EX-99.1 2 d616046dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Motorola Solutions Reports Third-Quarter 2013 Financial Results

 

    Sales of $2.1 billion, down 2 percent from a year ago

 

    GAAP earnings per share (EPS)* of $1.16, up 61 percent from a year ago

 

    Non-GAAP** EPS of $1.32, up 57 percent from a year ago

 

    Returned $494 million to shareholders through share repurchase, dividends

 

     Third Quarter  
     2013      2012      Change  

Total sales ($M)

   $ 2,112       $ 2,153         -2

GAAP operating earnings ($M)

   $ 320       $ 324         -1

Non-GAAP operating earnings ($M)

   $ 397       $ 387         3

GAAP EPS

   $ 1.16       $ 0.72         61

Non-GAAP EPS

   $ 1.32       $ 0.84         57

Click here for printable press release and financial tables.

SCHAUMBURG, III. – Oct. 23, 2013 – Motorola Solutions, Inc. (NYSE: MSI) announced today third-quarter 2013 sales of $2.1 billion, down 2 percent from the third quarter of 2012. Government sales were down 4 percent, while Enterprise sales grew 2 percent.

“In the third quarter, we expanded operating margins, reduced costs and delivered double-digit EPS growth,” said Greg Brown, chairman and CEO, Motorola Solutions. “In addition, we are on track to achieve 18 percent operating margin for the full year.”

GAAP operating earnings in the third quarter of 2013 were $320 million or 15.2 percent of sales, compared to $324 million or 15.0 percent of sales in the third quarter of 2012. GAAP earnings per share were $1.16, compared to $0.72 in the third quarter of 2012.

Non-GAAP operating earnings in the third quarter of 2013 were $397 million or 18.8 percent of sales, compared to $387 million or 18.0 percent of sales in the third quarter of 2012. Non-GAAP earnings per share were $1.32, compared to $0.84 in the third quarter of 2012. These earnings results reflect lower incentive payments and structural cost improvements. A tax benefit of $96 million in the quarter for both GAAP and Non-GAAP earnings was associated with excess foreign tax credits. Non-GAAP financial information excludes after-tax net charges of approximately $0.16 per diluted share related to stock-based compensation, intangible amortization 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 quarter, the company generated $152 million in operating cash flow. The company ended the quarter with total cash*** of $2.9 billion while returning $494 million to shareholders through share repurchases and dividends.

Government segment sales were $1.5 billion, down 4 percent from the year-ago quarter. GAAP operating earnings were $252 million or 17.2 percent of sales compared to $273 million or 17.9 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $299 million or 20.4 percent of sales compared to $310 million or 20.4 percent of sales in the year-ago quarter.


Government highlights:

 

    Secured multimillion dollar contracts with U.S. customers such as Los Angeles Regional Interoperable Communications System Authority; the cities of Arlington, Texas, Indianapolis, Ind., Phoenix, Ariz., Portland, Ore., and Midland, Mich.; Fulton County in Georgia; Prince George’s County in Maryland; Franklin County in Ohio; El Paso County in Texas; state of Maryland; and Colorado / Pikes Peak Regional Communication Network

 

    Secured multimillion dollar contracts with international customers such as Queensland, Australia, government; Brazilian Army; city of Montreal and Quebec Government in Canada; Guangdong Province Police, Chengdu Metro, Dalian Metro, Shanxi Police and Wuxi Metro Police in China; Delhi Metro in India; and Seoul Metro in Korea

 

    Continued leadership in public safety LTE technology with the new LEX 700 Mission Critical Handheld with Android 4.2.2 operating system and collaboration with Verizon to deliver the VML 700 LTE Vehicle Modem R1.1, which also can serve as a mobile Wi-Fi hot spot

Enterprise segment sales were $647 million, up 2 percent from the year-ago quarter. Excluding Psion, sales were down 5 percent. GAAP operating earnings were $68 million or 10.5 percent of sales compared to $51 million or 8.1 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $98 million or 15.1 percent of sales compared to $77 million or 12.2 percent of sales in the year-ago quarter.

