Attached files

file filename
8-K - FORM 8-K - Motorola Solutions, Inc.d383950d8k.htm

Exhibit 99.1

Motorola Solutions Reports

Second-Quarter 2012 Financial Results

Raises full year revenue outlook

 

   

Increases quarterly cash dividend by 18 percent to $0.26 per share

 

   

Expands share repurchase program by $2.0 billion to $5.0 billion

 

   

Sales of $2.1 billion, up 8 percent from a year ago

 

   

Government sales of $1.5 billion, up 14 percent from a year ago

 

(In millions, except EPS)

   Q2 2012      Q2 2011      Change  

Total sales

   $ 2,148       $ 1,984         8

GAAP operating earnings

   $ 278       $ 159         75

Non-GAAP* operating earnings

   $ 350       $ 304         15

GAAP EPS from continuing operations**

   $ 0.60       $ 0.14         329

Non-GAAP EPS from continuing operations

   $ 0.70       $ 0.54         30

Click here for printable press release and financial tables.

SCHAUMBURG, Ill. – July 25, 2012 – Motorola Solutions, Inc. (NYSE: MSI) announced today its second-quarter 2012 results highlighted by sales of $2.1 billion, up 8 percent from the second quarter of 2011 driven by strong worldwide demand in its Government segment.

In addition, the company announced today that its board of directors has increased its regular quarterly cash dividend by 18 percent to $0.26 per share. The next quarterly dividend will be payable on Oct. 15, 2012, to stockholders of record at the close of business on Sept. 14, 2012. As part of its continuing plan to return capital to shareholders, the company’s board also has authorized an additional $2.0 billion in share repurchases, with no expiration date. This increase is in addition to the $3.0 billion currently authorized, $2.9 billion of which has been utilized in the last 12 months. The company may continue to repurchase shares from time to time in the open market or in other privately negotiated transactions, subject to market conditions.

Greg Brown, chairman and CEO of Motorola Solutions, said: “Our strong revenue and earnings growth continues to demonstrate the strength and resiliency of our business. We also are pleased to continue to return capital to our shareholders through an increased dividend and expanded share repurchase program.”

GAAP operating earnings in the second quarter of 2012 were $278 million or 12.9 percent of sales, compared to $159 million or 8 percent of sales in the second quarter of 2011. GAAP earnings per share (EPS) from continuing operations was $0.60, compared to $0.14 in the second quarter of 2011.

Non-GAAP operating earnings in the second quarter of 2012 were $350 million or 16.3 percent of sales, compared to $304 million or 15.3 percent of sales in the second quarter of 2011. Non-GAAP EPS from continuing operations was $0.70, compared to $0.54 in the second quarter of 2011. Non-GAAP financial information excludes after-tax expense of approximately $0.10 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 second quarter of 2012, the company generated $254 million in operating cash flow from continuing operations. Additionally, the company repurchased $439 million in shares, paid $64 million in dividends and ended the quarter with total cash*** of $3.7 billion.

Government segment sales were $1.5 billion, up 14 percent from the year-ago quarter, driven by growth in all regions. GAAP operating earnings were $197 million or 13.5 percent of sales compared to $105 million or 8.2 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $240 million or 16.4 percent of sales compared to $168 million or 13.1 percent of sales in the year-ago quarter.

Government highlights:

 

   

Secured multi-million dollar contracts with the states of Arkansas, Louisiana and Ohio; the City of Lakeland, Fla.; Pennsylvania State Police; Centre County in Pennsylvania; Utah Communication Agency Networks; London Underground; Chilean Investigative Police; Ecuador’s National Telecommunications Corporation for the National Police; Beijing Metro Line and Hong Kong Mass Transit Railway

 

   

Continued to demonstrate leadership in Public Safety LTE with the launch of the Brazilian Army’s test of 4G LTE technologies for public safety and Randall County, Texas contract for advanced computer-aided dispatch solutions that also incorporates a public safety LTE network and expands the LTE core owned by Harris County, Texas

 

   

With the City of Apopka, Fla., announced the world’s first deployment and acceptance of a dual mode ASTRO® 25 system with P25 TDMA trunking, which is being used by Apopka police, fire and emergency management personnel, as well as by Apopka Public Works

 

   

Introduced three new models in the MTP3000 TETRA handheld radio series that answer core user demands for increased user safety and reliability and set new standards with significant improvements in audio quality, increased network coverage, ruggedness and ease of use

Enterprise segment sales were $689 million, down 2 percent from the year-ago quarter, which included the anticipated decline in iDEN sales. GAAP operating earnings were $81 million or 11.8 percent of sales compared to $54 million or 7.7 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $110 million or 16.0 percent of sales compared to $136 million or 19.4 percent of sales in the year-ago quarter.

