x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE (State of Incorporation) | 36-1115800 (I.R.S. Employer Identification No.) | |
500 W. Monroe Street, Chicago, Illinois (Address of principal executive offices) | 60661 (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | Emerging growth company ¨ | ||||
(Do not check if a smaller reporting company) |
Class | Number of Shares | |
Common Stock; $.01 Par Value | 164,786,286 |
Page | |
Item 1 Financial Statements | |
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 30, 2019 and March 31, 2018 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 30, 2019 and March 31, 2018 | |
Condensed Consolidated Balance Sheets as of March 30, 2019 (Unaudited) and December 31, 2018 | |
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 30, 2019 | |
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 30, 2019 and March 31, 2018 | |
Notes to Condensed Consolidated Financial Statements (Unaudited) | |
Item 4 Mine Safety Disclosures | |
Three Months Ended | |||||||
(In millions, except per share amounts) | March 30, 2019 | March 31, 2018 | |||||
Net sales from products | $ | 945 | $ | 801 | |||
Net sales from services | 712 | 667 | |||||
Net sales | 1,657 | 1,468 | |||||
Costs of products sales | 444 | 383 | |||||
Costs of services sales | 440 | 416 | |||||
Costs of sales | 884 | 799 | |||||
Gross margin | 773 | 669 | |||||
Selling, general and administrative expenses | 327 | 279 | |||||
Research and development expenditures | 162 | 152 | |||||
Other charges | 55 | 67 | |||||
Operating earnings | 229 | 171 | |||||
Other income (expense): | |||||||
Interest expense, net | (55 | ) | (46 | ) | |||
Gains on sales of investments and businesses, net | 1 | 11 | |||||
Other | 10 | 4 | |||||
Total other expense | (44 | ) | (31 | ) | |||
Net earnings before income taxes | 185 | 140 | |||||
Income tax expense | 33 | 23 | |||||
Net earnings | 152 | 117 | |||||
Less: Earnings attributable to noncontrolling interests | 1 | — | |||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 151 | $ | 117 | |||
Earnings per common share: | |||||||
Basic | $ | 0.92 | $ | 0.73 | |||
Diluted | $ | 0.86 | $ | 0.69 | |||
Weighted average common shares outstanding: | |||||||
Basic | 164.0 | 161.4 | |||||
Diluted | 174.6 | 170.6 | |||||
Dividends declared per share | $ | 0.57 | $ | 0.52 |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Net earnings | $ | 152 | $ | 117 | |||
Other comprehensive income (loss), net of tax (Note 4): | |||||||
Foreign currency translation adjustments | 30 | 48 | |||||
Marketable securities | — | (6 | ) | ||||
Defined benefit plans | 11 | 12 | |||||
Total other comprehensive income, net of tax | 41 | 54 | |||||
Comprehensive income | 193 | 171 | |||||
Less: Earnings attributable to noncontrolling interest | 1 | — | |||||
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ | 192 | $ | 171 |
(In millions, except par value) | March 30, 2019 | December 31, 2018 | |||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 886 | $ | 1,246 | |||
Restricted cash | 11 | 11 | |||||
Total cash and cash equivalents | 897 | 1,257 | |||||
Accounts receivable, net | 1,150 | 1,293 | |||||
Contract assets | 878 | 1,012 | |||||
Inventories, net | 425 | 356 | |||||
Other current assets | 364 | 354 | |||||
Total current assets | 3,714 | 4,272 | |||||
Property, plant and equipment, net | 937 | 895 | |||||
Operating lease assets | 593 | — | |||||
Investments | 163 | 169 | |||||
Deferred income taxes | 953 | 985 | |||||
Goodwill | 1,860 | 1,514 | |||||
Intangible assets, net | 1,416 | 1,230 | |||||
Other assets | 357 | 344 | |||||
Total assets | $ | 9,993 | $ | 9,409 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current portion of long-term debt | $ | 28 | $ | 31 | |||
Accounts payable | 558 | 592 | |||||
Contract liabilities | 1,158 | 1,263 | |||||
Accrued liabilities | 1,235 | 1,210 | |||||
Total current liabilities | 2,979 | 3,096 | |||||
Long-term debt | 5,287 | 5,289 | |||||
Operating lease liabilities | 553 | — | |||||
Other liabilities | 2,264 | 2,300 | |||||
Stockholders’ Equity | |||||||
Common stock, $.01 par value: | 2 | 2 | |||||
Authorized shares: 600.0 | |||||||
Issued shares: 3/30/19—165.4; 12/31/18—164.0 | |||||||
Outstanding shares: 3/30/19—164.8; 12/31/18—163.5 | |||||||
Additional paid-in capital | 651 | 419 | |||||
Retained earnings | 963 | 1,051 | |||||
Accumulated other comprehensive loss | (2,724 | ) | (2,765 | ) | |||
Total Motorola Solutions, Inc. stockholders’ equity (deficit) | (1,108 | ) | (1,293 | ) | |||
Noncontrolling interests | 18 | 17 | |||||
Total stockholders’ equity (deficit) | (1,090 | ) | (1,276 | ) | |||
Total liabilities and stockholders’ equity | $ | 9,993 | $ | 9,409 |
(In millions) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | |||||||||||||
Balance as of December 31, 2018 | 164.0 | $ | 421 | $ | (2,765 | ) | $ | 1,051 | $ | 17 | ||||||||
Net earnings | 151 | 1 | ||||||||||||||||
Other comprehensive income | 41 | |||||||||||||||||
Issuance of common stock and stock options exercised | 1.2 | 45 | ||||||||||||||||
Share repurchase program | (1.2 | ) | (145 | ) | ||||||||||||||
Share-based compensation expense | 27 | |||||||||||||||||
Issuance of common stock for acquisition | 1.4 | 160 | ||||||||||||||||
Dividends declared | (94 | ) | ||||||||||||||||
Balance as of March 30, 2019 | 165.4 | $ | 653 | $ | (2,724 | ) | $ | 963 | $ | 18 |
(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 | 117 | |||||||||||||||||
Other comprehensive income | 54 | |||||||||||||||||
Issuance of common stock and stock options exercised | 1.7 | 53 | ||||||||||||||||
Share repurchase program | (0.6 | ) | (66 | ) | ||||||||||||||
Share-based compensation expense | 17 | |||||||||||||||||
ASU 2016-16 Modified Retrospective Adoption | (30 | ) | ||||||||||||||||
ASU 2014-09 Modified Retrospective Adoption | 127 | |||||||||||||||||
Dividends declared | (84 | ) | ||||||||||||||||
Balance as of March 31, 2018 | 162.7 | $ | 423 | $ | (2,508 | ) | $ | 531 | $ | 15 |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Operating | |||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 151 | $ | 117 | |||
Earnings attributable to noncontrolling interests | 1 | — | |||||
Net earnings | 152 | 117 | |||||
Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities: | |||||||
Depreciation and amortization | 95 | 82 | |||||
Non-cash other charges | 10 | 3 | |||||
Share-based compensation expense | 27 | 17 | |||||
Gains on sales of investments and businesses, net | (1 | ) | (11 | ) | |||
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | |||||||
Accounts receivable | 168 | 195 | |||||
Inventories | (63 | ) | (9 | ) | |||
Other current assets and contract assets | 136 | 2 | |||||
Accounts payable, accrued liabilities, and contract liabilities | (261 | ) | (350 | ) | |||
Other assets and liabilities | (6 | ) | (553 | ) | |||
Deferred income taxes | (6 | ) | 7 | ||||
Net cash provided by (used for) operating activities | 251 | (500 | ) | ||||
Investing | |||||||
Acquisitions and investments, net | (368 | ) | (1,125 | ) | |||
Proceeds from sales of investments and businesses, net | 2 | 77 | |||||
Capital expenditures | (66 | ) | (41 | ) | |||
Net cash used for investing activities | (432 | ) | (1,089 | ) | |||
Financing | |||||||
Repayment of debt | (8 | ) | (50 | ) | |||
Net proceeds from issuance of debt | — | 1,296 | |||||
Issuance of common stock | 45 | 53 | |||||
Purchases of common stock | (145 | ) | (66 | ) | |||
Payments of dividends | (93 | ) | (84 | ) | |||
Net cash provided by (used for) financing activities | (201 | ) | 1,149 | ||||
Effect of exchange rate changes on cash and cash equivalents | 22 | 30 | |||||
Net decrease in cash and cash equivalents | (360 | ) | (410 | ) | |||
Cash and cash equivalents, beginning of period | 1,257 | 1,268 | |||||
Cash and cash equivalents, end of period | $ | 897 | $ | 858 | |||
Supplemental Cash Flow Information | |||||||
Cash paid during the period for: | |||||||
Interest, net | $ | 72 | $ | 55 | |||
Income and withholding taxes, net of refunds | 23 | 36 |
1. | Basis of Presentation |
March 30, 2019 | March 31, 2018 | ||||||||||||||
Products and Systems Integration | Services and Software | Products and Systems Integration | Services and Software | ||||||||||||
Regions: | |||||||||||||||
Americas | $ | 813 | $ | 352 | $ | 699 | $ | 296 | |||||||
EMEA | 164 | 199 | 156 | 182 | |||||||||||
Asia Pacific | 92 | 37 | 97 | 38 | |||||||||||
Total | $ | 1,069 | $ | 588 | $ | 952 | $ | 516 | |||||||
Major Products and Services: | |||||||||||||||
Devices | $ | 686 | $ | — | $ | 632 | $ | — | |||||||
Systems and Systems Integration | 383 | — | 320 | — | |||||||||||
Services | — | 452 | — | 446 | |||||||||||
Software | — | 136 | — | 70 | |||||||||||
Total | $ | 1,069 | $ | 588 | $ | 952 | $ | 516 | |||||||
Customer Type: | |||||||||||||||
Direct | $ | 657 | $ | 553 | $ | 617 | $ | 506 | |||||||
Indirect | 412 | 35 | 335 | 10 | |||||||||||
Total | $ | 1,069 | $ | 588 | $ | 952 | $ | 516 |
March 30, 2019 | December 31, 2018 | ||||||
Accounts receivable, net | $ | 1,150 | $ | 1,293 | |||
Contract assets | 878 | 1,012 | |||||
Contract liabilities | 1,158 | 1,263 | |||||
Non-current contract liabilities | 239 | 214 |
March 30, 2019 | December 31, 2018 | ||||||
Current contract cost assets | $ | 36 | $ | 30 | |||
Non-current contract cost assets | 99 | 98 |
Three Months Ended | ||||
March 30, 2019 | ||||
Lease expense: | ||||
Operating lease cost | $ | 33 | ||
Finance lease cost | ||||
Amortization of right-of-use assets | 3 | |||
Interest on lease liabilities | 1 | |||
Total finance lease cost | 4 | |||
Short-term lease cost | 2 | |||
Variable cost | 9 | |||
Sublease income | (1 | ) | ||
Net lease expense | $ | 47 |
Statement Line Classification | March 30, 2019 | |||||
Assets: | ||||||
Operating lease assets | Operating lease assets | $ | 593 | |||
Finance lease assets | Property, plant, and equipment, net | 53 | ||||
$ | 646 | |||||
Current liabilities: | ||||||
Operating lease liabilities | Accrued liabilities | $ | 116 | |||
Finance lease liabilities | Current portion of long-term debt | 15 | ||||
$ | 131 | |||||
Non-current liabilities: | ||||||
Operating lease liabilities | Operating lease liabilities | $ | 553 | |||
Finance lease liabilities | Long-term debt | 25 | ||||
$ | 578 |
Three Months Ended | |||
March 30, 2019 | |||
Supplemental cash flow information: | |||
Net cash used for operating activities related to operating leases | $ | 33 | |
Net cash used for operating activities related to finance leases | 1 | ||
Net cash used for financing activities related to finance leases | 4 | ||
Assets obtained in exchange for lease liabilities: | |||
Operating leases | $ | 27 |
Three Months Ended | ||
March 30, 2019 | ||
Weighted average remaining lease terms (years): | ||
Operating leases | 8 | |
Finance leases | 3 | |
Weighted average discount rate: | ||
Operating leases | 3.74 | % |
Finance leases | 4.97 | % |
Operating Leases | Finance Leases | Total | |||||||||
2019 | $ | 102 | $ | 13 | $ | 115 | |||||
2020 | 134 | 14 | 148 | ||||||||
2021 | 119 | 12 | 131 | ||||||||
2022 | 106 | 5 | 111 | ||||||||
2023 | 54 | — | 54 | ||||||||
Thereafter | 267 | — | 267 | ||||||||
Total lease payments | 782 | 44 | 826 | ||||||||
Less: Interest | 113 | 4 | 117 | ||||||||
Present value of lease liabilities | $ | 669 | $ | 40 | $ | 709 |
2019 | 2020 | 2021 | 2022 | 2023 | Beyond | ||||||||||||
$ | 131 | $ | 120 | $ | 112 | $ | 101 | $ | 54 | $ | 204 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Other charges (income): | |||||||
Intangibles amortization (Note 15) | $ | 50 | $ | 41 | |||
Reorganization of business (Note 14) | 4 | 8 | |||||
Legal settlements | (1 | ) | 1 | ||||
Acquisition-related transaction fees | 2 | 17 | |||||
$ | 55 | $ | 67 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Interest income (expense), net: | |||||||
Interest expense | $ | (60 | ) | $ | (54 | ) | |
Interest income | 5 | 8 | |||||
$ | (55 | ) | $ | (46 | ) | ||
Other: | |||||||
Net periodic pension and postretirement benefit (Note 8) | $ | 16 | $ | 20 | |||
Investment impairments | (8 | ) | — | ||||
Foreign currency loss | (4 | ) | (11 | ) | |||
Loss on derivative instruments | (4 | ) | (4 | ) | |||
Gains on equity method investments | 1 | 1 | |||||
Fair value adjustments to equity investments | (1 | ) | — | ||||
Other | 10 | (2 | ) | ||||
$ | 10 | $ | 4 |
Amounts attributable to Motorola Solutions, Inc. common stockholders | |||||||
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Basic earnings per common share: | |||||||
Earnings | $ | 151 | $ | 117 | |||
Weighted average common shares outstanding | 164.0 | 161.4 | |||||
Per share amount | $ | 0.92 | $ | 0.73 | |||
Diluted earnings per common share: | |||||||
Earnings | $ | 151 | $ | 117 | |||
Weighted average common shares outstanding | 164.0 | 161.4 | |||||
Add effect of dilutive securities: | |||||||
Share-based awards | 4.9 | 4.2 | |||||
Senior Convertible Notes | 5.7 | 5.0 | |||||
Diluted weighted average common shares outstanding | 174.6 | 170.6 | |||||
Per share amount | $ | 0.86 | $ | 0.69 |
March 30, 2019 | December 31, 2018 | ||||||
Accounts receivable | $ | 1,208 | $ | 1,344 | |||
Less allowance for doubtful accounts | (58 | ) | (51 | ) | |||
$ | 1,150 | $ | 1,293 |