Enterprise highlights:

 

    Secured contracts with key customers such as Jumbo Supermarkets in the Netherlands; courier companies TNT Global Express in Italy, TNT Express and Mondial Relay in France, Yodel in the UK and Blue Dart in India; State Grid Corporation of China; Haier Group electronics in China; Reject Shop variety stores in Australia; and Ministry of Environment and Public Space in Buenos Aires, Argentina

 

    Positioned in Gartner’s new Magic Quadrant for Managed Mobility Services†

 

    Introduced LI2208 linear imager that captures virtually every 1D bar code, enabling workers to scan faster and farther to improve productivity and reduce customer wait times

Full-Year Outlook

Motorola Solutions’ outlook for full-year 2013 is for revenues to be approximately flat compared with full-year 2012 and Non-GAAP earnings per share from continuing operations of $4.63 to $4.70. The company expects to achieve Non-GAAP operating margins of approximately 18 percent of sales. This outlook excludes stock-based compensation, intangible amortization and charges associated with items typically highlighted by the company in its quarterly earnings releases.

Consolidated GAAP Results

A comparison of results from operations is as follows:

 

     Third Quarter  
     2013      2012  

Net sales ($M)

   $ 2,112       $ 2,153   

Gross margin ($M)

     1,043         1,087   

Operating earnings ($M)

     320         324   

Earnings before income taxes ($M)

     325         324   

Net earnings ($M)

     307         206   

Diluted EPS

   $ 1.16       $ 0.72   

Weighted average diluted common shares outstanding (in millions)

     265.3         287.4   


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.

 

     Third Quarter  
(per diluted common share)    2013     2012  

GAAP Diluted Earnings Per Common Share*

   $ 1.16      $ 0.72   

Highlighted Items:

    

Reorganization of business charges

   $ 0.08      $ 0.03   

Result of tax rate change in foreign subsidiary

   $ 0.02        —     

Gain on sale of investment

   ($ 0.06   ($ 0.03

Total Highlighted Items

   $ 0.04        —     

Stock-based compensation expense

   $ 0.10      $ 0.11   

Intangible assets amortization expense

   $ 0.02      $ 0.01   

Total Stock-Based Compensation Expense and Intangible Assets Amortization Expense

   $ 0.12      $ 0.12   

Total Non-GAAP Adjustments

   $ 0.16      $ 0.12   

Non-GAAP Diluted Earnings Per Common Share

   $ 1.32      $ 0.84   

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) Wednesday, Oct. 23. 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 earnings 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 earnings 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 earnings 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, Motorola Solutions’ financial outlook for the full year of 2013, payment of a regular quarterly dividend and purchases of


shares under the company’s share repurchase program. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 8 through 19 in Item 1A of Motorola Solutions, Inc.’s 2012 Annual Report on Form 10-K 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) the economic outlook for the government and enterprise communications industries; (2) the level of demand for the company’s products, particularly if businesses and governments defer or cancel purchases in response to tighter credit; (3) the company’s ability to introduce new products and technologies in a timely manner; (4) negative impact on the company’s business from global economic conditions, including sequestration in the United States, which may include: (i) continued deferment or cancellation of purchase orders by customers; (ii) the inability of customers to obtain financing for purchases of the company’s products; (iii) increased demand to provide vendor financing to customers; (iv) increased financial pressures on third-party dealers, distributors and retailers; (v) the viability of the company’s suppliers that may no longer have access to necessary financing; (vi) counterparty failures negatively impacting the company’s financial position; (vii) changes in the value of investments held by the company’s pension plan and other defined benefit plans, which could impact future required or voluntary pension contributions; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (5) the impact of foreign currency fluctuations on the company when competing for business in foreign markets; (6) the outcome of currently ongoing and future tax matters; (7) the company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (8) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (9) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including Psion and 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) exposure under large systems and managed services contracts, including 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) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (14) 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; (15) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (16) the impact of the percentage of cash and cash equivalents held outside of the United States; (17) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) 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; (19) the impact of changes in governmental policies, laws or regulations; (20) negative consequences from the company’s outsourcing of various activities, including certain business operations, information technology and administrative functions; and (21) the impact of our multi-year phased upgrade and consolidation of our enterprise resource planning systems into a single global platform. 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

 

* Amounts attributable to Motorola Solutions, Inc. common shareholders

 

** Non-GAAP financial information excludes from GAAP results the effects of stock-based compensation expense, intangible assets amortization expense and highlighted items

 

*** Total cash = Cash and cash equivalents + Sigma Fund and short-term investments

 

Gartner, “Magic Quadrant for Managed Mobility Services,” by Eric Goodness, Gianluca Tramacere, Katja Ruud, July 25, 2013

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. ©2013 Motorola Solutions, Inc. All rights reserved.

