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 September 29, 2018

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 September 29, 2018:

Class	Number of Shares
Common Stock; $.01 Par Value	163,527,868

	Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements	1
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 29, 2018 and September 30, 2017	1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 29, 2018 and September 30, 2017	2
Condensed Consolidated Balance Sheets as of September 29, 2018 (Unaudited) and December 31, 2017	3
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Nine Months Ended September 29, 2018	4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 29, 2018 and September 30, 2017	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3 Quantitative and Qualitative Disclosures About Market Risk	43
Item 4 Controls and Procedures	44
PART II OTHER INFORMATION
Item 1 Legal Proceedings	45
Item 1A Risk Factors	45
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3 Defaults Upon Senior Securities	46
Item 4 Mine Safety Disclosures	46
Item 5 Other Information	46
Item 6 Exhibits	47

Part I—Financial Information

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Nine Months Ended
(In millions, except per share amounts)	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Net sales from products	$	1,151		$	989		$	2,993		$	2,540
Net sales from services	711			656			2,096			1,883
Net sales	1,862			1,645			5,089			4,423
Costs of products sales	516			428			1,383			1,167
Costs of services sales	445			423			1,314			1,202
Costs of sales	961			851			2,697			2,369
Gross margin	901			794			2,392			2,054
Selling, general and administrative expenses	323			259			918			760
Research and development expenditures	158			141			472			413
Other charges	126			47			263			100
Operating earnings	294			347			739			781
Other income (expense):
Interest expense, net	(59		)	(52		)	(163		)	(154		)
Gains on sales of investments and businesses, net	6			—			16			3
Other	29			(9		)	45			(20		)
Total other expense	(24		)	(61		)	(102		)	(171		)
Net earnings before income taxes	270			286			637			610
Income tax expense	22			73			91			188
Net earnings	248			213			546			422
Less: Earnings attributable to noncontrolling interests	1			1			2			2
Net earnings attributable to Motorola Solutions, Inc.	$	247		$	212		$	544		$	420
Earnings per common share:
Basic	$	1.52		$	1.30		$	3.36		$	2.57
Diluted	1.43			1.25			3.17			2.48
Weighted average common shares outstanding:
Basic	162.6			162.3			162.0			163.2
Diluted	172.6			169.0			171.6			169.3
Dividends declared per share	$	0.52		$	0.47		$	1.56		$	1.41

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

1

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
(In millions)	September 29, 2018			September 30, 2017
Net earnings	$	248		$	213
Other comprehensive income (loss), net of tax (Note 3):
Foreign currency translation adjustments	(4		)	46
Marketable securities	—			1
Defined benefit plans	13			26
Total other comprehensive income, net of tax	9			73
Comprehensive income	257			286
Less: Earnings attributable to noncontrolling interest	1			1
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$	256		$	285

	Nine Months Ended
(In millions)	September 29, 2018			September 30, 2017
Net earnings	$	546		$	422
Other comprehensive income (loss), net of tax (Note 3):
Foreign currency translation adjustments	(42		)	127
Marketable securities	(6		)	5
Defined benefit plans	39			59
Total other comprehensive income (loss), net of tax	(9		)	191
Comprehensive income	537			613
Less: Earnings attributable to noncontrolling interest	2			2
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$	535		$	611

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

2

Condensed Consolidated Balance Sheets

(In millions, except par value)	September 29, 2018			December 31, 2017
	(Unaudited)
ASSETS
Cash and cash equivalents	$	839		$	1,205
Restricted cash	12			63
Total cash and cash equivalents	851			1,268
Accounts receivable, net	1,179			1,523
Contract assets	917			—
Inventories, net	367			327
Other current assets	350			832
Total current assets	3,664			3,950
Property, plant and equipment, net	892			856
Investments	176			247
Deferred income taxes	949			1,023
Goodwill	1,541			938
Intangible assets, net	1,297			861
Other assets	444			333
Total assets	$	8,963		$	8,208
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	337		$	52
Accounts payable	456			593
Contract liabilities	1,127			—
Accrued liabilities	1,168			2,286
Total current liabilities	3,088			2,931
Long-term debt	5,095			4,419
Other liabilities	2,175			2,585
Stockholders’ Equity
Preferred stock, $100 par value	—			—
Common stock, $.01 par value:	2			2
Authorized shares: 600.0
Issued shares: 9/29/18—164.0; 12/31/17—161.6
Outstanding shares: 9/29/18—163.5; 12/31/17—161.2
Additional paid-in capital	370			351
Retained earnings	788			467
Accumulated other comprehensive loss	(2,571		)	(2,562		)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	(1,411		)	(1,742		)
Noncontrolling interests	16			15
Total stockholders’ equity (deficit)	(1,395		)	(1,727		)
Total liabilities and stockholders’ equity	$	8,963		$	8,208

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, 2017	161.6		$	353		$	(2,562	)	$	467		$	15
Net earnings									544			2
Other comprehensive loss						(9		)
Issuance of common stock and stock options exercised	3.0		139
Share repurchase program	(0.6	)							(66		)
Share-based compensation expense			53
ASU 2016-16 modified retrospective adoption									(31		)
ASU 2014-09 modified retrospective adoption									127
Dividends declared									(253		)	(1		)
Repurchase of senior convertible notes			(173		)
Balance as of September 29, 2018	164.0		$	372		$	(2,571	)	$	788		$	16

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

4

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
(In millions)	September 29, 2018			September 30, 2017
Operating
Net earnings attributable to Motorola Solutions, Inc.	$	544		$	420
Earnings attributable to noncontrolling interests	2			2
Net earnings	546			422
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization	267			254
Non-cash other charges	50			29
Non-U.S. pension settlement loss	—			46
Share-based compensation expense	53			49
Gains on sales of investments and businesses, net	(16		)	(3		)
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable, contract assets and contract liabilities	186			81
Inventories	61			(83		)
Other current assets	(137		)	(142		)
Accounts payable and accrued liabilities	(170		)	(178		)
Other assets and liabilities	(596		)	11
Deferred income taxes	19			99
Net cash provided by operating activities	263			585
Investing
Acquisitions and investments, net	(1,158		)	(383		)
Proceeds from sales of investments and businesses, net	90			174
Capital expenditures	(128		)	(206		)
Net cash used for investing activities	(1,196		)	(415		)
Financing
Repayment of debt	(412		)	(15		)
Net proceeds from issuance of debt	1,295			—
Proceeds from financing through capital leases	—			7
Issuance of common stock	139			61
Purchases of common stock	(66		)	(358		)
Settlement of conversion premium on convertible debt	(169		)	—
Payments of dividends	(252		)	(230		)
Payments of dividend to non-controlling interest	(1		)	(2		)
Net cash provided by (used for) financing activities	534			(537		)
Effect of exchange rate changes on cash and cash equivalents	(18		)	54
Net decrease in cash and cash equivalents	(417		)	(313		)
Cash and cash equivalents, beginning of period	1,268			1,030
Cash and cash equivalents, end of period	$	851		$	717
Supplemental Cash Flow Information
Cash paid during the period for:
Interest, net	$	164		$	146
Income and withholding taxes, net of refunds	79			83

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 September 29, 2018 and for the three and nine months endedSeptember 29, 2018 and September 30, 2017 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, 2017. The results of operations for the three and nine months endedSeptember 29, 2018 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.

During the second quarter of 2018, the Company modified its internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership, in part, as a result of recent acquisitions contributing to the growth within the newly aligned Services and Software segment. Previously, the Company had two reporting segments: Products and Services. The changes in reporting structure consist of Systems Integration related revenue and costs moving from the old Services segment into the newly presented Products and Systems Integration segment and Software related revenue and costs moving from the old Products segment into the newly presented Services and Software segment.

Recent Developments

On March 28, 2018, the Company completed the acquisition of Avigilon Corporation ("Avigilon"), a provider of advanced end-to-end security and surveillance solutions including video analytics, network video management hardware and software, surveillance cameras and access control solutions for a purchase price of $974 million.

On March 7, 2018, the Company completed the acquisition of Plant Holdings, Inc. ("Plant"), the parent company of Airbus DS Communications for a purchase price of $237 million. This acquisition expands our software portfolio in the command center with additional solutions for Next Generation 9-1-1.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 on January 1, 2019 and interim periods within that reporting period, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 that amended the ASU to include an additional (and optional) transition relief. The additional transition relief provides entities the option to adopt the ASU by applying the new ASU at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restatement of comparative periods. The new ASU must be adopted utilizing the modified retrospective method as of the earliest comparative period presented if the optional adoption method is not selected. The Company will adopt the ASU on January 1, 2019, utilizing the modified retrospective method as of the adoption date. The Company is continuing to assess the impact of the ASU on its condensed consolidated financial statements, including the package of available practical expedients, required disclosures, and changes to internal controls. Based on the preliminary work completed, the Company expects a material impact to its condensed consolidated balance sheet through the recording of right-of-use assets and lease obligations that are not required to be recorded within the condensed consolidated balance sheet under current accounting standards.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires entities to estimate and recognize current expected credit losses rather than delay recognition of credit losses until the loss is probable of occurring. The ASU is effective for the Company on January 1, 2020, and interim periods within that reporting period with early option permitted. The Company is currently evaluating the impact of the ASU on its consolidated financial statements and disclosures.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which is intended to simplify the application of hedge accounting and better portray the economic results of risk management strategies in the consolidated financial statements. The ASU expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU is effective for the Company on January 1, 2019

6

with adoption permitted immediately in any interim or annual period (including the current period). The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied using the modified retrospective method by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of this ASU, including transition elections and required elections, on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for the defined benefit pension plans and other postretirement plans. The ASU is effective for the Company on January 1, 2020 with early adoption permitted. The ASU requires a retrospective adoption method. The Company does not believe the ASU will have a material impact on its financial statement disclosures.

Recently Adopted Accounting Pronouncements

The Company adopted ASU No. 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory” on January 1, 2018 using the modified retrospective method of adoption. The Company recognized $31 million related to the cumulative effect of applying the ASU as an adjustment to its opening retained earnings balance. The comparative information has not been restated and continues to be reported under accounting standards in effect in those periods. This ASU eliminates the prior 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. Under the ASU, the Company will recognize tax expense when intra-entity transfers of assets other than inventory occur.

The Company adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on January 1, 2018 using the retrospective method of adoption. The amendments in the ASU 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 Company has restated its comparative period results to reflect the application of the presentation guidance of the ASU. As a result of the ASU, the presentation of net periodic cost (benefit) has been updated to classify all components of the Company’s net periodic benefit, with the exception of the service cost component, within Other in Other income (expense) on the statement of operations. The Company reclassified $18 million and $10 million in the three months ended September 29, 2018 and September 30, 2017, respectively, and $58 million and $10 million in the nine months ended September 29, 2018 and September 30, 2017, respectively.

The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," and all the related amendments (collectively “ASC 606”) on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to its opening retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods.

The Company has retained much of the same accounting treatment used to recognize revenue under ASC 606 as under accounting standards in effect in prior periods. Revenue on a significant portion of its System and Integration services contracts continues to be recognized under percentage of completion accounting, applying a cost-to-cost method. Services contracts continue to be recognized ratably over relevant contract terms as the Company stands ready to perform. Finally, revenue on equipment sales continues to be recognized based on delivery terms as aligned with the transfer of control.

Under the new standard, the Company identified distinct promises to transfer goods and services within its contracts. For system contracts that are 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 and accessories represent distinct goods. Accordingly, adoption of the new standard impacts the Company's system contracts, with the result being revenue recognized earlier as control of devices and accessories transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's system contracts, it continues to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time.

Under the new standard, revenue recognition for software sales is accelerated based on when control of software licenses and related support services are transferred to the customer. Amounts deferred under previous software accounting rules due to lack of vendor-specific objective evidence have been recognized as an adjustment through opening retained earnings.

Historically, the Company presented transactions that involved a third-party sales representative on a net basis. After considering the control concept and the remaining three indicators of gross presentation under the new standard, the Company has determined that it is the principal in contracts that involve a third-party sales representative. Thus, under the new standard, the Company presents associated revenues on a gross basis, with the affect being an equal increase to selling, general and administrative expenses for its cost of third-party commissions.

Under prior accounting standards, the Company expensed sales commissions and other costs to obtain a contract as incurred. However, under the new standard, the Company capitalizes sales commissions and certain other costs as incremental costs to obtain a contract. Such costs are classified as non-current contract cost assets within Other assets and amortized over a period that approximates the timing of revenue recognition on the underlying contracts.

7

The new standard clarified the definition of a receivable and requires the Company to present its net position in a contract with a customer on the balance sheet. The position is presented as either a receivable, contract asset, or a contract liability. Under the new definition, accounts receivable are unconditional rights to consideration from a customer. Contract assets represent rights to consideration from a customer in exchange for transferred goods and services that are conditional on events other than the passage of time. Contract liabilities represent obligations to transfer goods and services for which the Company has received, or is due, consideration from a customer. The Company reclassified its customer positions to align with the new definitions and presentation guidance. Accordingly, Unbilled accounts receivable and Costs and earnings in excess of billings have been reclassified from Accounts receivable and Other current assets, respectively, and are presented as Contract assets. Accounts receivable which are not due from customers have been reclassified into Other current assets. Deferred revenue, Billings in excess of costs and earnings, and Customer downpayments have been reclassified from Accrued liabilities and are presented as Contract liabilities. Non-current deferred revenue has been reclassified from Deferred revenue to Non-current contract liabilities within Other liabilities.

The cumulative effect of the changes made to our consolidated opening balance sheet as of January 1, 2018 due to the modified retrospective method of adoption of ASC 606 is as follows:

Balance Sheet (Selected captions)

(In millions)	December 31, 2017		Reclassification of Contract Assets			Reclassification of Non-customer receivables			Reclassification of Contract Liabilities			Impact of Adoption on Open Contracts			January 1, 2018
															(Unaudited)
ASSETS
Accounts receivable, net	$	1,523	$	(297	)	$	(24	)	$	—		$	(4	)	$	1,198
Contract assets	—		846			—			—			85			931
Inventories, net	327		—			—			—			1			328
Other current assets	832		(549		)	24			—			(23		)	284
Deferred income taxes	1,023		—			—			—			(41		)	982
Other assets	333		—			—			—			85			418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	$	—	$	—		$	—		$	1,099		$	(17	)	$	1,082
Accrued liabilities	2,286		—			—			(1,099		)	—			1,187
Other liabilities	2,585		—			—			—			(7		)	2,578
Stockholders’ Equity
Retained earnings	467		—			—			—			127			594

Adoption Impact to Financial Statements

The impact of the adoption of ASC 606 to the condensed consolidated financial statements for the three and nine months ended September 29, 2018 is as follows:

Statements of Operations (Selected captions)

	Three Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	1,862	$	(19	)	$	1,843
Gross margin	901		(18		)	883
Selling, general and administrative expenses	323		(17		)	306
Operating earnings	294		(1		)	293
Net earnings before income taxes	270		(1		)	269
Net earnings attributable to Motorola Solutions Inc.	$	247	$	(1	)	$	246

8

	Nine Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	5,089	$	(58	)	$	5,031
Gross margin	2,392		(57		)	2,335
Selling, general and administrative expenses	918		(46		)	872
Operating earnings	739		(11		)	728
Net earnings before income taxes	637		(11		)	626
Net earnings attributable to Motorola Solutions Inc.	$	544	$	(11	)	$	533

Balance Sheet (Selected captions)

(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
ASSETS
Accounts receivable, net	$	1,179	$	315		$	1,494
Contract assets	917		(917		)	—
Other current assets	350		540			890
Deferred income taxes	949		41			990
Other assets	444		(95		)	349
LIABILITIES AND STOCKHOLDERS' EQUITY
Contract liabilities	$	1,127	$	(1,127	)	$	—
Accrued liabilities	1,168		1,139			2,307
Other liabilities	2,175		10			2,185
Stockholders’ Equity
Retained earnings	788		(138		)	650

There is no impact to the condensed consolidated statement of comprehensive income or the statement of cash flows, with the exception of changes to Net earnings and changes within assets and liabilities as presented on the condensed consolidated balance sheet and disclosed above.

9

2. Revenue from Contracts with Customers

In accordance with ASC 606, the Company recognizes revenue to reflect the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services. The Company records revenue following the five steps below:

1.Identify the contract with customers: A contract is an agreement between two or more parties that creates enforceable rights and obligations and specifies that enforceability is a matter of law. Contracts shall be accounted for when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the goods or services to be transferred, (iii) the Company can identify the payment terms for the goods or services to be transferred, (iv) the contract has commercial substance (that is, the risk, timing, or amount of the Company’s future cash flow is expected to change as a result of the contract), and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. It is the Company’s customary business practice to obtain a signed legal document as evidence of an arrangement.

2.Identify performance obligations in contracts: The goods or services promised in a contract must be evaluated at inception to identify as a performance obligation each promise to transfer to the customer either: (i) a distinct good or service, or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

3.Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. In determining the transaction price, the Company considers the following components: (i) variable consideration, (ii) significant financing, (iii) noncash consideration, and (iv) consideration payable to a customer.

4.Allocate the transaction price: For a contract that has more than one distinct performance obligation, the Company must allocate the transaction price to each distinct performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying that specific performance obligation.

5.Recognize revenue when or as the entity satisfies a performance obligation: The Company recognizes revenue when, or as, it satisfies a performance obligation by transferring control of a promised good or service to a customer.

10

Disaggregation of Revenue

The following table summarizes the disaggregation of our revenue by segment, geography, major product and service type and customer type for the three and nine months ended September 29, 2018, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of operating segments:

	Three Months Ended				Nine Months Ended
(in millions)	Products and Systems Integration		Services and Software		Products and Systems Integration		Services and Software
Regions
Americas	$	957	$	343	$	2,533	$	969
EMEA	199		189		543		565
Asia Pacific	132		42		353		126
Total	$	1,288	$	574	$	3,429	$	1,660
Major Products and Services
Devices	$	828	$	—	$	2,184	$	—
Systems and Systems Integration	460		—		1,245		—
Services	—		455		—		1,357
Software	—		119		—		303
Total	$	1,288	$	574	$	3,429	$	1,660
Customer Type
Direct	$	811	$	543	$	2,168	$	1,586
Indirect	477		31		1,261		74
Total	$	1,288	$	574	$	3,429	$	1,660

Products and Systems Integration:The Products and Systems Integration segment is comprised of Systems, Devices and Systems Integration. Direct customers of the Products and Systems Integration segment are typically government, public safety and first-responder agencies, procuring at state, local, and federal levels as well as large commercial customers with secure mission-critical needs. Indirect customers are defined as customers purchasing professional commercial radios and Avigilon video solutions, which are primarily sold through the Company's reseller partners to an end-customer base, composed of various industries where private communications networks and video solutions are used to secure operations and enable a mobile workforce. Contracts with the Company's customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our direct customers, funded through government appropriations. On the Company's Products and Systems Integration sales, it records consideration from shipping and handling on a gross basis within Net sales.

Devices:Devices includes two-way portable and vehicle-mounted radios, accessories, software features, and upgrades. Devices also includes video surveillance cameras sold by Avigilon. Devices are considered capable of being distinct and distinct within the context of our contracts. Revenue is recognized upon the transfer of control of the devices to the customer at a point in time, typically consistent with delivery under the applicable shipping terms. Devices are sold by both the direct sales force and through reseller partners. Revenue is generally recognized upon transfer of devices to reseller partners, rather than the end-customer, except for limited consignment arrangements. Provisions for returns and reseller discounts are made on a portfolio basis using historical data.

Systems and Systems Integration:Systems and Systems Integration include customized end-to-end radio network, video solutions and implementation, optimization, and integration of networks, devices, software, and applications. Radio network includes the aggregation of promises to the customer to provide the radio network core and central processing software, base stations, consoles, and repeaters. These individual promises are not distinct in the context of the contract, as the Company provides a significant service of integrating and customizing the goods and services promised. The radio network represents distinct performance obligations for which revenue is recognized over time, as the Company creates an asset with no alternative use and has an enforceable right to payment for work performed. The Company's revenue recognition over time is based on an input measure of costs incurred, which depicts the transfer of control to its customers under its contracts. Systems and Systems Integration revenue is recognized over an average duration of approximately one to two years.

11

Systems also include Avigilon end-to-end security and surveillance solutions including: video analytics, network video management hardware and software, and access control solutions, which are capable of being distinct and distinct in the context of the contract. Avigilon security and surveillance video solutions are traditionally sold through reseller partners, with contracts negotiated under fixed pricing. Provisions for returns are determined on a portfolio basis using historical data. Revenue is recognized upon the transfer of control of the end-to-end video solution to the reseller partners, typically upon shipment.

Services and Software: The Services and Software segment provides a full set of offerings for government, public safety and commercial communication networks. Direct customers of the Services and Software segment are typically government, public safety and first-responder agencies and municipalities. Indirect customers are commercial customers who distribute broadband push-to-talk services to a final end customer base. Contracts with our customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our direct customers, funded through government appropriations.

Services: Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include: monitoring, software updates and cybersecurity services. Managed service offerings range from partial to full operation of customer or Motorola Solutions owned networks. Services are provided across all radio network technologies. Services are both distinct and capable of being distinct in the context of the contract, representing a series of recurring services that the Company stands ready to perform over the contract term. Since services contracts typically allow for customers to terminate for convenience or for non-appropriations of fiscal funding, the contract term is generally considered to be limited to a monthly or annual basis, subject to customer renewal. While contracts with customers are typically fixed fee, certain managed services contracts may be subject to variable consideration related to the achievement of service level agreement performance measurements. The Company has not historically paid significant penalties under service level agreements, and accordingly, it does not constrain its contract price. Certain contracts may also contain variable consideration driven by number of users. Revenue is typically recognized on services over time as a series of services performed over the contract term on a straight-line basis.

Software:Software offerings include public safety and enterprise command solutions, unified communications applications, and video software solutions delivered either “as a service” or on-premise. Solutions delivered as a service consist of a range of promises including hosted software, technical support and the right to unspecified future software enhancements. Software is not distinct from the hosting service since the customer does not have the right to take possession of the software at any time during the term of the arrangement. The hosted software, technical support, and right to unspecified future software enhancements each represent a series of distinct services that are delivered concurrently using the same over time method. As such, the promises are accounted for as a single performance obligation with revenue recognized on a straight-line basis.

 On-premise offerings consist of multiple promises primarily including software licenses and post-contract customer support. The promises are each distinct and distinct within the context of the contract as the customer benefits from each promise individually without any significant integration or interrelationship between the promises. On-premise software revenue is recognized at the point in time when the customer can benefit from the software which generally aligns with the beginning of the license period. Revenue for post-contract customer support is recognized over time as the customer simultaneously receives and consumes the services on a straight-line basis.

Significant Judgments

The Company enters into arrangements which consist of multiple promises to our customers. The Company evaluates whether the promised goods and services are distinct or a series of distinct goods or services. Where contracts contain multiple performance obligations, the Company generally allocates the total estimated consideration to each performance obligation based on applying an estimated selling price (“ESP”) as our best estimate of standalone selling price. The Company determines ESP by: (i) collecting all reasonably available data points including sales, cost and margin analysis of the product or services, and other inputs based on its normal pricing and discounting practices, (ii) making any reasonably required adjustments to the data based on market and Company-specific factors, and (iii) stratifying the data points, when appropriate, based on major product or service, type of customer, geographic market, and sales volume.

The Company accounts for certain system contracts on an over time basis, electing an input method of estimated costs as a measure of performance completed. The selection of the measurement of progress using estimated costs was based on a thorough consideration of alternatives of various output and input measures, including contract milestones and labor hours. However, the Company has determined that other input and output measures are not an appropriate measure of progress as they do not accurately align with the transfer of control on its customized product solutions. The selection of costs incurred as a measure of progress aligns the transfer of control to the overall production of the customized system.

For system contracts accounted for over time using estimated costs as a measure of performance completed, the Company relies on estimates around the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion may be complex and subject to many variables. We have a standard and disciplined quarterly process in which management reviews the progress and performance of open contracts in order to determine the best estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The

12

risks and opportunities include management’s judgment about the ability and cost to achieve the project schedule, technical requirements, and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of work to be performed, the availability and cost of materials, and performance by subcontractors, among other variables. Based on this analysis, any quarterly adjustment to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. When estimates of total costs to be incurred on a contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Remaining Performance Obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction price associated with remaining performance obligations which are not yet satisfied as of September 29, 2018 is $6.1 billion. A total of $3.3 billion is from Products and Systems Integration performance obligations that are not yet satisfied, of which $1.9 billion is expected to be recognized in the next 12 months. The remaining amounts will generally be satisfied over time as systems are implemented. A total of $2.8 billion is from Services and Software performance obligations that are not yet satisfied as of September 29, 2018. The determination of Services and Software performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's Services contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. The Company expects to recognize $1.2 billion from unsatisfied Services and Software performance obligations over the next 12 months, with the remaining performance obligations to be recognized over time as services are performed and software is implemented.

Contract Balances

(in millions)	September 29, 2018		January 1, 2018
Receivables	$	1,179	$	1,198
Contract assets	917		931
Contract liabilities	1,127		1,082
Non-current contract liabilities	159		162

Contract assets consist of amounts formerly classified as Costs and earnings in excess of billings and Unbilled accounts receivable where the Company does not yet have an unconditional right to bill. Contract liabilities consist of amounts formerly classified Billings in excess of costs and earnings recognized, Customer downpayments and Deferred revenue.

Payment terms on system contracts are typically tied to implementation milestones associated with progress on contracts, while revenue recognition is over time based on a cost-to-cost method of measuring performance. The Company may recognize a contract asset or contract liability, depending on whether revenue has been recognized in excess of billings or billings in excess of revenue. Services contracts are typically billed in advance, generating Contract liabilities until the Company has performed the services. The Company does not record a financing component to contracts when it expects, at contract inception, that the period between the transfer of a promised good or service and related payment terms are less than a year.

Revenue recognized during the three months ended September 29, 2018 which was previously included in Contract liabilities as of July 1, 2018 is $327 million. Revenue recognized during the nine months ended September 29, 2018 which was previously included in Contract liabilities as of January 1, 2018 is $777 million. Revenue of $7 million was reversed during the three months ended September 29, 2018 and $4 million of revenue was reversed during the nine months ended September 29, 2018 related to performance obligations satisfied, or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts.

There have been no material impairment losses recognized on contract assets during the nine months ended September 29, 2018.

Contract Cost Balances

(in millions)	September 29, 2018		January 1, 2018
Current contract cost assets	$	57	$	62
Non-current contract cost assets	95		85

Contract cost assets represent incremental costs to obtain a contract, primarily related to the Company's sales incentive plans, and certain costs to fulfill contracts. Contract cost assets are amortized into expense over a period that follows the

13

passage of control to the customer over time. Incremental costs to obtain a contract with the Company's sales incentive plans are accounted for under a portfolio approach, with amortization ranging from one to four years to approximate the recognition of revenues over time. Where incremental costs to obtain a contract will be recognized in one year or less, the Company applies a practical expedient around expensing amounts as incurred. Amortization of contract cost assets was $11 million and $34 million for the three and nine months ended September 29, 2018, respectively.

3. Other Financial Data

Statements of Operations Information

Other Charges (Income)

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

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Other charges:
Intangibles amortization (Note 14)	$	46	$	39	$	140	$	111
Reorganization of business (Note 13)	21		6		46		22
Environmental reserve expense	57		—		57		—
Building impairment	—		—		—		8
Loss (Gain) on legal settlements	2		—		3		(2		)
Gain on recovery of financial receivables	—		—		—		(42		)
Asset impairment	—		2		—		2
Acquisition-related transaction fees	—		—		17		1
	$	126	$	47	$	263	$	100

During the third quarter of 2018, the Company revised the estimate of a liability related to ongoing remediation efforts of environmental media such as groundwater, soil, and soil vapor, as well as related legal fees for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) incurred by a legacy business. It is the Company’s policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. During the third quarter of 2018, the Company became aware of additional remediation requirements for the Superfund site. As such, the Company recorded a charge of $57 million during the third quarter of 2018 which was primarily due to: (i) changes in the expected timeline of the remediation activities to 30 years and (ii) additional costs for further remediation efforts, increasing the reserve to $107 million. Given the timing and amount of the future cash payments are fixed or reliably determinable, the Company discounted the cash flows used in estimating this accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is $4 million and is included in the “Accrued liabilities” statement line and the non-current portion is included in the “Other liabilities” statement line within the Company's Condensed Consolidated Balance Sheet.