Enterprise highlights:

 

   

Secured contracts with key retail customers such as Tesco, CVS Caremark and Dunkin’ Donuts, as well as a services contract with UK Mail Group that includes asset tracking, security management, software upgrades and device management


   

Announced agreement to terms of a recommended $200 million cash offer to acquire Psion, a pioneer in quality enterprise mobile computing products and their application in industrial segments around the world

 

   

Introduced Motorola Solutions’ vision of the future of retail, including the launch of several advanced solutions for retailers such as the SB-1 smartbadge, MC40 Enterprise Assistant and Mobile Workforce Management software, which will bring retailers an omni-channel technology strategy that delivers a superior shopping experience

 

   

Hosted more than 160 North America and Latin America developers at AppForum to share how to architect next-generation solutions using the company’s latest tools, platforms, products and technologies including the RhoMobile Suite for application developers

Third Quarter and Full Year 2012 Outlook

The company expects third-quarter sales to grow approximately 3 percent compared with the third quarter of 2011, with EPS from continuing operations of $0.69 to $0.74. The company is increasing its full-year 2012 outlook of sales growth to 5 to 6 percent from approximately 5 percent compared with 2011. The operating earnings outlook remains at approximately 17 percent of sales. 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:

 

     Second Quarter  

(In millions, except per share amounts)

   2012      2011  

Net sales

   $ 2,148       $ 1,984   

Gross margin

     1,060         1,007   

Operating earnings

     278         159   

Earnings from continuing operations before income taxes

     240         61   

Income tax expense

     63         13   

Earnings from continuing operations**

     177         50   

Earnings from discontinued operations, net of tax

     5         299   

Net earnings

   $ 182       $ 349   

Diluted EPS from continuing operations:

   $ 0.60       $ 0.14   

Weighted average diluted common shares outstanding

     296.1         348.5   


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 second quarter of 2012.

 

(per diluted common share)

   Second Quarter
2012
 

GAAP Earnings per Common Share

   $ 0.60   

Highlighted Items:

  

Reorganization of business charges

   $ 0.03   

Tax expense from audit settlements and agreements

   $ (0.04
  

 

 

 

Total Highlighted Items

   $ (0.01
  

 

 

 

Stock-based compensation expense

   $ 0.10   

Intangible assets amortization expense

   $ 0.01   
  

 

 

 

Total Stock-Based Compensation Expense and Intangible Assets Amortization Expense

   $ 0.11   
  

 

 

 

Total Non-GAAP Adjustments

   $ 0.10   
  

 

 

 

Non-GAAP Earnings per Common Share

   $ 0.70   
  

 

 

 

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 Wednesday, July 25. 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, Motorola Solutions’ financial outlook for the third quarter and full year of 2012, 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 9 through 22 in Item 1A of Motorola Solutions, Inc.’s 2011 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, which may include: (i) potential 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; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (5) the company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (6) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (7) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (8) risks related to the company’s manufacturing and business operations in foreign countries; (9) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (10) 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; (11) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (12) 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; (13) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (14) 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; (15) the impact of the percentage of cash and cash equivalents held outside of the United States; (16) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (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; (20) negative consequences from the company’s outsourcing of various activities, including certain manufacturing, 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

 

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


About Motorola Solutions

Motorola Solutions is a leading provider of mission-critical communication products 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, MOTO, 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. ©2012 Motorola Solutions, Inc. All rights reserved.


