EX-99.1 2 d247527dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Motorola Solutions Reports Third-Quarter Results

Record Third Quarter in Sales and Operating Earnings

 

   

Sales of $2.1 billion, up 10 percent from third-quarter 2010

 

   

Government sales of $1.4 billion, up 9 percent from third-quarter 2010

 

   

Enterprise sales of $726 million, up 13 percent from third-quarter 2010

 

   

Cash flow from continuing operations during the quarter of $477 million and ended the quarter with total cash* of $6.3 billion

 

   

Repurchased $744 million of shares in the quarter

 

(In millions, except earnings per share)

   Q3 2011      Q3 2010     Change  

Total sales

   $ 2,105       $ 1,908        10

GAAP operating earnings

   $ 253       $ 211        20

Non-GAAP operating earnings

   $ 358       $ 289        24

GAAP EPS from continuing operations**

   $ 0.45       ($ 0.04     —     

Non-GAAP*** EPS from continuing operations**

   $ 0.65       $ 0.54        20

Click here for printable press release and financial tables.

SCHAUMBURG, Ill. – Oct. 27, 2011 – Motorola Solutions, Inc. (NYSE: MSI) announced today its third-quarter 2011 results highlighted by sales of $2.1 billion, up 10 percent from the third quarter of 2010 and driven by solid demand in all regions across both its Government and Enterprise segments.

“Our customers continue to invest in solutions that increase revenues and improve operating efficiency,” said Greg Brown, chairman and CEO of Motorola Solutions. “In addition to our robust growth this quarter, we returned significant capital to shareholders. We repurchased $744 million of stock, initiated our dividend and generated very strong operating cash flow.”

GAAP operating earnings in the third quarter of 2011 were $253 million or 12 percent of sales, compared to $211 million or 11 percent of sales in the third quarter of 2010. GAAP earnings per share from continuing operations** were $0.45, compared to a GAAP loss of $0.04 in the third quarter of 2010.

Non-GAAP*** operating earnings in the third quarter of 2011 were $358 million or 17 percent of sales, compared to $289 million or 15 percent of sales in the third quarter of 2010. Non-GAAP earnings per share from continuing operations were $0.65, compared to $0.54 in the third quarter of 2010. Non-GAAP financial information excludes after-tax benefits of approximately $0.20 per diluted share related to stock-based compensation expense, intangible assets amortization expense and highlighted items. Details on these Non-GAAP adjustments and the use of Non-GAAP measures are included later in this press release.

During the third quarter of 2011, the company generated $477 million in operating cash flow from continuing operations. The company ended the quarter with total cash* of $6.3 billion while returning $744 million to shareholders through share repurchases during the quarter.

Government segment sales were $1.4 billion, up 9 percent from the year-ago quarter. GAAP operating earnings were $185 million or 13 percent of sales compared to $159


million or 13 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $223 million or 16 percent of sales compared to $175 million or 14 percent of sales in the year-ago quarter.

Government highlights:

 

 

Secured multi-million dollar public safety contracts with Jefferson County 911 Dispatch in Missouri; Morris County in New Jersey; the city of Cleveland; the state of Hessen, Germany; the National Police of Colombia; the Public Safety State Council of Jalisco, Mexico; and Shangdong Police in China

 

 

Renewed a $95 million managed services and support agreement with Airwave for its UK TETRA network, the largest TETRA network in the world with 250,000 subscribers and nationwide coverage

 

 

Shipped one millionth MOTOTRBO™ digital two-way radio, the first digital radio in the professional market that Motorola Solutions introduced in 2007

 

 

Continued to demonstrate leadership in public safety LTE with an agreement to help the Brazilian Army test 4G LTE technologies for mobile broadband applications for public security operating in the 700MHz frequency range; also released first devices for LTE, a vehicle modem and a USB modem, which allow public safety personnel to access a Band Class 14 Public Safety LTE network

Enterprise segment sales were $726 million, up 13 percent from the year-ago quarter. GAAP operating earnings were $68 million or 9 percent of sales compared to $52 million or 8 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $135 million or 19 percent of sales compared to $114 million or 18 percent of sales in the year-ago quarter.

