(2)
Balance (in shares) at Jul. 01, 2017		163.1
Balance at end of period at Jul. 01, 2017	$ (976)	$ 266	(2,199)	945	12
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	132
Other comprehensive income	65
Balance (in shares) at Jul. 01, 2017		163.1
Balance at end of period at Jul. 01, 2017	$ (976)	$ 266	$ (2,199)	$ 945	$ 12

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Operating
Net earnings attributable to Motorola Solutions, Inc.	$ 208	$ 124
Earnings attributable to noncontrolling interests	2	1
Net earnings	210	125
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization	166	144
Non-cash other charges	21	35
Non-U.S. pension settlement loss	25	0
Share-based compensation expense	33	35
Losses (gains) on sales of investments and businesses, net	(2)	20
Deferred income taxes	63	71
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable	251	327
Inventories	(112)	(2)
Other current assets	(21)	(65)
Accounts payable and accrued liabilities	(340)	(362)
Other assets and liabilities	21	(24)
Net cash provided by operating activities	315	304
Investing
Acquisitions and investments, net	(140)	(1,120)
Proceeds from sales of investments and businesses, net	72	553
Capital expenditures	(121)	(143)
Proceeds from sales of property, plant and equipment	0	46
Net cash used for investing activities	(189)	(664)
Financing
Repayment of debt	(6)	(2)
Net proceeds from issuance of debt	0	673
Proceeds from financing through capital leases	7	0
Issuance of common stock	28	40
Purchase of common stock	(258)	(619)
Payment of dividends	(154)	(143)
Payment of dividend to non-controlling interest	(2)	0
Net cash used for financing activities	(385)	(51)
Effect of exchange rate changes on cash and cash equivalents	34	(24)
Net decrease in cash and cash equivalents	(225)	(435)
Cash and cash equivalents, beginning of period	1,030	1,980
Cash and cash equivalents, end of period	805	1,545
Cash paid during the period for:
Interest, net	88	94
Income and withholding taxes, net of refunds	$ 47	$ 54

XML

Basis of Presentation

6 Months Ended

Jul. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements as of July 1, 2017 and for the three and six months endedJuly 1, 2017 and July 2, 2016 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, 2016. The results of operations for the three and six months endedJuly 1, 2017 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 July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1.

On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year.

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 the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity 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.

The Company has continued to analyze the impact of the new standard on its financial results based on an inventory of the Company's current contracts with customers. The Company has obtained an understanding of the new standard and currently believes that it will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of its contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method.

Under the new standard, the Company must identify the distinct promises to transfer goods and/or services within its contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, the Company has considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact the Company's percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's percentage of completion contracts, it will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in the Company's contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services.

In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While the Company may have contracts which fall under these rules in the current standard, it has not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, the Company does not anticipate a significant acceleration of revenue upon applying the new standard to its current contracts under these fact patterns.

The Company continues to evaluate the impact of ASU No. 2014-09 on its financial results and prepare for the adoption of the standard on January 1, 2018, including readying its internal processes and control environment for new requirements, particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. The Company expects to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements.

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 prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The Company intends to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows.

In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The Company intends to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for the Company January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. The Company does not anticipate significant changes to the Company's financial statements and related disclosures from adoption of the ASU.

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. The Company intends to adopt this ASU on January 1, 2018. Upon adoption, the Company plans to update the presentation of net periodic cost (benefit) accordingly, noting all components of the Company's net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively.

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Other Financial Data

6 Months Ended

Jul. 01, 2017

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:

	Three Months Ended					Six Months Ended
	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Other charges:
Intangibles amortization	$	37		$	38	$	73		$	52
Reorganization of business	1			19		16			25
Building impairment	—			17		8			17
Non-U.S. pension settlement loss	16			—		25			—
Legal settlements	(1		)	—		(44		)	—
Acquisition-related transaction fees	—			—		1			13
	$	53		$	74	$	79		$	107

During the six months endedJuly 1, 2017, the Company recognized a net gain of $44 million related to legal settlements. Of this amount, $42 million relates to the recovery, through legal procedures to seize and liquidate assets, of financial receivables owed to the Company by a former customer of its legacy Networks business. 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						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Interest income (expense), net:
Interest expense	$	(55	)	$	(59	)	$	(109	)	$	(111	)
Interest income	4			5			7			8
	$	(51	)	$	(54	)	$	(102	)	$	(103	)
Other:
Foreign currency gain (loss)	$	(20	)	$	14		$	(22	)	$	27
Gain (loss) on derivative instruments	18			(18		)	11			(30		)
Gains on equity method investments	1			—			—			2
Realized foreign currency loss on acquisition	—			—			—			(10		)
Other	1			—			2			—
	$	—		$	(4	)	$	(9	)	$	(11	)

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				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Basic earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Per share amount	$	0.80	$	0.62	$	1.27	$	0.72
Diluted earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Add effect of dilutive securities:
Share-based awards	3.1		2.4		3.2		2.4
Senior Convertible Notes	2.8		0.5		2.6		0.3
Diluted weighted average common shares outstanding	169.0		174.8		169.5		175.7
Per share amount	$	0.78	$	0.61	$	1.23	$	0.71

In the computation of diluted earnings per common share for the three months endedJuly 1, 2017, the assumed exercise of 2.1 million options, including 1.8 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive. For the six months endedJuly 1, 2017, the assumed exercise of 2.4 million options, including 2.0 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive.

For the three months endedJuly 2, 2016, the assumed exercise of 2.3 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. For the six months endedJuly 2, 2016, the assumed exercise of 3.2 million options, including 2.1 million subject to market-based contingent stock agreements, and the assumed vesting of 0.6 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, the Company 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 endedJuly 1, 2017, the dilutive impact of the Senior Convertible Notes was 2.8 million shares and 2.6 million shares, respectively.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	July 1, 2017			December 31, 2016
Accounts receivable	$	1,250		$	1,454
Less allowance for doubtful accounts	(39		)	(44		)
	$	1,211		$	1,410

Inventories, Net

Inventories, net, consist of the following: 

	July 1, 2017			December 31, 2016
Finished goods	$	197		$	151
Work-in-process and production materials	321			253
	518			404
Less inventory reserves	(127		)	(131		)
	$	391		$	273

Other Current Assets

Other current assets consist of the following: 

	July 1, 2017		December 31, 2016
Available-for-sale securities	$	50	$	46
Costs and earnings in excess of billings	529		495
Tax-related refunds receivable	110		90
Other	115		124
	$	804	$	755

Property, Plant and Equipment, Net

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

	July 1, 2017			December 31, 2016
Land	$	10		$	12
Building	267			306
Machinery and equipment	2,078			1,921
	2,355			2,239
Less accumulated depreciation	(1,496		)	(1,450		)
	$	859		$	789

Depreciation expense for the three months endedJuly 1, 2017 and July 2, 2016 was $49 million and $44 million, respectively. Depreciation expense for the six months endedJuly 1, 2017 and July 2, 2016 was $93 million and $92 million, respectively.

Investments

Investments consist of the following:

July 1, 2017	Cost   Basis		Unrealized   Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	56	$	—	$	56
Corporate bonds	5		—		5
Common stock	5		7		12
	66		7		73
Other investments	210		—		210
Equity method investments	15		—		15
	$	291	$	7	$	298
Less: current portion of available-for-sale securities					50
					$	248

December 31, 2016	Cost   Basis		Unrealized   Gains		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

Other investments include strategic investments in non-public technology-driven startup companies recorded at cost of $74 million and $76 million, and insurance policies recorded at their cash surrender value of $136 million and $135 million, at July 1, 2017 and December 31, 2016.

During the three months endedJuly 1, 2017, the Company recognized a loss on the sale of investments and businesses of $1 million, compared to a gain of $1 million during the three months endedJuly 2, 2016. During the six months endedJuly 1, 2017, the Company recognized a gain on the sale of investments and businesses of $2 million, compared to a loss of $20 million during the six months endedJuly 2, 2016, of which, $19 million was associated with the sale of United Kingdom treasury securities.

Other Assets

Other assets consist of the following: 

	July 1, 2017		December 31, 2016
Long-term receivables	35		49
Defined benefit plan assets	125		102
Other	40		49
	$	200	200

Accrued Liabilities

Accrued liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Deferred revenue	$	427	$	439
Compensation	171		250
Billings in excess of costs and earnings	387		434
Tax liabilities	134		111
Dividend payable	76		77
Trade liabilities	174		180
Other	555		620
	$	1,924	$	2,111

Other Liabilities

Other liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Defined benefit plans	$	1,800	$	1,799
Deferred revenue	164		115
Unrecognized tax benefits	39		39
Deferred income taxes	139		121
Deferred consideration (Note 13)	78		72
Other	220		209
	$	2,440	$	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 six months endedJuly 1, 2017, the Company paid an aggregate of $258 million, including transaction costs, to repurchase approximately 3.2 million shares at an average price of $81.66 per share. As of July 1, 2017, the Company had used approximately $12.1 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.9 billion of authority available for future repurchases.