March 30, 2019 | December 31, 2018 | ||||||
Finished goods | $ | 227 | $ | 206 | |||
Work-in-process and production materials | 340 | 293 | |||||
567 | 499 | ||||||
Less inventory reserves | (142 | ) | (143 | ) | |||
$ | 425 | $ | 356 |
March 30, 2019 | December 31, 2018 | ||||||
Current contract cost assets (Note 2) | $ | 36 | $ | 30 | |||
Tax-related deposits | 137 | 138 | |||||
Other | 191 | 186 | |||||
$ | 364 | $ | 354 |
March 30, 2019 | December 31, 2018 | ||||||
Land | $ | 10 | $ | 10 | |||
Leasehold improvements | 372 | 362 | |||||
Machinery and equipment | 1,903 | 1,886 | |||||
2,285 | 2,258 | ||||||
Less accumulated depreciation | (1,348 | ) | (1,363 | ) | |||
$ | 937 | $ | 895 |
March 30, 2019 | December 31, 2018 | ||||||
Corporate bonds | $ | — | $ | 1 | |||
Common stock | 18 | 19 | |||||
Strategic investments, at cost | 50 | 62 | |||||
Company-owned life insurance policies | 78 | 75 | |||||
Equity method investments | 17 | 12 | |||||
$ | 163 | $ | 169 |
March 30, 2019 | December 31, 2018 | ||||||
Defined benefit plan assets (Note 8) | $ | 152 | $ | 135 | |||
Tax receivable | 39 | 39 | |||||
Non-current contract cost assets (Note 2) | 99 | 98 | |||||
Other | 67 | 72 | |||||
$ | 357 | $ | 344 |
March 30, 2019 | December 31, 2018 | ||||||
Compensation | $ | 336 | $ | 324 | |||
Tax liabilities | 94 | 111 | |||||
Dividend payable | 94 | 93 | |||||
Trade liabilities | 161 | 185 | |||||
Operating lease liabilities (Note 3) | 116 | — | |||||
Other | 434 | 497 | |||||
$ | 1,235 | $ | 1,210 |
March 30, 2019 | December 31, 2018 | ||||||
Defined benefit plans (Note 8) | $ | 1,527 | $ | 1,557 | |||
Non-current contract liabilities (Note 2) | 239 | 214 | |||||
Unrecognized tax benefits | 54 | 51 | |||||
Deferred income taxes | 222 | 201 | |||||
Other | 222 | 277 | |||||
$ | 2,264 | $ | 2,300 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Foreign Currency Translation Adjustments: | |||||||
Balance at beginning of period | $ | (444 | ) | $ | (353 | ) | |
Other comprehensive income before reclassification adjustment | 34 | 51 | |||||
Tax expense | (4 | ) | (3 | ) | |||
Other comprehensive income, net of tax | 30 | 48 | |||||
Balance at end of period | $ | (414 | ) | $ | (305 | ) | |
Available-for-Sale Securities: | |||||||
Balance at beginning of period | $ | — | $ | 6 | |||
Reclassification adjustment into Gains on sales of investments and businesses, net | — | (8 | ) | ||||
Tax benefit | — | 2 | |||||
Other comprehensive loss, net of tax | — | (6 | ) | ||||
Balance at end of period | $ | — | $ | — | |||
Defined Benefit Plans: | |||||||
Balance at beginning of period | $ | (2,321 | ) | $ | (2,215 | ) | |
Reclassification adjustment - Actuarial net losses into Other income (expense) | 17 | 18 | |||||
Reclassification adjustment - Prior service benefits into Other income (expense) | (4 | ) | (4 | ) | |||
Tax expense | (2 | ) | (2 | ) | |||
Other comprehensive income, net of tax | 11 | 12 | |||||
Balance at end of period | $ | (2,310 | ) | $ | (2,203 | ) | |
Total Accumulated other comprehensive loss | $ | (2,724 | ) | $ | (2,508 | ) |
Notional Amount | |||||||
Net Buy (Sell) by Currency | March 30, 2019 | December 31, 2018 | |||||
Euro | $ | 136 | $ | 89 | |||
Norwegian Krone | 34 | 28 | |||||
Australian Dollar | (83 | ) | (105 | ) | |||
Chinese Renminbi | (59 | ) | (55 | ) | |||
Brazilian Real | (41 | ) | (41 | ) |
Fair Values of Derivative Instruments | |||||||
March 30, 2019 | Other Current Assets | Accrued Liabilities | |||||
Derivatives designated as hedging instruments: | |||||||
Foreign exchange contracts | $ | 2 | $ | — | |||
Derivatives not designated as hedging instruments: | |||||||
Foreign exchange contracts | $ | 5 | $ | 3 | |||
Total derivatives | $ | 7 | $ | 3 |
Fair Values of Derivative Instruments | |||||||
December 31, 2018 | Other Current Assets | Accrued Liabilities | |||||
Derivatives not designated as hedging instruments: | |||||||
Foreign exchange contracts | $ | 5 | $ | 4 |
Three Months Ended | Financial Statement Location | ||||||||
Foreign Exchange Contracts | March 30, 2019 | March 31, 2018 | |||||||
Effective portion | $ | 2 | $ | (3 | ) | Accumulated other comprehensive loss | |||
Forward points recognized | 1 | — | Other income (expense) | ||||||
Undesignated derivatives recognized | (4 | ) | (4 | ) | Other income (expense) |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Net earnings before income taxes | $ | 185 | $ | 140 | |||
Income tax expense | 33 | 23 | |||||
Effective tax rate | 18 | % | 16 | % |
U.S. Pension Benefit Plans | Non-U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||
Three Months Ended | March 30, 2019 | March 31, 2018 | March 30, 2019 | March 31, 2018 | March 30, 2019 | March 31, 2018 | |||||||||||||||||
Service cost | $ | — | $ | — | $ | 1 | $ | 1 | $ | — | $ | — | |||||||||||
Interest cost | 51 | 46 | 10 | 10 | 1 | 1 | |||||||||||||||||
Expected return on plan assets | (69 | ) | (68 | ) | (21 | ) | (24 | ) | (3 | ) | (3 | ) | |||||||||||
Amortization of: | |||||||||||||||||||||||
Unrecognized net loss | 12 | 14 | 4 | 3 | 1 | 1 | |||||||||||||||||
Unrecognized prior service benefit | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||
Net periodic pension benefit | $ | (6 | ) | $ | (8 | ) | $ | (6 | ) | $ | (10 | ) | $ | (5 | ) | $ | (5 | ) |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Share-based compensation expense included in: | |||||||
Costs of sales | $ | 4 | $ | 2 | |||
Selling, general and administrative expenses | 16 | 11 | |||||
Research and development expenditures | 7 | 4 | |||||
Share-based compensation expense included in Operating earnings | 27 | 17 | |||||
Tax benefit | (6 | ) | (4 | ) | |||
Share-based compensation expense, net of tax | $ | 21 | $ | 13 | |||
Decrease in basic earnings per share | $ | (0.13 | ) | $ | (0.08 | ) | |
Decrease in diluted earnings per share | $ | (0.12 | ) | $ | (0.08 | ) |
March 30, 2019 | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 7 | $ | 7 | |||||
Common stock | 18 | — | 18 | ||||||||
Liabilities: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 3 | $ | 3 |
December 31, 2018 | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 5 | $ | 5 | |||||
Corporate bonds | 1 | — | 1 | ||||||||
Common stock | 19 | — | 19 | ||||||||
Liabilities: | |||||||||||
Foreign exchange derivative contracts | $ | — | $ | 4 | $ | 4 |
March 30, 2019 | December 31, 2018 | ||||||
Long-term receivables, gross | $ | 35 | $ | 33 | |||
Less allowance for losses | (2 | ) | (2 | ) | |||
Long-term receivables | 33 | 31 | |||||
Less current portion | (11 | ) | (7 | ) | |||
Non-current long-term receivables | $ | 22 | $ | 24 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Accounts receivable sales proceeds | $ | 24 | $ | 55 | |||
Long-term receivables sales proceeds | 21 | 13 | |||||
Total proceeds from receivable sales | $ | 45 | $ | 68 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Products and Systems Integration | $ | 1,069 | $ | 952 | |||
Services and Software | 588 | 516 | |||||
$ | 1,657 | $ | 1,468 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Products and Systems Integration | $ | 108 | $ | 90 | |||
Services and Software | 121 | 81 | |||||
Operating earnings | 229 | 171 | |||||
Total other expense | (44 | ) | (31 | ) | |||
Earnings before income taxes | $ | 185 | $ | 140 |
March 30, 2019 | Three Months Ended | ||
Products and Systems Integration | $ | 7 | |
Services and Software | 1 | ||
$ | 8 |
January 1, 2019 | Additional Charges | Adjustments | Amount Used | March 30, 2019 | |||||||||||||||
Employee separation costs | $ | 84 | $ | 12 | $ | (4 | ) | $ | (14 | ) | $ | 78 |
March 31, 2018 | Three Months Ended | ||
Products and Systems Integration | $ | 9 | |
Services and Software | 4 | ||
$ | 13 |
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 | (124 | ) | ||
Goodwill | 434 | |||
Intangible assets | 498 | |||
Total consideration | $ | 974 |
March 30, 2019 | December 31, 2018 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Completed technology | $ | 707 | $ | 105 | $ | 558 | $ | 92 | |||||||
Patents | 2 | 2 | 2 | 2 | |||||||||||
Customer-related | 1,187 | 414 | 1,085 | 364 | |||||||||||
Other intangibles | 75 | 34 | 74 | 31 | |||||||||||
$ | 1,971 | $ | 555 | $ | 1,719 | $ | 489 |
March 30, 2019 | December 31, 2018 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Products and Systems Integration | $ | 559 | $ | 46 | $ | 510 | $ | 38 | |||||||
Services and Software | 1,412 | 509 | 1,209 | 451 | |||||||||||
$ | 1,971 | $ | 555 | $ | 1,719 | $ | 489 |
Products and Systems Integration | Services and Software | Total | |||||||||
Balance as of January 1, 2019 | $ | 722 | $ | 792 | $ | 1,514 | |||||
Goodwill acquired | 47 | 283 | 330 | ||||||||
Purchase accounting adjustments | — | 9 | 9 | ||||||||
Foreign currency | — | 7 | 7 | ||||||||
Balance as of March 30, 2019 | $ | 769 | $ | 1,091 | $ | 1,860 |
• | Net sales were $1.7 billion in the first quarter of 2019 compared to $1.5 billion in the first quarter of 2018 and driven by growth in the Americas and EMEA. |
• | Operating earnings were $229 million in the first quarter of 2019 compared to $171 million in the first quarter of 2018. |
• | Earnings attributable to Motorola Solutions, Inc. were $151 million, or $0.86 per diluted common share, in the first quarter of 2019, compared to $117 million, or $0.69 per diluted common share, in the first quarter of 2018. |
• | Our operating cash flow increased $751 million to $251 million in the first quarter of 2019 compared to the first quarter of 2018. The increase is primarily driven by the $500 million voluntary contribution to our U.S. pension plan in the first quarter of 2018. |
• | We invested $445 million of cash and equity for VaaS International Holdings, and $136 million in cash for Avtec, Inc., repurchased $145 million of common stock, and paid $93 million in dividends. |
• | In the Products and Systems Integration segment, net sales were $1.1 billion in the first quarter of 2019, an increase of $117 million, or 12% compared to $952 million in the first quarter of 2018. On a geographic basis, net sales increased in the Americas and EMEA, partially offset by AP, compared to the year-ago quarter. Operating earnings were $108 million in the first quarter of 2019, compared to $90 million in the first quarter of 2018. Operating margin increased in 2019 to 10.1% from 9.5% in 2018 driven by higher sales and gross margin, offset by higher operating expenses associated with acquisitions. |
• | In the Services and Software segment, net sales were $588 million in the first quarter of 2019, an increase of $72 million, or 14% compared to net sales of $516 million in the first quarter of 2018. On a geographic basis, net sales increased in the Americas and EMEA, partially offset by AP, compared to the year-ago quarter. Operating earnings were $121 million in the first quarter of 2019, compared to $81 million in the first quarter of 2018. Operating margin increased in 2019 to 20.6% from 15.7% in 2018 driven by higher sales and gross margin, offset by higher operating expenses associated with acquisitions. |
Three Months Ended | |||||||||||||
(Dollars in millions, except per share amounts) | March 30, 2019 | % of Sales* | March 31, 2018 | % of Sales* | |||||||||
Net sales from products | $ | 945 | $ | 801 | |||||||||
Net sales from services | 712 | 667 | |||||||||||
Net sales | 1,657 | 1,468 | |||||||||||
Costs of products sales | 444 | 47.0 | % | 383 | 47.8 | % | |||||||
Costs of services sales | 440 | 61.8 | % | 416 | 62.4 | % | |||||||
Costs of sales | 884 | 799 | |||||||||||
Gross margin | 773 | 46.7 | % | 669 | 45.6 | % | |||||||
Selling, general and administrative expenses | 327 | 19.7 | % | 279 | 19.0 | % | |||||||
Research and development expenditures | 162 | 9.8 | % | 152 | 10.4 | % | |||||||
Other charges | 55 | 3.3 | % | 67 | 4.6 | % | |||||||
Operating earnings | 229 | 13.8 | % | 171 | 11.6 | % | |||||||
Other income (expense): | |||||||||||||
Interest expense, net | (55 | ) | (3.3 | )% | (46 | ) | (3.1 | )% | |||||
Gains on sales of investments and businesses, net | 1 | — | % | 11 | 0.7 | % | |||||||
Other | 10 | 0.6 | % | 4 | 0.3 | % | |||||||
Total other expense | (44 | ) | (2.7 | )% | (31 | ) | (2.1 | )% | |||||
Net earnings before income taxes | 185 | 11.2 | % | 140 | 9.5 | % | |||||||
Income tax expense | 33 | 2.0 | % | 23 | 1.6 | % | |||||||
Net earnings | 152 | 9.2 | % | 117 | 8.0 | % | |||||||
Less: Earnings attributable to noncontrolling interests | 1 | — | % | — | — | % | |||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 151 | 9.1 | % | $ | 117 | 8.0 | % | |||||
Earnings per diluted common share | $ | 0.86 | $ | 0.69 |
Three Months Ended | ||||||||||
(In millions) | March 30, 2019 | March 31, 2018 | % Change | |||||||
Net sales from Products and Systems Integration | $ | 1,069 | $ | 952 | 12 | % | ||||
Net sales from Services and Software | 588 | 516 | 14 | % | ||||||
Net sales | $ | 1,657 | $ | 1,468 | 13 | % |
• | $137 million of revenue from the acquisitions of VaaS and Avtec in the first quarter of 2019 and Avigilon and Plant which were acquired towards the end of the first quarter of 2018; |
• | partially offset by $38 million from unfavorable currency rates. |
• | growth in the Americas region of 17% across both the Products and Systems Integration and the Services and Software segments, inclusive of revenue from acquisitions; |