During the nine months ending September 29, 2018, the Company recognized $17 million of acquisition-related transaction fees for the Avigilon and Plant acquisitions.

During the nine months endedSeptember 30, 2017, the Company recognized $8 million of building impairments related to the anticipated sale of its Basingstoke, U.K. building.

During the nine months endedSeptember 30, 2017, the Company recognized a net gain of $42 million related 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.

14

Other Income (Expense)

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

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Interest income (expense), net:
Interest expense	$	(62	)	$	(55	)	$	(178	)	$	(164	)
Interest income	3			3			15			10
	$	(59	)	$	(52	)	$	(163	)	$	(154	)
Other:
Net periodic pension and postretirement benefit (Note 7)	$	18		$	11		$	58		$	36
Non-U.S. pension settlement loss (Note 7)	—			(21		)	—			(46		)
Gain from the extinguishment of convertible debt (Note 4)	6			—			6			—
Foreign currency loss	(14		)	(7		)	(14		)	(29		)
Gain (loss) on derivative instruments	8			3			(15		)	14
Gains on equity method investments	1			1			2			1
Fair value adjustments to equity investments	7			—			7			—
Other	3			4			1			4
	$	29		$	(9	)	$	45		$	(20	)

During the three and nine months endedSeptember 29, 2018, the Company recognized a foreign currency loss of $14 million, primarily driven by the Brazilian real, the Euro, the Australian dollar and the Argentinian peso. During the three and nine months endedSeptember 29, 2018, the Company recognized a gain of $8 million and a loss of $15 million, respectively, on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations. The loss on derivative instruments during the nine months ended September 29, 2018, includes a loss of $14 million on foreign currency derivatives put in place to minimize the exposure to the Canadian dollar related to the purchase of Avigilon.

During the three and nine months endedSeptember 30, 2017, the Company recognized foreign currency losses of $7 million and $29 million, respectively, primarily driven by British Pound, partially offset by gains of $3 million and $14 million, respectively, on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations.

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Basic earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Per share amount	$	1.52	$	1.30	$	3.36	$	2.57
Diluted earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Add effect of dilutive securities:
Share-based awards	4.6		3.4		4.2		3.3
Senior Convertible Notes	5.4		3.3		5.4		2.8
Diluted weighted average common shares outstanding	172.6		169.0		171.6		169.3
Per share amount	$	1.43	$	1.25	$	3.17	$	2.48

15

In the computation of diluted earnings per common share for the three months endedSeptember 29, 2018, the assumed exercise of 0.2 million options were excluded because their inclusion would have been antidilutive. For the nine months endedSeptember 29, 2018, the assumed exercise of 3.2 million options, including 0.8 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive.

For the three months endedSeptember 30, 2017, the assumed exercise of 2.0 million options, including 1.7 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. For the nine months endedSeptember 30, 2017, the assumed exercise of 2.3 million options, including 1.9 million subject to market-based contingent option agreements, 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 became fully convertible as of August 25, 2017. On September 5, 2018, the Company agreed with Silver Lake Partners to re-purchase $200 million principal of the convertible notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium. During the third quarter of 2018, the Company paid $169 million, with the remaining $200 million paid on October 15, 2018. In the event of an additional conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash. Since the Company’s intention is to settle the par value of the Senior Convertible Notes in cash upon conversion, only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) are included in our computation of diluted earnings per share. The conversion price is adjusted for dividends declared through the date of settlement. Diluted earnings per share has been calculated based upon the amount by which the average stock price exceeds the conversion price.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	September 29, 2018			December 31, 2017
Accounts receivable	$	1,227		$	1,568
Less allowance for doubtful accounts	(48		)	(45		)
	$	1,179		$	1,523

During the nine months endedSeptember 29, 2018, $297 million of Unbilled accounts receivable were reclassified to Contract assets and $24 million of non-customer miscellaneous receivables were reclassified to Other current assets as a result of the adoption of ASC 606.

Inventories, Net

Inventories, net, consist of the following: 

	September 29, 2018			December 31, 2017
Finished goods	$	190		$	178
Work-in-process and production materials	313			282
	503			460
Less inventory reserves	(136		)	(133		)
	$	367		$	327

During the nine months endedSeptember 29, 2018, the increase in Inventories, net was primarily driven by the acquisition of Avigilon.

Other Current Assets

Other current assets consist of the following: 

	September 29, 2018		December 31, 2017
Costs and earnings in excess of billings (Note 1)	$	—	$	549
Current contract cost assets (Note 2)	57		62
Tax-related refunds receivable	119		90
Other	174		131
	$	350	$	832

16

Property, Plant and Equipment, Net

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

	September 29, 2018			December 31, 2017
Land	$	11		$	11
Building	355			316
Machinery and equipment	2,224			2,122
	2,590			2,449
Less accumulated depreciation	(1,698		)	(1,593		)
	$	892		$	856

Depreciation expense for the three months endedSeptember 29, 2018 and September 30, 2017 was $43 million and $49 million, respectively. Depreciation expense for the nine months endedSeptember 29, 2018 and September 30, 2017 was $127 million and $142 million, respectively.

Investments

Investments consist of the following:

	September 29, 2018		December 31, 2017
Corporate bonds	$	2	$	2
Common stock	17		13
Strategic investments, at cost	60		78
Company-owned life insurance policies	83		141
Equity method investments	14		13
	$	176	$	247

Strategic investments include investments in non-public technology-driven startup companies. Strategic investments do not have a readily determinable fair value and are recorded at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. The Company did not recognize any significant adjustments to the recorded cost basis during the nine months ended September 29, 2018.

The Company’s common stock portfolio reflects an investment in the communications services sector and is valued utilizing active market prices for similar instruments. During the three and nine months ended September 29, 2018, the Company recognized $7 million in Other income (expense) related to an increase in the fair value of the investments.

Company-owned life insurance policies were recorded at their cash surrender value. During the nine months endedSeptember 29, 2018, the Company withdrew $60 million of excess cash from its company-sponsored life insurance investments.

During the three months endedSeptember 29, 2018, Gains on the sale of investments and businesses were $6 million. During the nine months endedSeptember 29, 2018, Gains on the sale of investments and businesses were $16 million, compared to $3 million during the nine months endedSeptember 30, 2017.

Other Assets

Other assets consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plan assets	$	182	$	133
Tax receivable	101		101
Non-current contract cost assets (Note 2)	95		—
Other	66		99
	$	444	$	333

17

Accrued Liabilities

Accrued liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Deferred revenue (Note 1)	$	—	$	613
Compensation	248		273
Billings in excess of costs and earnings (Note 1)	—		428
Tax liabilities	127		107
Deferred consideration on Airwave acquisition	84		83
Dividend payable	85		84
Trade liabilities	165		151
Other	459		547
	$	1,168	$	2,286

Deferred consideration in conjunction with the acquisition of Airwave will be paid on November 15, 2018.

Other Liabilities

Other liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plans	$	1,446	$	2,019
Non-current contract liabilities (Note 2)	159		—
Deferred revenue (Note 1)	—		169
Unrecognized tax benefits	51		54
Deferred income taxes	234		115
Other	285		228
	$	2,175	$	2,585

The Company made a $500 million contribution to our U.S. Pension Plans during the nine months endedSeptember 29, 2018.

During the nine months endedSeptember 29, 2018, the deferred income taxes increase was primarily driven by the intangible assets related to acquisition of Avigilon.

Stockholders’ Equity

Share Repurchase Program: Through a series of actions, 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 nine months endedSeptember 29, 2018, the Company paid an aggregate of $66 million, including transaction costs, to repurchase approximately 0.6 million shares at an average price of $101.54 per share. As of September 29, 2018, the Company had used approximately $12.4 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.6 billion of authority available for future repurchases.

Payment of Dividends: During the three months endedSeptember 29, 2018 and September 30, 2017, the Company paid $84 million and $76 million, respectively, in cash dividends to holders of its common stock. During the nine months endedSeptember 29, 2018 and September 30, 2017, the Company paid $252 million and $230 million, respectively, in cash dividends to holders of its common stock.

18

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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(391	)	$	(413	)	$	(353	)	$	(494	)
Other comprehensive income (loss) before reclassification adjustment	(3		)	49			(33		)	133
Tax benefit	(1		)	(3		)	(9		)	(6		)
Other comprehensive income (loss), net of tax	(4		)	46			(42		)	127
Balance at end of period	$	(395	)	$	(367	)	$	(395	)	$	(367	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	4		$	6		$	—
Other comprehensive income before reclassification adjustment	—			1			—			8
Tax benefit	—			—			—			(3		)
Other comprehensive income before reclassification adjustment, net of tax	—			1			—			5
Reclassification adjustment into Gains on sales of investments and businesses, net	—			—			(8		)	—
Tax expense	—			—			2			—
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			(6		)	—
Other comprehensive income (loss), net of tax	—			1			(6		)	5
Balance at end of period	$	—		$	5		$	—		$	5
Defined Benefit Plans:
Balance at beginning of period	$	(2,189	)	$	(1,790	)	$	(2,215	)	$	(1,823	)
Other comprehensive loss before reclassification adjustment, net of tax	—			(4		)	—			(15		)
Reclassification adjustment - Actuarial net losses into Other income (expense)	20			17			57			49
Reclassification adjustment - Prior service benefits into Other income (expense)	(4		)	(4		)	(11		)	(12		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other income (expense)	—			21			—			46
Tax benefit	(3		)	(4		)	(7		)	(9		)
Reclassification adjustment into Net earnings, net of tax	13			30			39			74
Other comprehensive income, net of tax	13			26			39			59
Balance at end of period	$	(2,176	)	$	(1,764	)	$	(2,176	)	$	(1,764	)
Total Accumulated other comprehensive loss	$	(2,571	)	$	(2,126	)	$	(2,571	)	$	(2,126	)

19

4. Debt and Credit Facilities

As of September 29, 2018, the Company had a $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022 (the "2017 Motorola Solutions Credit Agreement"). As of March 31, 2018, the Company borrowed $400 million under the facility to complete the Avigilon acquisition. As of September 29, 2018, the outstanding loan amount under the facility was $100 million, with $200 million paid during the third quarter. Subsequent to the quarter, the Company paid the remaining $100 million. The 2017 Motorola Solutions Credit Agreement includes 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 ("LIBOR"), at the Company's option. The weighted average borrowing rate on outstanding amounts for the three and nine months endedSeptember 29, 2018 was 3.58%. 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. 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 its financial covenants as of September 29, 2018.

Also in conjunction with the Avigilon acquisition in the first quarter of 2018, the Company entered into a term loan for $400 million with a maturity date of March 26, 2021 (the “Term Loan”). Interest on the Term Loan is variable, indexed to LIBOR, and paid monthly. The weighted average borrowing rates for amounts outstanding during the three and nine months endedSeptember 29, 2018 were 3.33% and 3.43%, respectively. No additional borrowings are permitted and amounts borrowed and repaid or prepaid may not be re-borrowed.

In February of 2018, the Company issued $500 million of 4.60% Senior notes due 2028. The Company recognized net proceeds of $497 million after debt issuance costs and debt discounts. These proceeds were then used to make a $500 million contribution to the Company's U.S. pension plan.

On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2.00% Senior Convertible Notes which mature in September 2020. The notes became fully convertible as of August 25, 2017. The notes are convertible based on a conversion rate of 14.8252, as may be adjusted for dividends declared, per $1,000 principal amount (which is currently equal to a conversion price of $67.45 per share). The exercise price adjusts automatically for dividends. On September 5, 2018, the Company agreed with Silver Lake Partners to repurchase $200 million in principal amount of the Senior Convertible Notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium. As of September 29, 2018, the Company paid $169 million of cash to Silver Lake Partners and recorded a gain of $6 million from the extinguishment of the convertible debt. The principal amount of $200 million was reclassified to short term debt. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of September 29, 2018 was $712 million. In the event of an additional conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash.

On September 28, 2018, the Company issued an additional $200 million on the outstanding 4.60% Senior notes due 2028 bringing the outstanding total to $700 million. The Company settled the issuance on October 5, 2018 and recognized net proceeds of $196 million, subsequent to quarter end, which was then used to pay the $200 million principal due to Silver Lake Partners on October 15, 2018.

5. Risk Management

Foreign Currency Risk

As of September 29, 2018, the Company had outstanding foreign exchange contracts with notional amounts totaling $782 million, compared to $507 million outstanding at December 31, 2017. 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 September 29, 2018, and the corresponding positions as of December 31, 2017: 

	Notional Amount
Net Buy (Sell) by Currency	September 29, 2018			December 31, 2017
British Pound	$	221		$	72
Euro	215			149
Australian Dollar	(109		)	(64		)
Chinese Renminbi	(75		)	(73		)
Brazilian Real	(46		)	(45		)

20

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 September 29, 2018, all of the counterparties have investment grade credit ratings. As of September 29, 2018, 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 September 29, 2018 and December 31, 2017:

	Fair Values of Derivative Instruments
	Assets			Liabilities
September 29, 2018	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	1	Accrued liabilities

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	3	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	5	Other current assets	$	2	Accrued liabilities
Total derivatives	$	5		$	5

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended					Balance Sheet Location
Loss on Derivative Instruments	September 29, 2018			September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange contracts	$	(1	)	$	(1	)	$	—	$	(3	)	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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended					Nine Months Ended						Statements of Operations Location
Gain (loss) on Derivative Instruments	September 29, 2018		September 30, 2017			September 29, 2018			September 30, 2017
Interest agreements	$	—	$	(1	)	$	—		$	(1	)	Other income (expense)
Foreign exchange contracts	8		4			(15		)	15			Other income (expense)
Total derivatives	$	8	$	3		$	(15	)	$	14

21

6. 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						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Net earnings before income taxes	$	270		$	286		$	637		$	610
Income tax expense	22			73			91			188
Effective tax rate	8		%	26		%	14		%	31		%

The Company recorded $22 million of net tax expense during the three months endedSeptember 29, 2018, resulting in an effective tax rate of 8%, compared to $73 million of net tax expense during the three months endedSeptember 30, 2017, resulting in an effective tax rate of 26%. The effective tax rate for the three months ended September 29, 2018 of 8% is lower than the effective tax rate for the three months ended September 30, 2017 of 26%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted December 22, 2017; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate in the third quarter of 2018 was lower than the U.S. statutory tax rate of 21% primarily driven by a tax benefit due to the recognition of tax benefits on share-based compensation and a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate in the third quarter of 2017 was lower than the U.S. statutory tax rate of 35% primarily driven by a tax benefit due to the recognition of a U.S. capital loss.

The Company recorded $91 million of net tax expense during the nine months endedSeptember 29, 2018, resulting in an effective tax rate of 14%, compared to $188 million of net tax expense during the nine months endedSeptember 30, 2017, resulting in an effective tax rate of 31%. The effective tax rate for the nine months endedSeptember 29, 2018 of 14% is lower than the effective tax rate for the nine months endedSeptember 30, 2017 of 31%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the Tax Act; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate for nine months endedSeptember 29, 2018 was lower than the U.S. statutory tax rate of 21% primarily due to: (i) the recognition of excess tax benefits on share-based compensation, (ii) a tax benefit due to a favorable settlement of a state audit, and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate for the nine months endedSeptember 30, 2017 was lower than the U.S. statutory tax rate of 35% primarily due to a tax benefit due to the recognition of a U.S. capital loss.

Under the guidance in the U.S. Securities and Exchange Commission's Staff Accounting Bulletin No. 118 ("SAB 118"), the Company recorded provisional amounts for the impact of the Tax Act as of December 31, 2017, representing $874 million of incremental tax expense. Under the transitional provisions of SAB 118, the Company has a one-year measurement period to complete the accounting for the initial tax effects of the Tax Act. The Company is continuing to analyze the impact of the recently issued IRS Notices related to the Tax Act and will record its final adjustments to the provisional amounts during the last three months of 2018. For the nine months endedSeptember 29, 2018, the Company has recorded the following adjustments to the previously recorded provisional tax amounts:

	December 31, 2017		Adjustment			September 29, 2018		Financial Statement Location
Valuation allowance on foreign tax credit carryforward	$	471	$	(9	)	$	462	Deferred tax expense
Measurement of U.S. deferred tax balances at 21%	366		(11		)	355		Deferred tax expense
Transition tax on repatriation of foreign earnings	16		2			18		Current tax expense
Uncertain tax positions on foreign operations	21		—			21		Current tax expense
Disallowed deduction of covered employees' incentive plans	—		4			4		Deferred tax expense
	$	874	$	(14	)	$	860

22

7. 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	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	1		$	1		$	—		$	—
Interest cost	47			46			9			10			1			1
Expected return on plan assets	(68		)	(57		)	(22		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	15			11			4			4			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(4		)
Settlement loss	—			—			—			21			—			—
Net periodic pension cost (benefit)	$	(6	)	$	—		$	(8	)	$	12		$	(5	)	$	(4	)

	U.S. Pension Benefit Plans						Non-U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Nine Months Ended	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	2		$	3		$	—		$	—
Interest cost	139			138			30			30			2			3
Expected return on plan assets	(203		)	(172		)	(70		)	(71		)	(8		)	(9		)
Amortization of:
Unrecognized net loss	43			33			11			12			3			4
Unrecognized prior service benefit	—			—			—			—			(11		)	(12		)
Settlement loss	—			—			—			46			—			—
Net periodic cost (benefit)	$	(21	)	$	(1	)	$	(27	)	$	20		$	(14	)	$	(14	)

The Company made a $500 million contribution to its U.S. Pension Benefit Plans during the nine months endedSeptember 29, 2018.

23

8. Share-Based Compensation Plans

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

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Share-based compensation expense included in:
Costs of sales	$	3		$	2		$	8		$	7
Selling, general and administrative expenses	12			11			33			32
Research and development expenditures	4			3			12			10
Share-based compensation expense included in Operating earnings	19			16			53			49
Tax benefit	5			5			13			16
Share-based compensation expense, net of tax	$	14		$	11		$	40		$	33
Decrease in basic earnings per share	$	(0.09	)	$	(0.07	)	$	(0.25	)	$	(0.20	)
Decrease in diluted earnings per share	$	(0.08	)	$	(0.07	)	$	(0.23	)	$	(0.19	)

During the nine months endedSeptember 29, 2018, the Company granted 0.4 million restricted stock units ("RSUs") and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $45 million and $7 million, respectively, and 0.2 million stock options and 0.2 million performance options ("POs") with an aggregate grant-date fair value of $6 million and $7 million, respectively. Share-based compensation expense will generally be recognized over the vesting period of three years.

9. Fair Value Measurements

The Company holds or has held 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 September 29, 2018 and December 31, 2017 were as follows: 

September 29, 2018	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Corporate bonds	2		—		2
Common stock	—		17		17
Liabilities:
Foreign exchange derivative contracts	$	—	$	1	$	1

24

December 31, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	5	$	5
Available-for-sale securities:
Corporate bonds	—		2		2
Common stock	13		—		13
Liabilities:
Foreign exchange derivative contracts	$	—	$	5	$	5

The Company had no Level 3 holdings as of September 29, 2018 or December 31, 2017.

At September 29, 2018 and December 31, 2017, the Company had $284 million and $633 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 September 29, 2018 and December 31, 2017 was $5.5 billion and $4.6 billion (Level 2), respectively.

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

10. 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: 

	September 29, 2018			December 31, 2017
Long-term receivables, gross	$	29		$	37
Less allowance for losses	(2		)	—
Long-term receivables	27			37
Less current portion	(7		)	(18		)
Non-current long-term receivables	$	20		$	19

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 $86 million at September 29, 2018, compared to $93 million at December 31, 2017.

Sales of Receivables

The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and nine months endedSeptember 29, 2018 and September 30, 2017: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Accounts receivable sales proceeds	$	—	$	99	$	76	$	179
Long-term receivables sales proceeds	73		55		101		123
Total proceeds from receivable sales	$	73	$	154	$	177	$	302

At September 29, 2018, the Company had retained servicing obligations for $879 million of long-term receivables, compared to $873 million at December 31, 2017. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables.

25

Credit Quality of Long-term Receivables and Allowance for Credit Losses

An aging analysis of long-term receivables at September 29, 2018 and December 31, 2017 is as follows: 

September 29, 2018	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—	$	2
Commercial loans and leases secured	9		2		—		1
Long-term receivables, including current portion	$	29	$	2	$	—	$	3

December 31, 2017	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	—	$	1	$	2
Commercial loans and leases secured	16		1		3		1
Long-term receivables, including current portion	$	37	$	1	$	4	$	3

11. 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 September 29, 2018.

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.

12. Segment Information

The Company conducts its business globally and manages it through the following two segments:

Products and Systems Integration:The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video solutions, and the implementation, optimization, and integration of such systems, devices, and applications, including the Company’s: (i) “ASTRO” products, which meet the Association of Public Safety Communications Officials Project 25 standard, (ii) “Dimetra” products which meet the European Telecommunications Standards Institute Terrestrial Trunked Radio “TETRA” standard, (iii) Professional and Commercial Radio (“PCR”) products, (iv) broadband technology products, such as Long-Term Evolution (“LTE”), and (v) video solutions, such as video surveillance cameras. The primary customers of the Products and Systems Integration segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and video solutions and manage a mobile workforce.

26

Services and Software: The Services and Software segment provides a full set of offerings for government, public safety and commercial communication networks. Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include monitoring, software updates and cybersecurity services. Managed services offerings range from partial to full operation of customer or Motorola Solutions owned networks. Software includes public safety and enterprise command center solutions, unified communications applications, video software solutions, delivered both on premise and “as a service.”

The following table summarizes Net sales by segment: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Products and Systems Integration	$	1,288	$	1,174	$	3,429	$	3,076
Services and Software	574		471		1,660		1,347
	$	1,862	$	1,645	$	5,089	$	4,423

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Products and Systems Integration	$	183		$	266		$	449		$	553
Services and Software	111			81			290			228
Operating earnings	294			347			739			781
Total other expense	(24		)	(61		)	(102		)	(171		)
Earnings before income taxes	$	270		$	286		$	637		$	610

13. Reorganization of Business

2018 Charges

During the three months endedSeptember 29, 2018, the Company recorded net reorganization of business charges of $25 million including $21 million of charges in Other charges and $4 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $25 million were charges of $13 million related to employee separation costs and $12 million related to exit costs.

During the nine months endedSeptember 29, 2018, the Company recorded net reorganization of business charges of $62 million including $46 million of charges in Other charges and $16 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $62 million were charges of $61 million related to employee separation costs and $16 million related to exit costs, partially offset by $15 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment: 

September 29, 2018	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	19	$	47
Services and Software	6		15
	$	25	$	62

27

The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2018 to September 29, 2018:

	January 1, 2018		Additional Charges		Adjustments			Amount Used			September 29, 2018
Exit costs	$	9	$	16	$	—		$	(3	)	$	22
Employee separation costs	41		61		(15		)	(48		)	39
	$	50	$	77	$	(15	)	$	(51	)	$	61

Exit Costs

At January 1, 2018, the Company had $9 million of accruals for exit costs. During the nine months endedSeptember 29, 2018, there were $16 million of additional charges and $3 million of cash payments related to the exit of leased facilities. The remaining accrual of $22 million, which the current portion is included in Accrued liabilities and the non-current portion is included in Other liabilities in the Company’s condensed consolidated balance sheet at September 29, 2018, 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, 2018, the Company had an accrual of $41 million for employee separation costs. The 2018 additional charges of $61 million represent severance costs for approximately 700 employees. The adjustment of $15 million reflects reversals for accruals no longer needed. The $48 million used reflects cash payments to severed employees. The remaining accrual of $39 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at September 29, 2018, 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.

2017 Charges

During the three months endedSeptember 30, 2017, the Company recorded net reorganization of business charges of $8 million including $6 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 $8 million were charges of $7 million related to employee separation costs and $1 million related to exit costs.

During the nine months endedSeptember 30, 2017, the Company recorded net reorganization of business charges of $30 million including $22 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 $30 million were charges of $30 million related to employee separation costs and $5 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: 

September 30, 2017	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	6	$	22
Services and Software	2		8
	$	8	$	30

28

14. 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.

Avigilon Corporation

On March 28, 2018, the Company completed the acquisition of Avigilon Corporation, a provider of advanced end-to-end security and surveillance solutions including video analytics, network video management hardware and software, surveillance cameras and access control solutions. The purchase price of $974 million, consisted of cash payments of $980 million for outstanding common stock, restricted stock units and employee held stock options, net of cash acquired of $107 million, debt assumed of $75 million and transaction costs of $26 million. Prior to the end of the first quarter, $35 million of the assumed debt was repaid with the remaining $40 million repaid during the second quarter of 2018.

The acquisition of Avigilon 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 purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts and goodwill may be subject to change. The following table summarizes fair values of assets acquired and liabilities assumed as of the March 28, 2018 acquisition date:

Accounts receivable, net	$	67
Inventory	93
Other current assets	18
Property, plant and equipment, net	33
Deferred income taxes	4
Accounts payable	(21		)
Accrued liabilities	(28		)
Deferred income tax liabilities	(134		)
Goodwill	444
Intangible assets	498
Total consideration	$	974

Acquired intangible assets consist of $110 million of customer relationships, $380 million of developed technology and $8 million of trade names and will have useful lives of two to 20 years. The fair values of all intangible assets were estimated using the income approach. Customer relationships and developed technology were valued under the excess earnings method which assumes that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable specifically to the intangible asset. Trade names were valued under the relief from royalty method, which assumes value to the extent that the acquired company is relieved of the obligation to pay royalties for the benefits received from them.

 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes.

The pro forma effect of this acquisition is not significant.

Other Acquisitions

On April 9, 2018, the Company completed the acquisition of a provider of two-way radio communications for a gross purchase price of $11 million, recognizing $7 million of identifiable intangible assets, which will be amortized over a period of seven years. The results of operations for this acquisition have been included in the Company’s condensed consolidated statements of operations subsequent to the acquisition date. 

On March 7, 2018, the Company completed the acquisition of Plant Holdings, Inc., the parent company of Airbus DS Communications for a purchase price of $237 million net cash. This acquisition will expand the Company's software portfolio in the command center with additional solutions for Next Generation 9-1-1. The Company recognized $161 million of goodwill, $80 million of identifiable intangible assets and $4 million of acquired liabilities. Goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $41 million of customer-related intangibles, $27 million of completed technology and $12 million of trade names. The identifiable intangible assets will be amortized over a period of 10 to 20 years. The purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts and goodwill may be subject to change.

On August 28, 2017, the Company completed the acquisition of Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers, for a purchase price of $225 million. As a result of the acquisition, the Company recognized $191 million of goodwill, $44 million of identifiable intangible assets and $10 million of acquired liabilities. The identifiable intangible assets were classified as $25 million of customer-related intangibles and $19 million of completed technology and will be amortized over a period of 13 to 16 years.

29

On March 13, 2017, the Company completed the acquisition of Interexport, a company that provides services for communications systems to public safety and commercial customers in Chile, for a purchase price of $98 billion Chilean pesos, or approximately $147 million U.S. dollars based on cash payments 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 $61 million of identifiable intangible assets, $70 million of acquired property, plant and equipment and $16 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.

The pro forma effects of these acquisitions are not significant.