Payment of Dividends: During the three months endedJuly 1, 2017 and July 2, 2016, the Company paid $77 million and $72 million, respectively, in cash dividends to holders of its common stock. During the six months endedJuly 1, 2017 and July 2, 2016, the Company paid $154 million and $143 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 endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(460	)	$	(253	)	$	(494	)	$	(266	)
Other comprehensive income (loss) before reclassification adjustment	47			(98		)	84			(84		)
Tax expense	—			—			(3		)	(1		)
Other comprehensive income (loss), net of tax	47			(98		)	81			(85		)
Balance at end of period	$	(413	)	$	(351	)	$	(413	)	$	(351	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	1		$	—		$	(3	)
Other comprehensive income (loss) before reclassification adjustment	7			(2		)	7			(2		)
Tax (expense) benefit	(3		)	1			(3		)	1
Other comprehensive income (loss) before reclassification adjustment, net of tax	4			(1		)	4			(1		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net	—			—			—			6
Tax benefit	—			—			—			(2		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			—			4
Other comprehensive income (loss), net of tax	4			(1		)	4			3
Balance at end of period	$	4		$	—		$	4		$	—
Defined Benefit Plans:
Balance at beginning of period	(1,804		)	(1,593		)	$	(1,823	)	$	(1,597	)
Other comprehensive income (loss) before reclassification adjustment	(11		)	53			(11		)	53
Tax expense	—			(16		)	—			(16		)
Other comprehensive income (loss) before reclassification adjustment, net of tax	(11		)	37			(11		)	37
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	16			18			32			28
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(4		)	(7		)	(8		)	(13		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges	16			—			25			—
Tax expense (benefit)	(3		)	8			(5		)	8
Reclassification adjustment into Operating earnings, net of tax	25			19			44			23
Other comprehensive income, net of tax	14			56			33			60
Balance at end of period	$	(1,790	)	$	(1,537	)	$	(1,790	)	$	(1,537	)
Total Accumulated other comprehensive loss	$	(2,199	)	$	(1,888	)	$	(2,199	)	$	(1,888	)

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Debt and Credit Facilities

6 Months Ended

Jul. 01, 2017

Debt Disclosure [Abstract]

Debt and Credit Facilities

Debt and Credit Facilities

On April 25, 2017, the Company entered into a $2.2 billion syndicated, unsecured revolving credit facility expiring April 2022, which can be used for borrowing and letters of credit (the "2017 Motorola Solutions Credit Agreement"). The 2017 Motorola Solutions Credit Agreement replaces the 2014 Motorola Solutions Credit Agreement.

The 2017 Motorola Solutions Credit Agreement has a $500 million letter of credit sub-limit with $450 million of fronting commitments. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate, at the Company's option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes.

Under the 2017 Motorola Solutions Credit Agreement, the Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2017 Motorola Solutions Credit Agreement. The Company was in compliance with it financial covenants as of July 1, 2017. The Company did not borrow or issue any letters of credit under the 2017 Motorola Solutions Credit Agreement during the three months ended July 1, 2017.

On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2% Senior Convertible Notes which mature in September 2020. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances including, for example, if the volume weighted average price of the Company's stock exceeds $85 for ten consecutive trading days, then up to 20% of the notes may be transferred, and then subsequently converted to shares of Company stock by such transferee. 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).  During the three months ended July 1, 2017, the volume weighted average price of the Company's stock exceeded $85 for ten consecutive trading days, making 20% of Senior Convertible Notes convertible. In the event of conversion, the notes may be settled in either cash or stock, at the Company's discretion. The Company intends to settle the principal amount of the Senior Convertible Notes in cash.

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Risk Management

6 Months Ended

Jul. 01, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk Management

Risk Management

Foreign Currency Risk

As of July 1, 2017, the Company had outstanding foreign exchange contracts with notional amounts totaling $590 million, compared to $717 million outstanding at December 31, 2016. 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 1, 2017, and the corresponding positions as of December 31, 2016: 

	Notional Amount
Net Buy (Sell) by Currency	July 1, 2017			December 31, 2016
Euro	$	161		$	122
British Pound	149			246
Chinese Renminbi	(81		)	(108		)
Australian Dollar	(50		)	(51		)
Brazilian Real	(45		)	(56		)

During the six months endedJuly 1, 2017, the Company entered into forward contracts to sell £50 million, expiring in December 2017. The forward contracts have been designated as a net investment hedge which is in place to partially hedge the Company's British Pound foreign currency exposure on its net investment in Airwave Solutions Limited. The gains and losses on the Company's net investment in pound-denominated foreign operations, driven by changes in foreign exchange rates, are economically offset by movements in the fair values of the forward contracts designated as net investment hedges. Any changes in fair value of the net investment hedges are reflected as a component of Accumulated other comprehensive loss. As of July 1, 2017, the fair value of the derivative contract was $2 million.

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 swaps liability was de minimus at both July 1, 2017 and December 31, 2016.

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 1, 2017, all of the counterparties have investment grade credit ratings. As of July 1, 2017, the Company had $6 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 1, 2017 and December 31, 2016:

	Fair Values of Derivative Instruments
	Assets			Liabilities
July 1, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	2	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	4	Accrued liabilities
Total derivatives	$	6		$	6

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2016	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	9	Other current assets	$	32	Accrued liabilities

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended					Six Months Ended					Balance Sheet Location
Derivatives Designated as Hedging Instruments	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Foreign exchange contracts	$	(2	)	$	—	$	(2	)	$	—	Other comprehensive income (loss)

The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended			Six Months Ended			Statements of Operations Location
Gain (loss) on Derivative Instruments	July 1, 2017	July 2, 2016		July 1, 2017	July 2, 2016
Foreign exchange contracts	18	(18	)	11	(30	)	Other income (expense)

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Income Taxes

6 Months Ended

Jul. 01, 2017

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:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Net earnings before income taxes	$	205		$	167		$	324		$	189
Income tax expense	73			59			114			64
Effective tax rate	36		%	35		%	35		%	34		%

The Company recorded $73 million of net tax expense during the three months endedJuly 1, 2017, resulting in an effective tax rate of 36%, compared to $59 million of net tax expense during the three months endedJuly 2, 2016, resulting in an effective tax rate of 35%. The effective tax rate in the second quarter of 2017 was greater than the U.S. statutory tax rate of 35% partly due to change of estimates between provision and the filing of tax returns in foreign jurisdictions. The effective tax rate in the second quarter of 2016 was equal to the U.S. statutory tax rate of 35%.

The Company recorded $114 million of net tax expense during the six months endedJuly 1, 2017, resulting in an effective tax rate of 35%, compared to $64 million of net tax expense during the six months endedJuly 2, 2016, resulting in an effective tax rate of 34%. The effective tax rate in the first half of 2017 was equal to the U.S. statutory tax rate of 35%. The effective tax rate in 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.

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Retirement and Other Employee Benefits

6 Months Ended

Jul. 01, 2017

Retirement Benefits [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:

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Three Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	1		$	2		$	—		$	—
Interest cost	46			46			10			14			1			1
Expected return on plan assets	(57		)	(55		)	(24		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	11			9			4			3			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(7		)
Settlement loss	—			—			16			—			—			—
Net periodic pension cost (benefit)	$	—		$	—		$	7		$	(5	)	$	(5	)	$	(7	)

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Six Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	2		$	4		$	—		$	—
Interest cost	92			91			20			28			2			2
Expected return on plan assets	(115		)	(110		)	(47		)	(48		)	(6		)	(5		)
Amortization of:
Unrecognized net loss	22			19			8			6			2			3
Unrecognized prior service benefit	—			—			—			—			(8		)	(13		)
Settlement loss	—			—			25			—			—			—
Net periodic cost (benefit)	$	(1	)	$	—		$	8		$	(10	)	$	(10	)	$	(13	)

During the six months endedJuly 1, 2017, the Company offered lump-sum settlements to certain participants in the Non-US defined benefit plan within the United Kingdom. The lump-sum settlements were targeted to certain participants who had accrued a pension benefit, but had not yet started receiving pension benefit payments. As of June 30, 2017, the window for the participant registration in the program has closed. However, the Company expects to account for continuing settlements through the third quarter of 2017, as remaining lump-sum settlements are paid to participants. As a result of the actions taken through the first half of 2017, the Company recorded a settlement loss of $16 million and $25 million during the three and six months endedJuly 1, 2017, which is recorded within Other Charges within the condensed consolidated statement of operations.

During the six months endedJuly 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 five years, or the period in which the remaining employees eligible for the plan will qualify for benefits under the plan.