• | growth in the EMEA region of 7% primarily due to both Services and Software within our Services and Software segment and Devices within our Products and Systems Integration segment, inclusive of revenue from acquisitions; and |
• | a decline in the AP region of 5% due to currency headwinds and lower sales in China. |
• | $75 million of revenue from the acquisitions of Avtec in the first quarter of 2019 and Avigilon and Plant which were acquired near the end of the first quarter of 2018; |
• | 20% growth in Systems and Systems Integration revenue in the first quarter of 2019, as compared to the first quarter of 2018 driven by system deployments in the Americas and revenue from Avigilon; and |
• | 9% growth in Devices revenue primarily due to the acquisition of Avigilon along with strong demand for land mobile radio ("LMR") in the Americas and EMEA. |
• | $62 million of revenue primarily from the acquisitions of VaaS in the first quarter of 2019 and Avigilon and Plant which were acquired near the end of the first quarter of 2018; |
• | 1% growth in Services, driven by growth in both maintenance and managed service revenues, and revenue from the acquisition of Plant, partially offset by unfavorable currency headwinds; and |
• | 94% growth in Software, driven primarily by revenue from the acquisitions of VaaS, Avigilon, and Plant, and growth in our command center software suite. |
Three Months Ended | ||||||||||
(In millions) | March 30, 2019 | March 31, 2018 | % Change | |||||||
Gross margin | $ | 773 | $ | 669 | 16 | % |
• | higher margins within the Services and Software segment primarily driven by higher margin contribution within our Software portfolio from acquisitions and operational improvements and efficiencies in service delivery costs of our Services portfolio; and |
• | higher margins in the Products and Systems Integration segment primarily driven by Systems and Systems Integration, partially offset by a slight decline in our Devices margins due to product mix. |
Three Months Ended | ||||||||||
(In millions) | March 30, 2019 | March 31, 2018 | % Change | |||||||
Selling, general and administrative expenses | $ | 327 | $ | 279 | 17 | % |
Three Months Ended | ||||||||||
(In millions) | March 30, 2019 | March 31, 2018 | % Change | |||||||
Research and development expenditures | $ | 162 | $ | 152 | 7 | % |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Other charges | $ | 55 | $ | 67 |
• | $2 million of charges for acquisition-related transaction fees in the first quarter of 2019 as compared to $17 million in the first quarter of 2018; and |
• | $4 million of net reorganization of business charges in the first quarter of 2019 as compared to $8 million in the first quarter of 2018, (see further detail in “Reorganization of Businesses” section); |
• | partially offset by $50 million of amortization of intangibles in the first quarter of 2019 compared to $41 million in the first quarter of 2018, driven by acquisitions. |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Operating earnings from Products and Systems Integration | $ | 108 | $ | 90 | |||
Operating earnings from Services and Software | 121 | 81 | |||||
Operating earnings | $ | 229 | $ | 171 |
• | Services and Software segment, which was up $40 million from the first quarter of 2018 compared to the first quarter of 2019, driven by higher sales and gross margin, and partially offset by higher operating expenses related to acquisitions; and |
• | Products and Systems Integration, which was up $18 million from the first quarter of 2018 compared to the first quarter of 2019, driven by higher sales and gross margin, and partially offset by higher operating expenses related to acquisitions. |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Interest expense, net | $ | (55 | ) | $ | (46 | ) |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Gains on sales of investments and businesses, net | $ | 1 | $ | 11 |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Other | $ | 10 | $ | 4 |
• | $10 million of other non-operating income in the first quarter of 2019, as compared to expense of $2 million in the first quarter of 2018; |
• | foreign currency losses of $4 million in the first quarter of 2019 as compared to $11 million in the first quarter of 2018; and |
• | a $4 million loss on derivative instruments in the first quarter of 2019 and 2018; |
• | partially offset by $8 million of investment impairments; and |
• | $16 million of net periodic pension and postretirement benefit in the first quarter of 2019 as compared to $20 million in the first quarter of 2018. |
Three Months Ended | |||||||
(In millions) | March 30, 2019 | March 31, 2018 | |||||
Income tax expense | $ | 33 | $ | 23 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Products and Systems Integration | $ | 7 | $ | 9 | |||
Services and Software | 1 | 4 | |||||
$ | 8 | $ | 13 |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Cash flows provided by (used for): | |||||||
Operating activities | $ | 251 | $ | (500 | ) | ||
Investing activities | (432 | ) | (1,089 | ) | |||
Financing activities | (201 | ) | 1,149 | ||||
Effect of exchange rates on cash and cash equivalents | 22 | 30 | |||||
Decrease in cash and cash equivalents | $ | (360 | ) | $ | (410 | ) |
• | a $500 million debt-funded voluntary contribution to our U.S. pension plan in the first quarter of 2018; |
• | annual incentive compensation payments being made in the first quarter of 2018, compared to the second quarter in 2019; and |
• | higher earnings in the first quarter of 2019 as compared to the first quarter of 2018; |
• | partially offset by $17 million of higher interest payments driven by additional debt issued towards the end of first quarter of 2018. |
• | a $757 million decrease in acquisitions and investments, primarily driven by cash used for the purchases of VaaS and Avtec for $231 million and $136 million, respectively, as compared to the first quarter of 2018 when we made acquisitions of Avigilon and Plant Holdings for $887 million and $237 million, respectively; and |
• | $75 million of lower proceeds from sales of investments and businesses, driven by $60 million of excess cash withdrawn from company-sponsored life insurance investments in the first quarter of 2018; and |
• | partially offset by a $25 million increase in capital expenditures in the first quarter of 2019 as compared to the first quarter of 2018, primarily due to the network builds for Airwave and ESN, as well as expenditures for Avigilon. |
• | $1.3 billion of debt issuance in the first quarter of 2018; and |
• | a $79 million increase in our share repurchase program in the first quarter of 2019 as compared to the first quarter of 2018. |
Three Months Ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Accounts receivable sales proceeds | $ | 24 | $ | 55 | |||
Long-term receivables sales proceeds | 21 | 13 | |||||
Total proceeds from sales of accounts receivable | $ | 45 | $ | 68 |
Notional Amount | |||||||
Net Buy (Sell) by Currency | March 30, 2019 | December 31, 2018 | |||||
Euro | $ | 136 | $ | 89 | |||
Norwegian Krone | 34 | 28 | |||||
Australian Dollar | (83 | ) | (105 | ) | |||
Chinese Renminbi | (59 | ) | (55 | ) | |||
Brazilian Real | (41 | ) | (41 | ) |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share (1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program(2) | |||||||||
12/28/18 to 01/23/19 | 1,077,188 | $ | 116.04 | 1,077,188 | $ | 1,451,377,126 | |||||||
02/21/19 to 03/27/19 | 142,145 | $ | 141.23 | 142,145 | $ | 1,431,301,601 | |||||||
Total | 1,219,333 | $ | 118.98 | 1,219,333 |
(1) | Average price paid per share of common stock repurchased is the execution price, including commissions paid to brokers. |
(2) | Through a series of actions, the board of directors has authorized the Company to repurchase an aggregate amount of up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. As of March 30, 2019, the Company had used approximately $12.6 billion, including transaction costs, to repurchase shares, leaving $1.4 billion of authority available for future repurchases. |
Exhibit No. | Exhibit | |
*10.1 | 2019-2021 Performance Measures under the Motorola Solutions Long Range Incentive Plan (LRIP), as approved on February 14, 2019. | |
*10.2 | Form of Motorola Solutions, Inc. Performance Option Award Agreement for grants to Section 16 Officers on or after February 14, 2019. | |
Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Gino A. Bonanotte pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
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. ©2019 Motorola Solutions, Inc. All rights reserved. |
MOTOROLA SOLUTIONS, INC. | |||
By: | /S/ DAN PEKOFSKE | ||
Dan Pekofske Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer) |
Exhibit No. | Exhibit | |
*10.1 | 2019-2021 Performance Measures under the Motorola Solutions Long Range Incentive Plan (LRIP), as approved on February 14, 2019. | |
*10.2 | Form of Motorola Solutions, Inc. Performance Option Award Agreement for grants to Section 16 Officers on or after February 14, 2019. | |
*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 |
Design Feature | 2019-2021 LRIP | |||
Performance Cycle | Three years from January 1, 2019 through December 31, 2021 | |||
Eligible Population | Corporate Vice Presidents and above | |||
Performance Criteria | Relative Total Shareholder Return (TSR) TSR Defined as: Ending stock price (Daily average during the final three months of the Performance Cycle) + Value of reinvested dividends = Total ending value – Beginning stock price (Daily average during the three months preceding the Performance Cycle) = Total value created ÷ Beginning share price (Daily average during the three months preceding the Performance Cycle) = Total shareholder return | |||
Negative TSR Component | If the resulting TSR performance for Motorola Solutions is negative, the Committee will have full discretion to reduce the final calculated payout. | |||
Comparator Group | S&P 500 defined as companies in the S&P 500 at the beginning of the performance period; must be publicly traded on or after July 1, 2020 to be included in the TSR percentile calculation at the end of the performance cycle. | |||
Payout Scale | ||||
Relative TSR Payout Scale | ||||
MSI 3-Year TSR Percentile Rank | Payout Factor | |||
90th - 100th Percentile | 250% | |||
80th - 89.99th Percentile | 200% | |||
70th - 79.99th Percentile | 175% | |||
60th - 69.99th Percentile | 150% | |||
55th - 59.99th Percentile | 110% | |||
50th - 54.99th Percentile | 90% | |||
45th - 49.99th Percentile | 80% | |||
35th - 44.99th Percentile | 50% | |||
30th - 34.99th Percentile | 30% | |||
< 30.00th Percentile | 0% | |||
Recipient: | Date of Expiration: | ||||
Commerce ID#: | Target Option Award: | ||||
Date of Grant: | Exercise Price: | ||||
(A) Options to Vest | (B) Vesting Date | (C) Payout Factor | (D) Number of Options Earned | |||
100% of Target Option Award | 3rd Anniversary of Date of Grant | See Appendix A for Payout Factor | Target Option Award (Column A) times Payout Factor (Column C) |
Relative TSR Payout Scale* | |
MSI 3-Year TSR Percentile Rank | Payout Factor** |
90th – 100th Percentile | 250% |
80th – 89.99th Percentile | 200% |
70th – 79.99th Percentile | 175% |
60th – 69.99th Percentile | 150% |
55th – 59.99th Percentile | 110% |
50th – 54.99th Percentile | 90% |
45th – 49.99th Percentile | 80% |
35th – 44.99th Percentile | 50% |
30th – 34.99th Percentile | 30% |
< 30.00th Percentile | 0% |
1. | I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ GREGORY Q. BROWN | |
Gregory Q. Brown | |
Chairman and Chief Executive Officer | |
Motorola Solutions, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ GINO A. BONANOTTE | |
Gino A. Bonanotte | |
Executive Vice President and Chief Financial Officer | |
Motorola Solutions, Inc. |
(1) | the quarterly report on Form 10-Q for the period ended March 30, 2019 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc. |
/s/ GREGORY Q. BROWN | |
Gregory Q. Brown | |
Chairman and Chief Executive Officer | |
Motorola Solutions, Inc. |
(1) | the quarterly report on Form 10-Q for the period ended March 30, 2019 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc. |
/s/ GINO A. BONANOTTE | |
Gino A. Bonanotte | |
Executive Vice President and Chief Financial Officer | |
Motorola Solutions, Inc. |
Document and Entity Information |
3 Months Ended |
---|---|
Mar. 30, 2019
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 | Mar. 30, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 164,786,286 |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 152 | $ 117 |
Other comprehensive income (loss), net of tax (Note 4): | ||
Foreign currency translation adjustments | 30 | 48 |
Marketable securities | 0 | (6) |
Defined benefit plans | 11 | 12 |
Total other comprehensive income (loss), net of tax | 41 | 54 |
Comprehensive income | 193 | 171 |
Less: Earnings attributable to noncontrolling interests | 1 | 0 |
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ 192 | $ 171 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Stockholders’ Equity | ||
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) | 165,400,000 | 164,000,000 |