Enterprise highlights:

 

   

Continued strong mobile computing growth in Europe with awards from customers such as Posten Logistik Group in Sweden, DHL Express in France, GDF Suez in France and Jumbo Supermarkets in the Netherlands

 

   

Completed the acquisition of Rhomobile, a mobile application development platform company, which reinforces Motorola Solutions’ commitment to enable its partner communities to deliver rich, highly tailored applications across multiple operating system environments that will help customers mobilize and connect across devices today and in the future

 

   

Secured a significant managed services win with Sears, and a WLAN contract that includes deployment and maintenance services with Raley’s grocery stores in western United States

 

   

Announced the sale of point-to-point (Orthogon) and point-to-multipoint (Canopy) businesses to Vector Capital


Results from Discontinued Operations

The third-quarter net loss from discontinued operations was $24 million, which substantially relates to an after-tax charge for an expected purchase price adjustment associated with the sale of the company’s Networks business in the second quarter of 2011.

Fourth-Quarter and Full-Year 2011 Outlook

The company has raised its expected full-year revenue outlook to approximately 7 percent growth with operating earnings of approximately 16.5 percent of sales. Fourth-quarter sales are expected to grow between 2 and 3 percent compared with the fourth quarter of 2010 and approximately 7 percent compared with the third quarter of 2011. Earnings per share from continuing operations are expected to be $0.78 to $0.83. This outlook excludes stock-based compensation expense, intangible assets amortization expense and charges associated with items of the variety typically highlighted by the company in its quarterly earnings releases.

Consolidated GAAP Results

A comparison of results from operations is as follows:

 

     Third Quarter  

(In millions, except per share amounts)

   2011      2010  

Net sales

   $ 2,105       $ 1,908   

Gross margin

     1,060         964   

Operating earnings

     253         211   

Earnings from continuing operations**

     152         (13

Net earnings **

     128         110   

Diluted earnings per common share from continuing operations: **

   $ 0.45       $ (0.04

Weighted average diluted common shares outstanding

     339.5         334.1   
  

 

 

    

 

 

 

Highlighted Items, Stock-Based Compensation Expense and Intangible Assets Amortization Expense

The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense for the third quarter of 2011.

 

(per diluted common share)

   Third Quarter
2011
 

GAAP Earnings per Common Share from Continuing Operations

   $ 0.45   

Highlighted Items:

  

Reorganization of business charges

     0.02   
  

 

 

 

Total Highlighted Items

     0.02   
  

 

 

 

Stock-based compensation expense

     0.09   

Intangible assets amortization expense

     0.09   
  

 

 

 


Stock-Based Compensation Expense and Intangible Assets Amortization Expense

     0.18   
  

 

 

 

Total Non-GAAP Adjustments

     0.20   
  

 

 

 

Non-GAAP Earnings per Common Share

   $ 0.65   
  

 

 

 

Conference Call and Webcast

Motorola Solutions will host its quarterly conference call beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time) on Thursday, Oct. 27. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.

Use of Non-GAAP Financial Information

In addition to the GAAP results included in this presentation, Motorola Solutions also has included non-GAAP measurements of results. We have provided these non-GAAP measurements to help investors better understand our core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to our competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate performance of the businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes this measurement enables it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP.

Highlighted items: The company has excluded the effects of highlighted items (and any reversals of highlighted items recorded in prior periods) from its non-GAAP operating expenses and net income measurements because the company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to the company’s past operating performance.

Stock-based compensation expense: The company has excluded stock-based compensation expense from its non-GAAP operating expenses and net income measurements. Although stock-based compensation is a key incentive offered to our employees and the company believes such compensation contributed to the revenue earned during the periods presented and also believes it will contribute to the generation of future period revenues, the company continues to evaluate its performance excluding stock-based compensation expense primarily because it represents a significant non-cash expense. Stock-based compensation expense will recur in future periods.

Intangible assets amortization expense: The company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net income measurements, primarily because it represents a significant non-cash expense and


because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company’s acquisitions. Investors should note that the use of intangible assets contributed to the company’s revenues earned during the periods presented and will contribute to the company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.

Details of the above items and reconciliations of the non-GAAP measurements to the corresponding GAAP measurements can be found at the end of this press release.