Intangible Assets

Amortized intangible assets were comprised of the following: 

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	559	$	81	$	148	$	55
Patents	2		2		2		2
Customer-related	1,115		344		977		242
Other intangibles	75		27		56		23
	$	1,751	$	454	$	1,183	$	322

Amortization expense on intangible assets was $46 million for the three months endedSeptember 29, 2018 and $140 million for the nine months endedSeptember 29, 2018. Amortization expense on intangible assets was $39 million for the three months endedSeptember 30, 2017 and $111 million for the nine months endedSeptember 30, 2017. As of September 29, 2018, annual amortization expense is estimated to be $189 million in 2018, $193 million in 2019, $191 million in 2020, $187 million in 2021, $184 million in 2022, and $84 million in 2023.

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

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products and Systems Integration	$	510	$	29	$	12	$	8
Services and Software	1,241		425		1,171		314
	$	1,751	$	454	$	1,183	$	322

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2018 to September 29, 2018: 

	Products and Systems Integration		Services and Software			Total
Balance as of January 1, 2018	$	362	$	576		$	938
Goodwill acquired	359		231			590
Purchase accounting adjustments	10		7			17
Foreign currency	—		(4		)	(4		)
Balance as of September 29, 2018	$	731	$	810		$	1,541

During the second quarter of 2018, the Company modified its internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership, in part, as a result of recent acquisitions contributing to the growth within the newly aligned Services and Software segment. Previously, the Company had two reporting segments: Products and Services. The changes in reporting structure consist of Systems Integration-related revenue and costs moving from the old Services segment into the newly presented Products and Systems Integration segment and Software related revenue and costs moving from the old Products segment into the newly presented Services and Software segment.

30

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 nine months endedSeptember 29, 2018 and September 30, 2017, 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, 2017.

During the second quarter of 2018, we modified our internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership in part as a result of recent acquisitions contributing to the growth within the newly aligned Services and Software segment. Previously, we had two reporting segments: Products and Services. The changes in reporting structure consist of Systems Integration related revenue and costs moving from the old Services segment into the newly presented Products and Systems Integration segment and Software related revenue and costs moving from the old Products segment into the newly presented Services and Software segment.

Executive Overview

Recent Developments

We have reached an agreement with the UK Home Office on terms for the new direction of the UK Emergency Services Network (“ESN”) as well as an agreement on terms to extend the Airwave contract through 2022.

On March 28, 2018, we completed the acquisition of Avigilon Corporation, a provider of advanced end-to-end security and surveillance solutions including video analytics, network video management hardware and software, surveillance cameras and access control solutions for a purchase price of $974 million.

On March 7, 2018, we completed the acquisition of Plant Holdings, Inc., the parent company of Airbus DS Communications for a purchase price of $237 million. This acquisition expands our software portfolio in the command center with additional solutions for Next Generation 9-1-1.

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 16,000 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 and Systems Integration: The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video solutions, and the implementation, optimization, and integration of such systems, devices, and applications, including the Company’s: (i) “ASTRO” products, which meet the Association of Public Safety Communications Officials Project 25 standard, (ii) “Dimetra” products which meet the European Telecommunications Standards Institute Terrestrial Trunked Radio “TETRA” standard, (iii) Professional and Commercial Radio (“PCR”) products, (iv) broadband technology products, such as Long-Term Evolution (“LTE”), and (v) video solutions, such as video surveillance cameras. The primary customers of the Products and Systems Integration segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and video solutions and manage a mobile workforce. In the third quarter of 2018, the segment’s net sales were $1.3 billion, representing 69% of our consolidated net sales.

Services and Software: The Services and Software segment provides a full set of offerings for government, public safety and commercial communication networks. Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include monitoring, software updates and cybersecurity services. Managed services offerings range from partial to full operation of customer or Motorola Solutions owned networks. Software includes public safety and enterprise command center solutions, unified communications applications, and video software solutions, delivered both on premise and “as a service.” In the third quarter of 2018, the segment’s net sales were $574 million, representing 31% of our consolidated net sales.

31

Third Quarter Summary

• Net sales were $1.9 billion in the third quarter of 2018, up$217 million, or 13%, from the third quarter of 2017.

• We generated operating earnings of $294 million, or 16% of net sales, in the third quarter of 2018, compared to $347 million, or 21% of net sales, in the third quarter of 2017.

• We had net earnings attributable to Motorola Solutions, Inc. of $247 million, or $1.43 per diluted common share, in the third quarter of 2018, compared to $212 million, or $1.25 per diluted common share, in the third quarter of 2017.

• We generated net cash from operating activities of $263 million during the first nine months of 2018, compared to $585 million in the first nine months of 2017. The decrease is primarily driven by the $500 million contribution to our U.S. pension plan, partially offset by improved working capital.

• We returned $318 million in capital to shareholders through dividends and share repurchases during the first nine months of 2018, compared to $588 million during the first nine months of 2017.

A summary of our segment results for the third quarter of 2018 is as follows:

• Products and Systems Integration: Net sales were $1.3 billion, an increase of $114 million, or 10% compared to net sales of $1.2 billion during the third quarter of 2017. On a geographic basis, net sales increased in the Americas and EMEA and decreased in AP, compared to the year-ago quarter.

• Services and Software: Net sales were $574 million, an increase of $103 million, or 22% compared to net sales of $471 million in the third quarter of 2017. On a geographic basis, net sales increased in every region, compared to the year-ago quarter.

32

Results of Operations

	Three Months Ended										Nine Months Ended
(Dollars in millions, except per share amounts)	September 29, 2018			% of Sales*		September 30, 2017			% of Sales*		September 29, 2018			% of Sales*		September 30, 2017			% of Sales*
Net sales from products	$	1,151				$	989				$	2,993				$	2,540
Net sales from services	711					656					2,096					1,883
Net sales	1,862					1,645					5,089					4,423
Costs of products sales	516			44.8	%	428			43.3	%	1,383			46.2	%	1,167			45.9	%
Costs of services sales	445			62.6	%	423			64.5	%	1,314			62.7	%	1,202			63.8	%
Costs of sales	961					851					2,697					2,369
Gross margin	901			48.4	%	794			48.3	%	2,392			47.0	%	2,054			46.4	%
Selling, general and administrative expenses	323			17.3	%	259			15.7	%	918			18.0	%	760			17.2	%
Research and development expenditures	158			8.5	%	141			8.6	%	472			9.3	%	413			9.3	%
Other charges	126			6.8	%	47			2.9	%	263			5.2	%	100			2.3	%
Operating earnings	294			15.8	%	347			21.1	%	739			14.5	%	781			17.7	%
Other income (expense):
Interest expense, net	(59		)	(3.2	)%	(52		)	(3.2	)%	(163		)	(3.2	)%	(154		)	(3.5	)%
Gains on sales of investments and businesses, net	6			0.3	%	—			—	%	16			0.3	%	3			0.1	%
Other	29			1.6	%	(9		)	(0.5	)%	45			0.9	%	(20		)	(0.5	)%
Total other expense	(24		)	(1.3	)%	(61		)	(3.7	)%	(102		)	(2.0	)%	(171		)	(3.9	)%
Earnings before income taxes	270			14.5	%	286			17.4	%	637			12.5	%	610			13.8	%
Income tax expense	22			1.2	%	73			4.4	%	91			1.8	%	188			4.3	%
Net earnings	248			13.3	%	213			12.9	%	546			10.7	%	422			9.5	%
Less: Earnings attributable to noncontrolling interests	1			0.1	%	1			0.1	%	2			—	%	2			—	%
Net earnings attributable to Motorola Solutions, Inc.	$	247		13.3	%	$	212		12.9	%	$	544		10.7	%	$	420		9.5	%
Earnings per diluted common share	$	1.43				$	1.25				$	3.17				$	2.48

* Percentages may not add due to rounding

33

Results of Operations—Three months endedSeptember 29, 2018 compared to three months endedSeptember 30, 2017

The results of operations for the third quarter of 2018 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 $1.9 billion in the third quarter of 2018, a $217 million, or 13%, increase compared to the third quarter of 2017. The net sales increase for the third quarter of 2018 included $145 million from acquisitions and $19 million from the adoption of ASC 606 (see Note 1 of our Condensed Consolidated Financial Statements), partially offset by $9 million from unfavorable foreign currency rates. The Products and Systems Integration segment grew 10% driven by the Americas and EMEA. The Services and Software segment grew 22% with growth in all regions.

The increase in net sales is reflective of growth in the Americas and EMEA. Devices net sales within the Products and Systems Integration segment increased in the Americas and EMEA and decreased in AP. Systems and Systems Integration net sales within the Products and Systems Integration segment increased in every region. The Services and Software segment net sales increased in every region. The Services and Software segment net sales increase in the Americas was driven by acquisitions within the Software business and growth absent of acquisitions in both Services and Software. The Services and Software segment net sales increase in EMEA was primarily driven by growth absent of acquisitions in Services. The Services and Software segment net sales increase in AP was driven by growth absent of acquisitions in both Services and Software.

Gross Margin

Gross margin was $901 million, or 48.4% of net sales, in the third quarter of 2018, compared to $794 million, or 48.3% of net sales, in the third quarter of 2017. The increase in gross margin was primarily driven by the adoption of ASC 606 and a favorable mix within the Services and Software segment, partially offset by lower margins in the Products and Systems Integration segment due to acquisitions and lower margins on a few large projects.

Selling, General and Administrative Expenses

SG&A expenses were $323 million, or 17.3% of net sales, in the third quarter of 2018, compared to $259 million, or 15.7% of net sales, in the third quarter of 2017. The increase in SG&A expenditures is primarily due to increased expenses associated with acquired businesses and the change in classification of our third-party sales commissions from the adoption of ASC 606.

Research and Development Expenditures

R&D expenditures were $158 million, or 8.5% of net sales, in the third quarter of 2018 and $141 million, or 8.6% of net sales, in the third quarter of 2017. The increase in R&D expenditures is primarily due to increased expenses associated with acquired businesses.

Other Charges

We recorded net charges of $126 million in the third quarter of 2018, compared to net charges of $47 million in the third quarter of 2017. The net Other charges in the third quarter of 2018 were primarily driven by: (i) a $57 million charge related to ongoing remediation efforts of environmental media for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act incurred by a legacy business (See Note 3 of our Condensed Consolidated Financial Statements), (ii) $46 million of charges relating to the amortization of intangibles, and (iii) $21 million of net reorganization of business charges. The net charges in the third quarter of 2017 of $47 million were primarily from $39 million of charges relating to the amortization of intangibles and $6 million of net reorganization of business charges. The net reorganization of business charges are discussed in further detail in the Reorganization of Businesses section.

Net Interest Expense

Net interest expense was $59 million in the third quarter of 2018 and $52 million in the third quarter of 2017. The increase in net interest expense in the third quarter of 2018 as compared to the third quarter of 2017 was a result of increases in outstanding debt issued during 2018.

Gains on Sales of Investments and Businesses, net

Net gains on sales of investments and businesses were $6 million in the third quarter of 2018. The net gains were related to the sales of various equity investments.

Other

Net Other income was $29 million in the third quarter of 2018, compared to an expense of $9 million in the third quarter of 2017. The net other income in the third quarter of 2018 was primarily comprised of: (i) $18 million of net periodic pension and postretirement benefit, (ii) an $8 million gain on derivative instruments, (iii) $7 million gain on fair value adjustments to investments, and iv) a $6 million gain from the extinguishment of convertible debt, partially offset by a $14 million foreign currency loss. The net Other expense in the third quarter of 2017 was primarily comprised of: (i) $21 million of charges relating to the Non-U.S. pension settlement loss and (ii) a $7 million foreign currency loss, partially offset by: (i) $11 million of net periodic pension and postretirement benefit, (ii) $4 million of other non-operating gains and (iii) a $3 milliongain on derivative instruments.

34

Effective Tax Rate

We recorded $22 million of net tax expense in the third quarter of 2018, resulting in an effective tax rate of 8%, compared to $73 million of net tax expense in the third quarter of 2017, resulting in an effective tax rate of 26%. Our effective tax rate for the three months ended September 29, 2018 of 8% is lower than our effective tax rate for the three months ended September 30, 2017 of 26%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted December 22, 2017; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. Our effective tax rate in the third quarter of 2018 was lower than the U.S. statutory tax rate of 21% primarily driven by a tax benefit due to the recognition of tax benefits on share-based compensation and a tax benefit related to the recording of U.S. federal return-to-provision adjustments. Our effective tax rate in the third quarter of 2017 was lower than the U.S. statutory tax rate of 35% primarily driven by a tax benefit due to the recognition of a U.S. capital loss.

Results of Operations—Nine months endedSeptember 29, 2018 compared to nine months endedSeptember 30, 2017

Net Sales

Net sales were $5.1 billion in the first nine months of 2018, a $666 million, or 15%, increase compared to the first nine months of 2017. The net sales increase for the first nine months of 2018 included $347 million from acquisitions, $58 million from the adoption of ASC 606 (see Note 1 of our Condensed Consolidated Financial Statements), and $56 million from favorable foreign currency rates. The Products and Systems Integration segment grew 11% driven by the Americas and EMEA. The Services and Software segment grew 23% with growth in all regions.

The increase in net sales is reflective of growth in every region. Within the Products and Systems Integration segment, Devices net sales increased in the Americas and EMEA and decreased in AP and Systems and Systems Integration net sales increased in every region. The Services and Software segment increased in every region. The Services and Software segment net sales increase in the Americas was driven by acquisitions within the Software business, the acquisition of Interexport in Services and growth absent of acquisitions in both Services and Software. The Services and Software segment net sales increase in EMEA was primarily driven by growth absent of acquisitions in Services. The Services and Software segment net sales increase in AP was driven by the acquisition of Kodiak Networks in the Software business and growth absent of acquisitions in both Services and the Software businesses.

Gross Margin

Gross margin was $2.4 billion, or 47.0% of net sales, in the first nine months of 2018, compared to $2.1 billion, or 46.4% of net sales, in the first nine months of 2017. The increase in gross margin percentage was primarily driven by the adoption of ASC 606 and improved margins in the Services and Software segment, partially offset by lower margins in the Products and Systems Integration segment due to acquisitions and lower margins on a few large projects.

Selling, General and Administrative Expenses

SG&A expenses were $918 million, or 18.0% of net sales, in the first nine months of 2018, compared to $760 million, or 17.2% of net sales, in the first nine months of 2017. The increase in SG&A expenditures is primarily due to increased expenses associated with acquired businesses and the change in classification of our third-party sales commissions from the adoption of ASC 606.

Research and Development Expenditures

R&D expenditures were $472 million, or 9.3% of net sales, in the first nine months of 2018 and $413 million, or 9.3% of net sales, in the first nine months of 2017. R&D expenditures increased due to increased expenses associated with acquired businesses.

Other Charges

We recorded net charges of $263 million in the first nine months of 2018, compared to net charges of $100 million in the first nine months of 2017. The net Other charges in the first nine months of 2018 were primarily driven by: (i) $140 million of charges relating to the amortization of intangibles, (ii) a $57 million charge related to ongoing remediation efforts of environmental media for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act incurred by a legacy business (See Note 3 of our Condensed Consolidated Financial Statements), (iii) $46 million of net reorganization of business charges, and (iv) $17 million of acquisition related transaction fees. The net charges in the first nine months of 2017 of $100 million primarily consisted of: (i) $111 million of charges relating to the amortization of intangibles, (ii) $22 million of net reorganization of business charges and (iii) $8 million of charges related to a building impairment, partially offset by a net gain of $42 million, related to the recovery of receivables owed to the Company by a former customer. The net reorganization of business charges are discussed in further detail in the Reorganization of Businesses section.

35

Net Interest Expense

Net interest expense was $163 million in the first nine months of 2018 and $154 million in the first nine months of 2017. The increase in net interest expense in the first nine months of 2018 as compared to the first nine months of 2017 was a result of increases in outstanding debt.

Gains on Sales of Investments and Businesses, net

Net gains on sales of investments and businesses were $16 million in the first nine months of 2018 compared to $3 million in the first nine months of 2017. The net gains in the first nine months of 2018 and 2017 were primarily related to the sales of various equity investments.

Other

Net Other income was $45 million in the first nine months of 2018, compared to expense of $20 million in the first nine months of 2017. The net Other income in the first nine months of 2018 was primarily comprised of: (i) $58 million net periodic postretirement benefit, (ii) $7 million gain on fair value adjustments to investments, and (iii) a $6 million gain from the extinguishment of convertible debt, partially offset by: (i) $15 millionloss on derivative investments, including losses of $14 million associated with foreign currency derivative contracts related to the acquisition of Avigilon and (ii) $14 million of foreign currency losses. The net Other expense in the first nine months of 2017 was comprised of $46 million of charges relating to the Non-U.S. pension settlement loss and a $29 million foreign currency loss, partially offset by: (i) $36 million of net periodic postretirement benefit, (ii) a $14 milliongain on derivative instruments, and (iii) $4 million of other non-operating gains.

Effective Tax Rate

We recorded $91 million of net tax expense in the first nine months of 2018, resulting in an effective tax rate of 14%, compared to $188 million of net tax expense in the first nine months of 2017, resulting in an effective tax rate of 31%. Our effective tax rate for the nine months endedSeptember 29, 2018 of 14% is lower than our effective tax rate for the nine months endedSeptember 30, 2017 of 31%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the Tax Act; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. Our effective tax rate in the first nine months of 2018 was lower than the U.S. statutory tax rate of 21% primarily due to: (i) the recognition of excess tax benefits on share-based compensation, (ii) a tax benefit due to a favorable settlement of a state audit, and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. Our effective tax rate in the first nine months of 2017 was lower than the U.S. statutory tax rate of 35% primarily due to a tax benefit due to the recognition of a U.S. capital loss.

Segment Information

The following commentary should be read in conjunction with the financial results of each reporting segment for the three and nine months endedSeptember 29, 2018 and September 30, 2017, as detailed in Note 12, “Segment Information,” of our condensed consolidated financial statements.

Products and Systems Integration Segment

For the third quarter of 2018, the segment’s net sales represented 69% of our consolidated net sales, compared to 71% of our consolidated net sales for the third quarter of 2017. For the first nine months of 2018, the segment's net sales represented 67% of our consolidated net sales, compared to 70% of our consolidated net sales for the first nine months of 2017.

	Three Months Ended						Nine Months Ended
	September 29, 2018		September 30, 2017		% Change		September 29, 2018		September 30, 2017		% Change
Segment net sales	$	1,288	$	1,174	10	%	$	3,429	$	3,076	11	%
Operating earnings	183		266		(31	)%	449		553		(19	)%

Three months endedSeptember 29, 2018 compared to three months endedSeptember 30, 2017

The segment’s net sales increased$114 million, to $1.3 billion in the third quarter of 2018, as compared to $1.2 billion during the third quarter of 2017. The increase in the segment's net sales was driven by an increase in Devices and Systems and Systems Integration sales. Devices net sales increased in the Americas and EMEA due to the acquisition of Avigilon and growth absent of acquisitions and decreased in AP. Systems and Systems Integration net sales increased in the Americas and EMEA due to the acquisition of Avigilon. Systems and Systems Integration net sales increased in AP due to the acquisition of Avigilon and growth absent of acquisitions.

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 third quarter of 2018, compared to 73% of the segment's net sales in the third quarter of 2017.

The segment had operating earnings of $183 million in the third quarter of 2018, compared to $266 million in the third quarter of 2017. The decrease in operating earnings in the third quarter of 2018 compared to the third quarter of 2017 was driven

36

by higher Other charges, SG&A expenses, and R&D expenditures driven by an environmental reserve charge, increased expenses associated with acquired businesses including the amortization of intangibles, and increased in reorganization of business charges, partially offset by higher net sales.

Nine months endedSeptember 29, 2018 compared to nine months endedSeptember 30, 2017

The segment’s net sales increased$353 million, to $3.4 billion in the first nine months of 2018, as compared to $3.1 billion during the first nine months of 2017. The increase in the segment's net sales was driven by an increase in Devices and Systems and Systems Integration sales. Devices net sales increased in the Americas and EMEA due to the acquisition of Avigilon and growth absent of acquisitions and decreased in AP. Systems and Systems Integration net sales increased in the Americas and EMEA due to the acquisition of Avigilon. Systems and Systems Integration net sales increased in AP due to the acquisition of Avigilon and growth absent of acquisitions.

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 nine months of 2018, compared to 73% of the segment's net sales in the first nine months of 2017.

The segment had operating earnings of $449 million in the first nine months of 2018, compared to $553 million in the first nine months of 2017. The decrease in operating earnings in the first nine months of 2018 compared to the first nine months of 2017 was driven by higher SG&A expenses, Other charges, and R&D expenditures driven by increased expenses associated with acquired businesses including the amortization of intangibles, an environmental reserve charge, increased reorganization of business charges, and an impact from the adoption of ASC 606, partially offset by higher net sales.

Services and Software Segment

For third quarter of 2018, the segment’s net sales represented 31% of our consolidated net sales, compared to 29% of our consolidated net sales for the third quarter of 2017. For the first nine months of 2018, the segment's net sales represented 33% of our consolidated net sales, compared to 30% of our consolidated net sales for the first nine months of 2017.

	Three Months Ended						Nine Months Ended
	September 29, 2018		September 30, 2017		% Change		September 29, 2018		September 30, 2017		% Change
Segment net sales	$	574	$	471	22	%	$	1,660	$	1,347	23	%
Operating earnings	111		81		37	%	290		228		27	%

Three months endedSeptember 29, 2018 compared to three months endedSeptember 30, 2017

The segment’s net sales increased$103 million, or 22%, to $574 million in the third quarter of 2018, as compared to $471 million in the third quarter of 2017. The increase in the segment's net sales was driven by acquisitions within the Software business, as well as growth absent of acquisitions in both Services and Software. On a geographic basis, net sales for the third quarter of 2018 increased in every region, compared to the third quarter of 2017.

Net sales in the Americas continued to comprise a significant portion of the segment’s business, accounting for approximately 60% of the segment’s net sales in the third quarter of 2018, compared to 56% of the segment’s net sales in the third quarter of 2017.

The segment had operating earnings of $111 million in the third quarter of 2018, compared to $81 million in the third quarter of 2017. The increase in operating earnings in the third quarter of 2018 compared to the third quarter of 2017 was driven by higher sales, partially offset by higher Other charges, SG&A expenses, and R&D expenditures driven by an environmental reserve charge, increased expenses associated with acquired businesses, and increased reorganization of business charges.

Nine months endedSeptember 29, 2018 compared to nine months endedSeptember 30, 2017

The segment’s net sales increased$313 million, or 23%, to $1.7 billion in the first nine months of 2018, as compared to $1.3 billion in the first nine months of 2017. The increase in the segment's net sales was driven by acquisitions within the Software business and the Interexport acquisition within Services, as well as growth absent of acquisitions in both Services and Software. On a geographic basis, net sales for the first nine months of 2018 increased in every region, compared to the first nine months of 2017.

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 first nine months of 2018, compared to 55% of the segment’s net sales in the first nine months of 2017.

The segment had operating earnings of $290 million in the first nine months of 2018, compared to $228 million in the first nine months of 2017. The increase in operating earnings in the first nine months of 2018 compared to the first nine months of 2017 was driven by higher sales, partially offset by higher Other charges, R&D expenditures, and SG&A expenses driven by increased expenses associated with acquired businesses including the amortization of intangibles, an environmental reserve charge, increased reorganization of business charges, and an impact from the adoption of ASC 606.

37

Reorganization of Business

During the third quarter of 2018, we recorded net reorganization of business charges of $25 million including $21 million of charges recorded within Other charges and $4 million in Cost of sales in our condensed consolidated statements of operations. Included in the $25 million were charges of $13 million related to employee separation costs and $12 million related to exit costs.

During the first nine months of 2018, we recorded net reorganization of business charges of $62 million including $46 million of charges recorded within Other charges and $16 million in Cost of sales in our condensed consolidated statements of operations. Included in the $62 million were charges of $61 million related to employee separation costs and $16 million related to exit costs, partially offset by $15 million of reversals for accruals no longer needed.

During the third quarter of 2017, we recorded net reorganization of business charges of $8 million including $6 million of charges recorded within Other charges and $2 million in Cost of sales in our condensed consolidated statements of operations. Included in the $8 million were charges of $7 million related to employee separation costs and $1 million related to exit costs.

During the first nine months of 2017, we recorded net reorganization of business charges of $30 million including $22 million of charges recorded within Other charges and $8 million in Cost of sales in our condensed consolidated statements of operations. Included in the $30 million were charges of $30 million related to employee separation costs and $5 million related to exit costs, partially offset by $5 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by business segment:

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Products and Systems Integration	$	19	$	6	$	47	$	22
Services and Software	6		2		15		8
	$	25	$	8	$	62	$	30

Cash payments for employee severance and exit costs in connection with the reorganization of business plans were $51 million in the first nine months of 2018 and $77 million in the first nine months of 2017. The reorganization of business accruals at September 29, 2018 were $61 million, of which $39 million relate to employee separation costs that are expected to be paid within one year and $22 million of accruals related primarily to lease termination obligations that are expected to be paid over a number of years.

Liquidity and Capital Resources

	Nine Months Ended
	September 29, 2018			September 30, 2017
Cash flows provided by (used for):
Operating activities	$	263		$	585
Investing activities	(1,196		)	(415		)
Financing activities	534			(537		)
Effect of exchange rates on cash and cash equivalents	(18		)	54
Decrease in cash and cash equivalents	$	(417	)	$	(313	)

Cash and Cash Equivalents

At September 29, 2018, $290 million of the $851 million cash and cash equivalents balance was held in the U.S. and $561 million was held by us or our subsidiaries in other countries, with approximately $200 million held in the United Kingdom. Restricted cash was $12 million at September 29, 2018 and $63 million at December 31, 2017. During the three months ended September 29, 2018, restricted cash decreased from $63 million to $12 million due to the completion of a settlement related to our legacy Networks business.

Operating Activities

Net cash provided by operating activities in the first nine months of 2018 decreased $322 million, compared to the first nine months of 2017. Operating cash flows in the first nine months of 2018, as compared to the first nine months of 2017, were negatively impacted by a $500 million contribution to our U.S. pension plan in February 2018, a settlement payment related to our legacy Networks business, higher incentive payments, and the recovery of financial receivables owed to us by a former customer in the first quarter of 2017, partially offset by improved working capital. The contribution to our U.S. pension plan moves the next anticipated required contribution to 2024, or beyond.

38

Investing Activities

Net cash used by investing activities increased $781 million in the first nine months of 2018, compared to the first nine months of 2017. The $1.2 billion of cash used in the first nine months of 2018 included $1.2 billion used for acquisitions and investments and $128 million in capital expenditures, partially offset by $90 million of proceeds from sales of investments and businesses. The cash usage of $415 million in the first nine months of 2017 consisted primarily of $383 million cash used for acquisitions and investments and $206 million in capital expenditures, partially offset by $174 million of proceeds from the sale of investments and businesses.

Acquisition and Investments: We used net cash for acquisitions and investments of $1.2 billion during the first nine months of 2018 compared to $383 million in the first nine months of 2017. The cash used during the first nine months of 2018 was primarily used for the acquisitions of Avigilon for a total of $903 million, net of cash acquired, and Plant for total of $237 million, net of cash acquired. The cash used during the first nine months of 2017 was used for investment in short-term government securities, and the acquisitions of Kodiak Networks for $205 million and Interexport for $55 million, net of cash acquired.

Sales of Investments and Businesses: We received $90 million of proceeds related to the sales of investments and businesses in the first nine months of 2018 compared to $174 million in the first nine months of 2017. The proceeds in the first nine months of 2018 primarily consisted of $60 million of excess cash withdrawn from company-sponsored life insurance investments and the sales of various equity investments. The proceeds from the first quarter of 2017 primarily consisted of the sales of short-term government securities.

Capital Expenditures: Capital expenditures decreased in the first nine months of 2018 to $128 million, compared to $206 million in the first nine months of 2017. The decrease in capital expenditures was primarily related to lower information technology and facilities spend.