Common stock outstanding (in shares) | 164,800,000 | 163,500,000 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements as of March 30, 2019 and for the three months ended March 30, 2019 and March 31, 2018 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, statements 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 United States 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, 2018. The results of operations for the three months ended March 30, 2019 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 Acquisitions On March 11, 2019, the Company announced that it acquired Avtec, Inc. ("Avtec"), a provider of dispatch communications for U.S. public safety and commercial customers for a purchase price of $136 million in cash, net of cash acquired. This acquisition expands the Company's commercial portfolio with new capabilities, allowing it to offer an enhanced platform for customers to communicate, coordinate resources, and secure their facilities. The business will be part of both the Products and Systems Integration and Services and Software segments. On January 7, 2019, the Company announced that it acquired VaaS International Holdings ("VaaS"), a company that is a global provider of data and image analytics for vehicle location for $445 million, inclusive of share-based compensation withheld at a fair value of $38 million that will be expensed over an average service period of one year. The acquisition was settled with $231 million of cash, net of cash acquired, and 1.4 million of shares issued at a fair value of $160 million for a purchase price of $391 million. This acquisition expands the Company's command center software portfolio under the Services and Software segment. On March 28, 2018, the Company completed the acquisition of Avigilon Corporation ("Avigilon"), a provider of advanced security and video solutions including video analytics, network video management hardware and software, video cameras and access control solutions for a purchase price of $974 million in cash. 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 in cash. This acquisition expanded the Company's software portfolio in the command center with additional solutions for Next Generation 9-1-1. Recent Accounting Pronouncements 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, 2021 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. 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 the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. This was subsequently amended by ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” which clarifies that receivables arising from operating leases are not within the scope of the ASU and amends the transition requirements. The ASU is effective for the Company on January 1, 2020 with early adoption permitted beginning as of January 1, 2019. The ASU requires a modified retrospective adoption method. The Company is still evaluating the impact of adoption on its financial statements and disclosures. Recently Adopted 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. This was subsequently amended by ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Targeted Improvements” (collectively "ASC 842"). ASC 842 establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with an initial term longer than twelve months. Leases will be classified as finance or operating, with classification affecting the pattern and presentation of expense recognition in the income statement. The Company adopted ASC 842 as of January 1, 2019 using a modified retrospective transition approach for all leases existing at January 1,2019, the date of the initial application. Consequently, financial information will not be updated and disclosures required under ASC 842 will not be provided for dates and periods before January 1, 2019. ASC 842 provides for a number of optional practical expedients in transition. The Company elected the practical expedients, which permit the Company to not reassess prior conclusions about lease identification, lease classification and initial direct costs under ASC 842. The Company did not elect the "use-of hindsight" practical expedient to determine the lease term or in assessing the likelihood that a lease purchase option will be exercised, allowing it to carry forward the lease term as determined prior to adoption of ASC 842. Finally, the Company also elected the practical expedient related to land easements, which enabled it to continue its accounting treatment for land easements on existing agreements as of January 1, 2019. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. A short-term lease is one with a term of 12 months or less, including any optional periods that are reasonably certain of exercise. For those leases that qualify, the exemption allows the Company to not recognize ROU assets or lease liabilities, including not recognizing ROU assets or lease liabilities for existing short-term leases at transition. Short-term lease costs are recognized as rent expense on a straight-line basis over the lease term consistent with the Company’s prior accounting. The Company also elected the practical expedient to not separate lease and non-lease components for all current lease categories. The Company recognized operating lease liabilities of $648 million based on the present value of the remaining minimum rental payments determined under prior lease accounting standards and corresponding ROU assets of $588 million. The $60 million difference between operating lease liabilities and ROU assets recognized is due to deferred rent and exit cost accruals recorded under prior lease accounting standards. ASC 842 requires such balances to be reclassified against ROU assets at transition. In future periods such balances will not be presented separately. For arrangements where the Company is the lessor, the adoption of ASC 842 did not have a material impact on its financial statements as the majority of its leases are operating leases embedded within managed services contracts. ASC 842 provides a practical expedient for lessors in which the lessor may elect, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for these components as a single component if both of the following are met: (1) the timing and pattern of transfer of the non-lease component(s) and associated lease component are the same and (2) the lease component, if accounted for separately, would be classified as an operating lease. The accounting under the practical expedient depends on which component(s) is predominant in the contract. If the non-lease component is predominant, the single component is accounted under ASC Topic 606 Revenue from Contract with Customers and accounting and disclosure under ASC 842 is not applicable. The Company has elected the above practical expedient and determined that non-lease components are predominant and is accounting for the single components as managed service contracts under ASC Topic 606. |
Revenue from Contracts with Customers |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers 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 months ended March 30, 2019 and March 31, 2018, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of operating segments:
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 March 30, 2019 is $7.0 billion. A total of $3.0 billion is from Products and Systems Integration performance obligations that are not yet satisfied, of which $1.6 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 $4.0 billion is from Services and Software performance obligations that are not yet satisfied as of March 30, 2019. 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 $1.3 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
Revenue recognized during the three months ended March 30, 2019 which was previously included in Contract liabilities as of December 31, 2018 is $393 million, compared to $297 million of revenue recognized during the three months ended March 31, 2018 which was previously included in Contract liabilities as of January 1, 2018. Revenue of $9 million was reversed during the three months ended March 30, 2019 and $9 million of revenue was recognized during the three months ended March 31, 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 were no material impairment losses recognized on contract assets during the three months ended March 30, 2019 and March 31, 2018. Contract Cost Balances
Amortization of contract cost assets was $11 million and $12 million for the three months ended March 30, 2019 and March 31, 2018, respectively. |
Leases |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases | Leases The Company leases certain office, factory and warehouse space, land, and other equipment, principally under non-cancelable operating leases. The Company determines if an arrangement is a lease at inception of the contract. The Company's key decisions in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated asset during the contract term. In the majority of the Company's contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the rights to operate the asset at its discretion during the term of the contract. ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company's lease payments are typically fixed or contain fixed escalators. The Company has elected to not separate lease and non-lease components for all of its current lease categories and therefore, all consideration is included in the lease liabilities. For the Company's leases consisting of both land and other equipment (i.e. "communication network sites"), future payments are subject to variability due to changes in indices or rates. The Company values its ROU assets and lease liabilities based on the index or rate in effect at lease commencement. Future changes in the indices or rates are accounted for as variable lease costs. Other variable lease costs also include items that are not fixed at lease commencement including property taxes, insurance, and operating charges that vary based on usage. ROU assets also include lease payments made in advance and are net of lease incentives. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rates based on the information available at the commencement date in determining the present value of future payments. The Company's incremental borrowing rates are based on the term of the lease, the economic environment of the lease, and the effect of collateralization. The Company's lease terms range from one to twenty-one years and may include options to extend the lease by one to ten years or terminate the lease after the initial non-cancelable term. The Company does not include options in the determination of the lease term for the majority of leases as sufficient economic factors do not exist that would compel it to continue to use the underlying asset beyond the initial non-cancelable term. However, for the Company's communication network site leases that are necessary to provide services to customers under managed service arrangements, the Company includes options in the lease term to the extent of the customer contracts to which those leases relate. The components of lease expense are as follows:
Lease assets and liabilities consist of the following:
Other information related to leases is as follows:
Future lease payments as of March 30, 2019 are as follows:
Rental expense, net of sublease income, for the year ended December 31, 2018 was $108 million. At December 31, 2018, future minimum lease obligations, net of minimum sublease rentals, for the next five years and beyond were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Leases | Leases The Company leases certain office, factory and warehouse space, land, and other equipment, principally under non-cancelable operating leases. The Company determines if an arrangement is a lease at inception of the contract. The Company's key decisions in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated asset during the contract term. In the majority of the Company's contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the rights to operate the asset at its discretion during the term of the contract. ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company's lease payments are typically fixed or contain fixed escalators. The Company has elected to not separate lease and non-lease components for all of its current lease categories and therefore, all consideration is included in the lease liabilities. For the Company's leases consisting of both land and other equipment (i.e. "communication network sites"), future payments are subject to variability due to changes in indices or rates. The Company values its ROU assets and lease liabilities based on the index or rate in effect at lease commencement. Future changes in the indices or rates are accounted for as variable lease costs. Other variable lease costs also include items that are not fixed at lease commencement including property taxes, insurance, and operating charges that vary based on usage. ROU assets also include lease payments made in advance and are net of lease incentives. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rates based on the information available at the commencement date in determining the present value of future payments. The Company's incremental borrowing rates are based on the term of the lease, the economic environment of the lease, and the effect of collateralization. The Company's lease terms range from one to twenty-one years and may include options to extend the lease by one to ten years or terminate the lease after the initial non-cancelable term. The Company does not include options in the determination of the lease term for the majority of leases as sufficient economic factors do not exist that would compel it to continue to use the underlying asset beyond the initial non-cancelable term. However, for the Company's communication network site leases that are necessary to provide services to customers under managed service arrangements, the Company includes options in the lease term to the extent of the customer contracts to which those leases relate. The components of lease expense are as follows:
Lease assets and liabilities consist of the following:
Other information related to leases is as follows:
Future lease payments as of March 30, 2019 are as follows:
Rental expense, net of sublease income, for the year ended December 31, 2018 was $108 million. At December 31, 2018, future minimum lease obligations, net of minimum sublease rentals, for the next five years and beyond were as follows:
|
Other Financial Data |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
During the three months ended March 30, 2019, the Company recognized $2 million of acquisition-related transaction fees for the VaaS and Avtec acquisitions and $17 million for the Avigilon and Plant acquisitions during the three months ended March 31, 2018. Other Income (Expense) Interest expense, net, and Other, both included in Other income (expense), consist of the following:
During the three months ended March 30, 2019, the Company recognized a foreign currency loss of $4 million, primarily driven by the British pound, and a loss of $4 million on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations. During the three months ended March 31, 2018, the Company recognized a foreign currency loss of $11 million, primarily driven by the Euro and British pound, and a loss of $4 million on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations, which 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. Earnings Per Common Share The computation of basic and diluted earnings per common share is as follows:
In the computation of diluted earnings per common share for the three months ended March 30, 2019, the assumed exercise of 0.5 million options, including 0.2 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. For the three months ended March 31, 2018, the assumed exercise of 1.5 million options, including 1.2 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. As of March 30, 2019, the Company had $800 million of 2.0% Senior Convertible Notes outstanding which mature in September 2020 (the "Senior Convertible Notes"), and are fully convertible. In the event of a conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash and accordingly, 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:
Inventories, Net Inventories, net, consist of the following:
Other Current Assets Other current assets consist of the following:
Property, Plant and Equipment, Net Property, plant and equipment, net, consists of the following:
Depreciation expense for the three months ended March 30, 2019 and March 31, 2018 was $45 million and $41 million, respectively. Investments Investments consist of the following:
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 three months ended March 30, 2019. The Company’s common stock portfolio reflects an investment in a publicly-traded company within the communications services sector and is valued utilizing active market prices for similar instruments. During the three months ended March 30, 2019, the Company recognized $1 million in Other income (expense) related to a decrease in the fair value of the investment. During the three months ended March 30, 2019, Gains on the sale of investments and businesses were $1 million, compared to $11 million during the three months ended March 31, 2018. During the three months ended March 30, 2019, the Company recorded investment impairment charges of $8 million, representing other-than-temporary declines in the value of the Company’s equity investment portfolio. There were no investment impairments recorded during the three months ended March 31, 2018. Investment impairment charges are included in Other within Other income (expense) in the Company’s Condensed Consolidated Statements of Operations. Other Assets Other assets consist of the following:
Accrued Liabilities Accrued liabilities consist of the following:
Other Liabilities Other liabilities consist of the following:
Stockholders’ Equity Share Repurchase Program: During the three months ended March 30, 2019, the Company paid an aggregate of $145 million, including transaction costs, to repurchase approximately 1.2 million shares at an average price of $118.98 per share. As of March 30, 2019, the Company had used approximately $12.6 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.4 billion of authority available for future repurchases. Payment of Dividends: During the three months ended March 30, 2019 and March 31, 2018, the Company paid $93 million and $84 million, respectively, in cash dividends to holders of its common stock. Accumulated Other Comprehensive Loss The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the condensed consolidated statements of operations during the three months ended March 30, 2019 and March 31, 2018:
|
Debt and Credit Facilities |
3 Months Ended |
---|---|
Mar. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt and Credit Facilities | Debt and Credit Facilities As of March 30, 2019, the Company had a $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022 (the "2017 Motorola Solutions Credit Agreement"). 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. 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 March 30, 2019. During the first quarter of 2018, the Company borrowed $400 million to facilitate the Avigilon acquisition. There were no borrowings outstanding or letters of credit issued under the revolving credit facility as of March 30, 2019. 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 rate for amounts outstanding during the three months ended March 30, 2019 was 3.75%. 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. As of March 30, 2019, the Company had $800 million of 2.0% Senior Convertible Notes outstanding with Silver Lake Partners which mature in September 2020 and are fully convertible. The notes are convertible based on a conversion rate of 14.8968, as may be adjusted for dividends declared, per $1,000 principal amount (which is currently equal to a conversion price of $67.13 per share). The exercise price adjusts automatically for dividends. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of March 30, 2019 was $876 million. In the event of a conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash. |
Risk Management |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management | Risk Management Foreign Currency Risk As of March 30, 2019, the Company had outstanding foreign exchange contracts with notional amounts totaling $897 million, compared to $819 million outstanding at December 31, 2018. 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 March 30, 2019, and the corresponding positions as of December 31, 2018:
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 March 30, 2019, all of the counterparties have investment grade credit ratings. As of March 30, 2019, the Company had $7 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 March 30, 2019 and December 31, 2018:
The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three months ended March 30, 2019 and March 31, 2018:
Net Investment Hedges The Company uses foreign exchange forward contracts with contract terms of 12 to 15 months to hedge against the effect of the British pound and Euro dollar exchange rate fluctuations on a portion of its net investment in certain European operations. The Company recognizes changes in the fair value of the net investment hedges as a component of foreign currency translation adjustments within other comprehensive income to offset a portion of the change in translated value of the net investment being hedged, until the investment is sold or liquidated. In accordance with ASU 2017-02, the Company has elected to exclude the difference between the spot rate and the forward rate of the forward contract from its assessment of hedge effectiveness. The effect of the excluded components will be amortized on a straight line basis and recognized through interest expense. As of March 30, 2019, the Company had €95 million of net investment hedges in certain Euro functional subsidiaries and £75 million of net investment hedges in certain British pound functional subsidiaries. During the first quarter of 2019, the Company amortized $1 million of income from the excluded components through interest expense. |
Income Taxes |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods. The following table provides details of income taxes:
The Company recorded $33 million of net tax expense during the three months ended March 30, 2019, resulting in an effective tax rate of 18%, compared to $23 million of net tax expense during the three months ended March 31, 2018, resulting in an effective tax rate of 16%. The effective tax rates for the three months ended March 30, 2019 of 18% and March 31, 2018 of 16% are lower than the U.S. statutory tax rate of 21% primarily due to excess tax benefits on share-based compensation. |
Retirement and Other Employee Benefits |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Share-Based Compensation Plans |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 plans was as follows:
During the three months ended March 30, 2019, the Company granted 0.5 million restricted stock units ("RSUs") and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $56 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. The share-based compensation expense will generally be recognized over the vesting period of three years. The Company granted an additional 0.4 million of restricted stock in connection with the acquisition of VaaS, with an aggregate grant-date fair value of $38 million related to compensation withheld from the purchase price that will be expensed over an average service period of one year. |
Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements. 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 and is measured using the fair value hierarchy. This hierarchy prescribes 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 prescribed 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 March 30, 2019 and December 31, 2018 were as follows:
The Company had no Level 3 holdings as of March 30, 2019 or December 31, 2018. At March 30, 2019 and December 31, 2018, the Company had $348 million and $734 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 March 30, 2019 and December 31, 2018 was $5.5 billion and $5.4 billion (Level 2), respectively. All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values. |
Long-term Financing and Sales of Receivables |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 and long-term loans. Long-term receivables consist of the following:
The current portion of long-term receivables is included in Accounts receivable, net and the non-current portion of long-term receivables is included in Other assets in the Company’s Condensed Consolidated Balance Sheets. The Company had outstanding commitments to provide long-term financing to third parties totaling $52 million at March 30, 2019, compared to $62 million at December 31, 2018. Sales of Receivables The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three months ended March 30, 2019 and March 31, 2018:
At March 30, 2019, the Company had retained servicing obligations for $944 million of long-term receivables, compared to $970 million at December 31, 2018. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables. |
Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 30, 2019 | |
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 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. 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 March 30, 2019. In addition, the Company may provide indemnifications for losses that result from the breach of general warranties contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these agreements. |
Segment Information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, including video 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 typically managing a mobile workforce. Services and Software: The Services and Software segment provides a broad range of solution 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 platforms include monitoring, software updates and cybersecurity services. Managed services range from partial to full operation of customer or Motorola Solutions-owned networks. Software includes a public safety and enterprise command center software suite, unified communications applications, and video software solutions, delivered both on premise and “as a service.” The following table summarizes Net sales by segment:
The following table summarizes the Operating earnings by segment:
|
Reorganization of Business |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization of Business | Reorganization of Business 2019 Charges During the three months ended March 30, 2019, the Company recorded net reorganization of business charges of $8 million including $4 million of charges in Other charges and $4 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $8 million were charges of $12 million related to employee separation, partially offset by $4 million of reversals for accruals no longer needed. The following table displays the net charges incurred by segment:
The following table displays a rollforward of the reorganization of business accruals established for employee separation costs from January 1, 2019 to March 30, 2019:
Employee Separation Costs At January 1, 2019, the Company had an accrual of $84 million for employee separation costs. The 2019 additional charges of $12 million represent severance costs for approximately 100 employees. The adjustment of $4 million reflects reversals for accruals no longer needed. The $14 million used reflects cash payments to severed employees. The remaining accrual of $78 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at March 30, 2019, is expected to be paid, primarily within one year, to approximately 700 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments. As of January 1, 2019, accruals for exit costs are included in Operating lease liabilities with an offsetting impairment to the Company's ROU assets, all within its Condensed Consolidated Balance Sheets (see Note 3). 2018 Charges During the three months ended March 31, 2018, the Company recorded net reorganization of business charges of $13 million including $8 million of charges in Other charges and $5 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $13 million were charges of $22 million related to employee separation costs and $2 million related to exit costs, partially offset by $11 million of reversals for accruals no longer needed. The following table displays the net charges incurred by segment:
|
Intangible Assets and Goodwill |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. Recent Acquisitions On March 11, 2019, the Company announced that it acquired Avtec, Inc. ("Avtec"), a provider of dispatch communications for U.S. public safety and commercial customers for a purchase price of $136 million in cash, net of cash acquired. This acquisition expands the Company's commercial portfolio with new capabilities, allowing it to offer an enhanced platform for customers to communicate, coordinate resources, and secure their facilities. The business will be a part of both the Products and Systems Integration and Services and Software segments. The Company recognized $73 million of identifiable intangible assets, $59 million of goodwill, and $4 million of net assets. The goodwill is deductible for tax purposes. The identifiable intangible assets were classified as $49 million of completed technology and $24 million of customer relationship intangibles and will be amortized over a period of 15 years. The purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts, intangible assets, goodwill, and net assets may be subject to change based on the finalization of assumptions and settlement of working capital considerations. On January 7, 2019, the Company announced that it acquired VaaS International Holdings ("VaaS"), a company that is a global provider of data and image analytics for vehicle location for $445 million, inclusive of share-based compensation withheld at a fair value of $38 million that will be expensed over an average service period of one year. The acquisition was settled with $231 million of cash, net of cash acquired, and 1.4 million of shares issued at a fair value of $160 million for a purchase price of $391 million to be utilized in the purchase price allocation. This acquisition expands the Company's command center software portfolio under the Services and Software segment. The Company recognized $271 million of goodwill, $141 million of identifiable intangible assets and $21 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $99 million of completed technology that will be amortized over a period of ten years and $42 million of customer relationship intangibles that will be amortized over a period of 15 years. The purchase accounting is not yet complete and as such the final allocation between deferred income tax accounts, goodwill, intangible assets, and net liabilities may be subject to change based on the finalization of assumptions and settlement of working capital considerations. The pro forma effects of these acquisitions are not significant. Avigilon Corporation On March 28, 2018, the Company completed the acquisition of Avigilon Corporation, a provider of advanced security and video solutions including video analytics, network video management hardware and software, video 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 of 2018, $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 has been completed as of March 30, 2019. The following table summarizes fair values of assets acquired and liabilities assumed as of the March 28, 2018 acquisition date:
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 twenty 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 was 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. The goodwill is not deductible for tax purposes. The pro forma effect of this acquisition was not significant. Other Acquisitions 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 in cash, net cash acquired. This acquisition expanded the Company's software portfolio in the command center with additional solutions for Next Generation 9-1-1. The Company recognized $160 million of goodwill, $80 million of identifiable intangible assets, and $3 million of net liabilities. The 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 ten to twenty years. The pro forma effect of this acquisition was not significant. Intangible Assets Amortized intangible assets were comprised of the following:
Amortization expense on intangible assets was $50 million for the three months ended March 30, 2019 and $41 million for the three months ended March 31, 2018. As of March 30, 2019, annual amortization expense is estimated to be $205 million in 2019 and 2020, $202 million in 2021, $200 million in 2022, $99 million in 2023, and $73 million in 2024. Amortized intangible assets were comprised of the following by segment:
Goodwill The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2019 to March 30, 2019:
|
Basis of Presentation (Policies) |
3 Months Ended |
---|---|
Mar. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The condensed consolidated financial statements as of March 30, 2019 and for the three months ended March 30, 2019 and March 31, 2018 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, statements 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 United States 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, 2018. The results of operations for the three months ended March 30, 2019 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 | Recent Accounting Pronouncements 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, 2021 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. 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 the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. This was subsequently amended by ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” which clarifies that receivables arising from operating leases are not within the scope of the ASU and amends the transition requirements. The ASU is effective for the Company on January 1, 2020 with early adoption permitted beginning as of January 1, 2019. The ASU requires a modified retrospective adoption method. The Company is still evaluating the impact of adoption on its financial statements and disclosures. Recently Adopted 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. This was subsequently amended by ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Targeted Improvements” (collectively "ASC 842"). ASC 842 establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with an initial term longer than twelve months. Leases will be classified as finance or operating, with classification affecting the pattern and presentation of expense recognition in the income statement. The Company adopted ASC 842 as of January 1, 2019 using a modified retrospective transition approach for all leases existing at January 1,2019, the date of the initial application. Consequently, financial information will not be updated and disclosures required under ASC 842 will not be provided for dates and periods before January 1, 2019. ASC 842 provides for a number of optional practical expedients in transition. The Company elected the practical expedients, which permit the Company to not reassess prior conclusions about lease identification, lease classification and initial direct costs under ASC 842. The Company did not elect the "use-of hindsight" practical expedient to determine the lease term or in assessing the likelihood that a lease purchase option will be exercised, allowing it to carry forward the lease term as determined prior to adoption of ASC 842. Finally, the Company also elected the practical expedient related to land easements, which enabled it to continue its accounting treatment for land easements on existing agreements as of January 1, 2019. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. A short-term lease is one with a term of 12 months or less, including any optional periods that are reasonably certain of exercise. For those leases that qualify, the exemption allows the Company to not recognize ROU assets or lease liabilities, including not recognizing ROU assets or lease liabilities for existing short-term leases at transition. Short-term lease costs are recognized as rent expense on a straight-line basis over the lease term consistent with the Company’s prior accounting. The Company also elected the practical expedient to not separate lease and non-lease components for all current lease categories. The Company recognized operating lease liabilities of $648 million based on the present value of the remaining minimum rental payments determined under prior lease accounting standards and corresponding ROU assets of $588 million. The $60 million difference between operating lease liabilities and ROU assets recognized is due to deferred rent and exit cost accruals recorded under prior lease accounting standards. ASC 842 requires such balances to be reclassified against ROU assets at transition. In future periods such balances will not be presented separately. For arrangements where the Company is the lessor, the adoption of ASC 842 did not have a material impact on its financial statements as the majority of its leases are operating leases embedded within managed services contracts. ASC 842 provides a practical expedient for lessors in which the lessor may elect, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for these components as a single component if both of the following are met: (1) the timing and pattern of transfer of the non-lease component(s) and associated lease component are the same and (2) the lease component, if accounted for separately, would be classified as an operating lease. The accounting under the practical expedient depends on which component(s) is predominant in the contract. If the non-lease component is predominant, the single component is accounted under ASC Topic 606 Revenue from Contract with Customers and accounting and disclosure under ASC 842 is not applicable. The Company has elected the above practical expedient and determined that non-lease components are predominant and is accounting for the single components as managed service contracts under ASC Topic 606. |
Revenue from Contracts with Customers (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 months ended March 30, 2019 and March 31, 2018, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of operating segments:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Balances |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Cost Balances | Contract Cost Balances
|
Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost |
Other information related to leases is as follows:
The components of lease expense are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets And Liabilities, Lessee | Lease assets and liabilities consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Lease Payments, Finance | Future lease payments as of March 30, 2019 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Lease Payments, Operating | Future lease payments as of March 30, 2019 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Obligations, Net of Sublease Rental | At December 31, 2018, future minimum lease obligations, net of minimum sublease rentals, for the next five years and beyond were as follows:
|
Other Financial Data (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Charges (Income) | Other charges (income) included in Operating earnings consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense) | Interest expense, net, and Other, both included in Other income (expense), consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | The computation of basic and diluted earnings per common share is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts receivable, net, consists of the following:
Long-term receivables consist of receivables with payment terms greater than twelve months and long-term loans. Long-term receivables consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | Inventories, net, consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other current assets consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | Property, plant and equipment, net, consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other assets consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued liabilities consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other liabilities consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 months ended March 30, 2019 and March 31, 2018:
|
Risk Management (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 30, 2019, and the corresponding positions as of December 31, 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 30, 2019 and December 31, 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Derivative Instruments and The Effect on the Condensed Consolidated Statements Of Operations | The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three months ended March 30, 2019 and March 31, 2018:
|
Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The following table provides details of income taxes:
|
Retirement and Other Employee Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Share-Based Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Expense | Compensation expense for the Company’s share-based plans was as follows:
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 30, 2019 and December 31, 2018 were as follows:
|
Long-term Financing and Sales of Receivables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Customer Financing | Accounts receivable, net, consists of the following:
Long-term receivables consist of receivables with payment terms greater than twelve months and long-term loans. Long-term receivables consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 months ended March 30, 2019 and March 31, 2018:
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales and Operating Earnings by Segment | The following table summarizes Net sales by segment:
The following table summarizes the Operating earnings by segment:
|
Reorganization of Business (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Reportable Segment | The following table displays the net charges incurred by segment:
The following table displays the net charges incurred by segment:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization of Businesses Accruals | The following table displays a rollforward of the reorganization of business accruals established for employee separation costs from January 1, 2019 to March 30, 2019:
|
Intangible Assets and Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Amortized intangible assets were comprised of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Intangible Assets, Excluding Goodwill, By Business Segment | Amortized intangible assets were comprised of the following by segment:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2019 to March 30, 2019:
|
Basis of Presentation - Recent Aquisitions (Details) - USD ($) shares in Millions, $ in Millions |
Mar. 11, 2019 |
Jan. 07, 2019 |
Mar. 28, 2018 |
Mar. 07, 2018 |
---|---|---|---|---|
Avetc | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 136 | |||
VaaS | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 445 | |||
Acquired debt | 38 | |||
Cash payments | $ 231 | |||
Shares issued (in shares) | 1.4 | |||
Share value | $ 160 | |||
Total consideration | 391 | |||
Cash paid for acquisition | $ 231 | |||
Avigilon | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 974 | |||
Acquired debt | 75 | |||
Cash payments | 980 | |||
Total consideration | $ 974 | |||
Plant Holdings, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash paid for acquisition | $ 237 |
Basis of Presentation - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease liabilities | $ 669 | |
Operating ROU assets | $ 593 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease liabilities | $ 648 | |
Operating ROU assets | 588 | |
Deferred rent and exit cost accruals reclassified | $ 60 |
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Contract with Customer, Asset and Liability [Abstract] | |||
Accounts receivable, net | $ 1,150 | $ 1,293 | |
Contract assets | 878 | 1,012 | |
Contract liabilities | 1,158 | 1,263 | |
Non-current contract liabilities | 239 | $ 214 | |
Contract with customer, liability, revenue recognized | 393 | $ 297 | |
Contract with customer, performance obligation satisfied (reversed) | (9) | 9 | |
Impairment losses | $ 0 | $ 0 |
Revenue from Contracts with Customers - Contract Cost Balances (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | |||
Current contract cost assets | $ 36,000,000 | $ 30,000,000 | |
Non-current contract cost assets | 99,000,000 | $ 98,000,000 | |
Contract cost, amortization | $ 11,000,000 | $ 12,000,000 |
Leases - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 30, 2019 |
Dec. 31, 2018 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Rent expense | $ 108 | |
Minimum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Lease terms | 1 year | |
Lease renewal terms | 1 year | |
Maximum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Lease terms | 21 years | |
Lease renewal terms | 10 years |
Leases - Operating Expense (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Lease expense: | |
Operating lease cost | $ 33 |
Finance lease cost | |
Amortization of right-of-use assets | 3 |
Interest on lease liabilities | 1 |
Total finance lease cost | 4 |
Short-term lease cost | 2 |
Variable cost | 9 |
Sublease income | (1) |
Net lease expense | $ 47 |
Leases - Assets and Liabilities (Details) $ in Millions |
Mar. 30, 2019
USD ($)
|
---|---|
Assets: | |
Operating lease assets | $ 593 |
Finance lease assets | 53 |
Total lease assets | 646 |
Current liabilities: | |
Operating lease liabilities | 116 |
Finance lease liabilities | 15 |
Total lease liabilities, current | 131 |
Non-current liabilities: | |
Operating lease liabilities | 553 |
Finance lease liabilities | 25 |
Total lease liabilities, non-current | $ 578 |
Leases - Cash Flows (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Supplemental cash flow information: | |
Net cash used for operating activities related to operating leases | $ 33 |
Net cash used for operating activities related to finance leases | 1 |
Net cash used for financing activities related to finance leases | 4 |
Assets obtained in exchange for lease liabilities: | |
Operating leases | $ 27 |
Leases - Terms (Details) |
Mar. 30, 2019 |
---|---|
Leases [Abstract] | |
Weighted average remaining lease terms, operating leases | 8 years |
Weighted average remaining lease terms, finance leases | 3 years |
Weighted average discount rate, operating leases | 3.74% |
Weighted average discount rate, finance leases | 4.97% |
Leases - Future Payments (Details) $ in Millions |
Mar. 30, 2019
USD ($)
|
---|---|
Operating Leases | |
2019 | $ 102 |
2020 | 134 |
2021 | 119 |
2022 | 106 |
2023 | 54 |
Thereafter | 267 |
Total lease payments | 782 |
Interest | 113 |
Present value of lease liabilities | 669 |
Finance Leases | |
2019 | 13 |
2020 | 14 |
2021 | 12 |
2022 | 5 |
2023 | 0 |
Thereafter | 0 |
Total lease payments | 44 |
Interest | 4 |
Present value of lease liabilities | 40 |
Lease expense: | |
2019 | 115 |
2020 | 148 |
2021 | 131 |
2022 | 111 |
2023 | 54 |
Thereafter | 267 |
Total lease payments | 826 |
Interest | 117 |
Present value of lease liabilities | $ 709 |
Leases - Future Minimum Payment, Net of Sublease Income (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 131 |
2020 | 120 |
2021 | 112 |
2022 | 101 |
2023 | 54 |
Beyond | $ 204 |
Other Financial Data - Other Charges (Income) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Other charges (income): | ||
Intangibles amortization | $ 50 | $ 41 |
Reorganization of business | 4 | 8 |
Legal settlements | (1) | 1 |
Acquisition-related transaction fees | 2 | 17 |
Other charges | $ 55 | $ 67 |
Other Financial Data - Other Charges (Income) - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Business Acquisition [Line Items] | ||
Acquisition-related transaction fees | $ 2 | $ 17 |
VaaS and Avtec | ||
Business Acquisition [Line Items] | ||
Acquisition-related transaction fees | $ 2 | |
Avigilon and Plant | ||
Business Acquisition [Line Items] | ||
Acquisition-related transaction fees | $ 17 |
Other Financial Data - Other Income (Expense) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Interest income (expense), net: | ||
Interest expense | $ (60,000,000) | $ (54,000,000) |
Interest income | 5,000,000 | 8,000,000 |
Interest income (expense), net | (55,000,000) | (46,000,000) |
Other: | ||
Net periodic pension and postretirement benefit (Note 8) | 16,000,000 | 20,000,000 |
Investment impairments | (8,000,000) | 0 |
Foreign currency loss | (4,000,000) | (11,000,000) |
Loss on derivative instruments | (4,000,000) | (4,000,000) |
Gains on equity method investments | 1,000,000 | 1,000,000 |
Fair value adjustments to equity investments | (1,000,000) | 0 |
Other | 10,000,000 | (2,000,000) |
Total other income (expense) | $ 10,000,000 | $ 4,000,000 |
Other Financial Data - Other Income (Expense) - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Foreign currency gain (loss) | $ (4) | $ (11) |
Gain (loss) on derivative instruments | $ (4) | (4) |
Canada, Dollars | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivative instruments | $ (14) |
Other Financial Data - Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Basic earnings (loss) per common share: | ||
Earnings | $ 151 | $ 117 |
Weighted average common shares outstanding (in shares) | 164.0 | 161.4 |
Basic earnings per share amount (in US$ per share) | $ 0.92 | $ 0.73 |
Diluted earnings per common share: | ||
Earnings | $ 151 | $ 117 |
Weighted average common shares outstanding (in shares) | 164.0 | 161.4 |
Add effect of dilutive securities: | ||
Share-based awards (in shares) | 4.9 | 4.2 |
Senior Convertible Notes (in shares) | 5.7 | 5.0 |
Diluted weighted average common shares outstanding (in shares) | 174.6 | 170.6 |
Per share amount (in US$ per share) | $ 0.86 | $ 0.69 |
Other Financial Data - Earnings Per Common Share - Additional Information (Details) - USD ($) shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Convertible Notes | 2% Senior Notes Due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument face amount | $ 800,000,000 | |
Interest rate | 2.00% | |
Stock Options | ||
Debt Instrument [Line Items] | ||
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares) | 0.5 | 1.5 |
Performance Options | ||
Debt Instrument [Line Items] | ||
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares) | 0.2 | 1.2 |
Other Financial Data - Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 1,208 | $ 1,344 |
Less allowance for doubtful accounts | (58) | (51) |
Accounts receivable, net | $ 1,150 | $ 1,293 |
Other Financial Data - Inventories, Net (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished goods | $ 227 | $ 206 |
Work-in-process and production materials | 340 | 293 |
Inventories, gross | 567 | 499 |
Less inventory reserves | (142) | (143) |
Inventories, net | $ 425 | $ 356 |
Other Financial Data - Other Current Assets (Details) - USD ($) |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Current Assets [Abstract] | ||
Current contract cost assets | $ 36,000,000 | $ 30,000,000 |
Tax-related deposits | 137,000,000 | 138,000,000 |
Other | 191,000,000 | 186,000,000 |
Other current assets | $ 364,000,000 | $ 354,000,000 |
Other Financial Data - Property, Plant And Equipment, Net (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment, Net [Abstract] | |||
Land | $ 10 | $ 10 | |
Leasehold improvements | 372 | 362 | |
Machinery and equipment | 1,903 | 1,886 | |
Property, plant and equipment, gross | 2,285 | 2,258 | |
Less accumulated depreciation | (1,348) | (1,363) | |
Property, plant and equipment, net | 937 | $ 895 | |
Depreciation expense | $ 45 | $ 41 |
Other Financial Data - Investments (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Net Investment Income [Line Items] | ||
Common stock | $ 18 | $ 19 |
Strategic investments, at cost | 50 | 62 |
Company-owned life insurance policies | 78 | 75 |
Equity method investments | 17 | 12 |
Long-term investments | 163 | 169 |
Corporate bonds | ||
Net Investment Income [Line Items] | ||
Corporate bonds | $ 0 | $ 1 |
Other Financial Data - Investments, Additional Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Fair value adjustments to equity investments | $ 1,000,000 | $ 0 |
Gains on sales of investments and businesses, net | 1,000,000 | 11,000,000 |
Investment impairments | $ 8,000,000 | $ 0 |
Other Financial Data - Other Assets (Details) - USD ($) |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Assets [Abstract] | ||
Defined benefit plan assets | $ 152,000,000 | $ 135,000,000 |
Tax receivable | 39,000,000 | 39,000,000 |
Non-current contract cost assets | 99,000,000 | 98,000,000 |