       GAAP-1   

 

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

  

  

  

     Three Months Ended  
     June 30, 2012     July 2, 2011  

Net sales from products

   $  1,563      $ 1,453   

Net sales from services

     585        531   
  

 

 

   

 

 

 

Net sales

     2,148        1,984   

Costs of products sales

     712        645   

Costs of services sales

     376        332   
  

 

 

   

 

 

 

Costs of sales

     1,088        977   
  

 

 

   

 

 

 

Gross margin

     1,060        1,007   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     496        482   

Research and development expenditures

     269        260   

Other charges

     11        56   

Intangibles amortization

     6        50   
  

 

 

   

 

 

 

Operating earnings

     278        159   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     (16     (21

Gain on sales of investments and businesses, net

     3        1   

Other

     (25     (78
  

 

 

   

 

 

 

Total other expense

     (38     (98
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     240        61   

Income tax expense

     63        13   
  

 

 

   

 

 

 

Earnings from continuing operations

     177        48   

Earnings from discontinued operations, net of tax

     5        299   
  

 

 

   

 

 

 

Net earnings

     182        347   

Less: Loss attributable to noncontrolling interests

     —          (2
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 182      $ 349   
  

 

 

   

 

 

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

    

Earnings from continuing operations, net of tax

   $ 177      $ 50   

Earnings from discontinued operations, net of tax

     5        299   
  

 

 

   

 

 

 

Net earnings

   $ 182      $ 349   
  

 

 

   

 

 

 

Earnings per common share

    

Basic:

    

Continuing operations

   $ 0.61      $ 0.15   

Discontinued operations

     0.02        0.87   
  

 

 

   

 

 

 
   $ 0.63      $ 1.02   
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 0.60      $ 0.14   

Discontinued operations

     0.01        0.86   
  

 

 

   

 

 

 
   $ 0.61      $ 1.00   
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     290.6        341.2   

Diluted

     296.1        348.5   
     Percentage of Net Sales*  

Net sales from products

     72.8     73.2

Net sales from services

     27.2     26.8
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     45.6     44.4

Costs of services sales

     64.3     62.5
  

 

 

   

 

 

 

Costs of sales

     50.7     49.2
  

 

 

   

 

 

 

Gross margin

     49.3     50.8
  

 

 

   

 

 

 

Selling, general and administrative expenses

     23.1     24.3

Research and development expenditures

     12.5     13.1

Other charges

     0.5     2.8

Intangibles amortization

     0.3     2.5
  

 

 

   

 

 

 

Operating earnings

     12.9     8.0
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     -0.7     -1.1

Gain on sales of investments and businesses, net

     0.1     0.1

Other

     -1.2     -3.9
  

 

 

   

 

 

 

Total other expense

     -1.8     -4.9
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     11.2     3.1

Income tax expense

     2.9     0.7
  

 

 

   

 

 

 

Earnings from continuing operations

     8.2     2.4

Earnings from discontinued operations, net of tax

     0.2     15.1
  

 

 

   

 

 

 

Net earnings

     8.5     17.5

Less: Loss attributable to noncontrolling interests

     0.0     -0.1
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     8.5     17.6
  

 

 

   

 

 

 

 

* 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)

 

  

  

  

     Six Months Ended  
     June 30, 2012     July 2, 2011  

Net sales from products

   $  3,007      $ 2,827   

Net sales from services

     1,097        991   
  

 

 

   

 

 

 

Net sales

     4,104        3,818   

Costs of products sales

     1,370        1,269   

Costs of services sales

     701        618   
  

 

 

   

 

 

 

Costs of sales

     2,071        1,887   
  

 

 

   

 

 

 

Gross margin

     2,033        1,931   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     968        943   

Research and development expenditures

     523        499   

Other charges

     20        61   

Intangibles amortization

     12        100   
  

 

 

   

 

 

 

Operating earnings

     510        328   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     (30     (41

Gain on sales of investments and businesses, net

     20        19   

Other

     (16     (73
  

 

 

   

 

 

 

Total other expense

     (26     (95
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     484        233   

Income tax expense (benefit)

     148        (176
  

 

 

   

 

 

 

Earnings from continuing operations

     336        409   

Earnings from discontinued operations, net of tax

     3        429   
  

 

 

   

 

 

 