Financing Activities

Net cash provided by financing activities increased $1.1 billion in the first nine months of 2018, compared to the first nine months of 2017. Cash provided by financing activities in the first nine months of 2018 was primarily comprised of $1.3 billion of proceeds from the issuance of debt and $139 million of net proceeds from the issuance of common stock in connection with our employee stock option plans and employee stock purchase plan, partially offset by: (i) $412 million used for the repayment of debt, (ii) $252 million of cash used for the payment of dividends, (iii) $169 million used to pay the conversion premium on the repurchase of convertible debt, and (iv) $66 million used for purchases under our share repurchase program. Net cash used for financing activities in the first nine months of 2017 was primarily comprised of: (i) $358 million used for purchases under our share repurchase program, (ii) $230 million of cash used for the payment of dividends, and (iii) $15 million used for the repayment of debt, partially offset by $61 million of net proceeds from the issuance of common stock in connection with our employee stock option plans and employee stock purchase plan.

Current and Long-Term Debt: We had outstanding long-term debt of $5.4 billion and $4.5 billion, including the current portions of $337 million and $52 million at September 29, 2018 and December 31, 2017, respectively.

To complete the acquisition of Avigilon during the quarter ended March 31, 2018, we entered into a term loan for $400 million with a maturity date of March 26, 2021 (the “Term Loan”). Interest on the Term Loan is variable, indexed to LIBOR, and paid monthly. The weighted average borrowing rate for amounts outstanding during the three and nine months endedSeptember 29, 2018 were 3.33% and 3.43%, respectively. No additional borrowings are permitted and amounts borrowed and repaid or prepaid may not be re-borrowed.

In February of 2018, we issued $500 million of 4.60% Senior notes due 2028. After debt issuance costs and debt discounts, we recognized net proceeds of $497 million. These proceeds were then used to make a $500 million contribution to our U.S. pension plan in the first quarter of 2018.

On August 25, 2015, we entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2.00% Senior Convertible Notes which mature in September 2020. The notes became fully convertible as of August 25, 2017. The notes are convertible based on a conversion rate of 14.8252, as may be adjusted for dividends declared, per $1,000 principal amount (which is currently equal to a conversion price of $67.45 per share). The exercise price adjusts automatically for dividends. On September 5, 2018, we agreed with Silver Lake Partners to repurchase $200 million in principal amount of the Senior Convertible Notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium. As of September 29, 2018, we paid $169 million of cash to Silver Lake Partners and recorded a gain of $6 million from the extinguishment of the convertible debt. The principal amount of $200 million was reclassified to short term debt. In the event of an additional 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.

On September 28, 2018, we issued an additional $200 million on the outstanding 4.60% Senior notes due 2028 bringing the outstanding total to $700 million. We settled the issuance on October 5, 2018 and recognized net proceeds of $196 million, subsequent to quarter end, which was then used to pay the $200 million principal due to Silver Lake Partners on October 15, 2018.

We continue to believe that we hold sufficient liquidity to cover the day-to-day operations of our business as well as any future volatility or uncertainty that may arise in the capital markets.

39

Share Repurchase Program: During the nine months endedSeptember 29, 2018, we paid an aggregate of $66 million, including transaction costs, to repurchase approximately 0.6 million shares at an average price of $101.54 per share. As of September 29, 2018, we had used approximately $12.4 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.6 billion of authority available for future repurchases.

Payment of Dividends: During the third quarter of 2018, we paid $84 million in cash dividends to holders of our common stock. During the first nine months of 2018, we paid $252 million in cash dividends to holders of our common stock. Subsequent to quarter end, we paid an additional $85 million in cash dividends to holders of our common stock.

Deferred Acquisition Consideration:We currently have an $84 million deferred consideration related to the Airwave acquisition within Accrued liabilities. This will be paid on November 15, 2018.

Credit Facilities

As of September 29, 2018, we had a $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022 (the "2017 Motorola Solutions Credit Agreement"). As of March 31, 2018, we borrowed $400 million under the facility to complete the Avigilon acquisition. As of September 29, 2018, the outstanding loan amount under the facility was $100 million, with $200 million paid during the third quarter. Subsequent to the quarter, we paid the remaining $100 million. The 2017 Motorola Solutions Credit Agreement includes 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 ("LIBOR"), at our option. The weighted average borrowing rate on outstanding amounts for the three and nine months ended September 29, 2018 was 3.58%. 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 a maximum leverage ratio, as defined in the 2017 Motorola Solutions Credit Agreement. We were in compliance with our financial covenants as of September 29, 2018.

Long-Term Customer Financing Commitments

Outstanding Commitments:We had outstanding commitments to provide long-term financing to third parties totaling $86 million at September 29, 2018, compared to $93 million at December 31, 2017.

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 nine months endedSeptember 29, 2018 and September 30, 2017: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Accounts receivable sales proceeds	$	—	$	99	$	76	$	179
Long-term receivables sales proceeds	73		55		101		123
Total proceeds from sales of accounts receivable	$	73	$	154	$	177	$	302

At September 29, 2018, the Company had retained servicing obligations for $879 million of long-term receivables, compared to $873 million at December 31, 2017. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables.

Other Contingencies

There were no significant changes impacting our commitments and contingencies during the three months ended September 29, 2018.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 us on January 1, 2019 and interim periods within that reporting period, with early adoption permitted. In July 2018 the FASB issued ASU 2018-11 that amended the ASU to include an additional (and optional) transition relief. The additional transition relief provides entities the option to adopt the ASU by applying the new ASU at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restatement of comparative periods. The new ASU must be adopted utilizing the modified retrospective method as of the earliest comparative period presented if the optional adoption method is not selected. We will adopt the ASU on January 1, 2019, utilizing the modified retrospective method as of the adoption date. We are continuing to assess the impact of the ASU on our financial statements, including the package of available practical expedients, required disclosures, and changes to internal controls. Based on the preliminary work completed, we expect a material impact to our balance sheet through the recording of right-of-use assets and lease obligations that are not required to be recorded within the balance sheet under current accounting standards.

40

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires entities to estimate and recognize current expected credit losses rather than delay recognition of credit losses until the loss is probable of occurring. The ASU is effective for us on January 1, 2020, and interim periods within that reporting period with early option permitted. We are currently evaluating the impact of the ASU on our consolidated financial statements and disclosures.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which is intended to simplify the application of hedge accounting and better portray the economic results of risk management strategies in the consolidated financial statements. The ASU expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU is effective for us on January 1, 2019 with adoption permitted immediately in any interim or annual period (including the current period). The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied using the modified retrospective method by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to presentation and disclosure should be applied prospectively. We are currently assessing the impact of this ASU, including transition elections and required elections, on our consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for the defined benefit pension plans and other postretirement plans. The ASU is effective for us on January 1, 2020 with early adoption permitted. The ASU requires a retrospective adoption method. We do not believe the ASU will have a material impact on our financial statement disclosures.

Recently Adopted Accounting Pronouncements

We adopted ASU No. 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory” on January 1, 2018 using the modified retrospective method of adoption. We recognized $31 million related to the cumulative effect of applying the ASU as an adjustment to our opening retained earnings balance. The comparative information has not been restated and continues to be reported under accounting standards in effect in those periods. This ASU eliminates the prior 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. Under the ASU, we will recognize tax expense when intra-entity transfers of assets other than inventory occur.

We adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on January 1, 2018 using the retrospective method of adoption. The amendments in the ASU 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. We have restated our comparative period results to reflect the application of the presentation guidance of the ASU. As a result of the ASU, the presentation of net periodic cost (benefit) has been updated to classify all components of our net periodic benefit, with the exception of the service cost component, within Other in Other income (expense) on the statement of operations. We reclassified $18 million and $10 million in the three months ended September 29, 2018 and September 30, 2017, respectively, and $58 million and $10 million in the nine months ended September 29, 2018 and September 30, 2017, respectively.

We adopted ASU No. 2014-09, "Revenue from Contracts with Customers," and all the related amendments (collectively “ASC 606”) on January 1, 2018 using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to our opening retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods.

We retained much of the same accounting treatment used to recognize revenue under ASC 606 as under accounting standards in effect in prior periods. Revenue on a significant portion of our System and Integration services contracts continues to be recognized under percentage of completion accounting, applying a cost-to-cost method. Services contracts continue to be recognized ratably over relevant contract terms as we stand ready to perform. Finally, revenue on equipment sales continues to be recognized based on delivery terms as aligned with the transfer of control.

Under the new standard, we identified distinct promises to transfer goods and/or services within our contracts. For contracts that are recognized under percentage of completion accounting, we considered the factors used to determine whether promises made in the contract are distinct and determined that devices and accessories represent distinct goods. Accordingly, adoption of the new standard impacts our system contracts, with the result being revenue recognized earlier as control of devices and accessories transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within our system contracts, we 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.

Under the new standard, revenue recognition for software sales is accelerated based on when control of software licenses and related support services are transferred to the customer. Amounts deferred under previous software accounting rules due to a lack of vendor-specific objective evidence have been recognized as an adjustment through opening retained earnings.

41

Historically, we presented transactions that involved a third-party sales representative on a net basis. After considering the control concept and the remaining three indicators of gross presentation under the new standard, we have determined that we are the principal in contracts that involve a third-party sales representative. Thus, we present associated revenues on a gross basis, with the affect being an equal increase to selling, general and administrative expenses for our cost of third-party commissions.

Under prior accounting standards, we expensed sales commissions and other costs to obtain a contract as incurred. However, under the new standard, we capitalize sales commissions and certain other costs as incremental costs to obtain a contract. Such costs are classified as non-current contract cost assets within Other assets and amortized over a period that approximates the timing of revenue recognition on the underlying contracts.

The new standard clarified the definition of a receivable and requires us to present our net position in a contract with a customer on the balance sheet. The position is presented as either a receivable, contract asset, or a contract liability. Under the new definition, accounts receivable are unconditional rights to consideration from a customer. Contract assets represent rights to consideration from a customer in exchange for transferred goods and services that are conditional on events other than the passage of time. Contract liabilities represent obligations to transfer goods and services for which we have received, or is due, consideration from a customer respectively. We reclassified our customer positions to align with the new definitions and presentation guidance. Accordingly, Unbilled accounts receivable and Costs and earnings in excess of billings have been reclassified from Accounts receivable and Other current assets, respectively, and are presented as Contract assets. Accounts receivable which are not due from customers have been reclassified into Other current assets. Deferred revenue, Billings in excess of costs and earnings, and Customer downpayments have been reclassified from Accrued liabilities and are presented as Contract liabilities. Non-current deferred revenue has been reclassified from Deferred revenue to Non-current contract liabilities within Other liabilities.

42

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Derivative Financial Instruments

As of September 29, 2018, we had outstanding foreign exchange contracts with notional amounts totaling $782 million, compared to $507 million outstanding as of December 31, 2017. 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 September 29, 2018, and the corresponding positions as of December 31, 2017: 

	Notional Amount
Net Buy (Sell) by Currency	September 29, 2018			December 31, 2017
British Pound	$	221		$	72
Euro	215			149
Australian Dollar	(109		)	(64		)
Chinese Renminbi	(75		)	(73		)
Brazilian Real	(46		)	(45		)

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) “Financial Statements,” about: (a) the recognition of revenue in future periods, and (b) our ability to settle the principal amount of the Senior Convertible Notes in cash, (2) “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 growth of our Services and Software segment and the resulting impact on operating margin, (iv) the focus on Services and Software and our expected growth opportunities, (b) the accuracy of the reserve estimate related to an environmental liability, (c) our business strategies and expected results, (d) 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, (e) our ability and cost to repatriate funds, (f) our ability to settle the principal amount of the Senior Convertible Notes in cash, (g) our ability and cost to access the capital markets at our current ratings, (h) our ability to borrow and the amount available under our credit facilities, (i) our plans with respect to the level of outstanding debt, (j) the return of capital to shareholders through dividends and/or repurchasing shares, (k) the adequacy of our cash balances to meet current operating requirements, (l) potential contractual damages claims, and (m) the outcome and effect of ongoing and future legal proceedings, (3) The impact of new FASB Accounting Standards Updates on our financial statements, (4) “Quantitative and Qualitative Disclosures about Market Risk,” about the impact of foreign currency exchange risks, (5) "Controls and Procedures," about the implementation of our enterprise resource planning systems, and (6) “Legal Proceedings,” about the ultimate disposition of pending legal matters. 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, in Part I, “Item 1A: Risk Factors” on pages 8 through 20 of our 2017 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.

43

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. Effective January 1, 2018, we adopted the new revenue standard ASC 606. We have implemented new accounting processes related to revenue recognition and related disclosures, including related control activities. There were no changes in our internal control over financial reporting that occurred during the quarter ended September 29, 2018, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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 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.

44

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 in Part I, “Item 1A: Risk Factors” on pages 8 through 20 of the Company’s 2017 Annual Report on Form 10-K and “Item 1A: Risk Factors” on page 44 of the Company’s 2018 second quarter Quarterly Report on Form 10-Q. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.

45

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

46

Item 6. Exhibits

Exhibit No.	Exhibit
*31.1	Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Gino A. Bonanotte pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2	Certification of Gino A. Bonanotte pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Scheme Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

___________________________________ 

*	Filed herewith
	MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2018 Motorola Solutions, Inc. All rights reserved.

47

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/ DAN PEKOFSKE
	Dan Pekofske Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer)

November 1, 2018

48

EXHIBIT INDEX

Exhibit No.	Exhibit
*31.1	Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Gino A. Bonanotte pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2	Certification of Gino A. Bonanotte pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Scheme Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

___________________________________ 

* Filed herewith

49

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: November 1, 2018

/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: November 1, 2018

/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 September 29, 2018 (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: November 1, 2018

/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 September 29, 2018 (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: November 1, 2018

/s/ GINO A. BONANOTTE

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

Motorola Solutions, Inc.

XML

Document and Entity Information	9 Months Ended
	Sep. 29, 2018 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	Sep. 29, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding	163,527,868

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Net sales	$ 1,862	$ 1,645	$ 5,089	$ 4,423
Costs of sales	961	851	2,697	2,369
Gross margin	901	794	2,392	2,054
Selling, general and administrative expenses	323	259	918	760
Research and development expenditures	158	141	472	413
Other charges	126	47	263	100
Operating earnings	294	347	739	781
Other income (expense):
Interest expense, net	(59)	(52)	(163)	(154)
Gains on sales of investments and businesses, net	6	0	16	3
Other	29	(9)	45	(20)
Total other expense	(24)	(61)	(102)	(171)
Net earnings before income taxes	270	286	637	610
Income tax expense	22	73	91	188
Net earnings	248	213	546	422
Less: Earnings attributable to noncontrolling interests	1	1	2	2
Net earnings attributable to Motorola Solutions, Inc.	$ 247	$ 212	$ 544	$ 420
Earnings per common share:
Basic (in US$ per share)	$ 1.52	$ 1.30	$ 3.36	$ 2.57
Diluted (in US$ per share)	$ 1.43	$ 1.25	$ 3.17	$ 2.48
Weighted average common shares outstanding:
Basic (in shares)	162.6	162.3	162.0	163.2
Diluted (in shares)	172.6	169.0	171.6	169.3
Dividends declared per share (in US$ per share)	$ 0.52	$ 0.47	$ 1.56	$ 1.41
Products
Net sales	$ 1,151	$ 989	$ 2,993	$ 2,540
Costs of sales	516	428	1,383	1,167
Services
Net sales	711	656	2,096	1,883
Costs of sales	$ 445	$ 423	$ 1,314	$ 1,202

XML

Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net earnings	$ 248	$ 213	$ 546	$ 422
Other comprehensive income (loss), net of tax (Note 3):
Foreign currency translation adjustments	(4)	46	(42)	127
Marketable securities	0	1	(6)	5
Defined benefit plans	13	26	39	59
Total other comprehensive income (loss), net of tax	9	73	(9)	191
Comprehensive income	257	286	537	613
Less: Earnings attributable to noncontrolling interests	1	1	2	2
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders	$ 256	$ 285	$ 535	$ 611

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 839	$ 1,205
Restricted cash	12	63
Total cash and cash equivalents	851	1,268
Accounts receivable, net	1,179	1,523
Contract assets	917	0
Inventories, net	367	327
Other current assets	350	832
Total current assets	3,664	3,950
Property, plant and equipment, net	892	856
Investments	176	247
Deferred income taxes	949	1,023
Goodwill	1,541	938
Intangible assets, net	1,297	861
Other assets	444	333
Total assets	8,963	8,208
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	337	52
Accounts payable	456	593
Contract liabilities	1,127	0
Accrued liabilities	1,168	2,286
Total current liabilities	3,088	2,931
Long-term debt	5,095	4,419
Other liabilities	2,175	2,585
Stockholders’ Equity
Preferred stock, $100 par value	0	0
Common stock, $.01 par value: Authorized shares: 600.0; Issued shares: 9/29/18—164.0; 12/31/17—161.6; Outstanding shares: 9/29/18—163.5; 12/31/17—161.2	2	2
Additional paid-in capital	370	351
Retained earnings	788	467
Accumulated other comprehensive loss	(2,571)	(2,562)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	(1,411)	(1,742)
Noncontrolling interests	16	15
Total stockholders’ equity (deficit)	(1,395)	(1,727)
Total liabilities and stockholders’ equity	$ 8,963	$ 8,208

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 29, 2018	Dec. 31, 2017
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)	164,000,000	161,600,000
Common stock outstanding (in shares)	163,500,000	161,200,000

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	$ 422
Other comprehensive loss	191
Balance at end of period at Sep. 30, 2017			$ (2,126)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	213
Other comprehensive loss	73
Balance at end of period at Sep. 30, 2017			(2,126)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of new accounting pronouncement | Accounting Standards Update 2016-16				$ (31)
Cumulative effect of new accounting pronouncement | Accounting Standards Update 2014-09				127
Balance (in shares) at Dec. 31, 2017		161.6
Balance at beginning of period at Dec. 31, 2017	(1,727)	$ 353	(2,562)	467	$ 15
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	546			544	2
Other comprehensive loss	$ (9)		(9)
Issuance of common stock and stock options exercised (in shares)		3.0
Issuance of common stock and stock options exercised		$ 139
Share repurchase program (in shares)	(0.6)	(0.6)
Share repurchase program				(66)
Share-based compensation expense		$ 53
Dividends declared				(253)	(1)
Repurchase of senior convertible notes		$ (173)
Balance (in shares) at Sep. 29, 2018		164.0
Balance at end of period at Sep. 29, 2018	$ (1,395)	$ 372	(2,571)	788	16
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	248
Other comprehensive loss	9
Balance (in shares) at Sep. 29, 2018		164.0
Balance at end of period at Sep. 29, 2018	$ (1,395)	$ 372	$ (2,571)	$ 788	$ 16

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017
Operating
Net earnings attributable to Motorola Solutions, Inc.	$ 544	$ 420
Earnings attributable to noncontrolling interests	2	2
Net earnings	546	422
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization	267	254
Non-cash other charges	50	29
Non-U.S. pension settlement loss	0	46
Share-based compensation expense	53	49
Gains on sales of investments and businesses, net	(16)	(3)
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable, contract assets and contract liabilities	186	81
Inventories	61	(83)
Other current assets	(137)	(142)
Accounts payable and accrued liabilities	(170)	(178)
Other assets and liabilities	(596)	11
Deferred income taxes	19	99
Net cash provided by operating activities	263	585
Investing
Acquisitions and investments, net	(1,158)	(383)
Proceeds from sales of investments and businesses, net	90	174
Capital expenditures	(128)	(206)
Net cash used for investing activities	(1,196)	(415)
Financing
Repayment of debt	(412)	(15)
Net proceeds from issuance of debt	1,295	0
Proceeds from financing through capital leases	0	7
Issuance of common stock	139	61
Purchases of common stock	(66)	(358)
Settlement of conversion premium on convertible debt	(169)	0
Payments of dividends	(252)	(230)
Payments of dividend to non-controlling interest	(1)	(2)
Net cash provided by (used for) financing activities	534	(537)
Effect of exchange rate changes on cash and cash equivalents	(18)	54
Net decrease in cash and cash equivalents	(417)	(313)
Cash and cash equivalents, beginning of period	1,268	1,030
Cash and cash equivalents, end of period	851	717
Cash paid during the period for:
Interest, net	164	146
Income and withholding taxes, net of refunds	$ 79	$ 83

XML

Basis of Presentation

9 Months Ended

Sep. 29, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements as of September 29, 2018 and for the three and nine months endedSeptember 29, 2018 and September 30, 2017 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, 2017. The results of operations for the three and nine months endedSeptember 29, 2018 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.

During the second quarter of 2018, the Company modified its internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership, in part, as a result of recent acquisitions contributing to the growth within the newly aligned Services and Software segment. Previously, the Company had two reporting segments: Products and Services. The changes in reporting structure consist of Systems Integration related revenue and costs moving from the old Services segment into the newly presented Products and Systems Integration segment and Software related revenue and costs moving from the old Products segment into the newly presented Services and Software segment.

Recent Developments

On March 28, 2018, the Company completed the acquisition of Avigilon Corporation ("Avigilon"), a provider of advanced end-to-end security and surveillance solutions including video analytics, network video management hardware and software, surveillance cameras and access control solutions for a purchase price of $974 million.

On March 7, 2018, the Company completed the acquisition of Plant Holdings, Inc. ("Plant"), the parent company of Airbus DS Communications for a purchase price of $237 million. This acquisition expands our software portfolio in the command center with additional solutions for Next Generation 9-1-1.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 on January 1, 2019 and interim periods within that reporting period, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 that amended the ASU to include an additional (and optional) transition relief. The additional transition relief provides entities the option to adopt the ASU by applying the new ASU at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restatement of comparative periods. The new ASU must be adopted utilizing the modified retrospective method as of the earliest comparative period presented if the optional adoption method is not selected. The Company will adopt the ASU on January 1, 2019, utilizing the modified retrospective method as of the adoption date. The Company is continuing to assess the impact of the ASU on its condensed consolidated financial statements, including the package of available practical expedients, required disclosures, and changes to internal controls. Based on the preliminary work completed, the Company expects a material impact to its condensed consolidated balance sheet through the recording of right-of-use assets and lease obligations that are not required to be recorded within the condensed consolidated balance sheet under current accounting standards.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires entities to estimate and recognize current expected credit losses rather than delay recognition of credit losses until the loss is probable of occurring. The ASU is effective for the Company on January 1, 2020, and interim periods within that reporting period with early option permitted. The Company is currently evaluating the impact of the ASU on its consolidated financial statements and disclosures.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which is intended to simplify the application of hedge accounting and better portray the economic results of risk management strategies in the consolidated financial statements. The ASU expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU is effective for the Company on January 1, 2019 with adoption permitted immediately in any interim or annual period (including the current period). The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied using the modified retrospective method by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of this ASU, including transition elections and required elections, on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for the defined benefit pension plans and other postretirement plans. The ASU is effective for the Company on January 1, 2020 with early adoption permitted. The ASU requires a retrospective adoption method. The Company does not believe the ASU will have a material impact on its financial statement disclosures.

Recently Adopted Accounting Pronouncements

The Company adopted ASU No. 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory” on January 1, 2018 using the modified retrospective method of adoption. The Company recognized $31 million related to the cumulative effect of applying the ASU as an adjustment to its opening retained earnings balance. The comparative information has not been restated and continues to be reported under accounting standards in effect in those periods. This ASU eliminates the prior 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. Under the ASU, the Company will recognize tax expense when intra-entity transfers of assets other than inventory occur.

The Company adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on January 1, 2018 using the retrospective method of adoption. The amendments in the ASU 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 Company has restated its comparative period results to reflect the application of the presentation guidance of the ASU. As a result of the ASU, the presentation of net periodic cost (benefit) has been updated to classify all components of the Company’s net periodic benefit, with the exception of the service cost component, within Other in Other income (expense) on the statement of operations. The Company reclassified $18 million and $10 million in the three months ended September 29, 2018 and September 30, 2017, respectively, and $58 million and $10 million in the nine months ended September 29, 2018 and September 30, 2017, respectively.

The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," and all the related amendments (collectively “ASC 606”) on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to its opening retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods.

The Company has retained much of the same accounting treatment used to recognize revenue under ASC 606 as under accounting standards in effect in prior periods. Revenue on a significant portion of its System and Integration services contracts continues to be recognized under percentage of completion accounting, applying a cost-to-cost method. Services contracts continue to be recognized ratably over relevant contract terms as the Company stands ready to perform. Finally, revenue on equipment sales continues to be recognized based on delivery terms as aligned with the transfer of control.

Under the new standard, the Company identified distinct promises to transfer goods and services within its contracts. For system contracts that are 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 and accessories represent distinct goods. Accordingly, adoption of the new standard impacts the Company's system contracts, with the result being revenue recognized earlier as control of devices and accessories transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's system contracts, it continues to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time.

Under the new standard, revenue recognition for software sales is accelerated based on when control of software licenses and related support services are transferred to the customer. Amounts deferred under previous software accounting rules due to lack of vendor-specific objective evidence have been recognized as an adjustment through opening retained earnings.

Historically, the Company presented transactions that involved a third-party sales representative on a net basis. After considering the control concept and the remaining three indicators of gross presentation under the new standard, the Company has determined that it is the principal in contracts that involve a third-party sales representative. Thus, under the new standard, the Company presents associated revenues on a gross basis, with the affect being an equal increase to selling, general and administrative expenses for its cost of third-party commissions.

Under prior accounting standards, the Company expensed sales commissions and other costs to obtain a contract as incurred. However, under the new standard, the Company capitalizes sales commissions and certain other costs as incremental costs to obtain a contract. Such costs are classified as non-current contract cost assets within Other assets and amortized over a period that approximates the timing of revenue recognition on the underlying contracts.

The new standard clarified the definition of a receivable and requires the Company to present its net position in a contract with a customer on the balance sheet. The position is presented as either a receivable, contract asset, or a contract liability. Under the new definition, accounts receivable are unconditional rights to consideration from a customer. Contract assets represent rights to consideration from a customer in exchange for transferred goods and services that are conditional on events other than the passage of time. Contract liabilities represent obligations to transfer goods and services for which the Company has received, or is due, consideration from a customer. The Company reclassified its customer positions to align with the new definitions and presentation guidance. Accordingly, Unbilled accounts receivable and Costs and earnings in excess of billings have been reclassified from Accounts receivable and Other current assets, respectively, and are presented as Contract assets. Accounts receivable which are not due from customers have been reclassified into Other current assets. Deferred revenue, Billings in excess of costs and earnings, and Customer downpayments have been reclassified from Accrued liabilities and are presented as Contract liabilities. Non-current deferred revenue has been reclassified from Deferred revenue to Non-current contract liabilities within Other liabilities.