Gartner Disclaimer

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.


GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

     Three Months Ended  
     September 28, 2013     September 29, 2012  

Net sales from products

   $ 1,482      $ 1,567   

Net sales from services

     630        586   
  

 

 

   

 

 

 

Net sales

     2,112        2,153   

Costs of products sales

     674        682   

Costs of services sales

     395        384   
  

 

 

   

 

 

 

Costs of sales

     1,069        1,066   
  

 

 

   

 

 

 

Gross margin

     1,043        1,087   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     438        485   

Research and development expenditures

     253        262   

Other charges

     24        10   

Intangibles amortization

     8        6   
  

 

 

   

 

 

 

Operating earnings

     320        324   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net:

     (29     (16

Gains on sales of investments and businesses, net

     29        19   

Other

     5        (3
  

 

 

   

 

 

 

Total other income

     5        —     
  

 

 

   

 

 

 

Earnings before income taxes

     325        324   

Income tax expense

     17        118   
  

 

 

   

 

 

 

Net earnings

     308        206   

Less: Earnings attributable to noncontrolling interests

     1        —     
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 307      $ 206   
  

 

 

   

 

 

 

Earnings per common share

    

Basic

   $ 1.17      $ 0.73   

Diluted

   $ 1.16      $ 0.72   

Weighted average common shares outstanding

    

Basic

     262.2        283.1   

Diluted

     265.3        287.4   
     Percentage of Net Sales*  

Net sales from products

     70.2     72.8

Net sales from services

     29.8     27.2
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     45.5     43.5

Costs of services sales

     62.7     65.5
  

 

 

   

 

 

 

Costs of sales

     50.6     49.5
  

 

 

   

 

 

 

Gross margin

     49.4     50.5
  

 

 

   

 

 

 

Selling, general and administrative expenses

     20.7     22.5

Research and development expenditures

     12.0     12.2

Other charges

     1.1     0.5

Intangibles amortization

     0.4     0.3
  

 

 

   

 

 

 

Operating earnings

     15.2     15.0
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net:

     -1.4     -0.7

Gains on sales of investments and businesses, net

     1.4     0.9

Other

     0.2     -0.1
  

 

 

   

 

 

 

Total other income

     0.2     0.0
  

 

 

   

 

 

 

Earnings before income taxes

     15.4     15.0

Income tax expense

     0.8     5.5
  

 

 

   

 

 

 

Net earnings

     14.6     9.6

Less: Earnings attributable to noncontrolling interests

     0.0     0.0
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     14.5     9.6
  

 

 

   

 

 

 

 

* Percentages may not add up due to rounding


GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

     Nine Months Ended  
     September 28, 2013     September 29, 2012  

Net sales from products

   $ 4,342      $ 4,574   

Net sales from services

     1,850        1,683   
  

 

 

   

 

 

 

Net sales

     6,192        6,257   

Costs of products sales

     2,019        2,052   

Costs of services sales

     1,145        1,085   
  

 

 

   

 

 

 

Costs of sales

     3,164        3,137   
  

 

 

   

 

 

 

Gross margin

     3,028        3,120   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     1,369        1,454   

Research and development expenditures

     782        785   

Other charges

     55        30   

Intangibles amortization

     20        18   
  

 

 

   

 

 

 

Operating earnings

     802        833   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net:

     (85     (46

Gains on sales of investments and businesses, net

     36        39   

Other

     1        (18
  

 

 

   

 

 

 

Total other expense

     (48     (25
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     754        808   

Income tax expense (benefit)

     (8     266   
  

 

 

   

 

 

 

Earnings from continuing operations

     762        542   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Net earnings

     762        545   

Less: Earnings attributable to noncontrolling interests

     5        —     
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 757      $ 545   
  

 

 

   

 

 

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

    

Earnings from continuing operations, net of tax

   $ 757      $ 542   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 757      $ 545   
  

 

 

   

 

 

 

Earnings per common share

    

Basic:

    

Continuing operations

   $ 2.82      $ 1.83   

Discontinued operations

     —          0.01   
  

 

