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8-K - 8-K - Motorola Solutions, Inc.a10-8892_18k.htm

Exhibit 99.1

 

Motorola Announces First-Quarter 2010 Financial Results

 

Financial Highlights

 

·                  First-quarter sales of $5.0 billion

·                  First-quarter GAAP earnings of $0.03 per share, compared to a loss from continuing operations of $0.13 per share in first quarter 2009; first-quarter 2010 GAAP earnings include income of $0.01 per share from highlighted items

·                  Total cash* of $8.5 billion, a sequential increase of $455 million

·                  Enterprise Mobility Solutions sales of $1.7 billion; operating earnings of $141 million

·                  Mobile Devices sales of $1.6 billion; shipped 8.5 million handsets, including 2.3 million smartphones; operating loss of $192 million

·                  Networks sales of $896 million; operating earnings of $112 million

·                  Home sales of $838 million; operating earnings of $20 million

 

SCHAUMBURG, Ill. — April 29, 2010 — Motorola, Inc. (NYSE: MOT) today reported sales of $5.0 billion in the first quarter of 2010. The GAAP earnings in the first quarter of 2010 were $69 million, or $0.03 per share, which compares to a GAAP loss from continuing operations of $291 million, or $0.13 per share, in the first quarter of 2009.

 

First-quarter 2010 GAAP earnings include net income of $0.01 per share from highlighted items, which are described at the end of the press release. GAAP earnings per share also include non-cash expenses for stock-based compensation and amortization of intangibles totaling $0.04 per share in the first quarter of 2010. Further details are outlined at the end of this press release.

 

During the quarter, the Company generated positive operating cash flow of $485 million and ended the quarter with a total cash* position of $8.5 billion.

 

“We continue to execute on our business strategy, build momentum in smartphones and improve our operating performance. During the quarter, we increased smartphone shipments sequentially and introduced six new devices,” said Sanjay Jha, Motorola co-chief executive officer and CEO of Mobile Devices and Home. “We are in a strong position to improve our share in the rapidly growing smartphone market, particularly in light of our competitive portfolio, strengthened brand and improved carrier relationships.”

 

Jha added, “The Mobile Devices and Home businesses are uniquely positioned to capitalize on the convergence of mobile experiences and home entertainment. We remain focused on developing next-generation products to capitalize on the opportunities of this dynamic market.”

 



 

“Our Enterprise Mobility Solutions and Networks businesses performed very well during the quarter, delivering strong operating earnings and excellent cash generation,” said Greg Brown, Motorola co-chief executive officer and CEO of Motorola Solutions. “These businesses continue to deliver best-in-class market leadership and financial returns.”

 

Operating Results

 

Mobile Devices segment sales were $1.6 billion, down 9 percent compared with the year-ago quarter. The GAAP operating loss was $192 million, a significant improvement compared to the operating loss of $545 million in the year-ago quarter.

 

Mobile Devices highlights:

 

·                  Shipped 8.5 million units, including 2.3 million smartphones; continued to strengthen North America position and shipped smartphones to carrier, distributor and retail customers globally

·                  Introduced six new Android-powered smartphones: BACKFLIP™, QUENCH™/CLIQ XT™, DEVOUR™, as well as three products designed for the Asia market, the MOTO XT701, MT710 and XT800, bringing our smartphone portfolio to eight

·                  Introduced SHOP4APPS, an application store, currently available for our consumers in China to enhance their Motorola Android experience

 

Home segment sales were $838 million, down 18 percent compared with the year-ago quarter. GAAP operating earnings were $20 million, compared to $3 million in the year-ago quarter.

 

Home highlights:

 

·                  Shipped 3.1 million digital entertainment devices

·                  Announced QIP eco-friendly set-top boxes for Verizon FiOS™ customers

·                  Introduced innovative 3DTV set-tops for cable, significantly enhancing 3D experience for consumers

·                  Strengthened North America position and secured wins with four customers to support the delivery of ultra-broadband triple play services

 

Enterprise Mobility Solutions segment sales were $1.7 billion, up 6 percent compared with the year-ago quarter. GAAP operating earnings were $141 million, compared with operating earnings of $66 million in the year-ago quarter.