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Share-Based Compensation Plans

6 Months Ended

Jul. 01, 2017

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: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Share-based compensation expense included in:
Costs of sales	$	2		$	2		$	4		$	4
Selling, general and administrative expenses	11			12			22			24
Research and development expenditures	3			4			7			7
Share-based compensation expense included in Operating earnings	16			18			33			35
Tax benefit	5			6			11			11
Share-based compensation expense, net of tax	$	11		$	12		$	22		$	24
Decrease in basic earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)
Decrease in diluted earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)

During the six months endedJuly 1, 2017, the Company granted 0.5 million RSUs and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $39 million and $6 million, respectively, and 0.3 million stock options and 0.6 million performance options ("POs") with an aggregate grant-date fair value of $5 million and $9 million, respectively. Share-based compensation expense will generally be recognized over the vesting period of three years.

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Fair Value Measurements

6 Months Ended

Jul. 01, 2017

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 1, 2017 and December 31, 2016 were as follows: 

July 1, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	—	$	56	$	56
Corporate bonds	—		5		5
Common stock	12		—		12
Liabilities:
Foreign exchange derivative contracts	$	—	$	6	$	6

December 31, 2016	Level 2		Total
Assets:
Foreign exchange derivative contracts	$	9	$	9
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	51		51
Corporate bonds	5		5
Liabilities:
Foreign exchange derivative contracts	$	32	$	32

The Company had no Level 3 holdings as of July 1, 2017 or December 31, 2016.

At July 1, 2017 and December 31, 2016, the Company had $298 million and $309 million, respectively, of investments in money market prime and government funds (Level 1) 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 1, 2017 and December 31, 2016 was $4.6 billion and $4.5 billion (Level 2), respectively.

All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.

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Long-term Financing and Sales of Receivables

6 Months Ended

Jul. 01, 2017

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: 

	July 1, 2017			December 31, 2016
Long-term receivables	$	48		$	63
Less current portion	(13		)	(14		)
Non-current long-term receivables	$	35		$	49

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 $209 million at July 1, 2017, compared to $125 million at December 31, 2016. During the six months endedJuly 1, 2017, the Company agreed to provide long-term financing to one customer in the amount of $75 million.

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 endedJuly 1, 2017 and July 2, 2016: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Accounts receivable sales proceeds	$	61	$	5	$	80	$	7
Long-term receivables sales proceeds	22		70		68		134
Total proceeds from receivable sales	$	83	$	75	$	148	$	141

At July 1, 2017, the Company had retained servicing obligations for $775 million of long-term receivables, compared to $774 million at December 31, 2016. 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 1, 2017 and December 31, 2016 is as follows: 

July 1, 2017	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	1	$	2
Commercial loans and leases secured	27		—		—
Long-term receivables, including current portion	$	48	$	1	$	2

December 31, 2016	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—
Commercial loans and leases secured	43		—		2
Long-term receivables, including current portion	$	63	$	—	$	2

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Commitments and Contingencies

6 Months Ended

Jul. 01, 2017

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 1, 2017.

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.

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Segment Information

6 Months Ended

Jul. 01, 2017

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 services 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: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Products	$	848	$	801	$	1,551	$	1,503
Services	649		629		1,226		1,120
	$	1,497	$	1,430	$	2,777	$	2,623

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Products	$	168		$	129		$	257		$	179
Services	89			95			176			144
Operating earnings	257			224			433			323
Total other expense	(52		)	(57		)	(109		)	(134		)
Earnings before income taxes	$	205		$	167		$	324		$	189

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Reorganization of Business

6 Months Ended

Jul. 01, 2017

Restructuring and Related Activities [Abstract]

Reorganization of Business

Reorganization of Business

2017 Charges

During the three months endedJuly 1, 2017, the Company recorded net reorganization of business charges of $3 million including $1 million of charges in Other charges and $2 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $3 million were charges of $8 million related to employee separation costs, partially offset by $5 million of reversals for accruals no longer needed.

During the six months endedJuly 1, 2017, the Company recorded net reorganization of business charges of $22 million including $16 million of charges in Other charges and $6 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $22 million were charges of $23 million for employee separation costs and $4 million for exit costs, partially offset by $5 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment: 

July 1, 2017	Three Months Ended		Six Months Ended
Products	$	3	$	16
Services	—		6
	$	3	$	22

The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2017 to July 1, 2017:

	January 1, 2017		Additional Charges		Adjustments			Amount Used			July 1, 2017
Exit costs	$	7	$	4	$	—		$	(1	)	$	10
Employee separation costs	95		23		(5		)	(55		)	58
	$	102	$	27	$	(5	)	$	(56	)	$	68

Exit Costs

At January 1, 2017, the Company had $7 million of accruals for exit costs. During the six months endedJuly 1, 2017, there were $4 million of additional charges and $1 million of cash payments related to the exit of leased facilities. The remaining accrual of $10 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017, 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, 2017, the Company had an accrual of $95 million for employee separation costs. The 2017 additional charges of $23 million represent severance costs for approximately 300 employees. The adjustment of $5 million reflects reversals for accruals no longer needed. The $55 million used reflects cash payments to severed employees. The remaining accrual of $58 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017, is expected to be paid, primarily within one year, to approximately 500 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.

2016 Charges

During the three months endedJuly 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 endedJuly 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 related to 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: 

July 2, 2016	Three Months Ended		Six Months Ended
Products	$	33	$	54
Services	11		13
	$	44	$	67

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Intangible Assets and Goodwill

6 Months Ended

Jul. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company's condensed consolidated financial statements for the period subsequent to the date of acquisition.

Guardian Digital Communications Limited

On February 19, 2016, the Company completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited (collectively referred to as "Airwave"), the largest private operator of a public safety network in the world. All of the outstanding equity of Airwave was acquired for the sum of £1, after which the Company invested into Airwave £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 Airwave 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.

The acquisition of Airwave 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.

The total consideration for the acquisition of Airwave 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:

Cash	$	86
Accounts receivable, net	55
Other current assets	36
Property, plant and equipment, net	245
Deferred income taxes	82
Accounts payable	(18		)
Accrued liabilities	(181		)
Other liabilities	(289		)
Goodwill	191
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

Acquired intangible assets consist of $846 million of customer relationships and $29 million of trade names. All intangibles have a useful life of seven years, over which amortization expense will be recognized on a straight line basis. Acquired goodwill of $191 million 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.

Other Acquisitions

On July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1.

On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year.

On March 13, 2017, the Company completed the acquisition of Interexport, a company that provides Managed & Support services for communications systems to public safety and commercial customers in Chile, for a gross purchase price of $98 billion Chilean Pesos, or approximately $147 million U.S. Dollars based on cash proceeds of $55 million, net of cash acquired, and assumed liabilities of $92 million, primarily related to capital leases. As a result of the acquisition, the Company recognized $7 million of goodwill, $61 million of identifiable intangible assets, $70 million of acquired property, plant and equipment and $9 million of net other tangible assets. The estimated identifiable intangible assets were classified as $56 million of customer-related intangibles and $5 million of other intangibles and will be amortized over a period of seven years.

On November 10, 2016, the Company completed the acquisition of Spillman Technologies, Inc., a provider of comprehensive law enforcement and public safety software solutions, for a gross purchase price of $221 million. As a result of the acquisition, the Company recognized $144 million of goodwill, $115 million of identifiable intangible assets, and $38 million of acquired liabilities. The identifiable intangible assets were classified as $49 million of completed technology, $59 million of customer-related intangibles, and $7 million of other intangibles and will be amortized over a period of seven to ten years.

During the year ended December 31, 2016, the Company completed the acquisition of several software and service-based providers for a total of $30 million, recognizing $6 million of goodwill, $15 million of intangible assets, and $9 million of tangible net assets related to these acquisitions. Under the preliminary purchase accounting, the $15 million of identifiable intangible assets were classified as: (i) $7 million of completed technology and (ii) $8 million of customer-related intangibles and will be amortized over a period of five years. During the first quarter of 2017, the Company completed the purchase accounting and recorded an additional $11 million completed technology intangible asset that will be amortized over a period of eight years.

Intangible Assets

Amortized intangible assets were comprised of the following: 

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	128	$	46	$	116	$	38
Patents	8		7		8		6
Customer-related	918		167		810		101
Other intangibles	54		20		49		17
	$	1,108	$	240	$	983	$	162

Amortization expense on intangible assets was $37 million for the three months endedJuly 1, 2017 and $73 million for the six months endedJuly 1, 2017. Amortization expense on intangible assets was $38 million for the three months endedJuly 2, 2016 and $52 million for the six months endedJuly 2, 2016. The increase in amortization expense is primarily due to the acquisition of Airwave, Spillman Technologies, Inc. and Interexport. As of July 1, 2017, annual amortization expense is estimated to be $144 million in 2017, $148 million in 2018, $147 million in 2019, $144 million in 2020, $143 million in 2021, and $140 million in 2022.