Business Risks

This press release contains “forward-looking statements” within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, the timing and ability to repurchase shares under the share repurchase program, our ability to pay future dividends, and Motorola Solutions’ financial outlook for the fourth quarter and full year of 2011. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 12 through 25 in Item 1A of Motorola Solutions, Inc.’s 2010 Annual Report on Form 10-K, on page 46 in Item 1A of Motorola Solutions, Inc.’s First Quarter Quarterly Report on Form 10-Q, and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions and factors that may impact forward-looking statements include, but are not limited to: (1) possible negative effects on the company’s business operations, financial performance or assets as a result of the separation into two independent, publicly traded companies, which may include: (i) diminished purchasing leverage and increased exposure to market fluctuations as a result of being a smaller, more focused company, (ii) ongoing obligations relating to certain debt and pension liabilities and certain corporate litigation matters retained by Motorola Solutions after the separation, and (iii) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (2) the economic outlook for the government and enterprise communications industries; (3) the level of demand for the company’s products, particularly if businesses and governments defer purchases in response to tighter credit; (4) the company’s ability to introduce new products and technologies in a timely manner; (5) unexpected negative consequences from the company’s restructuring and cost reduction activities; (6) negative impact on the company’s business from global economic conditions, which may include: (i) the inability of customers to obtain financing for purchases of the company’s products; (ii) the viability of the company’s suppliers that may no longer have access to necessary financing; (iii) changes in the value of investments held by the company’s pension plan and other defined benefit plans; (iv) fair and/or actual value of the company’s debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the company’s financial position; and (vi) difficulties or increased costs for the company in obtaining financing; (7) the company’s


ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions and the flooding that is currently occurring in Thailand; (8) risks related to dependence on certain key suppliers; (9) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (10) risks related to the company’s manufacturing and business operations in foreign countries; (11) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (12) risks related to the fact that certain customers require that the company build, own and operate their systems, often over a multi-year period; (13) variability in income received from licensing the company’s intellectual property to others, as well as expenses incurred when the company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the company when competing for business in foreign markets; (16) the impact of the increased percentage of cash and cash equivalents held outside of the United States; (17) the ability of the company to repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

Definitions

 

* Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) and short-term investments
** Amounts attributable to Motorola Solutions, Inc. common stockholders
*** Non-GAAP financial information excludes from GAAP results the effects of stock-based compensation expense, intangible assets amortization expense and highlighted items

About Motorola Solutions

Motorola Solutions is a leading provider of mission-critical communication solutions and services for enterprise and government customers. Through leading-edge innovation and communications technology, it is a global leader that enables its customers to be their best in the moments that matter. Motorola Solutions trades on the New York Stock Exchange under the ticker “MSI.” To learn more, visit www.motorolasolutions.com. For ongoing news, please visit our media center or subscribe to our news feed.

Media Contacts

Nick Sweers

Motorola Solutions

+1 847-576-2462

nicholas.sweers@motorolasolutions.com

Tama McWhinney

Motorola Solutions

+1 847-538-1865

tama.mcwhinney@motorolasolutions.com


Investor Contacts

Shep Dunlap

Motorola Solutions

+1 847-576-6899

shep.dunlap@motorolasolutions.com

Jason Winkler

Motorola Solutions

+1 847-576-4995

jason.winkler@motorolasolutions.com

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. ©2011 Motorola Solutions, Inc. All rights reserved.


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

    Three Months Ended  
  October 1, 2011         October 2, 2010  

Net sales from products

  $ 1,572        $ 1,413   

Net sales from services

    533          495   

Net sales

    2,105          1,908   

 

Costs of products sales

    695          624   

Costs of services sales

    350          320   

 

Costs of sales

    1,045          944   

Gross margin

    1,060          964   

Selling, general and administrative expenses

    475          457   

Research and development expenditures

    272          262   

Other charges (income)

    10          (17

Intangibles amortization

    50          51   

Operating earnings

    253          211   

Other income (expense):

       

Interest expense, net

    (18       (29

Gain on sales of investments and businesses, net

    2          4   

Other

    —            6   

Total other income (expense)

    (16       (19

 

Earnings from continuing operations before income taxes

    237          192   

 

Income tax expense

    84          203   

Earnings (loss) from continuing operations

    153          (11

 

Earnings (loss) from discontinued operations, net of tax

    (24       123   

Net earnings

    129          112   

 

Less: Earnings attributable to noncontrolling interests

    1          2   

Net earnings attributable to Motorola Solutions, Inc.