 



 

Enterprise Mobility Solutions highlights:

 

·                  Secured one of the single largest TETRA terminal contracts ever awarded in Europe, including more than 50,000 terminals, from the German Federal Ministry of Interior

·                  Received several North America contracts, including a number of multi-million dollar awards from cities, and three statewide expansion wins, including Michigan and Wyoming

·                  Announced a series of rugged digital bar code scanners for harsh industrial environments, and launched the first cordless digital imager designed for healthcare

·                  Continued momentum in retail and in transportation and logistics, including a win with Con-Way, a leader in freight transportation and logistics, for the selection of the MC75 mobile computers

 

Networks segment sales were $896 million, down 7 percent compared with the year-ago quarter. GAAP operating earnings were $112 million, compared to $62 million in the year-ago quarter.

 

Networks highlights:

 

·                  Announced contract with Zain for the first LTE network deployment in Saudi Arabia

·                  Achieved first over-the-air TD-LTE data sessions at the Expo Center for World Expo 2010 in Shanghai; selected by China Mobile Communications Corporation to provide indoor TD-LTE coverage at the World Expo

·                  Shipped 2 millionth WiMAX CPE and dongles, doubling cumulative shipments in just five months

 

Second-Quarter 2010 Outlook

 

The Company’s outlook for the second quarter of 2010 is for earnings of $0.07 to $0.09 per share. This outlook now excludes stock-based compensation and amortization of intangibles expenses of approximately $0.04 per share, as well as 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:

 

 

 

First Quarter

 

(In millions, except per share amounts)

 

2010

 

2009

 

 

 

 

 

 

 

Net sales

 

$

5,044

 

$

5,371

 

Gross margin

 

1,786

 

1,496

 

Operating earnings (loss)

 

76

 

(449

)

Earnings (loss) from continuing operations **

 

69

 

(291

)

Net earnings (loss) **

 

69

 

(231

)

Diluted earnings (loss) per common share: **

 

 

 

 

 

Continuing operations

 

0.03

 

(0.13

)

Discontinued operations

 

 

0.03

 

 

 

0.03

 

(0.10

)

 

 

 

 

 

 

Weighted average diluted common shares outstanding

 

2,341.3

 

2,280.5

 

 



 

Highlighted Items, Stock-Based Compensation Expense and Intangibles Amortization Expense

 

The table below includes highlighted items, stock-based compensation expense and intangibles amortization expense for the first quarter of 2010.

 

 

 

EPS Impact
Exp/(Inc)***

 

Tax-related benefit

 

$

(0.02

)

Legal settlement

 

(0.01

)

Separation-related transaction costs

 

0.01

 

Reorganization of business charges

 

0.01

 

Impact of Medicare Part D Subsidy tax law change

 

0.01

 

Total Highlighted Items

 

(0.01

)

 

 

 

 

Stock-based compensation expense

 

0.02

 

Intangibles amortization expense

 

0.02

 

 

 

 

 

Total

 

$

0.03

 

 

 

 

 

 

Conference Call and Webcast

 

Motorola will host its quarterly conference call beginning at 8 a.m. (U.S. Eastern Time) on Thursday, April 29. The conference call will be webcast live with audio and slides at www.motorola.com/investor.