 

   

 

 

 
   $ 2.82      $ 1.84   
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 2.77      $ 1.80   

Discontinued operations

     —          0.01   
  

 

 

   

 

 

 
   $ 2.77      $ 1.81   
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     268.7        296.1   

Diluted

     273.6        301.5   
     Percentage of Net Sales*  

Net sales from products

     70.1     73.1

Net sales from services

     29.9     26.9
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     46.5     44.9

Costs of services sales

     61.9     64.5
  

 

 

   

 

 

 

Costs of sales

     51.1     50.1
  

 

 

   

 

 

 

Gross margin

     48.9     49.9
  

 

 

   

 

 

 

Selling, general and administrative expenses

     22.1     23.2

Research and development expenditures

     12.6     12.5

Other charges

     0.9     0.5

Intangibles amortization

     0.3     0.3
  

 

 

   

 

 

 

Operating earnings

     13.0     13.3
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net:

     -1.4     -0.7

Gains on sales of investments and businesses, net

     0.6     0.6

Other

     0.0     -0.3
  

 

 

   

 

 

 

Total other expense

     -0.8     -0.4
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     12.2     12.9

Income tax expense (benefit)

     -0.1     4.3
  

 

 

   

 

 

 

Earnings from continuing operations

     12.3     8.7

Earnings from discontinued operations, net of tax

     0.0     0.0
  

 

 

   

 

 

 

Net earnings

     12.3     8.7

Less: Earnings attributable to noncontrolling interests

     0.1     0.0
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     12.2     8.7
  

 

 

   

 

 

 

 

* Percentages may not add up due to rounding


GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

     September 28,      December 31,  
     2013      2012  

Assets

     

Cash and cash equivalents

   $ 1,721       $ 1,468   

Sigma Fund and short-term investments

     1,169         2,135   

Accounts receivable, net

     1,823         1,881   

Inventories, net

     521         513   

Deferred income taxes

     586         604   

Other current assets

     760         800   
  

 

 

    

 

 

 

Total current assets

     6,580         7,401   
  

 

 

    

 

 

 

Property, plant and equipment, net

     841         839   

Investments

     259         240   

Deferred income taxes

     2,668         2,416   

Goodwill

     1,507         1,510   

Other assets

     203         273   
  

 

 

    

 

 

 

Total assets

   $ 12,058       $ 12,679   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current portion of long-term debt

   $ 4       $ 4   

Accounts payable

     633         705   

Accrued liabilities

     2,203         2,626   
  

 

 

    

 

 

 

Total current liabilities

     2,840         3,335   
  

 

 

    

 

 

 

Long-term debt

     2,458         1,859   

Other liabilities

     4,055         4,195   

Total Motorola Solutions, Inc. stockholders’ equity

     2,676         3,265   
  

 

 

    

 

 

 

Noncontrolling interests

     29         25   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 12,058       $ 12,679   
  

 

 

    

 

 

 

Total cash*

   $ 2,890       $ 3,603   

Net cash**

     428         1,740   

 

* Total cash = Cash and cash equivalents + Sigma Fund and short-term investments
** Net cash = Total cash - Current portion of long-term debt - Long-term debt


GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Three Months Ended  
     September 28, 2013     September 29, 2012  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 307      $ 206   

Earnings attributable to noncontrolling interests

     1        —     
  

 

 

   

 

 

 

Net earnings

     308        206   

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

    

Depreciation and amortization

     59        45   

Non-cash other charges (income)

     (4     13   

Share-based compensation expense

     37        44   

Gains on sales of investments and businesses, net

     (29     (19

Deferred income taxes

     (88     110   

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

    

Accounts receivable

     (103     (73

Inventories

     (21     (43

Other current assets

     23        (70

Accounts payable and accrued liabilities

     2        100   

Other assets and liabilities

     (32     (131
  

 

 

   

 

 

 

Net cash provided by operating activities

     152        182   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     (12     (7

Proceeds from sales of investments and businesses, net

     33        29   

Capital expenditures

     (36     (39

Proceeds from sales of Sigma Fund and short-term investments, net

     590        173   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     575        156   
  

 

 

   

 

 

 

Financing

    