  $ 128        $ 110   

Amounts attributable to Motorola Solutions, Inc. common shareholders

       

Earnings (loss) from continuing operations, net of tax

  $ 152        $ (13

Earnings (loss) from discontinued operations, net of tax

    (24       123   

Net earnings

  $ 128        $ 110   

 

Earnings (loss) per common share

       

Basic:

       

Continuing operations

  $ 0.45        $ (0.04

Discontinued operations

    (0.07       0.37   
  $ 0.38        $ 0.33   
         

Diluted:

       

Continuing operations

  $ 0.45        $ (0.04

Discontinued operations

    (0.07       0.37   
  $ 0.38        $ 0.33   

Weighted average common shares outstanding

       

Basic

    335.4          334.1   

Diluted

    339.5          334.1   
 
    Percentage of Net Sales*  

Net sales from products

    74.7       74.1

Net sales from services

    25.3       25.9

Net sales

    100       100

Costs of products sales

    44.2       44.2

Costs of services sales

    65.7       64.6

Costs of sales

    49.6       49.5
                 

Gross margin

    50.4       50.5

Selling, general and administrative expenses

    22.6       24.0

Research and development expenditures

    12.9       13.7

Other charges (income)

    0.5       -0.9

Intangibles amortization

    2.4       2.7

Operating earnings

    12.0       11.1

Other income (expense):

         

Interest expense, net

    -0.9       -1.5

Gain on sales of investments and businesses, net

    0.1       0.2

Other

    0.0       0.3

Total other income (expense)

    -0.8       -1.0

Earnings from continuing operations before income taxes

    11.3       10.1

Income tax expense

    4.0       10.6

Earnings (loss) from continuing operations

    7.3       -0.6

Earnings (loss) from discontinued operations, net of tax

    -1.1       6.4

Net earnings

    6.1       5.9

Less: Earnings attributable to noncontrolling interests

    0.0       0.1

Net earnings attributable to Motorola Solutions, Inc.

    6.1       5.8

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

     Nine Months Ended  
     October 1, 2011           October 2, 2010  

Net sales from products

   $ 4,445         $ 4,056   

Net sales from services

     1,524           1,442   

Net sales

     5,969           5,498   

 

Costs of products sales

     2,001           1,833   

Costs of services sales

     967           928   

Costs of sales

     2,968           2,761   

 

Gross margin

     3,001           2,737   

Selling, general and administrative expenses

     1,425           1,369   

Research and development expenditures

     775           772   

Other charges (income)

     71           (33

Intangibles amortization

     150           152   

Operating earnings

     580           477   

 

Other income (expense):

           

Interest expense, net

     (59        (97

Gain on sales of investments and businesses, net

     21           44   

Other

     (72        (9

Total other income (expense)

     (110        (62

 

Earnings from continuing operations before income taxes

     470           415   

 

Income tax expense (benefit)

     (91        332   

 

Earnings from continuing operations

     561           83   

 

Earnings from discontinued operations, net of tax

     407           263   

Net earnings

     968           346   

 

Less: Earnings (loss) attributable to noncontrolling interests

     (6        5   

Net earnings attributable to Motorola Solutions, Inc.

   $ 974         $ 341   

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

           

Earnings from continuing operations, net of tax

   $ 567         $ 78   

Earnings from discontinued operations, net of tax

     407           263   

Net earnings

   $ 974         $ 341   
     

Earnings per common share

           

Basic:

           

Continuing operations

   $ 1.68         $ 0.23   

Discontinued operations

     1.21           0.80   
   $ 2.89         $ 1.03   

Diluted:

           

Continuing operations

   $ 1.65         $ 0.23   

Discontinued operations

     1.19           0.78   
   $ 2.84         $ 1.01   
     

Weighted average common shares outstanding

           

Basic

     337.3           332.5   

Diluted

     343.4           337.1   
  
     Percentage of Net Sales*   

Net sales from products

     74.5        73.8

Net sales from services

     25.5        26.2

Net sales

     100        100

Costs of products sales

     45.0        45.2

Costs of services sales

     63.5        64.4

Costs of sales

     49.7        50.2
                   

Gross margin

     50.3        49.8

 

Selling, general and administrative expenses

     23.9        24.9

Research and development expenditures

     13.0        14.0

Other charges (income)

     1.2        -0.6

Intangibles amortization

     2.5        2.8

Operating earnings

     9.7        8.7

 

Other income (expense):

           

Interest expense, net

     -1.0        -1.8

Gain on sales of investments and businesses, net

     0.4        0.8

Other

     -1.2        -0.2

Total other income (expense)

     -1.8        -1.1

Earnings from continuing operations before income taxes

     7.9        7.5

Income tax expense (benefit)

     -1.5        6.0

Earnings from continuing operations

     9.4        1.5

 

Earnings from discontinued operations, net of tax

     6.8        4.8

Net earnings

     16.2        6.3

 

Less: Earnings (loss) attributable to noncontrolling interests

     -0.1        0.1

Net earnings attributable to Motorola Solutions, Inc.