Other | 67,000,000 | 72,000,000 |
Other assets, total | $ 357,000,000 | $ 344,000,000 |
Other Financial Data - Accrued Liabilities (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accrued Liabilities [Abstract] | ||
Compensation | $ 336 | $ 324 |
Tax liabilities | 94 | 111 |
Dividend payable | 94 | 93 |
Trade liabilities | 161 | 185 |
Operating lease liabilities | 116 | |
Other | 434 | 497 |
Accrued liabilities | $ 1,235 | $ 1,210 |
Other Financial Data - Other Liabilities (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Liabilities [Abstract] | ||
Defined benefit plans | $ 1,527 | $ 1,557 |
Non-current contract liabilities | 239 | 214 |
Unrecognized tax benefits | 54 | 51 |
Deferred income taxes | 222 | 201 |
Other | 222 | 277 |
Other liabilities | $ 2,264 | $ 2,300 |
Other Financial Data - Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Payments for repurchased shares | $ 145 | $ 66 |
Number of shares repurchased (in shares) | 1.2 | |
Repurchase of common shares, average cost (in US$ per share) | $ 118.98 | |
Share repurchase authority utilized during period | $ 12,600 | |
Amount available for future share repurchase | 1,400 | |
Cash dividends paid | $ 93 | $ 84 |
Risk Management - Counterparty Risk (Details) $ in Millions |
Mar. 30, 2019
USD ($)
|
---|---|
Credit Concentration Risk | |
Derivative [Line Items] | |
Net credit risk with all counterparties | $ 7 |
Risk Management - Summary of Fair Values and Location in Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value | ||
Other Current Assets | $ 7 | |
Accrued Liabilities | 3 | |
Designated as Hedging Instrument | Foreign exchange contracts | Other current assets | ||
Fair Value | ||
Other Current Assets | 2 | |
Designated as Hedging Instrument | Foreign exchange contracts | Accrued liabilities | ||
Fair Value | ||
Accrued Liabilities | 0 | |
Not Designated As Hedging Instruments | Foreign exchange contracts | Other current assets | ||
Fair Value | ||
Other Current Assets | 5 | $ 5 |
Not Designated As Hedging Instruments | Foreign exchange contracts | Accrued liabilities | ||
Fair Value | ||
Accrued Liabilities | $ 3 | $ 4 |
Risk Management - Summary of Derivative Instruments and the Effect on the Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Effective portion | $ 2 | $ (3) |
Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Forward points recognized | 1 | 0 |
Not Designated As Hedging Instruments | Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Undesignated derivatives recognized | $ (4) | $ (4) |
Risk Management - Net Investment Hedges (Details) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 30, 2019
USD ($)
|
Mar. 30, 2019
EUR (€)
|
Mar. 30, 2019
GBP (£)
|
Dec. 31, 2018
USD ($)
|
|
Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amounts of outstanding foreign exchange contracts | $ 897,000,000 | $ 819,000,000 | ||
Net Investment Hedging | Euro | Designated as Hedging Instrument | Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amounts of outstanding foreign exchange contracts | € 95,000,000 | £ 75,000,000 | ||
Interest Expense | Net Investment Hedging | Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Amortized income from excluded components | $ 1,000,000 | |||
Minimum | Net Investment Hedging | ||||
Derivative [Line Items] | ||||
Term of contract | 12 months | |||
Maximum | Net Investment Hedging | ||||
Derivative [Line Items] | ||||
Term of contract | 15 months |
Income Taxes - Schedule of Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Net earnings before income taxes | $ 185 | $ 140 |
Income tax expense | $ 33 | $ 23 |
Effective tax rate | 18.00% | 16.00% |
Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 33 | $ 23 |
Effective tax rate | 18.00% | 16.00% |
Federal income tax rate | 21.00% | 21.00% |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
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 | $ 348 | $ 734 |
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 | $ 5,400 |
Long-term Financing and Sales of Receivables - Long-Term Financing (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Receivables [Abstract] | ||
Long-term receivables, gross | $ 35 | $ 33 |
Less allowance for losses | (2) | (2) |
Long-term receivables | 33 | 31 |
Less current portion | (11) | (7) |
Non-current long-term receivables | 22 | 24 |
Outstanding commitment to provide long-term financing to third parties | $ 52 | $ 62 |
Long-term Financing and Sales of Receivables - Sales Receivables (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Receivables [Abstract] | |||
Accounts receivable sales proceeds | $ 24 | $ 55 | |
Long-term receivables sales proceeds | 21 | 13 | |
Total proceeds from receivable sales | 45 | $ 68 | |
Servicing obligations for long-term receivables | $ 944 | $ 970 |
Commitments and Contingencies - Narrative (Details) |
Mar. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Accrual for obligations of divestitures | $ 0 |
Segment Information - Operating Business Segment (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019
USD ($)
segment
|
Mar. 31, 2018
USD ($)
|
|
Segment Reporting [Abstract] | ||
Number of segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $ 1,657 | $ 1,468 |
Operating Earnings by Segment | ||
Operating earnings | 229 | 171 |
Total other expense | (44) | (31) |
Net earnings before income taxes | 185 | 140 |
Products and Systems Integration | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,069 | 952 |
Operating Earnings by Segment | ||
Operating earnings | 108 | 90 |
Services and Software | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 588 | 516 |
Operating Earnings by Segment | ||
Operating earnings | $ 121 | $ 81 |
Reorganization of Business - Narrative (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019
USD ($)
employee
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | |||
Reorganization of business charges | $ 8 | $ 13 | |
Reversal of accruals | 4 | ||
Other charges | |||
Restructuring Cost and Reserve [Line Items] | |||
Reorganization of business charges | 4 | 8 | |
Costs of sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Reorganization of business charges | 4 | 5 | |
Employee separation costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 12 | 22 | |
Reversal of accruals | 4 | 11 | |
Restructuring reserve | $ 78 | $ 84 | |
Restructuring charges in the period for total employee severance (in number of employees) | employee | 100 | ||
Payments for restructuring | $ 14 | ||
Number of employees expected to be paid (in number of employees) | employee | 700 | ||
Exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 2 |
Reorganization of Business - Net Charges Incurred by Business Segment (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||
Reorganization of business charges | $ 8 | $ 13 |
Products and Systems Integration | ||
Restructuring Cost and Reserve [Line Items] | ||
Reorganization of business charges | 7 | 9 |
Services and Software | ||
Restructuring Cost and Reserve [Line Items] | ||
Reorganization of business charges | $ 1 | $ 4 |
Reorganization of Business - Reorganization of Businesses Accruals (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Restructuring Reserve [Roll Forward] | ||
Adjustments | $ (4) | |
Employee separation costs | ||
Restructuring Reserve [Roll Forward] | ||
January 1, 2019 | 84 | |
Additional Charges | 12 | $ 22 |
Adjustments | (4) | $ (11) |
Amount Used | (14) | |
March 30, 2019 | $ 78 |
Intangible Assets and Goodwill - Avigilon Corporation, Additional Information (Details) - Avigilon - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 28, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Consideration transferred | $ 974 | ||
Cash payments | 980 | ||
Cash acquired | 107 | ||
Acquired debt | 75 | ||
Transaction costs | 26 | ||
Repayments of assumed debt | $ 40 | $ 35 | |
Intangible assets | $ 498 | ||
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 | ||
Technology | |||
Business Acquisition [Line Items] | |||
Intangible assets | 380 | ||
Trade Names | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 8 |
Intangible Assets and Goodwill - Avigilon Corporation, Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
Mar. 28, 2018 |
---|---|---|---|
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Goodwill | $ 1,860 | $ 1,514 | |
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 | (124) | ||
Goodwill | 434 | ||
Intangible assets | 498 | ||
Total consideration | $ 974 |
Intangible Assets and Goodwill - Other Acquisitions (Details) - USD ($) |
Mar. 07, 2018 |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 1,860,000,000 | $ 1,514,000,000 | |
Plant Holdings, Inc. | |||
Business Acquisition [Line Items] | |||
Cash paid for acquisition | $ 237,000,000 | ||
Goodwill | 160,000,000 | ||
Intangible assets acquired | 80,000,000 | ||
Acquired liabilities | 3,000,000 | ||
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 Relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 41,000,000 | ||
Plant Holdings, Inc. | Technology | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | 27,000,000 | ||
Plant Holdings, Inc. | Trade Names | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 12,000,000 |
Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 1,971 | $ 1,719 | |
Accumulated Amortization | 555 | 489 | |
Intangible Assets And Goodwill | |||
Amortization expense on intangibles | 50 | $ 41 | |
Finite-Lived Intangible Assets, Future Amortization Expense | |||
2019 | 205 | ||
2020 | 205 | ||
2021 | 202 | ||
2022 | 200 | ||
2023 | 99 | ||
2024 | 73 | ||
Completed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 707 | 558 | |
Accumulated Amortization | 105 | 92 | |
Patents | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 2 | 2 | |
Accumulated Amortization | 2 | 2 | |
Customer-related | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1,187 | 1,085 | |
Accumulated Amortization | 414 | 364 | |
Other intangibles | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 75 | 74 | |
Accumulated Amortization | $ 34 | $ 31 |
Intangible Assets and Goodwill - Amortized Intangible Assets, Excluding Goodwill, By Business Segment (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,971 | $ 1,719 |
Accumulated Amortization | 555 | 489 |
Products and Systems Integration | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 559 | 510 |
Accumulated Amortization | 46 | 38 |
Services and Software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,412 | 1,209 |
Accumulated Amortization | $ 509 | $ 451 |
Intangible Assets and Goodwill - Carrying Amount of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Goodwill Activity | |
Balance as of January 1, 2019 | $ 1,514 |
Goodwill acquired | 330 |
Purchase accounting adjustments | 9 |
Foreign currency | 7 |
Balance as of March 30, 2019 | 1,860 |
Products and Systems Integration | |
Goodwill Activity | |
Balance as of January 1, 2019 | 722 |
Goodwill acquired | 47 |
Purchase accounting adjustments | 0 |
Foreign currency | 0 |
Balance as of March 30, 2019 | 769 |
Services and Software | |
Goodwill Activity | |
Balance as of January 1, 2019 | 792 |
Goodwill acquired | 283 |
Purchase accounting adjustments | 9 |
Foreign currency | 7 |
Balance as of March 30, 2019 | $ 1,091 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 127,000,000 |
Accounting Standards Update 2016-16 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (30,000,000) |
-FE70BN(OTRIT7,?ISS&;:=N$=":D"R&+==A4*#I_QSTO RHQN@B&04+B@(/QRA7N0
M,@AY&R^3)IU+!N)R_Z;^+?;N>[D("_ _ 2$/X_()H#(BL 362FU$]$DB+G;/3X]+,&HL]$N(_49I9ZTNR=
M65/5"C5[+^(TS=%=&\V:XZ3!*PVV)*>M)(T7"5($"P9V8F 3'[W#R-P&D=,@
M,@;Q.X-'JXY)DQI-/]6!,ZL0AR9(W2"Q$R1V@.PLD$F3K))$<6"!;#5X%[E!
M$B=(L@7)K"3'9),D2>T=V6KBW !=F
M^*:-)LVCU80+39C>2XY;21K/$JP(9HS0B1&:^.@.(W(;1$Z#R!C$"X,H259Y
M6$UJ-+W5I+YY5MDXA/Y*>(<4.Y'B#5*\BU=(5I,L=@JBG9/)I=Q_!I4XH9+M
M.>U73,EVIR^!D\FAW*]/](XI=3*E&Z;-+Y@Z/EWL9'(HD[72,N'%'=$UZR?A
ME[87WIE)==W,I:@9DZ!<_0>59*/*Y#R@4$O=W:D^M\7"#B0;ICJ(YV)<_ =0
M2P,$% @ YXVB3I%P4!IR @ ]0< !D !X;"]W;W)K T\,F]51JP#9QG!PIS:#C**^RR\3>
M\7@IO^'3N#\)VW3:D8OQ>+7Q FIC/*"5W0W.4(LO; DDU#YL/^+>3G,V!=[T
M\Q-BRSLN?@%02P,$% @ YXVB3B2[#<^U 0 TP, !D !X;"]W;W)K
MQMO$7V#A_&_2>WM=".
MG(W'JXT74!GC :VLKG"&&GQA4R"A\F%[@WL[S-D0>-..3XA-[SC_"U!+ P04
M " #GC:).)5=Y%+8! #3 P &0 'AL+W=O9TZ\2+K ]?Z#_:NOW=9R81H>
M)/_=EJ;)\ &C$BHV,DQT>8Z]EA-!?_':[ +=QE8C4*R;7_HF+01HJ9Q:8B
MV-NTMIU?Q^DDWL]AX0 Z!] EX.!UR"3D,__"#,M3)4>DIKOOF?O%T9':NRF<
MTU^%/[/):^N]YC2B*;DZHAESFC!TA8D6!+'LBP0-29SH?^$T"<=O@REN??QV
M+9]\0A '"6)/$/]3X_:FQA F#HOL@B*[ ,'N1B2$^:22)"B2! CV-R(AS.%&
MA*S:0X"J_6!H5,BA\T.Y\BZS=T]]>_V%3X/[@ZFZ[32Z2&.;U+=2):4!F\KF
MSA;
8ZMF%P53\=[@!MW"7B=6H)-?^&U2]-E),+#85P=['M6G].HPGNW0*PP/H
M%$#G@,SKD%'(9_Z%&5;F2@Z!&N^^8^Z)XSVU=U,YI[\*?V:3U]9[*VE\GY.;
M(YHPAQ%#%YAX1A#+/DM03.) _PNG"1Z_05/<^/C-4CZYQPFV*,'6$VR7"=!H
M52.&^:3*'2JR0PCH2@3#;'"1!!5)$(+M2@3#['"1%!5)$8)D)8)A/A')4)$,
M(4A7(A@F6XF0Q8\N0%U]B^N@DGWKQ\O".T^1!^H;Y1]\'$$_F+HVK0Y.TMAV
M\TUQD=* 326ZLT]7VZDW&QPNQFU3NU=C[X^&D=TTUL@\6\N_4$L#!!0 (
M .>-HDZ-8]7P2P( #P( 9 >&PO=V]R:W-H965TZX6S-,'8MF.(*Y8_$$1V+[\D=D.@)$K@O,,<'<)IBXPU2.P>-LNB,<@\?Y
MYXZ,FMO)AH8?#R7W?6!ZN4TO<7*4P-!Q,<,-#!VW'W*V&_)S-QY)[OO Y'*;
M7.+"40(#QQ
4:E4HU*XQE40(C\HDW4.LO1RX847HI
M3E@V LC!.C&*0]^/,2-5C;+4VG8B2_E9T:J&G?#DF3$B_FZ!\G:- G0UO%2G
M4AD#SM*&G. GJ%_-3N@5'E@.%8-:5KSV!!S7:!.L\B T#A;QNX)6CN:>267/
M^:M9?#NLD6\B @J%,A1$#Q?(@5+#I.-XZTG1H&D