Repayment of debt

     (1     (1

Issuance of common stock

     9        16   

Purchase of common stock

     (425     (308

Excess tax benefit from share-based compensation

     2        —     

Payment of dividends

     (69     (63
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

     (484     (356
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     21        25   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     264        7   

Cash and cash equivalents, beginning of period

     1,457        1,772   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,721      $ 1,779   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ 116      $ 143   

 

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


GAAP-5

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Nine Months Ended  
     September 28, 2013     September 29, 2012  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 757      $ 545   

Earnings attributable to noncontrolling interests

     5        —     
  

 

 

   

 

 

 

Net earnings

     762        545   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Earnings from continuing operations, net of tax

     762        542   

Adjustments to reconcile Earnings from continuing operations to Net cash provided by operating activities:

    

Depreciation and amortization

     168        151   

Non-cash other charges (income)

     (9     12   

Share-based compensation expense

     116        139   

Gains on sales of investments and businesses, net

     (36     (39

Loss from the extinguishment of long term debt

     —          6   

Deferred income taxes

     (242     203   

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

    

Accounts receivable

     29        189   

Inventories

     (10     (51

Other current assets

     23        (147

Accounts payable and accrued liabilities

     (573     (283

Other assets and liabilities

     (25     (218
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     203        504   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     (27     61   

Proceeds from (used for) sales of investments and businesses, net

     54        (38

Capital expenditures

     (125     (140

Proceeds from sales of property, plant and equipment

     15        9   

Proceeds from sales of Sigma Fund and short-term investments, net

     966        1,450   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     883        1,342   
  

 

 

   

 

 

 

Financing

    

Repayment of debt

     (3     (412

Net proceeds from issuance of debt

     593        747   

Issuance of common stock

     109        79   

Purchase of common stock

     (1,332     (2,112

Excess tax benefit from share-based compensation

     20        17   

Payment of dividends

     (212     (197

Distributions to discontinued operations

     —          (84
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

     (825     (1,962
  

 

 

   

 

 

 

Discontinued Operations

    

Net cash provided by operating activities from discontinued operations

     —          2   

Net cash provided by financing activities from discontinued operations

     —          11   

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

     —          (13
  

 

 

   

 

 

 

Net cash provided by discontinued operations

     —          —     
  

 

 

   

 

 

 

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

     (8     14   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     253        (102

Cash and cash equivalents, beginning of period

     1,468        1,881   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,721      $ 1,779   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ 78      $ 364   

 

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


GAAP-6

Motorola Solutions, Inc. and Subsidiaries

Segment Information

(In millions)

Net Sales

 

     Three Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 1,465       $ 1,521         -4

Enterprise

     647         632         2
  

 

 

    

 

 

    

 

 

 

Company total

   $ 2,112       $ 2,153         -2
  

 

 

    

 

 

    

 

 

 
     Nine Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 4,262       $ 4,281         0

Enterprise

     1,930         1,976         -2
  

 

 

    

 

 

    

 

 

 

Company total

   $ 6,192       $ 6,257         -1
  

 

 

    

 

 

    

 

 

 

Operating Earnings

 

     Three Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 252       $ 273         -8

Enterprise

     68         51         33
  

 

 

    

 

 

    

 

 

 

Company total

   $ 320       $ 324         -1
  

 

 

    

 

 

    

 

 

 
     Nine Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 647       $ 620         4

Enterprise

     155         213         -27
  

 

 

    

 

 

    

 

 

 

Company total

   $ 802       $ 833         -4
  

 

 

    

 

 

    

 

 

 

Operating Earnings %

 

     Three Months Ended  
     September 28, 2013     September 29, 2012  

Government

     17.2     17.9

Enterprise

     10.5     8.1
  

 

 

   

 

 

 

Company total

     15.2     15.0
  

 

 

   

 

 

 
     Nine Months Ended  
     September 28, 2013     September 29, 2012  

Government

     15.2     14.5

Enterprise

     8.0     10.8
  

 

 

   

 

 

 

Company total

     13.0     13.3
  

 

 

   

 

 

 


Non-GAAP-1

Motorola Solutions, Inc. and Subsidiaries

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

Q1 2013

 

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

  

Intangibles amortization

   $ 6      $ 2      $ 4      $ 0.01   

Stock-based compensation expense

  

Cost of sales, SG&A and R&D

     45        14        31        0.11   

Reorganization of business charges

  