 

Business Risks

 

This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about the timing and financial impact of the launch of new products and Motorola’s financial outlook for the second quarter of 2010. Motorola cautions the reader that the risk factors

 



 

below, as well as those on pages 17 through 29 in Item 1A of Motorola’s 2009 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola’s actual results to differ materially from those estimated or predicted in the forward-looking statements. 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 its plan to create two independent, publicly traded companies; (2) the economic outlook for the telecommunications and broadband industries; (3) the Company’s ability to improve financial performance in its Mobile Devices business, including the success of its smartphone strategy; (4) Mobile Device’s dependency on third-party operating systems and software, including Google’s Android operating system; (5) the level of demand for the Company’s products, particularly if consumers, businesses and governments defer purchases in response to tighter credit; (6) the Company’s ability to introduce new products and technologies in a timely manner; (7) unexpected negative consequences from the Company’s restructuring and cost reduction activities, including as a result of significant restructuring at the Mobile Devices business; (8) 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; (vi) difficulties or increased costs for the Company in obtaining financing; and (vii) the inability of the Company to sell accounts receivable and long-term receivables in volumes and on terms comparable to historical practices; (9) the Company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (10) risks related to dependence on certain key suppliers; (11) the impact on the Company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (12) risks related to the Company’s high volume of manufacturing in Asia; (13) the creditworthiness of the Company’s customers and distributors, particularly purchasers of large infrastructure systems; (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 foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the Company when competing for business in foreign markets; (17) the impact on the Company from continuing hostilities in countries where the Company does business; (18) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (19) the impact of changes in governmental policies, laws or regulations; (20) the outcome of currently ongoing and future tax matters; and

 



 

(21) negative consequences from the Company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola 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 equals Cash and cash equivalents plus Sigma Fund (current and non-current) plus Short-term investments.

 

** Amounts attributable to Motorola, Inc. common shareholders

 

*** Due to rounding, EPS impact may not be equal to the sum of individual items.

 

About Motorola

 

Motorola is known around the world for innovation in communications and is focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $22 billion in 2009. For more information, please visit www.motorola.com.

 

# # #

 

Media contact:

Jennifer Erickson

Motorola, Inc.

+1 847-435-5320

jennifer.erickson@motorola.com

 

Investor contact:

Dean Lindroth

Motorola, Inc.

+1 847-576-6899

dean.lindroth@motorola.com

 

MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2010. All rights reserved.

 


 


 

Motorola, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

 

 

Three Months Ended

 

 

 

April 3, 2010

 

December 31, 2009

 

April 4, 2009

 

Net sales

 

$

5,044

 

$

5,723

 

$

5,371

 

Costs of sales

 

3,258

 

3,680

 

3,875

 

Gross margin

 

1,786

 

2,043

 

1,496

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

876

 

890

 

869

 

Research and development expenditures

 

757

 

793

 

847

 

Separation-related transaction costs

 

25

 

23

 

 

Other charges (income)

 

(13

)

106

 

158

 

Intangibles amortization

 

65

 

68

 

71

 

Operating earnings (loss)

 

76

 

163

 

(449

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net

 

(33

)

(18

)

(35

)

Gain (loss) on sales of investments and businesses, net

 

8

 

57

 

(20

)

Other

 

12

 

(2

)

70

 

Total other income (expense)

 

(13

)

37

 

15

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations before income taxes

 

63

 

200

 

(434

)

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(5

)

57

 

(146

)

Earnings (loss) from continuing operations

 

68

 

143

 

(288

)

 

 

 

 

 

 

 

 

Earnings from discontinued operations, net of tax

 

 

 

60

 

Net earnings (loss)

 

68

 

143

 

(228

)

 

 

 

 

 

 

 

 

Less: Earnings (loss) attributable to noncontrolling interests

 

(1

)

1

 

3

 

Net earnings (loss) attributable to Motorola, Inc.