Net earnings

     339        838   

Less: Loss attributable to noncontrolling interests

     —          (8
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 339      $ 846   
  

 

 

   

 

 

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

    

Earnings from continuing operations, net of tax

   $ 336      $ 417   

Earnings from discontinued operations, net of tax

     3        429   
  

 

 

   

 

 

 

Net earnings

   $ 339      $ 846   
  

 

 

   

 

 

 

Earnings per common share

    

Basic:

    

Continuing operations

   $ 1.11      $ 1.23   

Discontinued operations

     0.01        1.26   
  

 

 

   

 

 

 
   $ 1.12      $ 2.49   
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 1.09      $ 1.20   

Discontinued operations

     0.01        1.24   
  

 

 

   

 

 

 
   $ 1.10      $ 2.44   
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     302.1        339.3   

Diluted

     308.1        346.3   
     Percentage of Net Sales*  

Net sales from products

     73.3     74.0

Net sales from services

     26.7     26.0
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     45.6     44.9

Costs of services sales

     63.9     62.4
  

 

 

   

 

 

 

Costs of sales

     50.5     49.4
  

 

 

   

 

 

 

Gross margin

     49.5     50.6
  

 

 

   

 

 

 

Selling, general and administrative expenses

     23.6     24.7

Research and development expenditures

     12.7     13.1

Other charges

     0.5     1.6

Intangibles amortization

     0.3     2.6
  

 

 

   

 

 

 

Operating earnings

     12.4     8.6
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     -0.7     -1.1

Gain on sales of investments and businesses, net

     0.5     0.5

Other

     -0.4     -1.9
  

 

 

   

 

 

 

Total other expense

     -0.6     -2.5
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     11.8     6.1

Income tax expense (benefit)

     3.6     -4.6
  

 

 

   

 

 

 

Earnings from continuing operations

     8.2     10.7

Earnings from discontinued operations, net of tax

     0.1     11.2
  

 

 

   

 

 

 

Net earnings

     8.3     21.9

Less: Loss attributable to noncontrolling interests

     0.0     -0.2
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     8.3     22.2
  

 

 

   

 

 

 

 

* Percentages may not add up due to rounding


        GAAP-3   

 

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

  

  

  

     June 30,
2012
     December 31,
2011
 

Assets

     

Cash and cash equivalents

   $ 1,772       $ 1,881   

Sigma Fund and short-term investments

     1,933         3,210   

Accounts receivable, net

     1,590         1,866   

Inventories, net

     488         512   

Deferred income taxes

     679         613   

Other current assets

     761         686   
  

 

 

    

 

 

 

Total current assets

     7,223         8,768   
  

 

 

    

 

 

 

Property, plant and equipment, net

     857         896   

Investments

     200         166   

Deferred income taxes

     2,190         2,375   

Goodwill

     1,430         1,428   

Other assets

     293         296   
  

 

 

    

 

 

 

Total assets

   $ 12,193       $ 13,929   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current portion of long-term debt

   $ 4       $ 405   

Accounts payable

     637         677   

Accrued liabilities

     2,349         2,733   
  

 

 

    

 

 

 

Total current liabilities

     2,990         3,815   
  

 

 

    

 

 

 

Long-term debt

     1,861         1,130   

Other liabilities

     3,469         3,710   

Total Motorola Solutions, Inc. stockholders’ equity

     3,848         5,214   
  

 

 

    

 

 

 

Noncontrolling interests

     25         60   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 12,193       $ 13,929   
  

 

 

    

 

 

 

Total cash*

   $ 3,705       $ 5,091   

Net cash**

     1,840         3,556   

 

* Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments
** cash = Total cash - Notes payable and 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  
     June 30, 2012     July 2, 2011  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 182      $ 349   

Loss attributable to noncontrolling interests

     —          (2
  

 

 

   

 

 

 

Net earnings

     182        347   

Earnings from discontinued operations, net of tax

     5        299   
  

 

 

   

 

 

 

Earnings from continuing operations

     177        48   

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

    

Depreciation and amortization

     54        90   

Non-cash other expense (income)

     (2     53   

Share-based compensation expense

     52        39   

Gain on sales of investments and businesses, net

     (3     (1

Loss from the extinguishment of long-term debt

     6        81   

Deferred income taxes

     66        104   

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

    