     16.3        6.2

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

   

    October 1,    

2011

       

December 31,

2010

 

Assets

         

Cash and cash equivalents

  $ 1,785        $ 4,208   

Sigma Fund and short-term investments

    4,465          4,655   

Accounts receivable, net

    1,535          1,547   

Inventories, net

    548          521   

Deferred income taxes

    629          871   

Other current assets

    743          748   

Current assets held for disposition

    10          4,604   

Total current assets

    9,715          17,154   
   

Property, plant and equipment, net

    889          922   

Sigma Fund

    26          70   

Investments

    167          172   

Deferred income taxes

    2,074          1,920   

Goodwill

    1,449          1,429   

Other assets

    449          734   

Non-current assets held for disposition

    2          3,176   

Total assets

  $ 14,771        $ 25,577   
   

Liabilities and Stockholders’ Equity

         

Notes payable and current portion of long-term debt

  $ 605        $ 605   

Accounts payable

    641          731   

Accrued liabilities

    2,911          2,574   

Current liabilities held for disposition

    12          4,800   

Total current liabilities

    4,169          8,710   
   

Long-term debt

    1,538          2,098   

Other liabilities

    2,906          3,045   

Non-current liabilities held for disposition

    —            737   
   

Total Motorola Solutions, Inc. stockholders’ equity

    6,098          10,885   
   

Noncontrolling interests

    60          102   
   

Total liabilities and stockholders’ equity

  $ 14,771        $ 25,577   

Total cash*

  $ 6,276        $ 8,933   

Net cash**

    4,133          6,230   

 

  *Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments
**Net cash = Total cash - Notes payable and current portion of long-term debt - Long-term debt


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Three Months Ended  
     October 1, 2011           October 2, 2010  

Operating

             

Net earnings attributable to Motorola Solutions, Inc.

   $ 128           $ 110   

Earnings attributable to the noncontrolling interests

     1             2   

Net earnings

     129             112   

Earnings (loss) from discontinued operations, net of tax

     (24          123   

Earnings (loss) from continuing operations

     153             (11

Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:

             

Depreciation and amortization

     92             85   

Non-cash other income

     (6          (22

Share-based compensation expense

     45             39   

Gain on sales of investments and businesses, net

     (2          (4

Loss from the extinguishment of long-term debt

     —               —     

Deferred income taxes

     40             143   

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

             

Accounts receivable

     (6          (48

Inventories

     (26          (54

Other current assets

     (15          (63

Accounts payable and accrued liabilities

     107             326   

Other assets and liabilities

     95             (73

Net cash provided by operating activities from continuing operations

     477           318   

Investing

             

Acquisitions and investments, net

     (24          (1

Proceeds from sales of investments and businesses, net

     (14          (1

Capital expenditures

     (43          (37

Proceeds from sales of property, plant and equipment

     2             —     

Purchases of Sigma Fund investments, net

     (41          278   

Proceeds from sales of short-term investments, net

     —               17   

Net cash provided by (used for) investing activities from continuing operations

     (120          256   

Financing

             

Repayment of short-term borrowings, net

     —               —     

Repayment of debt

     (1          (3

Contribution to Motorola Mobility

     (75          —     

Issuance of common stock

     20             84   

Purchase of common stock

     (744          —     

Excess tax benefits from share-based compensation

     39             —     

Distribution from discontinued operations

     20             104   

Net cash provided by (used for) financing activities from continuing operations

     (741          185   

Discontinued Operations

             

Net cash provided by operating activities from discontinued operations

     19             271   

Net cash used for investing activities from discontinued operations

     —               (72

Net cash used for financing activities from discontinued operations

     (20          (104

 

Effect of exchange rate changes on cash and cash equivalents from discontinued operations

     1             (95

Net cash provided by (used for) financing activities from discontinued operations

     —               —     

 

Effect of exchange rate changes on cash and cash equivalents from continuing operations

     (34          196   

Net decrease in cash and cash equivalents

     (418          955   

Cash and cash equivalents, beginning of period

     2,203             2,893   

Cash and cash equivalents, end of period

   $ 1,785           $ 3,848   

Financial Ratios:

       

Free cash flow*

   $ 434         $ 281   

  *Free cash flow = Net cash provided by operating activities - Capital expenditures


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Nine Months Ended  
     October 1, 2011          October 2, 2010  

Operating

           

Net earnings attributable to Motorola Solutions, Inc.