The cumulative effect of the changes made to our consolidated opening balance sheet as of January 1, 2018 due to the modified retrospective method of adoption of ASC 606 is as follows:

Balance Sheet (Selected captions)

(In millions)	December 31, 2017		Reclassification of Contract Assets			Reclassification of Non-customer receivables			Reclassification of Contract Liabilities			Impact of Adoption on Open Contracts			January 1, 2018
															(Unaudited)
ASSETS
Accounts receivable, net	$	1,523	$	(297	)	$	(24	)	$	—		$	(4	)	$	1,198
Contract assets	—		846			—			—			85			931
Inventories, net	327		—			—			—			1			328
Other current assets	832		(549		)	24			—			(23		)	284
Deferred income taxes	1,023		—			—			—			(41		)	982
Other assets	333		—			—			—			85			418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	$	—	$	—		$	—		$	1,099		$	(17	)	$	1,082
Accrued liabilities	2,286		—			—			(1,099		)	—			1,187
Other liabilities	2,585		—			—			—			(7		)	2,578
Stockholders’ Equity
Retained earnings	467		—			—			—			127			594

Adoption Impact to Financial Statements

The impact of the adoption of ASC 606 to the condensed consolidated financial statements for the three and nine months ended September 29, 2018 is as follows:

Statements of Operations (Selected captions)

	Three Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	1,862	$	(19	)	$	1,843
Gross margin	901		(18		)	883
Selling, general and administrative expenses	323		(17		)	306
Operating earnings	294		(1		)	293
Net earnings before income taxes	270		(1		)	269
Net earnings attributable to Motorola Solutions Inc.	$	247	$	(1	)	$	246

	Nine Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	5,089	$	(58	)	$	5,031
Gross margin	2,392		(57		)	2,335
Selling, general and administrative expenses	918		(46		)	872
Operating earnings	739		(11		)	728
Net earnings before income taxes	637		(11		)	626
Net earnings attributable to Motorola Solutions Inc.	$	544	$	(11	)	$	533

Balance Sheet (Selected captions)

(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
ASSETS
Accounts receivable, net	$	1,179	$	315		$	1,494
Contract assets	917		(917		)	—
Other current assets	350		540			890
Deferred income taxes	949		41			990
Other assets	444		(95		)	349
LIABILITIES AND STOCKHOLDERS' EQUITY
Contract liabilities	$	1,127	$	(1,127	)	$	—
Accrued liabilities	1,168		1,139			2,307
Other liabilities	2,175		10			2,185
Stockholders’ Equity
Retained earnings	788		(138		)	650

There is no impact to the condensed consolidated statement of comprehensive income or the statement of cash flows, with the exception of changes to Net earnings and changes within assets and liabilities as presented on the condensed consolidated balance sheet and disclosed above.

XML

Revenue from Contracts with Customers

9 Months Ended

Sep. 29, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

In accordance with ASC 606, the Company recognizes revenue to reflect the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services. The Company records revenue following the five steps below:

1.Identify the contract with customers: A contract is an agreement between two or more parties that creates enforceable rights and obligations and specifies that enforceability is a matter of law. Contracts shall be accounted for when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the goods or services to be transferred, (iii) the Company can identify the payment terms for the goods or services to be transferred, (iv) the contract has commercial substance (that is, the risk, timing, or amount of the Company’s future cash flow is expected to change as a result of the contract), and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. It is the Company’s customary business practice to obtain a signed legal document as evidence of an arrangement.

2.Identify performance obligations in contracts: The goods or services promised in a contract must be evaluated at inception to identify as a performance obligation each promise to transfer to the customer either: (i) a distinct good or service, or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

3.Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. In determining the transaction price, the Company considers the following components: (i) variable consideration, (ii) significant financing, (iii) noncash consideration, and (iv) consideration payable to a customer.

4.Allocate the transaction price: For a contract that has more than one distinct performance obligation, the Company must allocate the transaction price to each distinct performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying that specific performance obligation.

5.Recognize revenue when or as the entity satisfies a performance obligation: The Company recognizes revenue when, or as, it satisfies a performance obligation by transferring control of a promised good or service to a customer.

Disaggregation of Revenue

The following table summarizes the disaggregation of our revenue by segment, geography, major product and service type and customer type for the three and nine months ended September 29, 2018, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of operating segments:

	Three Months Ended				Nine Months Ended
(in millions)	Products and Systems Integration		Services and Software		Products and Systems Integration		Services and Software
Regions
Americas	$	957	$	343	$	2,533	$	969
EMEA	199		189		543		565
Asia Pacific	132		42		353		126
Total	$	1,288	$	574	$	3,429	$	1,660
Major Products and Services
Devices	$	828	$	—	$	2,184	$	—
Systems and Systems Integration	460		—		1,245		—
Services	—		455		—		1,357
Software	—		119		—		303
Total	$	1,288	$	574	$	3,429	$	1,660
Customer Type
Direct	$	811	$	543	$	2,168	$	1,586
Indirect	477		31		1,261		74
Total	$	1,288	$	574	$	3,429	$	1,660

Products and Systems Integration:The Products and Systems Integration segment is comprised of Systems, Devices and Systems Integration. Direct customers of the Products and Systems Integration segment are typically government, public safety and first-responder agencies, procuring at state, local, and federal levels as well as large commercial customers with secure mission-critical needs. Indirect customers are defined as customers purchasing professional commercial radios and Avigilon video solutions, which are primarily sold through the Company's reseller partners to an end-customer base, composed of various industries where private communications networks and video solutions are used to secure operations and enable a mobile workforce. Contracts with the Company's customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our direct customers, funded through government appropriations. On the Company's Products and Systems Integration sales, it records consideration from shipping and handling on a gross basis within Net sales.

Devices:Devices includes two-way portable and vehicle-mounted radios, accessories, software features, and upgrades. Devices also includes video surveillance cameras sold by Avigilon. Devices are considered capable of being distinct and distinct within the context of our contracts. Revenue is recognized upon the transfer of control of the devices to the customer at a point in time, typically consistent with delivery under the applicable shipping terms. Devices are sold by both the direct sales force and through reseller partners. Revenue is generally recognized upon transfer of devices to reseller partners, rather than the end-customer, except for limited consignment arrangements. Provisions for returns and reseller discounts are made on a portfolio basis using historical data.

Systems and Systems Integration:Systems and Systems Integration include customized end-to-end radio network, video solutions and implementation, optimization, and integration of networks, devices, software, and applications. Radio network includes the aggregation of promises to the customer to provide the radio network core and central processing software, base stations, consoles, and repeaters. These individual promises are not distinct in the context of the contract, as the Company provides a significant service of integrating and customizing the goods and services promised. The radio network represents distinct performance obligations for which revenue is recognized over time, as the Company creates an asset with no alternative use and has an enforceable right to payment for work performed. The Company's revenue recognition over time is based on an input measure of costs incurred, which depicts the transfer of control to its customers under its contracts. Systems and Systems Integration revenue is recognized over an average duration of approximately one to two years.

Systems also include Avigilon end-to-end security and surveillance solutions including: video analytics, network video management hardware and software, and access control solutions, which are capable of being distinct and distinct in the context of the contract. Avigilon security and surveillance video solutions are traditionally sold through reseller partners, with contracts negotiated under fixed pricing. Provisions for returns are determined on a portfolio basis using historical data. Revenue is recognized upon the transfer of control of the end-to-end video solution to the reseller partners, typically upon shipment.

Services and Software: The Services and Software segment provides a full set of offerings for government, public safety and commercial communication networks. Direct customers of the Services and Software segment are typically government, public safety and first-responder agencies and municipalities. Indirect customers are commercial customers who distribute broadband push-to-talk services to a final end customer base. Contracts with our customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our direct customers, funded through government appropriations.

Services: Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include: monitoring, software updates and cybersecurity services. Managed service offerings range from partial to full operation of customer or Motorola Solutions owned networks. Services are provided across all radio network technologies. Services are both distinct and capable of being distinct in the context of the contract, representing a series of recurring services that the Company stands ready to perform over the contract term. Since services contracts typically allow for customers to terminate for convenience or for non-appropriations of fiscal funding, the contract term is generally considered to be limited to a monthly or annual basis, subject to customer renewal. While contracts with customers are typically fixed fee, certain managed services contracts may be subject to variable consideration related to the achievement of service level agreement performance measurements. The Company has not historically paid significant penalties under service level agreements, and accordingly, it does not constrain its contract price. Certain contracts may also contain variable consideration driven by number of users. Revenue is typically recognized on services over time as a series of services performed over the contract term on a straight-line basis.

Software:Software offerings include public safety and enterprise command solutions, unified communications applications, and video software solutions delivered either “as a service” or on-premise. Solutions delivered as a service consist of a range of promises including hosted software, technical support and the right to unspecified future software enhancements. Software is not distinct from the hosting service since the customer does not have the right to take possession of the software at any time during the term of the arrangement. The hosted software, technical support, and right to unspecified future software enhancements each represent a series of distinct services that are delivered concurrently using the same over time method. As such, the promises are accounted for as a single performance obligation with revenue recognized on a straight-line basis.

 On-premise offerings consist of multiple promises primarily including software licenses and post-contract customer support. The promises are each distinct and distinct within the context of the contract as the customer benefits from each promise individually without any significant integration or interrelationship between the promises. On-premise software revenue is recognized at the point in time when the customer can benefit from the software which generally aligns with the beginning of the license period. Revenue for post-contract customer support is recognized over time as the customer simultaneously receives and consumes the services on a straight-line basis.

Significant Judgments

The Company enters into arrangements which consist of multiple promises to our customers. The Company evaluates whether the promised goods and services are distinct or a series of distinct goods or services. Where contracts contain multiple performance obligations, the Company generally allocates the total estimated consideration to each performance obligation based on applying an estimated selling price (“ESP”) as our best estimate of standalone selling price. The Company determines ESP by: (i) collecting all reasonably available data points including sales, cost and margin analysis of the product or services, and other inputs based on its normal pricing and discounting practices, (ii) making any reasonably required adjustments to the data based on market and Company-specific factors, and (iii) stratifying the data points, when appropriate, based on major product or service, type of customer, geographic market, and sales volume.

The Company accounts for certain system contracts on an over time basis, electing an input method of estimated costs as a measure of performance completed. The selection of the measurement of progress using estimated costs was based on a thorough consideration of alternatives of various output and input measures, including contract milestones and labor hours. However, the Company has determined that other input and output measures are not an appropriate measure of progress as they do not accurately align with the transfer of control on its customized product solutions. The selection of costs incurred as a measure of progress aligns the transfer of control to the overall production of the customized system.

For system contracts accounted for over time using estimated costs as a measure of performance completed, the Company relies on estimates around the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion may be complex and subject to many variables. We have a standard and disciplined quarterly process in which management reviews the progress and performance of open contracts in order to determine the best estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the project schedule, technical requirements, and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of work to be performed, the availability and cost of materials, and performance by subcontractors, among other variables. Based on this analysis, any quarterly adjustment to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. When estimates of total costs to be incurred on a contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Remaining Performance Obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction price associated with remaining performance obligations which are not yet satisfied as of September 29, 2018 is $6.1 billion. A total of $3.3 billion is from Products and Systems Integration performance obligations that are not yet satisfied, of which $1.9 billion is expected to be recognized in the next 12 months. The remaining amounts will generally be satisfied over time as systems are implemented. A total of $2.8 billion is from Services and Software performance obligations that are not yet satisfied as of September 29, 2018. The determination of Services and Software performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's Services contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. The Company expects to recognize $1.2 billion from unsatisfied Services and Software performance obligations over the next 12 months, with the remaining performance obligations to be recognized over time as services are performed and software is implemented.

Contract Balances

(in millions)	September 29, 2018		January 1, 2018
Receivables	$	1,179	$	1,198
Contract assets	917		931
Contract liabilities	1,127		1,082
Non-current contract liabilities	159		162

Contract assets consist of amounts formerly classified as Costs and earnings in excess of billings and Unbilled accounts receivable where the Company does not yet have an unconditional right to bill. Contract liabilities consist of amounts formerly classified Billings in excess of costs and earnings recognized, Customer downpayments and Deferred revenue.

Payment terms on system contracts are typically tied to implementation milestones associated with progress on contracts, while revenue recognition is over time based on a cost-to-cost method of measuring performance. The Company may recognize a contract asset or contract liability, depending on whether revenue has been recognized in excess of billings or billings in excess of revenue. Services contracts are typically billed in advance, generating Contract liabilities until the Company has performed the services. The Company does not record a financing component to contracts when it expects, at contract inception, that the period between the transfer of a promised good or service and related payment terms are less than a year.

Revenue recognized during the three months ended September 29, 2018 which was previously included in Contract liabilities as of July 1, 2018 is $327 million. Revenue recognized during the nine months ended September 29, 2018 which was previously included in Contract liabilities as of January 1, 2018 is $777 million. Revenue of $7 million was reversed during the three months ended September 29, 2018 and $4 million of revenue was reversed during the nine months ended September 29, 2018 related to performance obligations satisfied, or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts.

There have been no material impairment losses recognized on contract assets during the nine months ended September 29, 2018.

Contract Cost Balances

(in millions)	September 29, 2018		January 1, 2018
Current contract cost assets	$	57	$	62
Non-current contract cost assets	95		85

Contract cost assets represent incremental costs to obtain a contract, primarily related to the Company's sales incentive plans, and certain costs to fulfill contracts. Contract cost assets are amortized into expense over a period that follows the passage of control to the customer over time. Incremental costs to obtain a contract with the Company's sales incentive plans are accounted for under a portfolio approach, with amortization ranging from one to four years to approximate the recognition of revenues over time. Where incremental costs to obtain a contract will be recognized in one year or less, the Company applies a practical expedient around expensing amounts as incurred. Amortization of contract cost assets was $11 million and $34 million for the three and nine months ended September 29, 2018, respectively.

XML

Other Financial Data

9 Months Ended

Sep. 29, 2018

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Other charges:
Intangibles amortization (Note 14)	$	46	$	39	$	140	$	111
Reorganization of business (Note 13)	21		6		46		22
Environmental reserve expense	57		—		57		—
Building impairment	—		—		—		8
Loss (Gain) on legal settlements	2		—		3		(2		)
Gain on recovery of financial receivables	—		—		—		(42		)
Asset impairment	—		2		—		2
Acquisition-related transaction fees	—		—		17		1
	$	126	$	47	$	263	$	100

During the third quarter of 2018, the Company revised the estimate of a liability related to ongoing remediation efforts of environmental media such as groundwater, soil, and soil vapor, as well as related legal fees for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) incurred by a legacy business. It is the Company’s policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. During the third quarter of 2018, the Company became aware of additional remediation requirements for the Superfund site. As such, the Company recorded a charge of $57 million during the third quarter of 2018 which was primarily due to: (i) changes in the expected timeline of the remediation activities to 30 years and (ii) additional costs for further remediation efforts, increasing the reserve to $107 million. Given the timing and amount of the future cash payments are fixed or reliably determinable, the Company discounted the cash flows used in estimating this accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is $4 million and is included in the “Accrued liabilities” statement line and the non-current portion is included in the “Other liabilities” statement line within the Company's Condensed Consolidated Balance Sheet.

During the nine months ending September 29, 2018, the Company recognized $17 million of acquisition-related transaction fees for the Avigilon and Plant acquisitions.

During the nine months endedSeptember 30, 2017, the Company recognized $8 million of building impairments related to the anticipated sale of its Basingstoke, U.K. building.

During the nine months endedSeptember 30, 2017, the Company recognized a net gain of $42 million related 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.

Other Income (Expense)

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

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Interest income (expense), net:
Interest expense	$	(62	)	$	(55	)	$	(178	)	$	(164	)
Interest income	3			3			15			10
	$	(59	)	$	(52	)	$	(163	)	$	(154	)
Other:
Net periodic pension and postretirement benefit (Note 7)	$	18		$	11		$	58		$	36
Non-U.S. pension settlement loss (Note 7)	—			(21		)	—			(46		)
Gain from the extinguishment of convertible debt (Note 4)	6			—			6			—
Foreign currency loss	(14		)	(7		)	(14		)	(29		)
Gain (loss) on derivative instruments	8			3			(15		)	14
Gains on equity method investments	1			1			2			1
Fair value adjustments to equity investments	7			—			7			—
Other	3			4			1			4
	$	29		$	(9	)	$	45		$	(20	)

During the three and nine months endedSeptember 29, 2018, the Company recognized a foreign currency loss of $14 million, primarily driven by the Brazilian real, the Euro, the Australian dollar and the Argentinian peso. During the three and nine months endedSeptember 29, 2018, the Company recognized a gain of $8 million and a loss of $15 million, respectively, on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations. The loss on derivative instruments during the nine months ended September 29, 2018, includes a loss of $14 million on foreign currency derivatives put in place to minimize the exposure to the Canadian dollar related to the purchase of Avigilon.

During the three and nine months endedSeptember 30, 2017, the Company recognized foreign currency losses of $7 million and $29 million, respectively, primarily driven by British Pound, partially offset by gains of $3 million and $14 million, respectively, on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations.

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Basic earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Per share amount	$	1.52	$	1.30	$	3.36	$	2.57
Diluted earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Add effect of dilutive securities:
Share-based awards	4.6		3.4		4.2		3.3
Senior Convertible Notes	5.4		3.3		5.4		2.8
Diluted weighted average common shares outstanding	172.6		169.0		171.6		169.3
Per share amount	$	1.43	$	1.25	$	3.17	$	2.48

In the computation of diluted earnings per common share for the three months endedSeptember 29, 2018, the assumed exercise of 0.2 million options were excluded because their inclusion would have been antidilutive. For the nine months endedSeptember 29, 2018, the assumed exercise of 3.2 million options, including 0.8 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive.

For the three months endedSeptember 30, 2017, the assumed exercise of 2.0 million options, including 1.7 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. For the nine months endedSeptember 30, 2017, the assumed exercise of 2.3 million options, including 1.9 million subject to market-based contingent option agreements, 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 became fully convertible as of August 25, 2017. On September 5, 2018, the Company agreed with Silver Lake Partners to re-purchase $200 million principal of the convertible notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium. During the third quarter of 2018, the Company paid $169 million, with the remaining $200 million paid on October 15, 2018. In the event of an additional conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash. Since the Company’s intention is to settle the par value of the Senior Convertible Notes in cash upon conversion, only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) are included in our computation of diluted earnings per share. The conversion price is adjusted for dividends declared through the date of settlement. Diluted earnings per share has been calculated based upon the amount by which the average stock price exceeds the conversion price.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	September 29, 2018			December 31, 2017
Accounts receivable	$	1,227		$	1,568
Less allowance for doubtful accounts	(48		)	(45		)
	$	1,179		$	1,523

During the nine months endedSeptember 29, 2018, $297 million of Unbilled accounts receivable were reclassified to Contract assets and $24 million of non-customer miscellaneous receivables were reclassified to Other current assets as a result of the adoption of ASC 606.

Inventories, Net

Inventories, net, consist of the following: 

	September 29, 2018			December 31, 2017
Finished goods	$	190		$	178
Work-in-process and production materials	313			282
	503			460
Less inventory reserves	(136		)	(133		)
	$	367		$	327

During the nine months endedSeptember 29, 2018, the increase in Inventories, net was primarily driven by the acquisition of Avigilon.

Other Current Assets

Other current assets consist of the following: 

	September 29, 2018		December 31, 2017
Costs and earnings in excess of billings (Note 1)	$	—	$	549
Current contract cost assets (Note 2)	57		62
Tax-related refunds receivable	119		90
Other	174		131
	$	350	$	832

Property, Plant and Equipment, Net

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

	September 29, 2018			December 31, 2017
Land	$	11		$	11
Building	355			316
Machinery and equipment	2,224			2,122
	2,590			2,449
Less accumulated depreciation	(1,698		)	(1,593		)
	$	892		$	856

Depreciation expense for the three months endedSeptember 29, 2018 and September 30, 2017 was $43 million and $49 million, respectively. Depreciation expense for the nine months endedSeptember 29, 2018 and September 30, 2017 was $127 million and $142 million, respectively.

Investments

Investments consist of the following:

	September 29, 2018		December 31, 2017
Corporate bonds	$	2	$	2
Common stock	17		13
Strategic investments, at cost	60		78
Company-owned life insurance policies	83		141
Equity method investments	14		13
	$	176	$	247

Strategic investments include investments in non-public technology-driven startup companies. Strategic investments do not have a readily determinable fair value and are recorded at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. The Company did not recognize any significant adjustments to the recorded cost basis during the nine months ended September 29, 2018.

The Company’s common stock portfolio reflects an investment in the communications services sector and is valued utilizing active market prices for similar instruments. During the three and nine months ended September 29, 2018, the Company recognized $7 million in Other income (expense) related to an increase in the fair value of the investments.

Company-owned life insurance policies were recorded at their cash surrender value. During the nine months endedSeptember 29, 2018, the Company withdrew $60 million of excess cash from its company-sponsored life insurance investments.

During the three months endedSeptember 29, 2018, Gains on the sale of investments and businesses were $6 million. During the nine months endedSeptember 29, 2018, Gains on the sale of investments and businesses were $16 million, compared to $3 million during the nine months endedSeptember 30, 2017.

Other Assets

Other assets consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plan assets	$	182	$	133
Tax receivable	101		101
Non-current contract cost assets (Note 2)	95		—
Other	66		99
	$	444	$	333

Accrued Liabilities

Accrued liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Deferred revenue (Note 1)	$	—	$	613
Compensation	248		273
Billings in excess of costs and earnings (Note 1)	—		428
Tax liabilities	127		107
Deferred consideration on Airwave acquisition	84		83
Dividend payable	85		84
Trade liabilities	165		151
Other	459		547
	$	1,168	$	2,286

Deferred consideration in conjunction with the acquisition of Airwave will be paid on November 15, 2018.

Other Liabilities

Other liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plans	$	1,446	$	2,019
Non-current contract liabilities (Note 2)	159		—
Deferred revenue (Note 1)	—		169
Unrecognized tax benefits	51		54
Deferred income taxes	234		115
Other	285		228
	$	2,175	$	2,585

The Company made a $500 million contribution to our U.S. Pension Plans during the nine months endedSeptember 29, 2018.

During the nine months endedSeptember 29, 2018, the deferred income taxes increase was primarily driven by the intangible assets related to acquisition of Avigilon.

Stockholders’ Equity

Share Repurchase Program: Through a series of actions, 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 nine months endedSeptember 29, 2018, the Company paid an aggregate of $66 million, including transaction costs, to repurchase approximately 0.6 million shares at an average price of $101.54 per share. As of September 29, 2018, the Company had used approximately $12.4 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.6 billion of authority available for future repurchases.

Payment of Dividends: During the three months endedSeptember 29, 2018 and September 30, 2017, the Company paid $84 million and $76 million, respectively, in cash dividends to holders of its common stock. During the nine months endedSeptember 29, 2018 and September 30, 2017, the Company paid $252 million and $230 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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(391	)	$	(413	)	$	(353	)	$	(494	)
Other comprehensive income (loss) before reclassification adjustment	(3		)	49			(33		)	133
Tax benefit	(1		)	(3		)	(9		)	(6		)
Other comprehensive income (loss), net of tax	(4		)	46			(42		)	127
Balance at end of period	$	(395	)	$	(367	)	$	(395	)	$	(367	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	4		$	6		$	—
Other comprehensive income before reclassification adjustment	—			1			—			8
Tax benefit	—			—			—			(3		)
Other comprehensive income before reclassification adjustment, net of tax	—			1			—			5
Reclassification adjustment into Gains on sales of investments and businesses, net	—			—			(8		)	—
Tax expense	—			—			2			—
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			(6		)	—
Other comprehensive income (loss), net of tax	—			1			(6		)	5
Balance at end of period	$	—		$	5		$	—		$	5
Defined Benefit Plans:
Balance at beginning of period	$	(2,189	)	$	(1,790	)	$	(2,215	)	$	(1,823	)
Other comprehensive loss before reclassification adjustment, net of tax	—			(4		)	—			(15		)
Reclassification adjustment - Actuarial net losses into Other income (expense)	20			17			57			49
Reclassification adjustment - Prior service benefits into Other income (expense)	(4		)	(4		)	(11		)	(12		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other income (expense)	—			21			—			46
Tax benefit	(3		)	(4		)	(7		)	(9		)
Reclassification adjustment into Net earnings, net of tax	13			30			39			74
Other comprehensive income, net of tax	13			26			39			59
Balance at end of period	$	(2,176	)	$	(1,764	)	$	(2,176	)	$	(1,764	)
Total Accumulated other comprehensive loss	$	(2,571	)	$	(2,126	)	$	(2,571	)	$	(2,126	)

XML

Debt and Credit Facilities

9 Months Ended

Sep. 29, 2018

Debt Disclosure [Abstract]

Debt and Credit Facilities

Debt and Credit Facilities

As of September 29, 2018, the Company had a $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022 (the "2017 Motorola Solutions Credit Agreement"). As of March 31, 2018, the Company borrowed $400 million under the facility to complete the Avigilon acquisition. As of September 29, 2018, the outstanding loan amount under the facility was $100 million, with $200 million paid during the third quarter. Subsequent to the quarter, the Company paid the remaining $100 million. The 2017 Motorola Solutions Credit Agreement includes 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 ("LIBOR"), at the Company's option. The weighted average borrowing rate on outstanding amounts for the three and nine months endedSeptember 29, 2018 was 3.58%. 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. 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 its financial covenants as of September 29, 2018.

Also in conjunction with the Avigilon acquisition in the first quarter of 2018, the Company entered into a term loan for $400 million with a maturity date of March 26, 2021 (the “Term Loan”). Interest on the Term Loan is variable, indexed to LIBOR, and paid monthly. The weighted average borrowing rates for amounts outstanding during the three and nine months endedSeptember 29, 2018 were 3.33% and 3.43%, respectively. No additional borrowings are permitted and amounts borrowed and repaid or prepaid may not be re-borrowed.

In February of 2018, the Company issued $500 million of 4.60% Senior notes due 2028. The Company recognized net proceeds of $497 million after debt issuance costs and debt discounts. These proceeds were then used to make a $500 million contribution to the Company's U.S. pension plan.

On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2.00% Senior Convertible Notes which mature in September 2020. The notes became fully convertible as of August 25, 2017. The notes are convertible based on a conversion rate of 14.8252, as may be adjusted for dividends declared, per $1,000 principal amount (which is currently equal to a conversion price of $67.45 per share). The exercise price adjusts automatically for dividends. On September 5, 2018, the Company agreed with Silver Lake Partners to repurchase $200 million in principal amount of the Senior Convertible Notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium. As of September 29, 2018, the Company paid $169 million of cash to Silver Lake Partners and recorded a gain of $6 million from the extinguishment of the convertible debt. The principal amount of $200 million was reclassified to short term debt. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of September 29, 2018 was $712 million. In the event of an additional conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash.

On September 28, 2018, the Company issued an additional $200 million on the outstanding 4.60% Senior notes due 2028 bringing the outstanding total to $700 million. The Company settled the issuance on October 5, 2018 and recognized net proceeds of $196 million, subsequent to quarter end, which was then used to pay the $200 million principal due to Silver Lake Partners on October 15, 2018.

XML

Risk Management

9 Months Ended

Sep. 29, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk Management

Risk Management

Foreign Currency Risk

As of September 29, 2018, the Company had outstanding foreign exchange contracts with notional amounts totaling $782 million, compared to $507 million outstanding at December 31, 2017. 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 September 29, 2018, and the corresponding positions as of December 31, 2017: 

	Notional Amount
Net Buy (Sell) by Currency	September 29, 2018			December 31, 2017
British Pound	$	221		$	72
Euro	215			149
Australian Dollar	(109		)	(64		)
Chinese Renminbi	(75		)	(73		)
Brazilian Real	(46		)	(45		)

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 September 29, 2018, all of the counterparties have investment grade credit ratings. As of September 29, 2018, 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 September 29, 2018 and December 31, 2017:

	Fair Values of Derivative Instruments
	Assets			Liabilities
September 29, 2018	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	1	Accrued liabilities

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	3	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	5	Other current assets	$	2	Accrued liabilities
Total derivatives	$	5		$	5

The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended					Balance Sheet Location
Loss on Derivative Instruments	September 29, 2018			September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange contracts	$	(1	)	$	(1	)	$	—	$	(3	)	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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended					Nine Months Ended						Statements of Operations Location
Gain (loss) on Derivative Instruments	September 29, 2018		September 30, 2017			September 29, 2018			September 30, 2017
Interest agreements	$	—	$	(1	)	$	—		$	(1	)	Other income (expense)
Foreign exchange contracts	8		4			(15		)	15			Other income (expense)
Total derivatives	$	8	$	3		$	(15	)	$	14

XML

Income Taxes

9 Months Ended

Sep. 29, 2018

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						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Net earnings before income taxes	$	270		$	286		$	637		$	610
Income tax expense	22			73			91			188
Effective tax rate	8		%	26		%	14		%	31		%

The Company recorded $22 million of net tax expense during the three months endedSeptember 29, 2018, resulting in an effective tax rate of 8%, compared to $73 million of net tax expense during the three months endedSeptember 30, 2017, resulting in an effective tax rate of 26%. The effective tax rate for the three months ended September 29, 2018 of 8% is lower than the effective tax rate for the three months ended September 30, 2017 of 26%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted December 22, 2017; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate in the third quarter of 2018 was lower than the U.S. statutory tax rate of 21% primarily driven by a tax benefit due to the recognition of tax benefits on share-based compensation and a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate in the third quarter of 2017 was lower than the U.S. statutory tax rate of 35% primarily driven by a tax benefit due to the recognition of a U.S. capital loss.