 

$

69

 

$

142

 

$

(231

)

 

 

 

 

 

 

 

 

Amounts attributable to Motorola, Inc. common shareholders

 

 

 

 

 

 

 

Earnings (loss) from continuing operations, net of tax

 

$

69

 

$

142

 

$

(291

)

Earnings from discontinued operations, net of tax

 

 

 

60

 

Net earnings (loss)

 

$

69

 

$

142

 

$

(231

)

 

 

 

 

 

 

 

 

Earnings (loss) per common share

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Continuing operations

 

$

0.03

 

$

0.06

 

$

(0.13

)

Discontinued operations

 

 

 

0.03

 

 

 

$

0.03

 

$

0.06

 

$

(0.10

)

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

Continuing operations

 

$

0.03

 

$

0.06

 

$

(0.13

)

Discontinued operations

 

 

 

0.03

 

 

 

$

0.03

 

$

0.06

 

$

(0.10

)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

2,315.7

 

2,311.4

 

2,280.5

 

Diluted

 

2,341.3

 

2,330.0

 

2,280.5

 

 

 

 

 

 

 

 

 

Dividends paid per share

 

$

 

$

 

$

0.05

 

 

 

 

Percentage of Net Sales*

 

Net sales

 

100

%

100

%

100

%

Costs of sales

 

64.6

%

64.3

%

72.1

%

Gross margin

 

35.4

%

35.7

%

27.9

%

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

17.4

%

15.6

%

16.2

%

Research and development expenditures

 

15.0

%

13.9

%

15.8

%

Separation-related transaction costs

 

0.5

%

0.4

%

0.0

%

Other charges (income)

 

-0.3

%

1.9

%

2.9

%

Intangibles amortization

 

1.3

%

1.2

%

1.3

%

Operating earnings (loss)

 

1.5

%

2.8

%

-8.4

%

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest exense, net

 

-0.7

%

-0.3

%

-0.7

%

Gain (loss) on sales of investments and businesses, net

 

0.2

%

1.0

%

-0.4

%

Other

 

0.2

%

0.0

%

1.3

%

Total other income (expense)

 

-0.3

%

0.6

%

0.3

%

Earnings (loss) from continuing operations before income taxes

 

1.2

%

3.5

%

-8.1

%

Income tax expense (benefit)

 

-0.1

%

1.0

%

-2.7

%

Earnings (loss) from continuing operations

 

1.3

%

2.5

%

-5.4

%

 

 

 

 

 

 

 

 

Earnings from discontinued operations, net of tax

 

0.0

%

0.0

%

1.1

%

Net earnings (loss)

 

1.3

%

2.5

%

-4.2

%

 

 

 

 

 

 

 

 

Less: Earnings (loss) attributable to noncontrolling interests

 

0.0

%

0.0

%

0.1

%

Net earnings (loss) attributable to Motorola, Inc.

 

1.4

%

2.5

%

-4.3

%

 


* Percentages may not add up due to rounding

 



 

Motorola, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

 

 

April 3,

 

December 31,

 

April 4,

 

 

 

2010

 

2009

 

2009

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,188

 

$

2,869

 

$

3,265

 

Sigma Fund

 

5,174

 

5,092

 

2,587

 

Short-term investments

 

6

 

2

 

19

 

Accounts receivable, net

 

3,086

 

3,495

 

3,689

 

Inventories, net

 

1,251

 

1,308

 

2,071

 

Deferred income taxes

 

1,125

 

1,082

 

1,161

 

Other current assets

 

2,066

 

2,184

 

2,919

 

Total current assets

 

15,896

 

16,032

 

15,711

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

2,088

 

2,154

 

2,322

 

Sigma Fund

 

116

 

66

 

257

 

Investments

 

408

 

459

 

498

 

Deferred income taxes

 

2,253

 

2,284

 

2,445

 

Goodwill

 

2,830

 

2,823

 

2,822

 

Other assets

 

1,669

 

1,785

 

1,708

 

Total assets

 

$

25,260

 

$

25,603

 

$

25,763

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Notes payable and current portion of long-term debt

 

$

532

 

$

536

 

$

63

 

Accounts payable

 

2,147

 

2,429

 

2,265

 

Accrued liabilities

 

5,194

 

5,296

 

6,728

 

Total current liabilities

 

7,873

 

8,261

 

9,056

 

 

 

 

 

 

 

 

 

Long-term debt

 

3,372

 

3,365

 

3,878

 