Accounts receivable

     121        (87

Inventories

     (17     (2

Other current assets

     23        22   

Accounts payable and accrued liabilities

     (134     (117

Other assets and liabilities

     (89     (136
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     254        94   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     (25     (2

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

     (12     1,026   

Capital expenditures

     (52     (33

Proceeds from sales of property, plant and equipment

     9        3   

Proceeds from sales (purchases) of Sigma Fund investments, net

     114        (975

Proceeds from sales of short-term investments, net

     —          6   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     34        25   
  

 

 

   

 

 

 

Financing

    

Repayment of debt

     (411     (616

Proceeds from issuance of debt

     747        —     

Issuance of common stock

     33        58   

Purchase of common stock

     (439     —     

Excess tax benefits from share-based compensation

     11        —     

Payment of dividends

     (64     —     

Contribution to Motorola Mobility

     (73     —     

Distribution to discontinued operations

     —          (128
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

     (196     (686
  

 

 

   

 

 

 

Discontinued Operations

    

Net cash used for operating activities from discontinued operations

     —          (145

Net cash used for investing activities from discontinued operations

     —          (2

Net cash provided by financing activities from discontinued operations

     —          128   

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

     —          19   
  

 

 

   

 

 

 

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

     —          —     
  

 

 

   

 

 

 

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

     (40     6   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     52        (561

Cash and cash equivalents, beginning of period

     1,720        2,764   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,772      $ 2,203   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ 202      $ 61   

 

* 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)

 

  

  

  

     Six Months Ended  
     June 30, 2012     July 2, 2011  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 339      $ 846   

Loss attributable to noncontrolling interests

     —          (8
  

 

 

   

 

 

 

Net earnings

     339        838   

Earnings from discontinued operations, net of tax

     3        429   
  

 

 

   

 

 

 

Earnings from continuing operations

     336        409   

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

    

Depreciation and amortization

     106        181   

Non-cash other expense (income)

     (1     45   

Share-based compensation expense

     95        78   

Gain on sales of investments and businesses, net

     (20     (19

Loss from the extinguishment of long-term debt

     6        81   

Deferred income taxes

     93        (10

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

    

Accounts receivable

     262        88   

Inventories

     (8     (12

Other current assets

     (77     9   

Accounts payable and accrued liabilities

     (383     (338

Other assets and liabilities

     (87     (185
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     322        327   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     68        (2

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

     (67     1,078   

Capital expenditures

     (101     (60

Proceeds from sales of property, plant and equipment

     9        4   

Proceeds from sales of Sigma Fund investments, net

     1,277        266   

Proceeds from sales of short-term investments, net

     —          6   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     1,186        1,292   
  

 

 

   

 

 

 

Financing

    

Repayment of debt

     (411     (616

Proceeds from issuance of debt

     747     

Issuance of common stock

     63        128   

Purchase of common stock

     (1,804     —     

Excess tax benefits from share-based compensation

     17        —     

Payments of dividends

     (134     —     

Contributions to Motorola Mobility

     (73     (3,200

Distribution from (to) discontinued operations

     (11     81   
  

 

 

   

 

 

 

Net cash provided by used for financing activities from continuing operations

     (1,606     (3,607
  

 

 

   

 

 

 

Discontinued Operations

    

Net cash provided by operating activities from discontinued operations

     2        44   

Net cash used for investing activities from discontinued operations

     —          (8

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

     11        (81

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

     (13     45   
  

 

 

   

 

 

 

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

     —          —     
  

 

 

   

 

 

 

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

     (11     (17
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (109     (2,005

Cash and cash equivalents, beginning of period

     1,881        4,208   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,772      $ 2,203   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ 221      $ 267   

 

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


         GAAP-6

 

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 six months ended June 30, 2012 and July 2, 2011.