The Company recorded $91 million of net tax expense during the nine months endedSeptember 29, 2018, resulting in an effective tax rate of 14%, compared to $188 million of net tax expense during the nine months endedSeptember 30, 2017, resulting in an effective tax rate of 31%. The effective tax rate for the nine months endedSeptember 29, 2018 of 14% is lower than the effective tax rate for the nine months endedSeptember 30, 2017 of 31%, primarily due to the following items: (i) corporate income tax rate decrease from 35% to 21% as a result of the Tax Act; (ii) a tax benefit due to the recognition of excess tax benefits on share-based compensation; and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate for nine months endedSeptember 29, 2018 was lower than the U.S. statutory tax rate of 21% primarily due to: (i) the recognition of excess tax benefits on share-based compensation, (ii) a tax benefit due to a favorable settlement of a state audit, and (iii) a tax benefit related to the recording of U.S. federal return-to-provision adjustments. The effective tax rate for the nine months endedSeptember 30, 2017 was lower than the U.S. statutory tax rate of 35% primarily due to a tax benefit due to the recognition of a U.S. capital loss.

Under the guidance in the U.S. Securities and Exchange Commission's Staff Accounting Bulletin No. 118 ("SAB 118"), the Company recorded provisional amounts for the impact of the Tax Act as of December 31, 2017, representing $874 million of incremental tax expense. Under the transitional provisions of SAB 118, the Company has a one-year measurement period to complete the accounting for the initial tax effects of the Tax Act. The Company is continuing to analyze the impact of the recently issued IRS Notices related to the Tax Act and will record its final adjustments to the provisional amounts during the last three months of 2018. For the nine months endedSeptember 29, 2018, the Company has recorded the following adjustments to the previously recorded provisional tax amounts:

	December 31, 2017		Adjustment			September 29, 2018		Financial Statement Location
Valuation allowance on foreign tax credit carryforward	$	471	$	(9	)	$	462	Deferred tax expense
Measurement of U.S. deferred tax balances at 21%	366		(11		)	355		Deferred tax expense
Transition tax on repatriation of foreign earnings	16		2			18		Current tax expense
Uncertain tax positions on foreign operations	21		—			21		Current tax expense
Disallowed deduction of covered employees' incentive plans	—		4			4		Deferred tax expense
	$	874	$	(14	)	$	860

XML

Retirement and Other Employee Benefits

9 Months Ended

Sep. 29, 2018

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	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	1		$	1		$	—		$	—
Interest cost	47			46			9			10			1			1
Expected return on plan assets	(68		)	(57		)	(22		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	15			11			4			4			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(4		)
Settlement loss	—			—			—			21			—			—
Net periodic pension cost (benefit)	$	(6	)	$	—		$	(8	)	$	12		$	(5	)	$	(4	)

	U.S. Pension Benefit Plans						Non-U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Nine Months Ended	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	2		$	3		$	—		$	—
Interest cost	139			138			30			30			2			3
Expected return on plan assets	(203		)	(172		)	(70		)	(71		)	(8		)	(9		)
Amortization of:
Unrecognized net loss	43			33			11			12			3			4
Unrecognized prior service benefit	—			—			—			—			(11		)	(12		)
Settlement loss	—			—			—			46			—			—
Net periodic cost (benefit)	$	(21	)	$	(1	)	$	(27	)	$	20		$	(14	)	$	(14	)

The Company made a $500 million contribution to its U.S. Pension Benefit Plans during the nine months endedSeptember 29, 2018.

XML

Share-Based Compensation Plans

9 Months Ended

Sep. 29, 2018

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						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Share-based compensation expense included in:
Costs of sales	$	3		$	2		$	8		$	7
Selling, general and administrative expenses	12			11			33			32
Research and development expenditures	4			3			12			10
Share-based compensation expense included in Operating earnings	19			16			53			49
Tax benefit	5			5			13			16
Share-based compensation expense, net of tax	$	14		$	11		$	40		$	33
Decrease in basic earnings per share	$	(0.09	)	$	(0.07	)	$	(0.25	)	$	(0.20	)
Decrease in diluted earnings per share	$	(0.08	)	$	(0.07	)	$	(0.23	)	$	(0.19	)

During the nine months endedSeptember 29, 2018, the Company granted 0.4 million restricted stock units ("RSUs") and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $45 million and $7 million, respectively, and 0.2 million stock options and 0.2 million performance options ("POs") with an aggregate grant-date fair value of $6 million and $7 million, respectively. Share-based compensation expense will generally be recognized over the vesting period of three years.

XML

Fair Value Measurements

9 Months Ended

Sep. 29, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company holds or has held 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 September 29, 2018 and December 31, 2017 were as follows: 

September 29, 2018	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Corporate bonds	2		—		2
Common stock	—		17		17
Liabilities:
Foreign exchange derivative contracts	$	—	$	1	$	1

December 31, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	5	$	5
Available-for-sale securities:
Corporate bonds	—		2		2
Common stock	13		—		13
Liabilities:
Foreign exchange derivative contracts	$	—	$	5	$	5

The Company had no Level 3 holdings as of September 29, 2018 or December 31, 2017.

At September 29, 2018 and December 31, 2017, the Company had $284 million and $633 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 September 29, 2018 and December 31, 2017 was $5.5 billion and $4.6 billion (Level 2), respectively.

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

XML

Long-term Financing and Sales of Receivables

9 Months Ended

Sep. 29, 2018

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: 

	September 29, 2018			December 31, 2017
Long-term receivables, gross	$	29		$	37
Less allowance for losses	(2		)	—
Long-term receivables	27			37
Less current portion	(7		)	(18		)
Non-current long-term receivables	$	20		$	19

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 $86 million at September 29, 2018, compared to $93 million at December 31, 2017.

Sales of Receivables

The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and nine months endedSeptember 29, 2018 and September 30, 2017: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Accounts receivable sales proceeds	$	—	$	99	$	76	$	179
Long-term receivables sales proceeds	73		55		101		123
Total proceeds from receivable sales	$	73	$	154	$	177	$	302

At September 29, 2018, the Company had retained servicing obligations for $879 million of long-term receivables, compared to $873 million at December 31, 2017. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables.

Credit Quality of Long-term Receivables and Allowance for Credit Losses

An aging analysis of long-term receivables at September 29, 2018 and December 31, 2017 is as follows: 

September 29, 2018	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—	$	2
Commercial loans and leases secured	9		2		—		1
Long-term receivables, including current portion	$	29	$	2	$	—	$	3

December 31, 2017	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	—	$	1	$	2
Commercial loans and leases secured	16		1		3		1
Long-term receivables, including current portion	$	37	$	1	$	4	$	3

XML

Commitments and Contingencies

9 Months Ended

Sep. 29, 2018

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 September 29, 2018.

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.

XML

Segment Information

9 Months Ended

Sep. 29, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company conducts its business globally and manages it through the following two segments:

Products and Systems Integration:The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video solutions, and the implementation, optimization, and integration of such systems, devices, and applications, including the Company’s: (i) “ASTRO” products, which meet the Association of Public Safety Communications Officials Project 25 standard, (ii) “Dimetra” products which meet the European Telecommunications Standards Institute Terrestrial Trunked Radio “TETRA” standard, (iii) Professional and Commercial Radio (“PCR”) products, (iv) broadband technology products, such as Long-Term Evolution (“LTE”), and (v) video solutions, such as video surveillance cameras. The primary customers of the Products and Systems Integration segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and video solutions and manage a mobile workforce.

Services and Software: The Services and Software segment provides a full set of offerings for government, public safety and commercial communication networks. Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include monitoring, software updates and cybersecurity services. Managed services offerings range from partial to full operation of customer or Motorola Solutions owned networks. Software includes public safety and enterprise command center solutions, unified communications applications, video software solutions, delivered both on premise and “as a service.”

The following table summarizes Net sales by segment: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Products and Systems Integration	$	1,288	$	1,174	$	3,429	$	3,076
Services and Software	574		471		1,660		1,347
	$	1,862	$	1,645	$	5,089	$	4,423

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Products and Systems Integration	$	183		$	266		$	449		$	553
Services and Software	111			81			290			228
Operating earnings	294			347			739			781
Total other expense	(24		)	(61		)	(102		)	(171		)
Earnings before income taxes	$	270		$	286		$	637		$	610

XML

Reorganization of Business

9 Months Ended

Sep. 29, 2018

Restructuring and Related Activities [Abstract]

Reorganization of Business

Reorganization of Business

2018 Charges

During the three months endedSeptember 29, 2018, the Company recorded net reorganization of business charges of $25 million including $21 million of charges in Other charges and $4 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $25 million were charges of $13 million related to employee separation costs and $12 million related to exit costs.

During the nine months endedSeptember 29, 2018, the Company recorded net reorganization of business charges of $62 million including $46 million of charges in Other charges and $16 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $62 million were charges of $61 million related to employee separation costs and $16 million related to exit costs, partially offset by $15 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment: 

September 29, 2018	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	19	$	47
Services and Software	6		15
	$	25	$	62

The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2018 to September 29, 2018:

	January 1, 2018		Additional Charges		Adjustments			Amount Used			September 29, 2018
Exit costs	$	9	$	16	$	—		$	(3	)	$	22
Employee separation costs	41		61		(15		)	(48		)	39
	$	50	$	77	$	(15	)	$	(51	)	$	61

Exit Costs

At January 1, 2018, the Company had $9 million of accruals for exit costs. During the nine months endedSeptember 29, 2018, there were $16 million of additional charges and $3 million of cash payments related to the exit of leased facilities. The remaining accrual of $22 million, which the current portion is included in Accrued liabilities and the non-current portion is included in Other liabilities in the Company’s condensed consolidated balance sheet at September 29, 2018, 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, 2018, the Company had an accrual of $41 million for employee separation costs. The 2018 additional charges of $61 million represent severance costs for approximately 700 employees. The adjustment of $15 million reflects reversals for accruals no longer needed. The $48 million used reflects cash payments to severed employees. The remaining accrual of $39 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at September 29, 2018, 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.

2017 Charges

During the three months endedSeptember 30, 2017, the Company recorded net reorganization of business charges of $8 million including $6 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 $8 million were charges of $7 million related to employee separation costs and $1 million related to exit costs.

During the nine months endedSeptember 30, 2017, the Company recorded net reorganization of business charges of $30 million including $22 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 $30 million were charges of $30 million related to employee separation costs and $5 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: 

September 30, 2017	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	6	$	22
Services and Software	2		8
	$	8	$	30

XML

Intangible Assets and Goodwill

9 Months Ended

Sep. 29, 2018

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.

Avigilon Corporation

On March 28, 2018, the Company completed the acquisition of Avigilon Corporation, a provider of advanced end-to-end security and surveillance solutions including video analytics, network video management hardware and software, surveillance cameras and access control solutions. The purchase price of $974 million, consisted of cash payments of $980 million for outstanding common stock, restricted stock units and employee held stock options, net of cash acquired of $107 million, debt assumed of $75 million and transaction costs of $26 million. Prior to the end of the first quarter, $35 million of the assumed debt was repaid with the remaining $40 million repaid during the second quarter of 2018.

The acquisition of Avigilon 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 purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts and goodwill may be subject to change. The following table summarizes fair values of assets acquired and liabilities assumed as of the March 28, 2018 acquisition date:

Accounts receivable, net	$	67
Inventory	93
Other current assets	18
Property, plant and equipment, net	33
Deferred income taxes	4
Accounts payable	(21		)
Accrued liabilities	(28		)
Deferred income tax liabilities	(134		)
Goodwill	444
Intangible assets	498
Total consideration	$	974

Acquired intangible assets consist of $110 million of customer relationships, $380 million of developed technology and $8 million of trade names and will have useful lives of two to 20 years. The fair values of all intangible assets were estimated using the income approach. Customer relationships and developed technology were valued under the excess earnings method which assumes that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable specifically to the intangible asset. Trade names were valued under the relief from royalty method, which assumes value to the extent that the acquired company is relieved of the obligation to pay royalties for the benefits received from them.

 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes.

The pro forma effect of this acquisition is not significant.

Other Acquisitions

On April 9, 2018, the Company completed the acquisition of a provider of two-way radio communications for a gross purchase price of $11 million, recognizing $7 million of identifiable intangible assets, which will be amortized over a period of seven years. The results of operations for this acquisition have been included in the Company’s condensed consolidated statements of operations subsequent to the acquisition date. 

On March 7, 2018, the Company completed the acquisition of Plant Holdings, Inc., the parent company of Airbus DS Communications for a purchase price of $237 million net cash. This acquisition will expand the Company's software portfolio in the command center with additional solutions for Next Generation 9-1-1. The Company recognized $161 million of goodwill, $80 million of identifiable intangible assets and $4 million of acquired liabilities. Goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $41 million of customer-related intangibles, $27 million of completed technology and $12 million of trade names. The identifiable intangible assets will be amortized over a period of 10 to 20 years. The purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts and goodwill may be subject to change.

On August 28, 2017, the Company completed the acquisition of Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers, for a purchase price of $225 million. As a result of the acquisition, the Company recognized $191 million of goodwill, $44 million of identifiable intangible assets and $10 million of acquired liabilities. The identifiable intangible assets were classified as $25 million of customer-related intangibles and $19 million of completed technology and will be amortized over a period of 13 to 16 years.

On March 13, 2017, the Company completed the acquisition of Interexport, a company that provides services for communications systems to public safety and commercial customers in Chile, for a purchase price of $98 billion Chilean pesos, or approximately $147 million U.S. dollars based on cash payments 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 $61 million of identifiable intangible assets, $70 million of acquired property, plant and equipment and $16 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.

The pro forma effects of these acquisitions are not significant.

Intangible Assets

Amortized intangible assets were comprised of the following: 

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	559	$	81	$	148	$	55
Patents	2		2		2		2
Customer-related	1,115		344		977		242
Other intangibles	75		27		56		23
	$	1,751	$	454	$	1,183	$	322

Amortization expense on intangible assets was $46 million for the three months endedSeptember 29, 2018 and $140 million for the nine months endedSeptember 29, 2018. Amortization expense on intangible assets was $39 million for the three months endedSeptember 30, 2017 and $111 million for the nine months endedSeptember 30, 2017. As of September 29, 2018, annual amortization expense is estimated to be $189 million in 2018, $193 million in 2019, $191 million in 2020, $187 million in 2021, $184 million in 2022, and $84 million in 2023.

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

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products and Systems Integration	$	510	$	29	$	12	$	8
Services and Software	1,241		425		1,171		314
	$	1,751	$	454	$	1,183	$	322

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2018 to September 29, 2018: 

	Products and Systems Integration		Services and Software			Total
Balance as of January 1, 2018	$	362	$	576		$	938
Goodwill acquired	359		231			590
Purchase accounting adjustments	10		7			17
Foreign currency	—		(4		)	(4		)
Balance as of September 29, 2018	$	731	$	810		$	1,541

During the second quarter of 2018, the Company modified its internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership, in part, as a result of recent acquisitions contributing to the growth within the newly aligned Services and Software segment. Previously, the Company had two reporting segments: Products and Services. The changes in reporting structure consist of Systems Integration-related revenue and costs moving from the old Services segment into the newly presented Products and Systems Integration segment and Software related revenue and costs moving from the old Products segment into the newly presented Services and Software segment.

XML

Basis of Presentation (Policies)

9 Months Ended

Sep. 29, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The condensed consolidated financial statements as of September 29, 2018 and for the three and nine months endedSeptember 29, 2018 and September 30, 2017 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, 2017. The results of operations for the three and nine months endedSeptember 29, 2018 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 February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 on January 1, 2019 and interim periods within that reporting period, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 that amended the ASU to include an additional (and optional) transition relief. The additional transition relief provides entities the option to adopt the ASU by applying the new ASU at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restatement of comparative periods. The new ASU must be adopted utilizing the modified retrospective method as of the earliest comparative period presented if the optional adoption method is not selected. The Company will adopt the ASU on January 1, 2019, utilizing the modified retrospective method as of the adoption date. The Company is continuing to assess the impact of the ASU on its condensed consolidated financial statements, including the package of available practical expedients, required disclosures, and changes to internal controls. Based on the preliminary work completed, the Company expects a material impact to its condensed consolidated balance sheet through the recording of right-of-use assets and lease obligations that are not required to be recorded within the condensed consolidated balance sheet under current accounting standards.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires entities to estimate and recognize current expected credit losses rather than delay recognition of credit losses until the loss is probable of occurring. The ASU is effective for the Company on January 1, 2020, and interim periods within that reporting period with early option permitted. The Company is currently evaluating the impact of the ASU on its consolidated financial statements and disclosures.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which is intended to simplify the application of hedge accounting and better portray the economic results of risk management strategies in the consolidated financial statements. The ASU expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU is effective for the Company on January 1, 2019 with adoption permitted immediately in any interim or annual period (including the current period). The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied using the modified retrospective method by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of this ASU, including transition elections and required elections, on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for the defined benefit pension plans and other postretirement plans. The ASU is effective for the Company on January 1, 2020 with early adoption permitted. The ASU requires a retrospective adoption method. The Company does not believe the ASU will have a material impact on its financial statement disclosures.

Recently Adopted Accounting Pronouncements

The Company adopted ASU No. 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory” on January 1, 2018 using the modified retrospective method of adoption. The Company recognized $31 million related to the cumulative effect of applying the ASU as an adjustment to its opening retained earnings balance. The comparative information has not been restated and continues to be reported under accounting standards in effect in those periods. This ASU eliminates the prior 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. Under the ASU, the Company will recognize tax expense when intra-entity transfers of assets other than inventory occur.

The Company adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on January 1, 2018 using the retrospective method of adoption. The amendments in the ASU 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 Company has restated its comparative period results to reflect the application of the presentation guidance of the ASU. As a result of the ASU, the presentation of net periodic cost (benefit) has been updated to classify all components of the Company’s net periodic benefit, with the exception of the service cost component, within Other in Other income (expense) on the statement of operations. The Company reclassified $18 million and $10 million in the three months ended September 29, 2018 and September 30, 2017, respectively, and $58 million and $10 million in the nine months ended September 29, 2018 and September 30, 2017, respectively.

The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," and all the related amendments (collectively “ASC 606”) on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to its opening retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods.

The Company has retained much of the same accounting treatment used to recognize revenue under ASC 606 as under accounting standards in effect in prior periods. Revenue on a significant portion of its System and Integration services contracts continues to be recognized under percentage of completion accounting, applying a cost-to-cost method. Services contracts continue to be recognized ratably over relevant contract terms as the Company stands ready to perform. Finally, revenue on equipment sales continues to be recognized based on delivery terms as aligned with the transfer of control.

Under the new standard, the Company identified distinct promises to transfer goods and services within its contracts. For system contracts that are 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 and accessories represent distinct goods. Accordingly, adoption of the new standard impacts the Company's system contracts, with the result being revenue recognized earlier as control of devices and accessories transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's system contracts, it continues to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time.

Under the new standard, revenue recognition for software sales is accelerated based on when control of software licenses and related support services are transferred to the customer. Amounts deferred under previous software accounting rules due to lack of vendor-specific objective evidence have been recognized as an adjustment through opening retained earnings.

Historically, the Company presented transactions that involved a third-party sales representative on a net basis. After considering the control concept and the remaining three indicators of gross presentation under the new standard, the Company has determined that it is the principal in contracts that involve a third-party sales representative. Thus, under the new standard, the Company presents associated revenues on a gross basis, with the affect being an equal increase to selling, general and administrative expenses for its cost of third-party commissions.

Under prior accounting standards, the Company expensed sales commissions and other costs to obtain a contract as incurred. However, under the new standard, the Company capitalizes sales commissions and certain other costs as incremental costs to obtain a contract. Such costs are classified as non-current contract cost assets within Other assets and amortized over a period that approximates the timing of revenue recognition on the underlying contracts.

The new standard clarified the definition of a receivable and requires the Company to present its net position in a contract with a customer on the balance sheet. The position is presented as either a receivable, contract asset, or a contract liability. Under the new definition, accounts receivable are unconditional rights to consideration from a customer. Contract assets represent rights to consideration from a customer in exchange for transferred goods and services that are conditional on events other than the passage of time. Contract liabilities represent obligations to transfer goods and services for which the Company has received, or is due, consideration from a customer. The Company reclassified its customer positions to align with the new definitions and presentation guidance. Accordingly, Unbilled accounts receivable and Costs and earnings in excess of billings have been reclassified from Accounts receivable and Other current assets, respectively, and are presented as Contract assets. Accounts receivable which are not due from customers have been reclassified into Other current assets. Deferred revenue, Billings in excess of costs and earnings, and Customer downpayments have been reclassified from Accrued liabilities and are presented as Contract liabilities. Non-current deferred revenue has been reclassified from Deferred revenue to Non-current contract liabilities within Other liabilities.

Revenue from Contracts with Customers

Payment terms on system contracts are typically tied to implementation milestones associated with progress on contracts, while revenue recognition is over time based on a cost-to-cost method of measuring performance. The Company may recognize a contract asset or contract liability, depending on whether revenue has been recognized in excess of billings or billings in excess of revenue. Services contracts are typically billed in advance, generating Contract liabilities until the Company has performed the services. The Company does not record a financing component to contracts when it expects, at contract inception, that the period between the transfer of a promised good or service and related payment terms are less than a year.

Significant Judgments

The Company enters into arrangements which consist of multiple promises to our customers. The Company evaluates whether the promised goods and services are distinct or a series of distinct goods or services. Where contracts contain multiple performance obligations, the Company generally allocates the total estimated consideration to each performance obligation based on applying an estimated selling price (“ESP”) as our best estimate of standalone selling price. The Company determines ESP by: (i) collecting all reasonably available data points including sales, cost and margin analysis of the product or services, and other inputs based on its normal pricing and discounting practices, (ii) making any reasonably required adjustments to the data based on market and Company-specific factors, and (iii) stratifying the data points, when appropriate, based on major product or service, type of customer, geographic market, and sales volume.

The Company accounts for certain system contracts on an over time basis, electing an input method of estimated costs as a measure of performance completed. The selection of the measurement of progress using estimated costs was based on a thorough consideration of alternatives of various output and input measures, including contract milestones and labor hours. However, the Company has determined that other input and output measures are not an appropriate measure of progress as they do not accurately align with the transfer of control on its customized product solutions. The selection of costs incurred as a measure of progress aligns the transfer of control to the overall production of the customized system.

For system contracts accounted for over time using estimated costs as a measure of performance completed, the Company relies on estimates around the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion may be complex and subject to many variables. We have a standard and disciplined quarterly process in which management reviews the progress and performance of open contracts in order to determine the best estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the project schedule, technical requirements, and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of work to be performed, the availability and cost of materials, and performance by subcontractors, among other variables. Based on this analysis, any quarterly adjustment to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. When estimates of total costs to be incurred on a contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

In accordance with ASC 606, the Company recognizes revenue to reflect the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services. The Company records revenue following the five steps below:

1.Identify the contract with customers: A contract is an agreement between two or more parties that creates enforceable rights and obligations and specifies that enforceability is a matter of law. Contracts shall be accounted for when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the goods or services to be transferred, (iii) the Company can identify the payment terms for the goods or services to be transferred, (iv) the contract has commercial substance (that is, the risk, timing, or amount of the Company’s future cash flow is expected to change as a result of the contract), and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. It is the Company’s customary business practice to obtain a signed legal document as evidence of an arrangement.

2.Identify performance obligations in contracts: The goods or services promised in a contract must be evaluated at inception to identify as a performance obligation each promise to transfer to the customer either: (i) a distinct good or service, or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

3.Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. In determining the transaction price, the Company considers the following components: (i) variable consideration, (ii) significant financing, (iii) noncash consideration, and (iv) consideration payable to a customer.

4.Allocate the transaction price: For a contract that has more than one distinct performance obligation, the Company must allocate the transaction price to each distinct performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying that specific performance obligation.

5.Recognize revenue when or as the entity satisfies a performance obligation: The Company recognizes revenue when, or as, it satisfies a performance obligation by transferring control of a promised good or service to a customer.