Amortized intangible assets, excluding goodwill, were comprised of the following by segment:

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products	$	178	$	73	$	178	$	63
Services	930		167		805		99
	$	1,108	$	240	$	983	$	162

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2017 to July 1, 2017: 

	Products		Services		Total
Balance as of January 1, 2017
Goodwill, net of impairment losses	$	316	$	412	$	728
Goodwill acquired	—		7		7
Purchase accounting adjustments	1		3		4
Foreign currency	—		10		10
Balance as of July 1, 2017
Goodwill, net of impairment losses	$	317	$	432	$	749

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Basis of Presentation (Policies)

6 Months Ended

Jul. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The condensed consolidated financial statements as of July 1, 2017 and for the three and six months endedJuly 1, 2017 and July 2, 2016 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, 2016. The results of operations for the three and six months endedJuly 1, 2017 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 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 the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity 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.

The Company has continued to analyze the impact of the new standard on its financial results based on an inventory of the Company's current contracts with customers. The Company has obtained an understanding of the new standard and currently believes that it will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of its contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method.

Under the new standard, the Company must identify the distinct promises to transfer goods and/or services within its contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, the Company has considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact the Company's percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's percentage of completion contracts, it will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in the Company's contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services.

In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While the Company may have contracts which fall under these rules in the current standard, it has not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, the Company does not anticipate a significant acceleration of revenue upon applying the new standard to its current contracts under these fact patterns.

The Company continues to evaluate the impact of ASU No. 2014-09 on its financial results and prepare for the adoption of the standard on January 1, 2018, including readying its internal processes and control environment for new requirements, particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. The Company expects to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements.

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 prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The Company intends to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows.

In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The Company intends to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for the Company January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. The Company does not anticipate significant changes to the Company's financial statements and related disclosures from adoption of the ASU.

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. The Company intends to adopt this ASU on January 1, 2018. Upon adoption, the Company plans to update the presentation of net periodic cost (benefit) accordingly, noting all components of the Company's net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively.

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Other Financial Data (Tables)

6 Months Ended

Jul. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other Charges (Income)

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

	Three Months Ended					Six Months Ended
	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Other charges:
Intangibles amortization	$	37		$	38	$	73		$	52
Reorganization of business	1			19		16			25
Building impairment	—			17		8			17
Non-U.S. pension settlement loss	16			—		25			—
Legal settlements	(1		)	—		(44		)	—
Acquisition-related transaction fees	—			—		1			13
	$	53		$	74	$	79		$	107

Other Income (Expense)

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

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Interest income (expense), net:
Interest expense	$	(55	)	$	(59	)	$	(109	)	$	(111	)
Interest income	4			5			7			8
	$	(51	)	$	(54	)	$	(102	)	$	(103	)
Other:
Foreign currency gain (loss)	$	(20	)	$	14		$	(22	)	$	27
Gain (loss) on derivative instruments	18			(18		)	11			(30		)
Gains on equity method investments	1			—			—			2
Realized foreign currency loss on acquisition	—			—			—			(10		)
Other	1			—			2			—
	$	—		$	(4	)	$	(9	)	$	(11	)

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				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Basic earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Per share amount	$	0.80	$	0.62	$	1.27	$	0.72
Diluted earnings per common share:
Earnings	$	131	$	107	$	208	$	124
Weighted average common shares outstanding	163.1		171.9		163.7		173.0
Add effect of dilutive securities:
Share-based awards	3.1		2.4		3.2		2.4
Senior Convertible Notes	2.8		0.5		2.6		0.3
Diluted weighted average common shares outstanding	169.0		174.8		169.5		175.7
Per share amount	$	0.78	$	0.61	$	1.23	$	0.71

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	July 1, 2017			December 31, 2016
Accounts receivable	$	1,250		$	1,454
Less allowance for doubtful accounts	(39		)	(44		)
	$	1,211		$	1,410

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: 

	July 1, 2017			December 31, 2016
Long-term receivables	$	48		$	63
Less current portion	(13		)	(14		)
Non-current long-term receivables	$	35		$	49

Inventories, Net

Inventories, net, consist of the following: 

	July 1, 2017			December 31, 2016
Finished goods	$	197		$	151
Work-in-process and production materials	321			253
	518			404
Less inventory reserves	(127		)	(131		)
	$	391		$	273

Other Current Assets

Other current assets consist of the following: 

	July 1, 2017		December 31, 2016
Available-for-sale securities	$	50	$	46
Costs and earnings in excess of billings	529		495
Tax-related refunds receivable	110		90
Other	115		124
	$	804	$	755

Property, Plant And Equipment, Net

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

	July 1, 2017			December 31, 2016
Land	$	10		$	12
Building	267			306
Machinery and equipment	2,078			1,921
	2,355			2,239
Less accumulated depreciation	(1,496		)	(1,450		)
	$	859		$	789

Investments

Investments consist of the following:

July 1, 2017	Cost   Basis		Unrealized   Gains		Investments
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	56	$	—	$	56
Corporate bonds	5		—		5
Common stock	5		7		12
	66		7		73
Other investments	210		—		210
Equity method investments	15		—		15
	$	291	$	7	$	298
Less: current portion of available-for-sale securities					50
					$	248

December 31, 2016	Cost   Basis		Unrealized   Gains		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

Other Assets

Other assets consist of the following: 

	July 1, 2017		December 31, 2016
Long-term receivables	35		49
Defined benefit plan assets	125		102
Other	40		49
	$	200	200

Accrued Liabilities

Accrued liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Deferred revenue	$	427	$	439
Compensation	171		250
Billings in excess of costs and earnings	387		434
Tax liabilities	134		111
Dividend payable	76		77
Trade liabilities	174		180
Other	555		620
	$	1,924	$	2,111

Other Liabilities

Other liabilities consist of the following: 

	July 1, 2017		December 31, 2016
Defined benefit plans	$	1,800	$	1,799
Deferred revenue	164		115
Unrecognized tax benefits	39		39
Deferred income taxes	139		121
Deferred consideration (Note 13)	78		72
Other	220		209
	$	2,440	$	2,355

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 endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(460	)	$	(253	)	$	(494	)	$	(266	)
Other comprehensive income (loss) before reclassification adjustment	47			(98		)	84			(84		)
Tax expense	—			—			(3		)	(1		)
Other comprehensive income (loss), net of tax	47			(98		)	81			(85		)
Balance at end of period	$	(413	)	$	(351	)	$	(413	)	$	(351	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	1		$	—		$	(3	)
Other comprehensive income (loss) before reclassification adjustment	7			(2		)	7			(2		)
Tax (expense) benefit	(3		)	1			(3		)	1
Other comprehensive income (loss) before reclassification adjustment, net of tax	4			(1		)	4			(1		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net	—			—			—			6
Tax benefit	—			—			—			(2		)
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			—			4
Other comprehensive income (loss), net of tax	4			(1		)	4			3
Balance at end of period	$	4		$	—		$	4		$	—
Defined Benefit Plans:
Balance at beginning of period	(1,804		)	(1,593		)	$	(1,823	)	$	(1,597	)
Other comprehensive income (loss) before reclassification adjustment	(11		)	53			(11		)	53
Tax expense	—			(16		)	—			(16		)
Other comprehensive income (loss) before reclassification adjustment, net of tax	(11		)	37			(11		)	37
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses	16			18			32			28
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses	(4		)	(7		)	(8		)	(13		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges	16			—			25			—
Tax expense (benefit)	(3		)	8			(5		)	8
Reclassification adjustment into Operating earnings, net of tax	25			19			44			23
Other comprehensive income, net of tax	14			56			33			60
Balance at end of period	$	(1,790	)	$	(1,537	)	$	(1,790	)	$	(1,537	)
Total Accumulated other comprehensive loss	$	(2,199	)	$	(1,888	)	$	(2,199	)	$	(1,888	)

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Risk Management (Tables)

6 Months Ended

Jul. 01, 2017

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 1, 2017, and the corresponding positions as of December 31, 2016: 

	Notional Amount
Net Buy (Sell) by Currency	July 1, 2017			December 31, 2016
Euro	$	161		$	122
British Pound	149			246
Chinese Renminbi	(81		)	(108		)
Australian Dollar	(50		)	(51		)
Brazilian Real	(45		)	(56		)

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 1, 2017 and December 31, 2016:

	Fair Values of Derivative Instruments
	Assets			Liabilities
July 1, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	2	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	4	Accrued liabilities
Total derivatives	$	6		$	6

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2016	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	9	Other current assets	$	32	Accrued liabilities

Summary of Derivative Instruments and The Effect on the Condensed Consolidated Statements Of Operations