 

Net Sales

 

     Three Months Ended         
     June 30, 2012      July 2, 2011          % Change  

Government

   $ 1,459       $ 1,284         14

Enterprise

     689         700         -2
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 2,148       $ 1,984         8
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 30, 2012      July 2, 2011          % Change  

Government

   $ 2,760       $ 2,451         13

Enterprise

     1,344         1,367         -2
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 4,104       $ 3,818         7
  

 

 

    

 

 

    

 

 

 

Operating Earnings

 

     Three Months Ended         
     June 30, 2012      July 2, 2011          % Change  

Government

   $ 197       $ 105         88

Enterprise

     81         54         50
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 278       $ 159         75
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 30, 2012      July 2, 2011          % Change  

Government

   $ 347       $ 204         70

Enterprise

     163         124         31
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 510       $ 328         55
  

 

 

    

 

 

    

 

 

 

Operating Earnings %

 

     Three Months Ended        
     June 30, 2012     July 2, 2011         % Change  

Government

     13.5     8.2     65

Enterprise

     11.8     7.7     52
  

 

 

   

 

 

   

 

 

 

Company Total

     12.9     8.0     61
  

 

 

   

 

 

   

 

 

 
     Six Months Ended        
     June 30, 2012     July 2, 2011         % Change  

Government

     12.6     8.3     51

Enterprise

     12.1     9.1     34
  

 

 

   

 

 

   

 

 

 

Company Total

     12.4     8.6     45
  

 

 

   

 

 

   

 

 

 


                 Non-GAAP-1   

 

Motorola Solutions, Inc. and Subsidiaries

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

 

Q1 2012

 

  

  

  

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

     43        13        30        0.09   

Reorganization of business charges

  

Cost of sales and Other charges

     9        3        6        0.02   

Gain on equity investments

  

Gain on sales of investments and businesses, net

     (16     (6     (10     (0.03
     

 

 

   

 

 

   

 

 

   

 

 

 

Total continuing operations impact

      $ 42      $ 12      $ 30      $ 0.09   

Q2 2012

 

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

     52         21         31        0.10   

Reorganization of business charges

  

Cost of sales and Other charges

     14         5         9        0.03   

Tax expense from audit settlements and agreements

  

Income tax (expense) benefit

     —           13         (13     (0.04
     

 

 

    

 

 

    

 

 

   

 

 

 

Total continuing operations impact

      $ 72       $ 41       $ 31      $ 0.10   


           Non-GAAP-2   

 

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Segment Information

(In millions)

 

Non-GAAP Operating Earnings

 

  

  

  

  

     Three Months Ended         
     June 30, 2012      July 2, 2011      % Change  

Government

   $ 240       $ 168         43

Enterprise

     110         136         -19
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 350       $ 304         15
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 30, 2012      July 2, 2011      % Change  

Government

   $ 424       $ 302         40

Enterprise

     216         268         -19
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 640       $ 570         12
  

 

 

    

 

 

    

 

 

 

Non-GAAP Operating Earnings %

 

     Three Months Ended        
     June 30, 2012     July 2, 2011     % Change  

Government

     16.4     13.1     26

Enterprise

     16.0     19.4     -18
  

 

 

   

 

 

   

 

 

 

Company Total

     16.3     15.3     6
  

 

 

   

 

 

   

 

 

 
     Six Months Ended        
     June 30, 2012     July 2, 2011     % Change  

Government

     15.4     12.3     25

Enterprise

     16.1     19.6     -18
  

 

 

   

 

 

   

 

 

 

Company Total

     15.6     14.9     4
  

 

 

   

 

 

   

 

 

 


           Non-GAAP-3   

 

Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

 

Q1 2012

 

  

  

  

     TOTAL     Government     Enterprise  

Net sales

   $ 1,956      $ 1,301      $ 655   

Operating earnings

   $ 232      $ 150      $ 82   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     43        27        16   

Reorganization of business charges

     9        7        2   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     58        34        24   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 290      $ 184      $ 106   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     11.9     11.5     12.5

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

     14.8     14.1     16.2

Q2 2012

 

     TOTAL     Government     Enterprise  

Net sales

   $ 2,148      $ 1,459      $ 689   

Operating earnings

   $ 278      $ 197      $ 81   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     52        34        18   

Reorganization of business charges

     14        9        5   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     72        43        29   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 350      $ 240      $ 110   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     12.9     13.5     11.8

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

     16.3     16.4     16.0