XML

Basis of Presentation (Tables)

9 Months Ended

Sep. 29, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The cumulative effect of the changes made to our consolidated opening balance sheet as of January 1, 2018 due to the modified retrospective method of adoption of ASC 606 is as follows:

Balance Sheet (Selected captions)

(In millions)	December 31, 2017		Reclassification of Contract Assets			Reclassification of Non-customer receivables			Reclassification of Contract Liabilities			Impact of Adoption on Open Contracts			January 1, 2018
															(Unaudited)
ASSETS
Accounts receivable, net	$	1,523	$	(297	)	$	(24	)	$	—		$	(4	)	$	1,198
Contract assets	—		846			—			—			85			931
Inventories, net	327		—			—			—			1			328
Other current assets	832		(549		)	24			—			(23		)	284
Deferred income taxes	1,023		—			—			—			(41		)	982
Other assets	333		—			—			—			85			418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	$	—	$	—		$	—		$	1,099		$	(17	)	$	1,082
Accrued liabilities	2,286		—			—			(1,099		)	—			1,187
Other liabilities	2,585		—			—			—			(7		)	2,578
Stockholders’ Equity
Retained earnings	467		—			—			—			127			594

Adoption Impact to Financial Statements

The impact of the adoption of ASC 606 to the condensed consolidated financial statements for the three and nine months ended September 29, 2018 is as follows:

Statements of Operations (Selected captions)

	Three Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	1,862	$	(19	)	$	1,843
Gross margin	901		(18		)	883
Selling, general and administrative expenses	323		(17		)	306
Operating earnings	294		(1		)	293
Net earnings before income taxes	270		(1		)	269
Net earnings attributable to Motorola Solutions Inc.	$	247	$	(1	)	$	246

	Nine Months Ended
(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
Net sales	$	5,089	$	(58	)	$	5,031
Gross margin	2,392		(57		)	2,335
Selling, general and administrative expenses	918		(46		)	872
Operating earnings	739		(11		)	728
Net earnings before income taxes	637		(11		)	626
Net earnings attributable to Motorola Solutions Inc.	$	544	$	(11	)	$	533

Balance Sheet (Selected captions)

(In millions)	September 29, 2018		Adjustments due to ASC 606			September 29, 2018 Balances Under ASC 605
ASSETS
Accounts receivable, net	$	1,179	$	315		$	1,494
Contract assets	917		(917		)	—
Other current assets	350		540			890
Deferred income taxes	949		41			990
Other assets	444		(95		)	349
LIABILITIES AND STOCKHOLDERS' EQUITY
Contract liabilities	$	1,127	$	(1,127	)	$	—
Accrued liabilities	1,168		1,139			2,307
Other liabilities	2,175		10			2,185
Stockholders’ Equity
Retained earnings	788		(138		)	650

XML

Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 29, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table summarizes the disaggregation of our revenue by segment, geography, major product and service type and customer type for the three and nine months ended September 29, 2018, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of operating segments:

	Three Months Ended				Nine Months Ended
(in millions)	Products and Systems Integration		Services and Software		Products and Systems Integration		Services and Software
Regions
Americas	$	957	$	343	$	2,533	$	969
EMEA	199		189		543		565
Asia Pacific	132		42		353		126
Total	$	1,288	$	574	$	3,429	$	1,660
Major Products and Services
Devices	$	828	$	—	$	2,184	$	—
Systems and Systems Integration	460		—		1,245		—
Services	—		455		—		1,357
Software	—		119		—		303
Total	$	1,288	$	574	$	3,429	$	1,660
Customer Type
Direct	$	811	$	543	$	2,168	$	1,586
Indirect	477		31		1,261		74
Total	$	1,288	$	574	$	3,429	$	1,660

Contract Balances

(in millions)	September 29, 2018		January 1, 2018
Receivables	$	1,179	$	1,198
Contract assets	917		931
Contract liabilities	1,127		1,082
Non-current contract liabilities	159		162

Contract Cost Balances

(in millions)	September 29, 2018		January 1, 2018
Current contract cost assets	$	57	$	62
Non-current contract cost assets	95		85

XML

Other Financial Data (Tables)

9 Months Ended

Sep. 29, 2018

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Other charges:
Intangibles amortization (Note 14)	$	46	$	39	$	140	$	111
Reorganization of business (Note 13)	21		6		46		22
Environmental reserve expense	57		—		57		—
Building impairment	—		—		—		8
Loss (Gain) on legal settlements	2		—		3		(2		)
Gain on recovery of financial receivables	—		—		—		(42		)
Asset impairment	—		2		—		2
Acquisition-related transaction fees	—		—		17		1
	$	126	$	47	$	263	$	100

Other Income (Expense)

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

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Interest income (expense), net:
Interest expense	$	(62	)	$	(55	)	$	(178	)	$	(164	)
Interest income	3			3			15			10
	$	(59	)	$	(52	)	$	(163	)	$	(154	)
Other:
Net periodic pension and postretirement benefit (Note 7)	$	18		$	11		$	58		$	36
Non-U.S. pension settlement loss (Note 7)	—			(21		)	—			(46		)
Gain from the extinguishment of convertible debt (Note 4)	6			—			6			—
Foreign currency loss	(14		)	(7		)	(14		)	(29		)
Gain (loss) on derivative instruments	8			3			(15		)	14
Gains on equity method investments	1			1			2			1
Fair value adjustments to equity investments	7			—			7			—
Other	3			4			1			4
	$	29		$	(9	)	$	45		$	(20	)

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Basic earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Per share amount	$	1.52	$	1.30	$	3.36	$	2.57
Diluted earnings per common share:
Earnings	$	247	$	212	$	544	$	420
Weighted average common shares outstanding	162.6		162.3		162.0		163.2
Add effect of dilutive securities:
Share-based awards	4.6		3.4		4.2		3.3
Senior Convertible Notes	5.4		3.3		5.4		2.8
Diluted weighted average common shares outstanding	172.6		169.0		171.6		169.3
Per share amount	$	1.43	$	1.25	$	3.17	$	2.48

Accounts Receivable, Net

Accounts receivable, net, consists of the following: 

	September 29, 2018			December 31, 2017
Accounts receivable	$	1,227		$	1,568
Less allowance for doubtful accounts	(48		)	(45		)
	$	1,179		$	1,523

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: 

	September 29, 2018			December 31, 2017
Long-term receivables, gross	$	29		$	37
Less allowance for losses	(2		)	—
Long-term receivables	27			37
Less current portion	(7		)	(18		)
Non-current long-term receivables	$	20		$	19

Inventories, Net

Inventories, net, consist of the following: 

	September 29, 2018			December 31, 2017
Finished goods	$	190		$	178
Work-in-process and production materials	313			282
	503			460
Less inventory reserves	(136		)	(133		)
	$	367		$	327

Other Current Assets

Other current assets consist of the following: 

	September 29, 2018		December 31, 2017
Costs and earnings in excess of billings (Note 1)	$	—	$	549
Current contract cost assets (Note 2)	57		62
Tax-related refunds receivable	119		90
Other	174		131
	$	350	$	832

Property, Plant and Equipment, Net

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

	September 29, 2018			December 31, 2017
Land	$	11		$	11
Building	355			316
Machinery and equipment	2,224			2,122
	2,590			2,449
Less accumulated depreciation	(1,698		)	(1,593		)
	$	892		$	856

Investments

Investments consist of the following:

	September 29, 2018		December 31, 2017
Corporate bonds	$	2	$	2
Common stock	17		13
Strategic investments, at cost	60		78
Company-owned life insurance policies	83		141
Equity method investments	14		13
	$	176	$	247

Other Assets

Other assets consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plan assets	$	182	$	133
Tax receivable	101		101
Non-current contract cost assets (Note 2)	95		—
Other	66		99
	$	444	$	333

Accrued Liabilities

Accrued liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Deferred revenue (Note 1)	$	—	$	613
Compensation	248		273
Billings in excess of costs and earnings (Note 1)	—		428
Tax liabilities	127		107
Deferred consideration on Airwave acquisition	84		83
Dividend payable	85		84
Trade liabilities	165		151
Other	459		547
	$	1,168	$	2,286

Other Liabilities

Other liabilities consist of the following: 

	September 29, 2018		December 31, 2017
Defined benefit plans	$	1,446	$	2,019
Non-current contract liabilities (Note 2)	159		—
Deferred revenue (Note 1)	—		169
Unrecognized tax benefits	51		54
Deferred income taxes	234		115
Other	285		228
	$	2,175	$	2,585

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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Foreign Currency Translation Adjustments:
Balance at beginning of period	$	(391	)	$	(413	)	$	(353	)	$	(494	)
Other comprehensive income (loss) before reclassification adjustment	(3		)	49			(33		)	133
Tax benefit	(1		)	(3		)	(9		)	(6		)
Other comprehensive income (loss), net of tax	(4		)	46			(42		)	127
Balance at end of period	$	(395	)	$	(367	)	$	(395	)	$	(367	)
Available-for-Sale Securities:
Balance at beginning of period	$	—		$	4		$	6		$	—
Other comprehensive income before reclassification adjustment	—			1			—			8
Tax benefit	—			—			—			(3		)
Other comprehensive income before reclassification adjustment, net of tax	—			1			—			5
Reclassification adjustment into Gains on sales of investments and businesses, net	—			—			(8		)	—
Tax expense	—			—			2			—
Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax	—			—			(6		)	—
Other comprehensive income (loss), net of tax	—			1			(6		)	5
Balance at end of period	$	—		$	5		$	—		$	5
Defined Benefit Plans:
Balance at beginning of period	$	(2,189	)	$	(1,790	)	$	(2,215	)	$	(1,823	)
Other comprehensive loss before reclassification adjustment, net of tax	—			(4		)	—			(15		)
Reclassification adjustment - Actuarial net losses into Other income (expense)	20			17			57			49
Reclassification adjustment - Prior service benefits into Other income (expense)	(4		)	(4		)	(11		)	(12		)
Reclassification adjustment - Non-U.S. pension settlement loss into Other income (expense)	—			21			—			46
Tax benefit	(3		)	(4		)	(7		)	(9		)
Reclassification adjustment into Net earnings, net of tax	13			30			39			74
Other comprehensive income, net of tax	13			26			39			59
Balance at end of period	$	(2,176	)	$	(1,764	)	$	(2,176	)	$	(1,764	)
Total Accumulated other comprehensive loss	$	(2,571	)	$	(2,126	)	$	(2,571	)	$	(2,126	)

XML

Risk Management (Tables)

9 Months Ended

Sep. 29, 2018

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 September 29, 2018, and the corresponding positions as of December 31, 2017: 

	Notional Amount
Net Buy (Sell) by Currency	September 29, 2018			December 31, 2017
British Pound	$	221		$	72
Euro	215			149
Australian Dollar	(109		)	(64		)
Chinese Renminbi	(75		)	(73		)
Brazilian Real	(46		)	(45		)

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 September 29, 2018 and December 31, 2017:

	Fair Values of Derivative Instruments
	Assets			Liabilities
September 29, 2018	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	6	Other current assets	$	1	Accrued liabilities

	Fair Values of Derivative Instruments
	Assets			Liabilities
December 31, 2017	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	Other assets	$	3	Other liabilities
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	5	Other current assets	$	2	Accrued liabilities
Total derivatives	$	5		$	5

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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended						Nine Months Ended					Balance Sheet Location
Loss on Derivative Instruments	September 29, 2018			September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange contracts	$	(1	)	$	(1	)	$	—	$	(3	)	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 nine months endedSeptember 29, 2018 and September 30, 2017:

	Three Months Ended					Nine Months Ended						Statements of Operations Location
Gain (loss) on Derivative Instruments	September 29, 2018		September 30, 2017			September 29, 2018			September 30, 2017
Interest agreements	$	—	$	(1	)	$	—		$	(1	)	Other income (expense)
Foreign exchange contracts	8		4			(15		)	15			Other income (expense)
Total derivatives	$	8	$	3		$	(15	)	$	14

XML

Income Taxes (Tables)

9 Months Ended

Sep. 29, 2018

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table provides details of income taxes:

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Net earnings before income taxes	$	270		$	286		$	637		$	610
Income tax expense	22			73			91			188
Effective tax rate	8		%	26		%	14		%	31		%

Schedule of Provisional Income Tax Expense (Benefit)

For the nine months endedSeptember 29, 2018, the Company has recorded the following adjustments to the previously recorded provisional tax amounts:

	December 31, 2017		Adjustment			September 29, 2018		Financial Statement Location
Valuation allowance on foreign tax credit carryforward	$	471	$	(9	)	$	462	Deferred tax expense
Measurement of U.S. deferred tax balances at 21%	366		(11		)	355		Deferred tax expense
Transition tax on repatriation of foreign earnings	16		2			18		Current tax expense
Uncertain tax positions on foreign operations	21		—			21		Current tax expense
Disallowed deduction of covered employees' incentive plans	—		4			4		Deferred tax expense
	$	874	$	(14	)	$	860

XML

Retirement and Other Employee Benefits (Tables)

9 Months Ended

Sep. 29, 2018

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	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	1		$	1		$	—		$	—
Interest cost	47			46			9			10			1			1
Expected return on plan assets	(68		)	(57		)	(22		)	(24		)	(3		)	(3		)
Amortization of:
Unrecognized net loss	15			11			4			4			1			2
Unrecognized prior service benefit	—			—			—			—			(4		)	(4		)
Settlement loss	—			—			—			21			—			—
Net periodic pension cost (benefit)	$	(6	)	$	—		$	(8	)	$	12		$	(5	)	$	(4	)

	U.S. Pension Benefit Plans						Non-U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
Nine Months Ended	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Service cost	$	—		$	—		$	2		$	3		$	—		$	—
Interest cost	139			138			30			30			2			3
Expected return on plan assets	(203		)	(172		)	(70		)	(71		)	(8		)	(9		)
Amortization of:
Unrecognized net loss	43			33			11			12			3			4
Unrecognized prior service benefit	—			—			—			—			(11		)	(12		)
Settlement loss	—			—			—			46			—			—
Net periodic cost (benefit)	$	(21	)	$	(1	)	$	(27	)	$	20		$	(14	)	$	(14	)

XML

Share-Based Compensation Plans (Tables)

9 Months Ended

Sep. 29, 2018

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						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Share-based compensation expense included in:
Costs of sales	$	3		$	2		$	8		$	7
Selling, general and administrative expenses	12			11			33			32
Research and development expenditures	4			3			12			10
Share-based compensation expense included in Operating earnings	19			16			53			49
Tax benefit	5			5			13			16
Share-based compensation expense, net of tax	$	14		$	11		$	40		$	33
Decrease in basic earnings per share	$	(0.09	)	$	(0.07	)	$	(0.25	)	$	(0.20	)
Decrease in diluted earnings per share	$	(0.08	)	$	(0.07	)	$	(0.23	)	$	(0.19	)

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 29, 2018

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 September 29, 2018 and December 31, 2017 were as follows: 

September 29, 2018	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	6	$	6
Corporate bonds	2		—		2
Common stock	—		17		17
Liabilities:
Foreign exchange derivative contracts	$	—	$	1	$	1

December 31, 2017	Level 1		Level 2		Total
Assets:
Foreign exchange derivative contracts	$	—	$	5	$	5
Available-for-sale securities:
Corporate bonds	—		2		2
Common stock	13		—		13
Liabilities:
Foreign exchange derivative contracts	$	—	$	5	$	5

XML

Long-term Financing and Sales of Receivables (Tables)

9 Months Ended

Sep. 29, 2018

Receivables [Abstract]

Long-Term Customer Financing

Accounts receivable, net, consists of the following: 

	September 29, 2018			December 31, 2017
Accounts receivable	$	1,227		$	1,568
Less allowance for doubtful accounts	(48		)	(45		)
	$	1,179		$	1,523

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: 

	September 29, 2018			December 31, 2017
Long-term receivables, gross	$	29		$	37
Less allowance for losses	(2		)	—
Long-term receivables	27			37
Less current portion	(7		)	(18		)
Non-current long-term receivables	$	20		$	19

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 nine months endedSeptember 29, 2018 and September 30, 2017: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Accounts receivable sales proceeds	$	—	$	99	$	76	$	179
Long-term receivables sales proceeds	73		55		101		123
Total proceeds from receivable sales	$	73	$	154	$	177	$	302

Financing Receivables Aging Analysis

An aging analysis of long-term receivables at September 29, 2018 and December 31, 2017 is as follows: 

September 29, 2018	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	20	$	—	$	—	$	2
Commercial loans and leases secured	9		2		—		1
Long-term receivables, including current portion	$	29	$	2	$	—	$	3

December 31, 2017	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	21	$	—	$	1	$	2
Commercial loans and leases secured	16		1		3		1
Long-term receivables, including current portion	$	37	$	1	$	4	$	3

XML

Segment Information (Tables)

9 Months Ended

Sep. 29, 2018

Segment Reporting [Abstract]

Net Sales and Operating Earnings by Segment

The following table summarizes Net sales by segment: 

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Products and Systems Integration	$	1,288	$	1,174	$	3,429	$	3,076
Services and Software	574		471		1,660		1,347
	$	1,862	$	1,645	$	5,089	$	4,423

The following table summarizes the Operating earnings by segment: 

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Products and Systems Integration	$	183		$	266		$	449		$	553
Services and Software	111			81			290			228
Operating earnings	294			347			739			781
Total other expense	(24		)	(61		)	(102		)	(171		)
Earnings before income taxes	$	270		$	286		$	637		$	610

XML

Reorganization of Business (Tables)

9 Months Ended

Sep. 29, 2018

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Reportable Segment

The following table displays the net charges incurred by segment: 

September 29, 2018	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	19	$	47
Services and Software	6		15
	$	25	$	62

The following table displays the net charges incurred by segment: 

September 30, 2017	Three Months Ended		Nine Months Ended
Products and Systems Integration	$	6	$	22
Services and Software	2		8
	$	8	$	30

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, 2018 to September 29, 2018:

	January 1, 2018		Additional Charges		Adjustments			Amount Used			September 29, 2018
Exit costs	$	9	$	16	$	—		$	(3	)	$	22
Employee separation costs	41		61		(15		)	(48		)	39
	$	50	$	77	$	(15	)	$	(51	)	$	61

XML

Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 29, 2018

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 March 28, 2018 acquisition date:

Accounts receivable, net	$	67
Inventory	93
Other current assets	18
Property, plant and equipment, net	33
Deferred income taxes	4
Accounts payable	(21		)
Accrued liabilities	(28		)
Deferred income tax liabilities	(134		)
Goodwill	444
Intangible assets	498
Total consideration	$	974

Intangible Assets

Amortized intangible assets were comprised of the following: 

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology	$	559	$	81	$	148	$	55
Patents	2		2		2		2
Customer-related	1,115		344		977		242
Other intangibles	75		27		56		23
	$	1,751	$	454	$	1,183	$	322

Amortized Intangible Assets, Excluding Goodwill, By Business Segment

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

	September 29, 2018				December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Products and Systems Integration	$	510	$	29	$	12	$	8
Services and Software	1,241		425		1,171		314
	$	1,751	$	454	$	1,183	$	322

Goodwill

The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2018 to September 29, 2018: 

	Products and Systems Integration		Services and Software			Total
Balance as of January 1, 2018	$	362	$	576		$	938
Goodwill acquired	359		231			590
Purchase accounting adjustments	10		7			17
Foreign currency	—		(4		)	(4		)
Balance as of September 29, 2018	$	731	$	810		$	1,541

XML

Basis of Presentation - Recent Developments (Details) $ in Millions			3 Months Ended	9 Months Ended
	Mar. 28, 2018 USD ($)	Mar. 07, 2018 USD ($)	Mar. 31, 2018 segment	Sep. 29, 2018 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of segments | segment			2	2
Avigilon
Business Acquisition [Line Items]
Consideration transferred	$ 974
Plant Holdings, Inc.
Business Acquisition [Line Items]
Cash paid for acquisition		$ 237

XML

Basis of Presentation - Recently Adopted Accounting Pronoucements (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Restatement Adjustment | Accounting Standards Update 2017-07 | Other income (expense)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net periodic benefit excluding service cost	$ 18	$ 10	$ 58	$ 10
Retained Earnings | Accounting Standards Update 2016-16
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting pronouncement					$ (31)

XML

Basis of Presentation - Balance Sheet (Selected captions) (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
ASSETS
Accounts receivable, net	$ 1,179	$ 1,198	$ 1,523
Contract assets	917	931	0
Inventories, net	367	328	327
Other current assets	350	284	832
Deferred income taxes	949	982	1,023
Other assets	444	418	333
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	1,127	1,082	0
Accrued liabilities	1,168	1,187	2,286
Other liabilities	2,175	2,578	2,585
Retained earnings	788	594	467
Calculated under Revenue Guidance in Effect before Topic 606
ASSETS
Accounts receivable, net	1,494		1,523
Contract assets	0		0
Inventories, net			327
Other current assets	890		832
Deferred income taxes	990		1,023
Other assets	349		333
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	0		0
Accrued liabilities	2,307		2,286
Other liabilities	2,185		2,585
Retained earnings	650		$ 467
Accounting Standards Update 2014-09 | Restatement Adjustment
ASSETS
Accounts receivable, net		(24)
Contract assets		0
Inventories, net		0
Other current assets		24
Deferred income taxes		0
Other assets		0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities		1,099
Accrued liabilities		(1,099)
Other liabilities		0
Retained earnings		0
Accounting Standards Update 2014-09 | Restatement Adjustment | Contract Assets
ASSETS
Accounts receivable, net		(297)
Contract assets		846
Inventories, net		0
Other current assets		(549)
Deferred income taxes		0
Other assets		0
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
ASSETS
Accounts receivable, net	315	(4)
Contract assets	(917)	85
Inventories, net		1
Other current assets	540	(23)
Deferred income taxes	41	(41)
Other assets	(95)	85
LIABILITIES AND STOCKHOLDERS’ EQUITY
Contract liabilities	(1,127)	(17)
Accrued liabilities	1,139	0
Other liabilities	10	(7)
Retained earnings	$ (138)	$ 127

XML

Basis of Presentation - Adoption Impact to Statements of Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	$ 1,862	$ 1,645	$ 5,089	$ 4,423
Gross margin	901	794	2,392	2,054
Selling, general and administrative expenses	323	259	918	760
Operating earnings	294	347	739	781
Net earnings before income taxes	270	286	637	610
Net earnings attributable to Motorola Solutions, Inc.	247	$ 212	544	$ 420
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	(19)		(58)
Gross margin	(18)		(57)
Selling, general and administrative expenses	(17)		(46)
Operating earnings	(1)		(11)
Net earnings before income taxes	(1)		(11)
Net earnings attributable to Motorola Solutions, Inc.	(1)		(11)
Calculated under Revenue Guidance in Effect before Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	1,843		5,031
Gross margin	883		2,335
Selling, general and administrative expenses	306		872
Operating earnings	293		728
Net earnings before income taxes	269		626
Net earnings attributable to Motorola Solutions, Inc.	$ 246		$ 533

XML

Basis of Presentation - Adoption Impact to Balance Sheet (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	$ 1,179	$ 1,198	$ 1,523
Contract assets	917	931	0
Other current assets	350	284	832
Deferred income taxes	949	982	1,023
Other assets	444	418	333
Contract liabilities	1,127	1,082	0
Accrued liabilities	1,168	1,187	2,286
Other liabilities	2,175	2,578	2,585
Retained earnings	788	594	467
Calculated under Revenue Guidance in Effect before Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	1,494		1,523
Contract assets	0		0
Other current assets	890		832
Deferred income taxes	990		1,023
Other assets	349		333
Contract liabilities	0		0
Accrued liabilities	2,307		2,286
Other liabilities	2,185		2,585
Retained earnings	650		$ 467
Difference between Revenue Guidance in Effect before and after Topic 606 | Adjustments due to ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	315	(4)
Contract assets	(917)	85
Other current assets	540	(23)
Deferred income taxes	41	(41)
Other assets	(95)	85
Contract liabilities	(1,127)	(17)
Accrued liabilities	1,139	0
Other liabilities	10	(7)
Retained earnings	$ (138)	$ 127

XML

Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Net sales	$ 1,862	$ 1,645	$ 5,089	$ 4,423
Products and Systems Integration
Disaggregation of Revenue [Line Items]
Net sales	1,288	1,174	3,429	3,076
Products and Systems Integration | Direct
Disaggregation of Revenue [Line Items]
Net sales	811		2,168
Products and Systems Integration | Indirect
Disaggregation of Revenue [Line Items]
Net sales	477		1,261
Products and Systems Integration | Devices
Disaggregation of Revenue [Line Items]
Net sales	828		2,184
Products and Systems Integration | Systems and Systems Integration
Disaggregation of Revenue [Line Items]
Net sales	460		1,245
Products and Systems Integration | Services
Disaggregation of Revenue [Line Items]
Net sales	0		0
Products and Systems Integration | Software
Disaggregation of Revenue [Line Items]
Net sales	0		0
Products and Systems Integration | Americas
Disaggregation of Revenue [Line Items]
Net sales	957		2,533
Products and Systems Integration | EMEA
Disaggregation of Revenue [Line Items]
Net sales	199		543
Products and Systems Integration | Asia Pacific
Disaggregation of Revenue [Line Items]
Net sales	132		353
Services and Software
Disaggregation of Revenue [Line Items]
Net sales	574	$ 471	1,660	$ 1,347
Services and Software | Direct
Disaggregation of Revenue [Line Items]
Net sales	543		1,586
Services and Software | Indirect
Disaggregation of Revenue [Line Items]
Net sales	31		74
Services and Software | Devices
Disaggregation of Revenue [Line Items]
Net sales	0		0
Services and Software | Systems and Systems Integration
Disaggregation of Revenue [Line Items]
Net sales	0		0
Services and Software | Services
Disaggregation of Revenue [Line Items]
Net sales	455		1,357
Services and Software | Software
Disaggregation of Revenue [Line Items]
Net sales	119		303
Services and Software | Americas
Disaggregation of Revenue [Line Items]
Net sales	343		969
Services and Software | EMEA
Disaggregation of Revenue [Line Items]
Net sales	189		565
Services and Software | Asia Pacific
Disaggregation of Revenue [Line Items]
Net sales	$ 42		$ 126

XML

Revenue from Contracts with Customers - Additional Information (Details)	9 Months Ended
	Sep. 29, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | Minimum | Systems and Systems Integration
Disaggregation of Revenue [Line Items]
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | Maximum | Systems and Systems Integration
Disaggregation of Revenue [Line Items]
Expected timing of satisfaction, period	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Disaggregation of Revenue [Line Items]
Expected timing of satisfaction, period

XML

Revenue from Contracts with Customers - Remaining Performance Obligation (Details) $ in Billions	9 Months Ended
	Sep. 29, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | Products and Systems Integration
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 1.9
Expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | Managed and Support Services | Services and Software
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 1.2
Expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 6.1
Expected timing of satisfaction, period
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | Products and Systems Integration
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 3.3
Expected timing of satisfaction, period
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | Services and Software
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.8
Expected timing of satisfaction, period

XML

Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 29, 2018	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Contract with Customer, Asset and Liability [Abstract]
Receivables	$ 1,179	$ 1,179	$ 1,198	$ 1,523
Contract assets	917	917	931
Contract liabilities	1,127	1,127	1,082	$ 0
Non-current contract liabilities	159	159	$ 162
Contract with customer, liability, revenue recognized	327	777
Contract with customer, performance obligation satisfied in previous period	$ (7)	(4)
Impairment losses		$ 0

XML

Revenue from Contracts with Customers - Contract Cost Balances (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 29, 2018	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Capitalized Contract Cost [Line Items]
Current contract cost assets	$ 57,000,000	$ 57,000,000	$ 62,000,000	$ 62,000,000
Non-current contract cost assets	95,000,000	95,000,000	$ 85,000,000	$ 0
Contract cost, amortization	$ 11,000,000	$ 34,000,000
Minimum
Capitalized Contract Cost [Line Items]
Capitalized contract cost, amortization period		1 year
Maximum
Capitalized Contract Cost [Line Items]
Capitalized contract cost, amortization period		4 years

XML

Other Financial Data - Other Charges (Income) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Other charges:
Intangibles amortization (Note 14)	$ 46	$ 39	$ 140	$ 111
Reorganization of business (Note 13)	21	6	46	22
Environmental reserve expense	57	0	57	0
Building impairment	0	0	0	8
Loss (Gain) on legal settlements	2	0	3	(2)
Gain on recovery of financial receivables	0	0	0	(42)
Asset impairment	0	2	0	2
Acquisition-related transaction fees	0	0	17	1
Other charges	$ 126	$ 47	$ 263	$ 100

XML

Other Financial Data - Other Charges (Income) - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Environmental reserve expense	$ 57	$ 0	$ 57	$ 0
Minimum activity timeline period	30 years
Accrual for environmental loss contingencies	$ 107		107
Current ac for environmental loss contingencies	4		4
Acquisition-related transaction fees	0	0	17	1
Building impairment	0	0	0	8
Gain on recovery of financial receivables	$ 0	$ 0	$ 0	$ 42

XML

Other Financial Data - Other Income (Expense) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Interest income (expense), net:
Interest expense	$ (62)	$ (55)	$ (178)	$ (164)
Interest income	3	3	15	10
Interest income (expense), net	(59)	(52)	(163)	(154)
Other:
Net periodic pension and postretirement benefit (Note 7)	18	11	58	36
Non-U.S. pension settlement loss (Note 7)	0	(21)	0	(46)
Gain from the extinguishment of convertible debt (Note 4)	6	0	6	0
Foreign currency loss	(14)	(7)	(14)	(29)
Gain (loss) on derivative instruments	8	3	(15)	14
Gains on equity method investments	1	1	2	1
Fair value adjustments to equity investments	7	0	7	0
Other	3	4	1	4
Total other income (expense)	$ 29	$ (9)	$ 45	$ (20)

XML

Other Financial Data - Other Income (Expense) - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Foreign currency gain (loss)	$ (14)	$ (7)	$ (14)	$ (29)
Gain (loss) on derivative instruments	$ 8	$ 3	(15)	$ 14
Loss on hedges			$ 14

XML

Other Financial Data - Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Basic earnings (loss) per common share:
Earnings	$ 247	$ 212	$ 544	$ 420
Weighted average common shares outstanding (in shares)	162.6	162.3	162.0	163.2
Basic earnings per share amount (in US$ per share)	$ 1.52	$ 1.30	$ 3.36	$ 2.57
Diluted earnings per common share:
Earnings	$ 247	$ 212	$ 544	$ 420
Weighted average common shares outstanding (in shares)	162.6	162.3	162.0	163.2
Add effect of dilutive securities:
Share-based awards (in shares)	4.6	3.4	4.2	3.3
Senior Convertible Notes (in shares)	5.4	3.3	5.4	2.8
Diluted weighted average common shares outstanding (in shares)	172.6	169.0	171.6	169.3
Per share amount (in US$ per share)	$ 1.43	$ 1.25	$ 3.17	$ 2.48
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)	0.2	2.0	3.2	2.3
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)		1.7	0.8	1.9

XML

Other Financial Data - Earnings Per Common Share, Additional Information (Details) - Senior Convertible Notes - USD ($)			1 Months Ended
	Oct. 15, 2018	Sep. 05, 2018	Sep. 29, 2018	Aug. 25, 2015
Subsequent Event
Debt Instrument [Line Items]
Repayments of debt	$ 200,000,000
Convertible Notes
Debt Instrument [Line Items]
Debt instrument face amount				$ 1,000,000,000
Interest rate				2.00%
Amount of debt to repurchase		$ 200,000,000
Repayments of debt and premium		$ 369,000,000
Repayments of convertible debt			$ 169,000,000