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended					Six Months Ended					Balance Sheet Location
Derivatives Designated as Hedging Instruments	July 1, 2017			July 2, 2016		July 1, 2017			July 2, 2016
Foreign exchange contracts	$	(2	)	$	—	$	(2	)	$	—	Other comprehensive income (loss)

The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months endedJuly 1, 2017 and July 2, 2016:

	Three Months Ended			Six Months Ended			Statements of Operations Location
Gain (loss) on Derivative Instruments	July 1, 2017	July 2, 2016		July 1, 2017	July 2, 2016
Foreign exchange contracts	18	(18	)	11	(30	)	Other income (expense)

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Income Taxes (Tables)

6 Months Ended

Jul. 01, 2017

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table provides details of income taxes:

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Net earnings before income taxes	$	205		$	167		$	324		$	189
Income tax expense	73			59			114			64
Effective tax rate	36		%	35		%	35		%	34		%

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Retirement and Other Employee Benefits (Tables)

6 Months Ended

Jul. 01, 2017

Retirement Benefits [Abstract]

Schedule of Net Benefit Plan Costs

The net periodic costs (benefits) for Pension and Postretirement Health Care Benefits Plans were as follows:

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Three Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	1		$	2		$	—		$	—
Interest cost	46			46			10			14			1			1
Expected return on plan assets	(57		)	(55		)	(24		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	11			9			4			3			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(7		)
Settlement loss	—			—			16			—			—			—
Net periodic pension cost (benefit)	$	—		$	—		$	7		$	(5	)	$	(5	)	$	(7	)

	U.S. Pension Benefit Plans						Non U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Six Months Ended	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Service cost	$	—		$	—		$	2		$	4		$	—		$	—
Interest cost	92			91			20			28			2			2
Expected return on plan assets	(115		)	(110		)	(47		)	(48		)	(6		)	(5		)
Amortization of:
Unrecognized net loss	22			19			8			6			2			3
Unrecognized prior service benefit	—			—			—			—			(8		)	(13		)
Settlement loss	—			—			25			—			—			—
Net periodic cost (benefit)	$	(1	)	$	—		$	8		$	(10	)	$	(10	)	$	(13	)

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Share-Based Compensation Plans (Tables)

6 Months Ended

Jul. 01, 2017

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: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Share-based compensation expense included in:
Costs of sales	$	2		$	2		$	4		$	4
Selling, general and administrative expenses	11			12			22			24
Research and development expenditures	3			4			7			7
Share-based compensation expense included in Operating earnings	16			18			33			35
Tax benefit	5			6			11			11
Share-based compensation expense, net of tax	$	11		$	12		$	22		$	24
Decrease in basic earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)
Decrease in diluted earnings per share	$	(0.07	)	$	(0.07	)	$	(0.13	)	$	(0.14	)

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Fair Value Measurements (Tables)

6 Months Ended

Jul. 01, 2017

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 1, 2017 and December 31, 2016 were as follows: 

July 1, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	$	—	$	56	$	56
Corporate bonds	—		5		5
Common stock	12		—		12
Liabilities:
Foreign exchange derivative contracts	$	—	$	6	$	6

December 31, 2016	Level 2		Total
Assets:
Foreign exchange derivative contracts	$	9	$	9
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations	51		51
Corporate bonds	5		5
Liabilities:
Foreign exchange derivative contracts	$	32	$	32

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Long-term Financing and Sales of Receivables (Tables)

6 Months Ended

Jul. 01, 2017

Receivables [Abstract]

Long-Term Customer Financing

Accounts receivable, net, consists of the following: 

	July 1, 2017			December 31, 2016
Accounts receivable	$	1,250		$	1,454
Less allowance for doubtful accounts	(39		)	(44		)
	$	1,211		$	1,410

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: 

	July 1, 2017			December 31, 2016
Long-term receivables	$	48		$	63
Less current portion	(13		)	(14		)
Non-current long-term receivables	$	35		$	49

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 endedJuly 1, 2017 and July 2, 2016: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Accounts receivable sales proceeds	$	61	$	5	$	80	$	7
Long-term receivables sales proceeds	22		70		68		134
Total proceeds from receivable sales	$	83	$	75	$	148	$	141

Financing Receivables Aging Analysis

An aging analysis of financing receivables at July 1, 2017 and December 31, 2016 is as follows: 

July 1, 2017	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	1	$	2
Commercial loans and leases secured	27		—		—
Long-term receivables, including current portion	$	48	$	1	$	2

December 31, 2016	Total Long-term Receivable		Current Billed Due		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—
Commercial loans and leases secured	43		—		2
Long-term receivables, including current portion	$	63	$	—	$	2

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Segment Information (Tables)

6 Months Ended

Jul. 01, 2017

Segment Reporting [Abstract]

Net Sales and Operating Earnings by Segment

The following table summarizes Net sales by segment: 

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Products	$	848	$	801	$	1,551	$	1,503
Services	649		629		1,226		1,120
	$	1,497	$	1,430	$	2,777	$	2,623

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Products	$	168		$	129		$	257		$	179
Services	89			95			176			144
Operating earnings	257			224			433			323
Total other expense	(52		)	(57		)	(109		)	(134		)
Earnings before income taxes	$	205		$	167		$	324		$	189

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Reorganization of Business (Tables)

6 Months Ended

Jul. 01, 2017

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Reportable Segment

The following table displays the net charges incurred by segment: 

July 2, 2016	Three Months Ended		Six Months Ended
Products	$	33	$	54
Services	11		13
	$	44	$	67

The following table displays the net charges incurred by segment: 

July 1, 2017	Three Months Ended		Six Months Ended
Products	$	3	$	16
Services	—		6
	$	3	$	22

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, 2017 to July 1, 2017:

	January 1, 2017		Additional Charges		Adjustments			Amount Used			July 1, 2017
Exit costs	$	7	$	4	$	—		$	(1	)	$	10
Employee separation costs	95		23		(5		)	(55		)	58
	$	102	$	27	$	(5	)	$	(56	)	$	68

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Intangible Assets and Goodwill (Tables)

6 Months Ended

Jul. 01, 2017

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:

Cash	$	86
Accounts receivable, net	55
Other current assets	36
Property, plant and equipment, net	245
Deferred income taxes	82
Accounts payable	(18		)
Accrued liabilities	(181		)
Other liabilities	(289		)
Goodwill	191
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

Amortized intangible assets were comprised of the following: 

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	128	$	46	$	116	$	38
Patents	8		7		8		6
Customer-related	918		167		810		101
Other intangibles	54		20		49		17
	$	1,108	$	240	$	983	$	162

Amortized Intangible Assets, Excluding Goodwill, By Business Segment

Amortized intangible assets, excluding goodwill, were comprised of the following by segment:

	July 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products	$	178	$	73	$	178	$	63
Services	930		167		805		99
	$	1,108	$	240	$	983	$	162

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2017 to July 1, 2017: 

	Products		Services		Total
Balance as of January 1, 2017
Goodwill, net of impairment losses	$	316	$	412	$	728
Goodwill acquired	—		7		7
Purchase accounting adjustments	1		3		4
Foreign currency	—		10		10
Balance as of July 1, 2017
Goodwill, net of impairment losses	$	317	$	432	$	749

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Basis of Presentation - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Jan. 01, 2018	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment out of operating earnings		$ 257	$ 224	$ 433	$ 323
Reclassification adjustment to other expense		$ 0	$ 4	$ 9	$ 11
Forecast | Accounting Standards Update 2017-07, Year 2017 Effect
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment out of operating earnings	$ 37
Reclassification adjustment to other expense	37
Forecast | Accounting Standards Update 2017-07, Year 2016 Effect
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment out of operating earnings	29
Reclassification adjustment to other expense	$ 29

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Other Financial Data - Other Charges (Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Other charges:
Intangibles amortization	$ 37	$ 38	$ 73	$ 52
Reorganization of business	1	19	16	25
Building impairment	0	17	8	17
Non-U.S. pension settlement loss	16	0	25	0
Legal settlements	(1)	0	(44)	0
Acquisition-related transaction fees	0	0	1	13
Other charges	$ 53	$ 74	$ 79	$ 107

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Other Financial Data - Other Charges (Income) - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Gain on legal settlement	$ 1	$ 0	$ 44	$ 0
Proceeds from legal settlements, excluding fees			42
Proceeds from legal settlements			52
Collection fees payable	$ 10		$ 10

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Other Financial Data - Other Income (Expense) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Interest income (expense), net:
Interest expense	$ (55)	$ (59)	$ (109)	$ (111)
Interest income	4	5	7	8
Interest income (expense), net	(51)	(54)	(102)	(103)
Other:
Foreign currency gain (loss)	(20)	14	(22)	27
Gain (loss) on derivative instruments	18	(18)	11	(30)
Gains on equity method investments	1	0	0	2
Realized foreign currency loss on acquisition	0	0	0	(10)
Other	1	0	2	0
Total other income (expense)	$ 0	$ (4)	$ (9)	$ (11)