   $ 974         $ 341   

Earnings (loss) attributable to the noncontrolling interests

     (6        5   

Net earnings

     968           346   

Earnings from discontinued operations, net of tax

     407           263   

Earnings from continuing operations

     561           83   

Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:

           

Depreciation and amortization

     273           257   

Non-cash other charges (income)

     40           (60

Share-based compensation expense

     123           108   

Gain on sales of investments and businesses, net

     (21        (44

Loss from the extinguishment of long-term debt

     81           12   

Deferred income taxes

     30           398   

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

           

Accounts receivable

     82           (80

Inventories

     (37        (90

Other current assets

     (6        (53

Accounts payable and accrued liabilities

     (230        182   

Other assets and liabilities

     (93        (242

Net cash provided by operating activities from continuing operations

     803           471   

Investing

           

Acquisitions and investments, net

     (26        (7

Proceeds from sales of investments and businesses, net

     1,064           238   

Capital expenditures

     (103        (111

Proceeds from sales of property, plant and equipment

     6           27   

Purchases of Sigma Fund investments, net

     225           30   

Proceeds from sales (purchases) of short-term investments, net

     6           (6

Net cash provided by investing activities from continuing operations

     1,172           171   

Financing

           

Repayment of short-term borrowings, net

     —             (5

Repayment of debt

     (617        (484

Contribution to Motorola Mobility

     (3,275        —     

Issuance of common stock

     148           152   

Purchase of common stock

     (744        —     

Excess tax benefits from share-based compensation

     39           —     

Distribution from discontinued operations

     102           644   

Net cash provided by (used for) financing activities from continuing operations

     (4,347        307   

Discontinued Operations

           

Net cash provided by operating activities from discontinued operations

     65           847   

Net cash used for investing activities from discontinued operations

     (8        (160

Net cash used for financing activities from discontinued operations

     (102        (644
   

Effect of exchange rate changes on cash and cash equivalents from discontinued operations

     45           (43

Net cash provided by (used for) financing activities from discontinued operations

     —             —     
   

Effect of exchange rate changes on cash and cash equivalents from continuing operations

     (51        30   

Net increase (decrease) in cash and cash equivalents

     (2,423        979   

Cash and cash equivalents, beginning of period

     4,208           2,869   

Cash and cash equivalents, end of period

   $ 1,785         $ 3,848   
   

Financial Ratios:

       

Free cash flow*

   $ 700         $ 360   

 

*Free cash flow = Net cash provided by operating activities - Capital expenditures

 


Motorola Solutions, Inc. and Subsidiaries

Segment Information

(In millions)

Summarized below are the Company’s Net sales and Operating earnings by reportable segment for the three and nine months ended Ocobter 1, 2011 and October 2, 2010.

 

Net Sales

 

     Three Months Ended             
                              
     October 1, 2011          October 2, 2010          % Change  

Government

   $ 1,379         $ 1,267           9

Enterprise

     726           641           13

Company Total

   $ 2,105         $ 1,908           10
                              
     Nine Months Ended             
                              
     October 1, 2011          October 2, 2010          % Change  

Government

   $ 3,876         $ 3,661           6

Enterprise

     2,093           1,837           14

Company Total

   $ 5,969         $ 5,498           9
            
Operating Earnings   
            
     Three Months Ended             
                              
     October 1, 2011          October 2, 2010          % Change  

Government

   $ 185         $ 159           16

Enterprise

     68           52           31

Company Total

   $ 253         $ 211           20
                              
     Nine Months Ended             
                              
     October 1, 2011          October 2, 2010          % Change  

Government

   $ 388         $ 352           10

Enterprise

     192           125           54

Company Total

   $ 580         $ 477           22


Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Adjustments Bridge

(In millions, except per share amounts)

 

     Three Months Ended
October 1, 2011
         Three Months Ended
October 2, 2010
 
     GAAP Results          Non-GAAP
Adjustments and
Discontinued
Operations
         Non-GAAP Results          GAAP Results          Non-GAAP
Adjustments and
Discontinued
Operations
         Non-GAAP Results  

Net sales

   $ 2,105         $ —           $ 2,105         $ 1,908         $ —           $ 1,908   

Costs of sales

     1,045           6           1,039           944           11           933   

Gross margin

     1,060           (6        1,066           964           (11        975   
           

Selling, general and administrative expenses

     475           29           446           457           22           435   

Research and development expenditures

     272           10           262           262           11           251   

Other charges

     10           10           —             (17        (17        —     

Intangibles amortization

     50           50           —             51           51           —     

Operating earnings

     253           (105        358           211           (78        289   
           

Other income (expense):