XML

Other Financial Data - Accounts Receivable, Net (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts receivable	$ 1,227		$ 1,568
Less allowance for doubtful accounts	(48)		(45)
Accounts receivable, net	$ 1,179	$ 1,198	$ 1,523

XML

Other Financial Data - Accounts Receivable, Net, Additional Information (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in accounts receivable	$ (1,179)	$ (1,198)	$ (1,523)
Contract assets	917	931	$ 0
Restatement Adjustment | Adjustments due to ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in accounts receivable		24
Contract assets		$ 0
Restatement Adjustment | Other Receivables | Adjustments due to ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in accounts receivable	24
Contract assets	24
Unbilled Receivables | Restatement Adjustment | Adjustments due to ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in accounts receivable	297
Contract assets	$ 297

XML

Other Financial Data - Inventories, Net (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Inventory, Net [Abstract]
Finished goods	$ 190		$ 178
Work-in-process and production materials	313		282
Inventories, gross	503		460
Less inventory reserves	(136)		(133)
Inventories, net	$ 367	$ 328	$ 327

XML

Other Financial Data - Other Current Assets (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Other Current Assets [Abstract]
Costs and earnings in excess of billings (Note 1)			$ 549
Current contract cost assets (Note 2)	$ 57	$ 62	62
Tax-related refunds receivable	119		90
Other	174		131
Other current assets	$ 350	$ 284	$ 832

XML

Other Financial Data - Property, Plant And Equipment, Net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment, Net [Abstract]
Land	$ 11		$ 11		$ 11
Building	355		355		316
Machinery and equipment	2,224		2,224		2,122
Property, plant and equipment, gross	2,590		2,590		2,449
Less accumulated depreciation	(1,698)		(1,698)		(1,593)
Property, plant and equipment, net	892		892		$ 856
Depreciation expense	$ 43	$ 49	$ 127	$ 142

XML

Other Financial Data - Investments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Net Investment Income [Line Items]
Common stock	$ 17		$ 17
Strategic investments, at cost	60		60
Strategic investments, at cost					$ 78
Company-owned life insurance policies	83		83		141
Equity method investments	14		14		13
Long-term investments	176		176		247
Fair value adjustments to equity investments	7	$ 0	7	$ 0
Excess cash withdrawal from life insurance investments			60
Gains on sales of investments and businesses, net	6	$ 0	16	$ 3
Corporate bonds
Net Investment Income [Line Items]
Securities investments					2
Securities investments	$ 2		$ 2
Common stock
Net Investment Income [Line Items]
Securities investments					$ 13

XML

Other Financial Data - Other Assets (Details) - USD ($)	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Other Assets [Abstract]
Defined benefit plan assets	$ 182,000,000		$ 133,000,000
Tax receivable	101,000,000		101,000,000
Non-current contract cost assets (Note 2)	95,000,000	$ 85,000,000	0
Other	66,000,000		99,000,000
Other assets, total	$ 444,000,000	$ 418,000,000	$ 333,000,000

XML

Other Financial Data - Accrued Liabilities (Details) - USD ($) $ in Millions	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Accrued Liabilities [Abstract]
Deferred revenue (Note 1)			$ 613
Compensation	$ 248		273
Billings in excess of costs and earnings (Note 1)			428
Tax liabilities	127		107
Deferred consideration on Airwave acquisition	84		83
Dividend payable	85		84
Trade liabilities	165		151
Other	459		547
Accrued liabilities	$ 1,168	$ 1,187	$ 2,286

XML

Other Financial Data - Other Liabilities (Details) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Feb. 28, 2018	Sep. 29, 2018	Jan. 01, 2018	Dec. 31, 2017
Other Liabilities [Abstract]
Defined benefit plans		$ 1,446		$ 2,019
Non-current contract liabilities (Note 2)		159	$ 162
Deferred revenue (Note 1)				169
Unrecognized tax benefits		51		54
Deferred income taxes		234		115
Other		285		228
Other liabilities		2,175	$ 2,578	$ 2,585
Pension Benefit Plan | U.S.
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions	$ 500	$ 500

XML

Other Financial Data - Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Equity, Class of Treasury Stock [Line Items]
Payments for repurchased shares			$ 66,000,000	$ 358,000,000
Number of shares repurchased (in shares)			0.6
Repurchase of common shares, average cost (in US$ per share)			$ 101.54
Share repurchase authority utilized during period			$ 12,400,000,000
Amount available for future share repurchase	$ 1,600,000,000		1,600,000,000
Cash dividends paid	84,000,000	$ 76,000,000	252,000,000	$ 230,000,000
Maximum
Equity, Class of Treasury Stock [Line Items]
Stock repurchase program, authorized amount	$ 14,000,000,000		$ 14,000,000,000

XML

Other Financial Data - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			$ (1,727)
Total other comprehensive income (loss), net of tax	$ 9	$ 73	(9)	$ 191
Balance at end of period	(1,395)		(1,395)
Total Accumulated other comprehensive loss	(1,395)		(1,727)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			(2,562)
Total other comprehensive income (loss), net of tax			(9)
Balance at end of period	(2,571)	(2,126)	(2,571)	(2,126)
Total Accumulated other comprehensive loss	(2,571)	(2,126)	(2,562)	(2,126)
Foreign Currency Translation Adjustments:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(391)	(413)	(353)	(494)
Other comprehensive income (loss) before reclassification adjustment	(3)	49	(33)	133
Tax benefit	(1)	(3)	(9)	(6)
Total other comprehensive income (loss), net of tax	(4)	46	(42)	127
Balance at end of period	(395)	(367)	(395)	(367)
Total Accumulated other comprehensive loss	(391)	(413)	(353)	(494)
Available-for-Sale Securities:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	0	4	6	0
Other comprehensive income (loss) before reclassification adjustment	0	1	0	8
Tax benefit	0	0	0	(3)
Other comprehensive income before reclassification adjustment, net of tax	0	1	0	5
Reclassification adjustment before tax	0	0	(8)	0
Tax expense (benefit)	0	0	2	0
Reclassification adjustment, net	0	0	(6)	0
Total other comprehensive income (loss), net of tax	0	1	(6)	5
Balance at end of period	0	5	0	5
Total Accumulated other comprehensive loss	0	4	6	0
Defined Benefit Plans:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(2,189)	(1,790)	(2,215)	(1,823)
Other comprehensive income before reclassification adjustment, net of tax	0	(4)	0	(15)
Tax expense (benefit)	(3)	(4)	(7)	(9)
Reclassification adjustment, net	13	30	39	74
Total other comprehensive income (loss), net of tax	13	26	39	59
Balance at end of period	(2,176)	(1,764)	(2,176)	(1,764)
Total Accumulated other comprehensive loss	(2,189)	(1,790)	(2,215)	(1,823)
Reclassification adjustment - Actuarial net losses into Other income (expense)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	20	17	57	49
Reclassification adjustment - Prior service benefits into Other income (expense)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	(4)	(4)	(11)	(12)
Reclassification adjustment - Non-U.S. pension settlement loss into Other income (expense)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification adjustment before tax	$ 0	$ 21	$ 0	$ 46

XML

Debt and Credit Facilities (Details)						1 Months Ended			3 Months Ended			9 Months Ended
	Oct. 15, 2018 USD ($)	Oct. 05, 2018 USD ($)	Sep. 28, 2018 USD ($)	Sep. 05, 2018 USD ($)	Aug. 25, 2015 USD ($) $ / shares	Nov. 01, 2018 USD ($)	Sep. 29, 2018 USD ($)	Feb. 28, 2018 USD ($)	Sep. 29, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 29, 2018 USD ($)	Sep. 30, 2017 USD ($)
Debt Instrument [Line Items]
Gain from the extinguishment of convertible debt (Note 4)									$ 6,000,000		$ 0	$ 6,000,000	$ 0
Net proceeds from issuance of debt												1,295,000,000	$ 0
Senior Convertible Notes
Debt Instrument [Line Items]
Convertible debt reclassified from long-term to short-term debt							$ 200,000,000		200,000,000			200,000,000
Senior Convertible Notes | Subsequent Event
Debt Instrument [Line Items]
Repayments of short-term debt	$ 200,000,000
U.S. | Pension Benefit Plan
Debt Instrument [Line Items]
Defined benefit plan contributions								$ 500,000,000				500,000,000
Line of Credit | Revolving Credit Facility | 2017 Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility borrowing capacity							2,200,000,000.0		2,200,000,000.0			2,200,000,000.0
Outstanding loan amount							$ 100,000,000		$ 100,000,000			$ 100,000,000
Net proceeds from line of credit										$ 400,000,000
Weighted average interest rate							3.58%		3.58%			3.58%
Repayments of short-term debt									$ 200,000,000
Line of Credit | Revolving Credit Facility | 2017 Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Repayments of lines of credit						$ 100,000,000
Line of Credit | Letter of Credit | 2017 Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility borrowing capacity							$ 500,000,000		500,000,000			$ 500,000,000
Fronting commitment sub-limit							450,000,000		$ 450,000,000			$ 450,000,000
Loans Payable | Term Loan
Debt Instrument [Line Items]
Debt instrument face amount										$ 400,000,000
Weighted average interest rate									3.33%			3.43%
Additional borrowings available							0		$ 0			$ 0
Senior Notes | 4.60% Senior Notes Due 2028
Debt Instrument [Line Items]
Debt instrument face amount			$ 200,000,000					500,000,000
Proceeds from debt, net								$ 497,000,000
Interest rate			4.60%					4.60%
Long-term debt			$ 700,000,000
Senior Notes | 4.60% Senior Notes Due 2028 | Subsequent Event
Debt Instrument [Line Items]
Net proceeds from issuance of debt		$ 196,000,000
Convertible Notes | Senior Convertible Notes
Debt Instrument [Line Items]
Debt instrument face amount					$ 1,000,000,000
Interest rate					2.00%
Conversion rate					0.0148252
Effective conversion price of convertible shares (in US$ per share) | $ / shares					$ 67.45
Amount of debt to repurchase				$ 200,000,000
Repayments of debt				$ 369,000,000
Repayments of convertible debt							$ 169,000,000
Gain from the extinguishment of convertible debt (Note 4)			$ 6,000,000
Convertible debt, if-converted value in excess of principal												$ 712,000,000

XML

Risk Management - Foreign Currency Risk (Details)	Sep. 29, 2018 USD ($) position	Dec. 31, 2017 USD ($) 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
Foreign Exchange Contract
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	$ 782,000,000	$ 507,000,000
Foreign Exchange Contract | British Pound | Long
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	221,000,000	72,000,000
Foreign Exchange Contract | Euro | Long
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	215,000,000	149,000,000
Foreign Exchange Contract | Australian Dollar | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	109,000,000	64,000,000
Foreign Exchange Contract | Chinese Renminbi | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	75,000,000	73,000,000
Foreign Exchange Contract | Brazilian Real | Short
Derivative [Line Items]
Notional amounts of outstanding foreign exchange contracts	$ 46,000,000	$ 45,000,000

XML

Risk Management - Counterparty Risk (Details) $ in Millions	Sep. 29, 2018 USD ($)
Credit Concentration Risk
Derivative [Line Items]
Net credit risk with all counterparties	$ 6

XML

Risk Management - Summary of Fair Values and Location in Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
Fair Value
Assets		$ 5
Liabilities		5
Designated as Hedging Instrument | Foreign exchange contracts | Other assets
Fair Value
Assets		0
Designated as Hedging Instrument | Foreign exchange contracts | Other liabilities
Fair Value
Liabilities		3
Not Designated As Hedging Instruments | Foreign exchange contracts | Other current assets
Fair Value
Assets	$ 6	5
Not Designated As Hedging Instruments | Foreign exchange contracts | Accrued liabilities
Fair Value
Liabilities	$ 1	$ 2

XML

Risk Management - Summary of Derivative Instruments and the Effect on the Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Designated as Hedging Instrument | Foreign exchange contracts | Other comprehensive income (loss)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	$ (1)	$ (1)	$ 0	$ (3)
Not Designated As Hedging Instruments
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	8	3	(15)	14
Not Designated As Hedging Instruments | Interest agreements | Other income (expense)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	0	(1)	0	(1)
Not Designated As Hedging Instruments | Foreign exchange contracts | Other income (expense)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on Derivative Instruments	$ 8	$ 4	$ (15)	$ 15

XML

Income Taxes - Schedule of Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Net earnings before income taxes	$ 270	$ 286	$ 637	$ 610
Income tax expense	$ 22	$ 73	$ 91	$ 188
Effective tax rate	8.00%	26.00%	14.00%	31.00%

XML

Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income tax expense	$ 22	$ 73	$ 91	$ 188
Effective tax rate	8.00%	26.00%	14.00%	31.00%
Federal income tax rate	21.00%	35.00%	21.00%	35.00%	21.00%
Provisional income tax expense			$ 860		$ 874

XML

Income Taxes - Schedule of Provisional Tax Amounts (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Federal income tax rate	21.00%	35.00%	21.00%	35.00%	21.00%
Valuation allowance on foreign tax credit carryforward			$ 462		$ 471
Measurement of U.S. deferred tax balances at 21%			355		366
Transition tax on repatriation of foreign earnings			18		16
Uncertain tax positions on foreign operations	$ 21		21		21
Disallowed deduction of covered employees' incentive plans			4		0
Provisional income tax expense			860		$ 874
Adjustment
Valuation allowance on foreign tax credit carryforward			(9)
Measurement of U.S. deferred tax balances at 21%			(11)
Transition tax on repatriation of foreign earnings			2
Uncertain tax positions on foreign operations			0
Disallowed deduction of covered employees' incentive plans			4
Adjustment			$ (14)

XML

Retirement and Other Employee Benefits - Pension and Postretirement Health Care Benefits (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Amortization of:
Settlement loss	$ 0	$ 21	$ 0	$ 46
Postretirement Health Care Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	0	0
Interest cost	1	1	2	3
Expected return on plan assets	(3)	(3)	(8)	(9)
Amortization of:
Unrecognized net loss	1	2	3	4
Unrecognized prior service benefit	(4)	(4)	(11)	(12)
Settlement loss	0	0	0	0
Net periodic pension cost (benefit)	(5)	(4)	(14)	(14)
U.S. | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	0	0
Interest cost	47	46	139	138
Expected return on plan assets	(68)	(57)	(203)	(172)
Amortization of:
Unrecognized net loss	15	11	43	33
Unrecognized prior service benefit	0	0	0	0
Settlement loss	0	0	0	0
Net periodic pension cost (benefit)	(6)	0	(21)	(1)
Non-U.S. | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	1	2	3
Interest cost	9	10	30	30
Expected return on plan assets	(22)	(24)	(70)	(71)
Amortization of:
Unrecognized net loss	4	4	11	12
Unrecognized prior service benefit	0	0	0	0
Settlement loss	0	21	0	46
Net periodic pension cost (benefit)	$ (8)	$ 12	$ (27)	$ 20

XML

Retirement and Other Employee Benefits - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Feb. 28, 2018	Sep. 29, 2018
U.S. | Pension Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions	$ 500	$ 500

XML

Share-Based Compensation Plans - Schedule of Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 19	$ 16	$ 53	$ 49
Tax benefit	5	5	13	16
Share-based compensation expense, net of tax	$ 14	$ 11	$ 40	$ 33
Decrease in basic earnings per share (in US$ per share)	$ (0.09)	$ (0.07)	$ (0.25)	$ (0.20)
Decrease in diluted earnings per share (in US$ per share)	$ (0.08)	$ (0.07)	$ (0.23)	$ (0.19)
Costs of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 3	$ 2	$ 8	$ 7
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	12	11	33	32
Research and development expenditures
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense included in Operating earnings	$ 4	$ 3	$ 12	$ 10

XML

Share-Based Compensation Plans - Narrative (Details) shares in Millions, $ in Millions	9 Months Ended
	Sep. 29, 2018 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	0.4
Aggregate grant date fair value | $	$ 45
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 | $	$ 7
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares) | shares	0.2
Aggregate grant date fair value | $	$ 6
Performance Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares) | shares	0.2
Aggregate grant date fair value | $	$ 7

XML

Fair Value Measurements - Assets and Liabilities (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
Assets:
Foreign exchange derivative contracts		$ 5
Common stock	$ 17
Liabilities:
Foreign exchange derivative contracts		5
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Corporate bonds
Assets:
Corporate bonds	2
Available-for-sale securities:		2
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Common stock
Assets:
Common stock	17
Available-for-sale securities:		13
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	6	5
Liabilities:
Foreign exchange derivative contracts	1	5
Recurring basis | Level 1 | Corporate bonds
Assets:
Corporate bonds	2
Available-for-sale securities:		0
Recurring basis | Level 1 | Common stock
Assets:
Common stock	0
Available-for-sale securities:		13
Recurring basis | Level 1 | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	0	0
Liabilities:
Foreign exchange derivative contracts	0	0
Recurring basis | Level 2 | Corporate bonds
Assets:
Corporate bonds	0
Available-for-sale securities:		2
Recurring basis | Level 2 | Common stock
Assets:
Common stock	17
Available-for-sale securities:		0
Recurring basis | Level 2 | Foreign exchange contracts
Assets:
Foreign exchange derivative contracts	6	5
Liabilities:
Foreign exchange derivative contracts	$ 1	$ 5

XML

Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
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	$ 284	$ 633
Estimate of Fair Value, Fair Value Disclosure | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of long term debt	$ 5,500	$ 4,600

XML

Long-term Financing and Sales of Receivables - Long-Term Financing (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
Receivables [Abstract]
Long-term receivables, gross	$ 29	$ 37
Less allowance for losses	(2)	0
Long-term receivables	27	37
Less current portion	(7)	(18)
Non-current long-term receivables	20	19
Outstanding commitment to provide long-term financing to third parties	$ 86	$ 93

XML

Long-term Financing and Sales of Receivables - Sales Receivables (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Receivables [Abstract]
Accounts receivable sales proceeds	$ 0	$ 99	$ 76	$ 179
Long-term receivables sales proceeds	73	55	101	123
Total proceeds from receivable sales	73	$ 154	177	$ 302
Servicing obligations for long-term receivables	$ 879		$ 879		$ 873

XML

Long-term Financing and Sales of Receivables - Credit Quality of Long-term Receivables and Allowance for Credit Losses (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	$ 29	$ 37
Current Billed Due	2	1
Past Due Under 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	4
Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3	3
Municipal leases secured tax exempt
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	20	21
Current Billed Due	0	0
Municipal leases secured tax exempt | Past Due Under 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	1
Municipal leases secured tax exempt | Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2	2
Commercial loans and leases secured
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Long-term Receivable	9	16
Current Billed Due	2	1
Commercial loans and leases secured | Past Due Under 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	3
Commercial loans and leases secured | Past Due Over 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 1	$ 1

XML

Commitments and Contingencies - Narrative (Details)	Sep. 29, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Accrual for obligations of divestitures	$ 0

XML

Segment Information - Operating Business Segment (Details) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 29, 2018 USD ($)	Mar. 31, 2018 segment	Sep. 30, 2017 USD ($)	Sep. 29, 2018 USD ($) segment	Sep. 30, 2017 USD ($)
Segment Reporting [Abstract]
Number of segments | segment		2		2
Segment Reporting Information [Line Items]
Net Sales	$ 1,862		$ 1,645	$ 5,089	$ 4,423
Operating Earnings by Segment
Operating earnings	294		347	739	781
Total other expense	(24)		(61)	(102)	(171)
Net earnings before income taxes	270		286	637	610
Products and Systems Integration
Segment Reporting Information [Line Items]
Net Sales	1,288		1,174	3,429	3,076
Operating Earnings by Segment
Operating earnings	183		266	449	553
Services and Software
Segment Reporting Information [Line Items]
Net Sales	574		471	1,660	1,347
Operating Earnings by Segment
Operating earnings	$ 111		$ 81	$ 290	$ 228

XML

Reorganization of Business - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018 USD ($) employee	Sep. 30, 2017 USD ($)	Sep. 29, 2018 USD ($) employee	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 25	$ 8	$ 62	$ 30
Restructuring charges			77
Adjustments			(15)
Restructuring reserve	61		61		$ 50
Payments for restructuring			51
Other charges
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	21	6	46	22
Costs of sales
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	4	2	16	8
Employee separation costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	13	7	61	30
Adjustments			(15)	(5)
Restructuring reserve	$ 39		39		41
Payments for restructuring			$ 48
Restructuring charges in the period for total employee severance (in number of employees) | employee			700
Number of employees expected to be paid (in number of employees) | employee	500		500
Exit costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 12	$ 1	$ 16	$ 5
Adjustments			0
Restructuring reserve	$ 22		22		$ 9
Payments for restructuring			$ 3

XML

Reorganization of Business - Net Charges Incurred by Business Segment (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 25	$ 8	$ 62	$ 30
Products and Systems Integration
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	19	6	47	22
Services and Software
Restructuring Cost and Reserve [Line Items]
Reorganization of business charges	$ 6	$ 2	$ 15	$ 8

XML

Reorganization of Business - Reorganization of Businesses Accruals (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Restructuring Reserve [Roll Forward]
January 1, 2018			$ 50
Additional Charges			77
Adjustments			(15)
Amount Used			(51)
September 29, 2018	$ 61		61
Exit costs
Restructuring Reserve [Roll Forward]
January 1, 2018			9
Additional Charges	12	$ 1	16	$ 5
Adjustments			0
Amount Used			(3)
September 29, 2018	22		22
Employee separation costs
Restructuring Reserve [Roll Forward]
January 1, 2018			41
Additional Charges	13	$ 7	61	30
Adjustments			(15)	$ (5)
Amount Used			(48)
September 29, 2018	$ 39		$ 39

XML

Intangible Assets and Goodwill - Avigilon Corporation, Additional Information (Details) - Avigilon - USD ($)		3 Months Ended
	Mar. 28, 2018	Jun. 30, 2018	Mar. 31, 2018
Business Acquisition [Line Items]
Consideration transferred	$ 974,000,000
Cash payments	980,000,000
Cash acquired	107,000,000
Acquired debt	75,000,000
Transaction costs	26,000,000
Repayments of assumed debt		$ 40,000,000	$ 35,000,000
Intangible assets	498,000,000
Goodwill expected to be tax deductible	$ 0
Minimum
Business Acquisition [Line Items]
Useful life of intangibles	2 years
Maximum
Business Acquisition [Line Items]
Useful life of intangibles	20 years
Customer Relationships
Business Acquisition [Line Items]
Intangible assets	$ 110,000,000
Developed Technology
Business Acquisition [Line Items]
Intangible assets	380,000,000
Trade Names
Business Acquisition [Line Items]
Intangible assets	$ 8,000,000

XML

Intangible Assets and Goodwill - Avigilon Corporation, Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Sep. 29, 2018	Mar. 28, 2018	Dec. 31, 2017
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill	$ 1,541		$ 938
Avigilon
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Accounts receivable, net		$ 67
Inventory		93
Other current assets		18
Property, plant and equipment, net		33
Deferred income taxes		4
Accounts payable		(21)
Accrued liabilities		(28)
Deferred income tax liabilities		(134)
Goodwill		444
Intangible assets		498
Total consideration		$ 974

XML

Intangible Assets and Goodwill - Other Acquisitions (Details) $ in Billions	Apr. 09, 2018 USD ($)	Mar. 07, 2018 USD ($)	Aug. 28, 2017 USD ($)	Mar. 13, 2017 USD ($)	Mar. 13, 2017 CLP ($)	Sep. 29, 2018 USD ($)	Dec. 31, 2017 USD ($)
Business Acquisition [Line Items]
Goodwill						$ 1,541,000,000	$ 938,000,000
Provider of Two-Way Radio Communications
Business Acquisition [Line Items]
Cash paid for acquisition	$ 11,000,000
Intangible assets	$ 7,000,000
Useful life of intangibles	7 years
Plant Holdings, Inc.
Business Acquisition [Line Items]
Cash paid for acquisition		$ 237,000,000
Intangible assets		80,000,000
Goodwill		161,000,000
Acquired liabilities		4,000,000
Goodwill expected to be tax deductible		$ 0
Plant Holdings, Inc. | Minimum
Business Acquisition [Line Items]
Useful life of intangibles		10 years
Plant Holdings, Inc. | Maximum
Business Acquisition [Line Items]
Useful life of intangibles		20 years
Plant Holdings, Inc. | Customer-related
Business Acquisition [Line Items]
Intangible assets		$ 41,000,000
Plant Holdings, Inc. | Completed technology
Business Acquisition [Line Items]
Intangible assets		27,000,000
Plant Holdings, Inc. | Trade Names
Business Acquisition [Line Items]
Intangible assets		$ 12,000,000
Kodiak Networks
Business Acquisition [Line Items]
Intangible assets			$ 44,000,000
Goodwill			191,000,000
Acquired liabilities			10,000,000
Consideration transferred			$ 225,000,000
Kodiak Networks | Minimum
Business Acquisition [Line Items]
Useful life of intangibles			13 years
Kodiak Networks | Maximum
Business Acquisition [Line Items]
Useful life of intangibles			16 years
Kodiak Networks | Customer-related
Business Acquisition [Line Items]
Intangible assets			$ 25,000,000
Kodiak Networks | Completed technology
Business Acquisition [Line Items]
Intangible assets			$ 19,000,000
Interexport
Business Acquisition [Line Items]
Cash paid for acquisition				$ 55,000,000
Intangible assets				$ 61,000,000
Useful life of intangibles				7 years	7 years
Consideration transferred				$ 147,000,000	$ 98
Acquired debt				92,000,000
Property, plant and equipment, net				70,000,000
Other tangible assets				16,000,000
Interexport | Customer-related
Business Acquisition [Line Items]
Intangible assets				56,000,000
Interexport | Other Intangible Assets
Business Acquisition [Line Items]
Intangible assets				$ 5,000,000

XML

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,751		$ 1,751		$ 1,183
Accumulated Amortization	454		454		322
Intangible Assets And Goodwill
Amortization expense on intangibles	46	$ 39	140	$ 111
Finite-Lived Intangible Assets, Future Amortization Expense
2018	189		189
2019	193		193
2020	191		191
2021	187		187
2022	184		184
2023	84		84
Completed technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	559		559		148
Accumulated Amortization	81		81		55
Patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2		2		2
Accumulated Amortization	2		2		2
Customer-related
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,115		1,115		977
Accumulated Amortization	344		344		242
Other intangibles
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	75		75		56
Accumulated Amortization	$ 27		$ 27		$ 23

XML

Intangible Assets and Goodwill - Amortized Intangible Assets, Excluding Goodwill, By Business Segment (Details) - USD ($) $ in Millions	Sep. 29, 2018	Dec. 31, 2017
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,751	$ 1,183
Accumulated Amortization	454	322
Products and Systems Integration
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	510	12
Accumulated Amortization	29	8
Services and Software
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,241	1,171
Accumulated Amortization	$ 425	$ 314

XML

Intangible Assets and Goodwill - Carrying Amount of Goodwill (Details) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2018 USD ($) segment	Sep. 29, 2018 USD ($) segment
Goodwill Activity
Balance as of January 1, 2018	$ 938	$ 938
Goodwill acquired		590
Purchase accounting adjustments		17
Foreign currency		(4)
Balance as of September 29, 2018		$ 1,541
Number of segments | segment	2	2
Products and Systems Integration
Goodwill Activity
Balance as of January 1, 2018	$ 362	$ 362
Goodwill acquired		359
Purchase accounting adjustments		10
Foreign currency		0
Balance as of September 29, 2018		731
Services and Software
Goodwill Activity
Balance as of January 1, 2018	$ 576	576
Goodwill acquired		231
Purchase accounting adjustments		7
Foreign currency		(4)
Balance as of September 29, 2018		$ 810