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Other Financial Data - Earnings Per Common Share (Details) $ / shares in Units, shares in Millions		3 Months Ended		6 Months Ended
	Aug. 25, 2015 USD ($) $ / shares	Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares	Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares
Basic earnings (loss) per common share:
Earnings | $		$ 131,000,000	$ 107,000,000	$ 208,000,000	$ 124,000,000
Weighted average common shares outstanding (in shares)		163.1	171.9	163.7	173.0
Basic earnings per share amount (in US$ per share) | $ / shares		$ 0.80	$ 0.62	$ 1.27	$ 0.72
Diluted earnings per common share:
Earnings | $		$ 131,000,000	$ 107,000,000	$ 208,000,000	$ 124,000,000
Weighted average common shares outstanding (in shares)		163.1	171.9	163.7	173.0
Add effect of dilutive securities:
Share-based awards (in shares)		3.1	2.4	3.2	2.4
Senior Convertible Notes (in shares)		2.8	0.5	2.6	0.3
Diluted weighted average common shares outstanding (in shares)		169.0	174.8	169.5	175.7
Per share amount (in US$ per share) | $ / shares		$ 0.78	$ 0.61	$ 1.23	$ 0.71
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive impact of Senior Convertible Notes (in shares)		2.8	0.5	2.6	0.3
Senior Convertible Notes | Convertible Notes
Add effect of dilutive securities:
Senior Convertible Notes (in shares)		2.8		2.6
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Debt instrument face amount | $	$ 1,000,000,000.0
Interest rate	2.00%
Conversion rate	0.0145985
Effective conversion price of convertible shares (in US$ per share) | $ / shares	$ 68.50
Dilutive impact of Senior Convertible Notes (in shares)		2.8		2.6
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares)		2.1	2.3	2.4	3.2
Performance Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares)		1.8	2.1	2.0	2.1
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares)			0.6		0.6

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Other Financial Data - Accounts Receivable, Net (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts receivable	$ 1,250	$ 1,454
Less allowance for doubtful accounts	(39)	(44)
Accounts receivable, net	$ 1,211	$ 1,410

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Other Financial Data - Inventories, Net (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Inventory, Net [Abstract]
Finished goods	$ 197	$ 151
Work-in-process and production materials	321	253
Inventories, gross	518	404
Less inventory reserves	(127)	(131)
Inventories, net	$ 391	$ 273

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Other Financial Data - Other Current Assets (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Other Current Assets [Abstract]
Available-for-sale securities	$ 50	$ 46
Costs and earnings in excess of billings	529	495
Tax-related refunds receivable	110	90
Other	115	124
Other current assets	$ 804	$ 755

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Other Financial Data - Property, Plant And Equipment, Net (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Property, Plant and Equipment, Net [Abstract]
Land	$ 10		$ 10		$ 12
Building	267		267		306
Machinery and equipment	2,078		2,078		1,921
Property, plant and equipment, gross	2,355		2,355		2,239
Less accumulated depreciation	(1,496)		(1,496)		(1,450)
Property, plant and equipment, net	859		859		$ 789
Depreciation expense	$ 49	$ 44	$ 93	$ 92

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Other Financial Data - Investments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Available-for-sale securities:
Cost Basis	$ 66		$ 66		$ 56
Unrealized Gains	7		7		0
Investments	73		73		56
Other investments	210		210		211
Equity method investments	15		15		17
Investments, Cost Basis	291		291		284
Investments	298		298		284
Less: current portion of available-for-sale securities	50		50		46
Long-term investments noncurrent	248		248		238
Cash surrender value of life insurance	136		136		135
Gains (losses) on sales of investments and businesses, net	(1)	$ 1	2	$ (20)
Government, agency, and government-sponsored enterprise obligations
Available-for-sale securities:
Cost Basis	56		56		51
Unrealized Gains	0		0		0
Investments	56		56		51
Corporate bonds
Available-for-sale securities:
Cost Basis	5		5		5
Unrealized Gains	0		0		0
Investments	5		5		5
Common stock
Available-for-sale securities:
Cost Basis	5		5
Unrealized Gains	7		7
Investments	12		12
United Kingdom Treasury Securities
Available-for-sale securities:
Gross realized gain (loss) on securities				$ 19
Technology-drivent Startup Companies
Available-for-sale securities:
Other investments	$ 74		$ 74		$ 76

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Other Financial Data - Other Assets (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Other Assets [Abstract]
Long-term receivables	$ 35	$ 49
Defined benefit plan assets	125	102
Other	40	49
Other assets, total	$ 200	$ 200

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Other Financial Data - Accrued Liabilities (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Accrued Liabilities [Abstract]
Deferred revenue	$ 427	$ 439
Compensation	171	250
Billings in excess of costs and earnings	387	434
Tax liabilities	134	111
Dividend payable	76	77
Trade liabilities	174	180
Other	555	620
Accrued liabilities	$ 1,924	$ 2,111

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Other Financial Data - Other Liabilities (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Other Liabilities [Abstract]
Defined benefit plans	$ 1,800	$ 1,799
Deferred revenue	164	115
Unrecognized tax benefits	39	39
Deferred income taxes	139	121
Deferred consideration	78	72
Other	220	209
Other liabilities	$ 2,440	$ 2,355

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Other Financial Data - Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Aug. 03, 2016
Equity, Class of Treasury Stock [Line Items]
Payments for repurchased shares			$ 258,000,000	$ 619,000,000
Number of shares repurchased (in shares)			3.2
Repurchase of common shares, average cost (in US$ per share)			$ 81.66
Share repurchase authority utilized during period			$ 12,100,000,000
Amount available for future share repurchase	$ 1,900,000,000		1,900,000,000
Cash dividends paid	$ 77,000,000	$ 72,000,000	$ 154,000,000	$ 143,000,000
Maximum
Equity, Class of Treasury Stock [Line Items]
Stock repurchase program, authorized amount					$ 14,000,000,000

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Other Financial Data - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			$ (952)
Total other comprehensive income (loss), net of tax	$ 65	$ (43)	118	$ (22)
Balance at end of period	(976)		(976)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			(2,317)
Total other comprehensive income (loss), net of tax			118
Balance at end of period	(2,199)	(1,888)	(2,199)	(1,888)
Foreign Currency Translation Adjustments:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(460)	(253)	(494)	(266)
Other comprehensive income (loss) before reclassification adjustment	47	(98)	84	(84)
Tax expense	0	0	(3)	(1)
Total other comprehensive income (loss), net of tax	47	(98)	81	(85)
Balance at end of period	(413)	(351)	(413)	(351)
Available-for-Sale Securities:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	0	1	0	(3)
Other comprehensive income (loss) before reclassification adjustment	7	(2)	7	(2)
Tax expense	(3)	1	(3)	1
Other comprehensive income (loss) before reclassification adjustment, net of tax	4	(1)	4	(1)
Reclassification adjustment before tax	0	0	0	6
Tax expense (benefit)	0	0	0	(2)
Reclassification adjustment after tax	0	0	0	4
Total other comprehensive income (loss), net of tax	4	(1)	4	3
Balance at end of period	4	0	4	0
Defined Benefit Plans:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(1,804)	(1,593)	(1,823)	(1,597)
Other comprehensive income (loss) before reclassification adjustment	(11)	53	(11)	53
Tax expense	0	(16)	0	(16)
Other comprehensive income (loss) before reclassification adjustment, net of tax	(11)	37	(11)	37
Tax expense (benefit)	(3)	8	(5)	8
Reclassification adjustment after tax	25	19	44	23
Total other comprehensive income (loss), net of tax	14	56	33	60
Balance at end of period	(1,790)	(1,537)	(1,790)	(1,537)
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	16	18	32	28
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	(4)	(7)	(8)	(13)
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	$ 16	$ 0	$ 25	$ 0

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Debt and Credit Facilities (Details)	Aug. 25, 2015 USD ($) trading_days $ / shares	Jul. 01, 2017 USD ($)	Apr. 25, 2017 USD ($)
2017 Revolving Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility borrowing capacity			$ 2,200,000,000.0
2017 Revolving Credit Facility | Letter of Credit
Debt Instrument [Line Items]
Line of credit facility borrowing capacity		$ 500,000,000
Fronting commitment sub-limit		$ 450,000,000
Convertible Notes | Senior Convertible Notes
Debt Instrument [Line Items]
Debt instrument face amount	$ 1,000,000,000.0
Interest rate	2.00%
Minimum period from issuance to convert	2 years
Stock price trigger (in US$ per share) | $ / shares	$ 85
Threshold consecutive trading days | trading_days	10
Percentage of debt	20.00%
Conversion rate	0.0145985
Effective conversion price of convertible shares (in US$ per share) | $ / shares	$ 68.50