                                       

Interest expense, net

     (18        —             (18        (29        —             (29

Gain on sales of investments and businesses, net

     2           —             2           4           —             4   

Other

     —             —             —             6           —             6   

Total other income (expense)

     (16        —             (16        (19        —             (19
           

Earnings from continuing operations before income taxes

     237           (105        342           192           (78        270   
           

Income tax expense (benefit)

     84           (35        119           203           115           88   

Earnings (loss) from continuing operations

     153           (70        223           (11        (193        182   
           

Earnings (loss) from discontinued operations, net of tax

     (24        (24        —             123           123           —     

Net earnings

     129           (94        223           112           (70        182   
           

Less: Earnings attributable to noncontrolling interests

     1           —             1           2           —             2   

Net earnings attributable to Motorola Solutions, Inc.

   $ 128         $ (94      $ 222         $ 110         $ (70      $ 180   

Earnings (loss) from continuing operations, net of tax

   $ 152         $ (70      $ 222         $ (13      $ (193      $ 180   

Earnings (loss) from discontinued operations, net of tax

     (24        (24        —             123           123           —     

Net earnings

   $ 128         $ (94      $ 222         $ 110         $ (70      $ 180   
           

Earnings per common share

                                       

Basic:

                                       

Continuing operations

   $ 0.45         $ (0.21      $ 0.66         $ (0.04      $ (0.58      $ 0.54   

Discontinued operations

     (0.07        (0.07        —             0.37           0.37           —     
   $ 0.38         $ (0.28      $ 0.66         $ 0.33         $ (0.21      $ 0.54   

Diluted:

                                       

Continuing operations

   $ 0.45         $ (0.20      $ 0.65         $ (0.04      $ (0.58      $ 0.54   

Discontinued operations

     (0.07        (0.07        —             0.37           0.37           —     
   $ 0.38         $ (0.27      $ 0.65         $ 0.33         $ (0.21      $ 0.54   

Weighted average common shares outstanding

                                       

Basic

     335.4           335.4           335.4           334.1           334.1           334.1   

Diluted

     339.5           339.5           339.5           334.1           334.1           334.1   
                           

Percentage of Net Sales*

                           

Net sales

     100             100        100             100

Costs of sales

     49.6             49.4        49.5             48.9

Gross margin

     50.4             50.6        50.5             51.1
       

Selling, general and administrative expenses

     22.6             21.2        24.0             22.8

Research and development expenditures

     12.9             12.4        13.7             13.2

Other charges

     0.5             0.0        -0.9             0.0

Intangibles amortization

     2.4             0.0        2.7             0.0

Operating earnings

     12.0             17.0        11.1             15.1
       

Other income (expense):

                                   

Interest expense, net

     -0.9             -0.9        -1.5             -1.5

Gain on sales of investments and businesses, net

     0.1             0.1        0.2             0.2

Other

     0.0             0.0        0.3             0.3

Total other income (expense)

     -0.8             -0.8        -1.0             -1.0

Earnings from continuing operations before income taxes

     11.3             16.2        10.1             14.2

Income tax expense (benefit)

     4.0             5.7        10.6             4.6

Earnings (loss) from continuing operations

     7.3             10.6        -0.6             9.5
       

Earnings (loss) from discontinued operations, net of tax

     -1.1             0.0        6.4             0.0

Net earnings

     6.1             10.6        5.9             9.5
       

Less: Earnings attributable to noncontrolling interests

     0.0             0.0        0.1             0.1

Net earnings attributable to Motorola Solutions, Inc.

     6.1             10.5        5.8             9.4

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

 

Q1 2011   
                 
                 TOTAL           Government           Enterprise  

Net sales

        $ 1,856         $ 1,189         $ 667   

Operating earnings

            $ 168         $ 98         $ 70   

Above-OE non-GAAP adjustments by P&L statement line:

   Statement Line                     

Reorganization of business charges

   Cost of sales        3           3           —     

Stock-based compensation expense

   Cost of sales        3           2           1   

Stock-based compensation expense

   SG&A and R&D        36           24           12   

Reorganization of business charges

   Other charges (income)        5           5           —     

Intangibles amortization expense

   Intangibles amortization        50           1           49   

Less: Total above-OE non-GAAP adjustments

              97             35             62   

Operating earnings after non-GAAP adjustments

            $ 265           $ 133           $ 132   
                 

Operating earnings as a percentage of net sales - GAAP

       9.1        8.2        10.5

Operating earnings as a percentage of net sales - after non-GAAP adjustments

       14.3        11.2        19.8
                 
Q2 2011   
                 
                 TOTAL           Government           Enterprise  

Net sales

        $ 2,008         $ 1,308         $ 700   

Operating earnings

            $ 159           $ 105           $ 54   

Above-OE non-GAAP adjustments by P&L statement line:

   Statement Line                     

Stock-based compensation expense

   Cost of sales        5           3           2   

Stock-based compensation expense

   SG&A and R&D        34           23           11   

Legal matters, net

   Other charges        48           32           16   

Reorganization of business charges

   Other charges        17           10           7   

Pension plan adjustments, net

   Other charges        (9        (6        (3

Intangibles amortization expense

   Intangibles amortization        50           1           49   

Less: Total above-OE non-GAAP adjustments

 

          145           63           82   

Operating earnings after non-GAAP adjustments

            $ 304           $ 168           $ 136   
              

Operating earnings as a percentage of net sales - GAAP

       7.9        8.0        7.7

Operating earnings as a percentage of net sales - after non-GAAP adjustments

       15.1        12.8        19.4
                 
Q3 2011   
                 
                 TOTAL           Government           Enterprise  

Net sales

        $ 2,105         $ 1,379         $ 726   

Operating earnings

            $ 253           $ 185           $ 68   

Above-OE non-GAAP adjustments by P&L statement line:

   Statement Line                     

Stock-based compensation expense

   Cost of sales        6           4           2   

Stock-based compensation expense

   SG&A and R&D        39           26           13   

Reorganization of business charges

   Other charges        10           7           3   

Intangibles amortization expense

   Intangibles amortization        50           1           49   

Less: Total above-OE non-GAAP adjustments

 

              105             38             67   

Operating earnings after non-GAAP adjustments

            $ 358           $ 223           $ 135   
                 

Operating earnings as a percentage of net sales - GAAP

       12.0        13.4        9.4

Operating earnings as a percentage of net sales - after non-GAAP adjustments

       17.0        16.2        18.6


Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Adjustments (Intangibles Amortization Expense, Stock-Based Compensation Expense and Highlighted Items)

 

Q1 2011  

Highlighted Items

  

Statement Line

   PBT
(Inc)/Exp
     Tax
Inc/(Exp)
     PAT
(Inc)/Exp
    EPS impact  

Intangibles amortization expense

   Intangibles amortization    $ 50       $ 18       $ 32        0.09   

Stock-based compensation expense

   Cost of sales, SG&A and R&D      39         11         28        0.08   

Reorganization of business charges

  

Cost of sales and Other charges (income)

     8         4         4        0.02   

Reduction in deferred tax valuation allowance

   Income tax benefit      —           244         (244     (0.71
     

 

 

    

 

 

    

 

 

   

 

 

 

Total continuing operations impact

      $ 97       $ 277       $ (180   $ (0.52

 

Q2 2011   

Highlighted Items

  

Statement Line

   PBT
(Inc)/Exp
    Tax
Inc/(Exp)
     PAT
(Inc)/Exp
    EPS impact  

Debt extinguishment loss

   Other income (expense)    $ 81      $ 30       $ 51        0.14   

Intangibles amortization expense

   Intangibles amortization      50        18         32        0.09   

Legal matters, net

   Other charges      48        18         30        0.08   

Stock-based compensation expense

   Cost of sales, SG&A and R&D      39        12         27        0.08   

Reorganization of business charges

   Other charges      17        4         13        0.04   

Pension plan adjustments, net

   Other charges      (9     2         (11     (0.03
     

 

 

   

 

 

    

 

 

   

 

 

 

Total continuing operations impact

      $ 226      $ 84       $ 142      $ 0.40   

 

Q3 2011   

Highlighted Items

  

Statement Line

   PBT
(Inc)/Exp
     Tax
Inc/(Exp)
     PAT
(Inc)/Exp
     EPS impact  

Intangibles amortization expense

   Intangibles amortization      50         18         32         0.09   

Stock-based compensation expense

   Cost of sales, SG&A and R&D      45         14         31         0.09   

Reorganization of business charges

   Other charges      10         3         7         0.02   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total continuing operations impact

      $ 105       $ 35       $ 70       $ 0.20