Cost of sales and Other charges

     11        3        8        0.03   

Tax benefit for prior period R&D tax credit

  

Income tax expense

       12        (12     (0.04

Reduction in deferred tax asset valuation allowance

  

Income tax expense

       11        (11     (0.04

Reduction in deferred tax liability for undistributed earnings

  

Income tax expense

       25        (25     (0.09
     

 

 

   

 

 

   

 

 

   

 

 

 

Total impact on Net earnings

      $ 62      $ 67      $ (5   $ (0.02
Q2 2013   

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

  

Intangibles amortization

   $ 6      $ 2      $ 4      $ 0.01   

Stock-based compensation expense

  

Cost of sales, SG&A and R&D

     34        10        24        0.09   

Reorganization of business charges

  

Cost of sales and Other charges

     28        6        22        0.08   
     

 

 

   

 

 

   

 

 

   

 

 

 

Total impact on Net earnings

      $ 68      $ 18      $ 50      $ 0.18   
Q3 2013   

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

  

Intangibles amortization

   $ 8      $ 2      $ 6      $ 0.02   

Stock-based compensation expense

  

Cost of sales, SG&A and R&D

     37      $ 12        25        0.10   

Reorganization of business charges

  

Cost of sales and Other charges

     32      $ 10        22        0.08   

Gain on sale of investment

  

Gain on sale of investment

     (23   $ (8     (15     (0.06

Result of tax rate change in foreign subsidiary

  

Income tax

     $ (6     6        0.02   
     

 

 

   

 

 

   

 

 

   

 

 

 

Total impact on Net earnings

      $ 54      $ 10      $ 44      $ 0.16   


Non-GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Segment Information

(In millions)

 

Net Sales   
     Three Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 1,465       $ 1,521         -4

Enterprise

     647         632         2
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 2,112       $ 2,153         -2
  

 

 

    

 

 

    

 

 

 
     Nine Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 4,262       $ 4,281         0

Enterprise

     1,930         1,976         -2
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 6,192       $ 6,257         -1
  

 

 

    

 

 

    

 

 

 
Non-GAAP Operating Earnings   
     Three Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 299       $ 310         -4

Enterprise

     98         77         27
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 397       $ 387         3
  

 

 

    

 

 

    

 

 

 
     Nine Months Ended         
     September 28, 2013      September 29, 2012      % Change  

Government

   $ 771       $ 735         5

Enterprise

     237         292         -19
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 1,008       $ 1,027         -2
  

 

 

    

 

 

    

 

 

 

 

Non-GAAP Operating Earnings %   
     Three Months Ended  
     September 28, 2013     September 29, 2012  

Government

     20.4     20.4

Enterprise

     15.1     12.2
  

 

 

   

 

 

 

Company Total

     18.8     18.0
  

 

 

   

 

 

 
     Nine Months Ended  
     September 28, 2013     September 29, 2012  

Government

     18.1     17.2

Enterprise

     12.3     14.8
  

 

 

   

 

 

 

Company Total

     16.3     16.4
  

 

 

   

 

 

 


Non-GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

 

Q1 2013   
     TOTAL     Government     Enterprise  

Net sales

   $ 1,973      $ 1,346      $ 627   

Operating earnings (“OE”)

   $ 216      $ 180      $ 36   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     45        30        15   

Reorganization of business charges

     11        7        4   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     62        37        25   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 278      $ 217      $ 61   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     10.9     13.4     5.7

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

     14.1     16.1     9.7
Q2 2013   
     TOTAL     Government     Enterprise  

Net sales

   $ 2,107      $ 1,451      $ 656   

Operating earnings

   $ 266      $ 215      $ 51   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     34        23        11   

Reorganization of business charges

     28        18        10   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     68        41        27   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 334      $ 256      $ 78   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     12.6     14.8     7.8

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

     15.9     17.6     11.9
Q3 2013   
     TOTAL     Government     Enterprise  

Net sales

   $ 2,112      $ 1,465      $ 647   

Operating earnings

   $ 320      $ 252      $ 68   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     37        25        12   

Reorganization of business charges

     32        21        11   

Intangibles amortization expense

     8        1        7   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     77        47        30   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 397      $ 299      $ 98   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     15.2     17.2     10.5

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

     18.8     20.4     15.1