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Risk Management - Foreign Currency Risk (Details)	Jul. 01, 2017 USD ($) position	Jul. 01, 2017 GBP (£) position	Dec. 31, 2016 USD ($) position
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Number of net notional positions to buy or sell foreign currency disclosed (in number of positions) | position	5	5	5
Foreign Exchange Contract
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	$ 590,000,000		$ 717,000,000
Foreign Exchange Contract | Euro | Long
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	161,000,000		122,000,000
Foreign Exchange Contract | British Pound | Designated as Hedging Instrument | Net Investment Hedging
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts | £		£ 50,000,000
Fair value of derivative liabilities	2,000,000
Foreign Exchange Contract | British Pound | Long
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	149,000,000		246,000,000
Foreign Exchange Contract | Chinese Renminbi | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	81,000,000		108,000,000
Foreign Exchange Contract | Australian Dollar | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	50,000,000		51,000,000
Foreign Exchange Contract | Brazilian Real | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	$ 45,000,000		$ 56,000,000

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Risk Management - Interest Rate Risk (Details) - Not Designated As Hedging Instruments - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Derivative [Line Items]
Fair value of derivative liabilities	$ 6
Interest Rate Swap | Accrued liabilities
Derivative [Line Items]
Fair value of derivative liabilities	$ 0	$ 0

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Risk Management - Counterparty Risk (Details) $ in Millions	Jul. 01, 2017 USD ($)
Credit Concentration Risk
Derivative [Line Items]
Net credit risk with all counterparties	$ 6

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Risk Management - Summary of Fair Values and Location in Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Designated as Hedging Instrument | Foreign exchange contracts | Other assets
Derivatives, Fair Value [Line Items]
Fair value of derivative assets	$ 0
Designated as Hedging Instrument | Foreign exchange contracts | Other liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative liabilities	2
Not Designated As Hedging Instruments
Derivatives, Fair Value [Line Items]
Fair value of derivative assets	6
Fair value of derivative liabilities	6
Not Designated As Hedging Instruments | Foreign exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Fair value of derivative assets	6	$ 9
Not Designated As Hedging Instruments | Foreign exchange contracts | Accrued liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative liabilities	$ 4	$ 32

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Risk Management - Summary of Derivative Instruments and the Effect on the Condensed Consolidated Statements of Operations (Details) - Foreign exchange contracts - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Designated as Hedging Instrument | Other comprehensive income (loss)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	$ (2)	$ 0	$ (2)	$ 0
Not Designated As Hedging Instruments | Other income (expense)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	$ 18	$ (18)	$ 11	$ (30)

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Income Tax Disclosure [Abstract]
Net earnings before income taxes	$ 205	$ 167	$ 324	$ 189
Income tax expense	$ 73	$ 59	$ 114	$ 64
Effective tax rate	36.00%	35.00%	35.00%	34.00%
Federal income tax rate	35.00%	35.00%	35.00%	35.00%

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Retirement and Other Employee Benefits - Pension and Postretirement Health Care Benefits (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Amortization of:
Settlement loss	$ 16	$ 0	$ 25	$ 0
Postretirement Health Care Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	0	0
Interest cost	1	1	2	2
Expected return on plan assets	(3)	(3)	(6)	(5)
Amortization of:
Unrecognized net loss	1	2	2	3
Unrecognized prior service benefit	(4)	(7)	(8)	(13)
Settlement loss	0	0	0	0
Net periodic pension cost (benefit)	(5)	(7)	(10)	(13)
U.S. | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	0	0
Interest cost	46	46	92	91
Expected return on plan assets	(57)	(55)	(115)	(110)
Amortization of:
Unrecognized net loss	11	9	22	19
Unrecognized prior service benefit	0	0	0	0
Settlement loss	0	0	0	0
Net periodic pension cost (benefit)	0	0	(1)	0
Non U.S. | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	2	2	4
Interest cost	10	14	20	28
Expected return on plan assets	(24)	(24)	(47)	(48)
Amortization of:
Unrecognized net loss	4	3	8	6
Unrecognized prior service benefit	0	0	0	0
Settlement loss	16	0	25	0
Net periodic pension cost (benefit)	$ 7	$ (5)	$ 8	$ (10)

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Retirement and Other Employee Benefits - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Defined Benefit Plan Disclosure [Line Items]
Settlement loss	$ (16)	$ 0	$ (25)	$ 0
Retirement age				65 years
Reduction to accumulated postretirement benefit obligation				$ 53
Amortization period				5 years
United Kingdom | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Settlement loss	$ (16)		$ (25)

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Share-Based Compensation Plans - Schedule of Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 16	$ 18	$ 33	$ 35
Tax benefit	5	6	11	11
Share-based compensation expense, net of tax	$ 11	$ 12	$ 22	$ 24
Decrease in basic earnings per share (in US$ per share)	$ (0.07)	$ (0.07)	$ (0.13)	$ (0.14)
Decrease in diluted earnings per share (in US$ per share)	$ (0.07)	$ (0.07)	$ (0.13)	$ (0.14)
Costs of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 2	$ 2	$ 4	$ 4
Selling, general and administrative expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	11	12	22	24
Research and development expenditures
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 3	$ 4	$ 7	$ 7

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Share-Based Compensation Plans - Narrative (Details) shares in Millions, $ in Millions	6 Months Ended
	Jul. 01, 2017 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units granted in period (in shares) | shares	0.5
Aggregate grant date fair value | $	$ 39
Market Stock Units (MSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units granted in period (in shares) | shares	0.1
Aggregate grant date fair value | $	$ 6
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares) | shares	0.3
Aggregate grant date fair value | $	$ 5
Performance Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares) | shares	0.6
Aggregate grant date fair value | $	$ 9

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Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - USD ($)	Jul. 01, 2017	Dec. 31, 2016
Assets:
Available-for-sale securities:	$ 73,000,000	$ 56,000,000
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Government, agency, and government-sponsored enterprise obligations
Assets:
Available-for-sale securities:	56,000,000	51,000,000
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Corporate bonds
Assets:
Available-for-sale securities:	5,000,000	5,000,000
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Common stock
Assets:
Available-for-sale securities:	12,000,000
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	6,000,000	9,000,000
Liabilities:
Foreign exchange derivative contracts	6,000,000	32,000,000
Recurring basis | Level 1 | Government, agency, and government-sponsored enterprise obligations
Assets:
Available-for-sale securities:	0
Recurring basis | Level 1 | Corporate bonds
Assets:
Available-for-sale securities:	0
Recurring basis | Level 1 | Common stock
Assets:
Available-for-sale securities:	12,000,000
Recurring basis | Level 1 | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	0
Liabilities:
Foreign exchange derivative contracts	0
Recurring basis | Level 2 | Government, agency, and government-sponsored enterprise obligations
Assets:
Available-for-sale securities:	56,000,000	51,000,000
Recurring basis | Level 2 | Corporate bonds
Assets:
Available-for-sale securities:	5,000,000	5,000,000
Recurring basis | Level 2 | Common stock
Assets:
Available-for-sale securities:	0
Recurring basis | Level 2 | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	6,000,000	9,000,000
Liabilities:
Foreign exchange derivative contracts	6,000,000	32,000,000
Recurring basis | Level 3 | Government, agency, and government-sponsored enterprise obligations
Assets:
Available-for-sale securities:	0	0
Recurring basis | Level 3 | Corporate bonds
Assets:
Available-for-sale securities:	0	0
Recurring basis | Level 3 | Common stock
Assets:
Available-for-sale securities:	0
Recurring basis | Level 3 | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	0	0
Liabilities:
Foreign exchange derivative contracts	$ 0	$ 0

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
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	$ 298	$ 309
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	$ 4,600	$ 4,500

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Long-term Financing and Sales of Receivables - Long-Term Financing (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Receivables [Abstract]
Long-term receivables	$ 48	$ 63
Less current portion	(13)	(14)
Non-current long-term receivables	35	49
Outstanding commitment to provide long-term financing to third parties	209	$ 125
Long-term financing, commitment to lend	$ 75

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Long-term Financing and Sales of Receivables - Sales Receivables (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Receivables [Abstract]
Accounts receivable sales proceeds	$ 61	$ 5	$ 80	$ 7
Long-term receivables sales proceeds	22	70	68	134
Total proceeds from receivable sales	83	$ 75	148	$ 141
Servicing obligations for long-term receivables	$ 775		$ 775		$ 774

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Long-term Financing and Sales of Receivables - Credit Quality of Financing Receivables and Allowance for Credit Losses (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	$ 48	$ 63
Current Billed Due	1	0
Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2	2
Municipal leases secured tax exempt
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	21	20
Current Billed Due	1	0
Municipal leases secured tax exempt | Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2	0
Commercial loans and leases secured
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	27	43
Current Billed Due	0	0
Commercial loans and leases secured | Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 0	$ 2

XML

Commitments and Contingencies - Narrative (Details)	Jul. 01, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Accrual for obligations of divestitures	$ 0

XML

Segment Information - Operating Business Segment (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017 USD ($)	Jul. 02, 2016 USD ($)	Jul. 01, 2017 USD ($) segment	Jul. 02, 2016 USD ($)
Segment Reporting [Abstract]
Number of segments | segment			2
Segment Reporting Information [Line Items]
Net Sales	$ 1,497	$ 1,430	$ 2,777	$ 2,623
Operating Earnings by Segment
Operating earnings	257	224	433	323
Total other expense	(52)	(57)	(109)	(134)
Net earnings before income taxes	205	167	324	189
Products
Segment Reporting Information [Line Items]
Net Sales	848	801	1,551	1,503
Operating Earnings by Segment
Operating earnings	168	129	257	179
Services
Segment Reporting Information [Line Items]
Net Sales	649	629	1,226	1,120
Operating Earnings by Segment
Operating earnings	$ 89	$ 95	$ 176	$ 144

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Reorganization of Business - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017 USD ($) employee	Jul. 02, 2016 USD ($)	Jul. 01, 2017 USD ($) employee	Jul. 02, 2016 USD ($)	Dec. 31, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 3	$ 44	$ 22	$ 67
Restructuring, additional charges			27
Restructuring reserve	68		68		$ 102
Restructuring charges settled with cash			56
Restructuring, reversal of accruals no longer needed			5	4
Employee separation costs
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges				46
Restructuring, additional charges	8	22	23
Restructuring reserve	$ 58		58		95
Restructuring charges settled with cash			$ 55
Restructuring charges in the period for total employee severance (in number of employees) | employee			300
Number of employees expected to be paid (in number of employees) | employee	500		500
Restructuring, reversal of accruals no longer needed	$ 5		$ 5
Exit costs
Restructuring Cost and Reserve [Line Items]
Restructuring, additional charges		5	4	5
Restructuring reserve	10		10		$ 7
Restructuring charges settled with cash			1
Restructuring, reversal of accruals no longer needed			0
Asset Impairment Due to Reorganization
Restructuring Cost and Reserve [Line Items]
Restructuring, impairment of assets				20
Building | Asset Impairment Due to Reorganization
Restructuring Cost and Reserve [Line Items]
Restructuring, impairment of assets		17		17
Corporate aircraft | Asset Impairment Due to Reorganization
Restructuring Cost and Reserve [Line Items]
Restructuring, impairment of assets				3
Other charges
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	1	36	16	42
Costs of sales
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 2	$ 8	$ 6	$ 25

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Reorganization of Business - Reorganization of Businesses Accruals (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Restructuring Reserve [Roll Forward]
January 1, 2017			$ 102
Additional Charges			27
Adjustments			(5)	$ (4)
Amount Used			(56)
July 1, 2017	$ 68		68
Exit costs
Restructuring Reserve [Roll Forward]
January 1, 2017			7
Additional Charges		$ 5	4	$ 5
Adjustments			0
Amount Used			(1)
July 1, 2017	10		10
Employee separation costs
Restructuring Reserve [Roll Forward]
January 1, 2017			95
Additional Charges	8	$ 22	23
Adjustments	(5)		(5)
Amount Used			(55)
July 1, 2017	$ 58		$ 58

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Reorganization of Business - Net Charges Incurred by Business Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 3	$ 44	$ 22	$ 67
Products
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	3	33	16	54
Services
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 0	$ 11	$ 6	$ 13

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Intangible Assets and Goodwill - Guardian Digital Communications Limited (Details) $ in Millions	Feb. 19, 2016 USD ($)	Feb. 19, 2016 GBP (£)	Jul. 01, 2017 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Goodwill			$ 749	$ 728
Airwave
Business Acquisition [Line Items]
Consideration transferred, excluding third party debt paid and liabilities assumed | £		£ 1
Aggregate purchase price	$ 1,000	698,000,000
Deferred cash payment | £		£ 64,000,000
Consideration transferred	1,100
Net present value of deferred consideration payment to former owners	$ 82
Discount rate used to calculate net present value	4.20%	4.20%
Useful life of intangibles	7 years	7 years
Goodwill	$ 191
Airwave | Customer Relationships
Business Acquisition [Line Items]
Acquired intangible assets	846
Airwave | Trade Names
Business Acquisition [Line Items]
Acquired intangible assets	$ 29

XML

Intangible Assets and Goodwill - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Feb. 19, 2016	Jul. 01, 2017	Dec. 31, 2016
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill		$ 749	$ 728
Airwave
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	82
Accounts payable	(18)
Accrued liabilities	(181)
Other liabilities	(289)
Goodwill	191
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

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Intangible Assets and Goodwill - Other Acquisitions (Details) $ in Millions, CLP in Billions				3 Months Ended	12 Months Ended
	Mar. 13, 2017 USD ($)	Mar. 13, 2017 CLP	Nov. 10, 2016 USD ($)	Apr. 01, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jul. 01, 2017 USD ($)
Business Acquisition [Line Items]
Goodwill					$ 728	$ 749
Interexport
Business Acquisition [Line Items]
Consideration transferred	$ 147	CLP 98
Cash paid for acquisition	55
Acquired debt	92
Goodwill	7
Intangible assets	61
Property, plant and equipment, net	70
Other tangible assets	$ 9
Useful life of intangibles	7 years	7 years
Interexport | Customer-related
Business Acquisition [Line Items]
Intangible assets	$ 56
Interexport | Other Intangible Assets
Business Acquisition [Line Items]
Intangible assets	$ 5
Spillman Technologies
Business Acquisition [Line Items]
Goodwill			$ 144
Intangible assets			115
Acquired liabilities			38
Gross purchase price			$ 221
Spillman Technologies | Minimum
Business Acquisition [Line Items]
Useful life of intangibles			7 years
Spillman Technologies | Maximum
Business Acquisition [Line Items]
Useful life of intangibles			10 years
Spillman Technologies | Customer-related
Business Acquisition [Line Items]
Intangible assets			$ 59
Spillman Technologies | Other Intangible Assets
Business Acquisition [Line Items]
Intangible assets			7
Spillman Technologies | Completed technology
Business Acquisition [Line Items]
Intangible assets			$ 49
Business Acquisitions of Software and Service-based Providers
Business Acquisition [Line Items]
Goodwill					6
Intangible assets					$ 15
Useful life of intangibles				8 years	5 years
Gross purchase price					$ 30
Tangible assets acquired					9
Accounting adjustment for intangible assets acquired				$ 11
Business Acquisitions of Software and Service-based Providers | Customer-related
Business Acquisition [Line Items]
Intangible assets					8
Business Acquisitions of Software and Service-based Providers | Completed technology
Business Acquisition [Line Items]
Intangible assets					$ 7

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Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,108		$ 1,108		$ 983
Accumulated Amortization	240		240		162
Intangible Assets And Goodwill
Amortization expense on intangibles	37	$ 38	73	$ 52
Finite-Lived Intangible Assets, Future Amortization Expense
2017	144		144
2018	148		148
2019	147		147
2020	144		144
2021	143		143
2022	140		140
Completed technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	128		128		116
Accumulated Amortization	46		46		38
Patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	8		8		8
Accumulated Amortization	7		7		6
Customer-related
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	918		918		810
Accumulated Amortization	167		167		101
Other intangibles
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	54		54		49
Accumulated Amortization	$ 20		$ 20		$ 17

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Intangible Assets and Goodwill - Amortized Intangible Assets, Excluding Goodwill, By Business Segment (Details) - USD ($) $ in Millions	Jul. 01, 2017	Dec. 31, 2016
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,108	$ 983
Accumulated Amortization	240	162
Products
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	178	178
Accumulated Amortization	73	63
Services
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	930	805
Accumulated Amortization	$ 167	$ 99

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Intangible Assets and Goodwill - Carrying Amount of Goodwill (Details) $ in Millions	6 Months Ended
	Jul. 01, 2017 USD ($)
Goodwill Activity
Goodwill, net of impairment losses	$ 728
Goodwill acquired	7
Purchase accounting adjustments	4
Foreign currency	10
Goodwill, net of impairment losses	749
Products
Goodwill Activity
Goodwill, net of impairment losses	316
Goodwill acquired	0
Purchase accounting adjustments	1
Foreign currency	0
Goodwill, net of impairment losses	317
Services
Goodwill Activity
Goodwill, net of impairment losses	412
Goodwill acquired	7
Purchase accounting adjustments	3
Foreign currency	10
Goodwill, net of impairment losses	$ 432