Other liabilities

 

3,970

 

4,094

 

3,463

 

 

 

 

 

 

 

 

 

Total Motorola, Inc. stockholders’ equity

 

9,944

 

9,775

 

9,275

 

 

 

 

 

 

 

 

 

Noncontrolling interests

 

101

 

108

 

91

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

25,260

 

$

25,603

 

$

25,763

 

 

 

 

 

 

 

 

 

Financial Ratios:

 

 

 

 

 

 

 

Total cash*

 

$

8,484

 

$

8,029

 

$

6,128

 

 


*Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments

 



 

Motorola, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

 

 

Three Months Ended

 

 

 

April 3, 2010

 

December 31, 2009

 

April 4, 2009

 

Operating

 

 

 

 

 

 

 

Net earnings (loss) attributable to Motorola, Inc.

 

$

69

 

$

142

 

$

(231

)

Earnings (loss) attributable to the noncontrolling interest

 

(1

)

1

 

3

 

Net earnings (loss)

 

68

 

143

 

(228

)

Earnings from discontinued operations, net of tax

 

 

 

60

 

Earnings (loss) from continuing operations

 

68

 

143

 

(288

)

Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

173

 

180

 

190

 

Non-cash other charges

 

(21

)

(5

)

(63

)

Share-based compensation expense

 

72

 

71

 

76

 

Loss (gain) on sales of investments and businesses, net

 

(8

)

(58

)

20

 

Deferred income taxes, including change in valuation allowance

 

(22

)

164

 

(197

)

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

 

 

 

 

 

 

 

Accounts receivable

 

411

 

(94

)

(204

)

Inventories

 

58

 

223

 

582

 

Other current assets

 

114

 

 

217

 

Accounts payable and accrued liabilities

 

(388

)

164

 

(1,355

)

Other assets and liabilities

 

28

 

89

 

8

 

Net cash provided by (used for) operating activities

 

485

 

877

 

(1,014

)

Investing

 

 

 

 

 

 

 

Acquisitions and investments, net

 

(23

)

(20

)

(15

)

Proceeds from sales of investments and businesses, net

 

22

 

35

 

137

 

Capital expenditures

 

(70

)

(86

)

(71

)

Proceeds from sales of property, plant and equipment

 

28

 

14

 

3

 

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

 

(116

)

(1,020

)

1,319

 

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

 

(4

)

14

 

206

 

Net cash provided by (used for) investing activities

 

(163

)

(1,063

)

1,579

 

Financing

 

 

 

 

 

 

 

Repayment of short-term borrowings, net

 

(4

)

(15

)

(31

)

Repayment of debt

 

(2

)

(2

)

(129

)

Issuance of common stock

 

63

 

6

 

56

 

Payment of dividends

 

 

 

(114

)

Other, net

 

(8

)

(1

)

 

Net cash provided by (used for) financing activities

 

49

 

(12

)

(218

)

Effect of exchange rate changes on cash and cash equivalents

 

(52

)

17

 

(146

)

Net increase (decrease) in cash and cash equivalents

 

319

 

(181

)

201

 

Cash and cash equivalents, beginning of period

 

2,869

 

3,050

 

3,064

 

Cash and cash equivalents, end of period

 

$

3,188

 

$

2,869

 

$

3,265

 

 



 

Motorola, Inc. and Subsidiaries

Segment Information

(In millions)

 

Summarized below are the Company’s Net sales and Operating earnings (loss) by reportable segment for the three months ended April 3, 2010 and April 4, 2009.

 

 

 

Net Sales

 

 

 

Three Months Ended
April 3, 2010

 

Three Months Ended
April 4, 2009

 

% Change from
2009

 

 

 

 

 

 

 

 

 

Mobile Devices

 

$

1,641

 

$

1,801

 

-9

%

Home

 

838

 

1,025

 

-18

%

Enterprise Mobility Solutions

 

1,694

 

1,599

 

6

%

Networks

 

896

 

966

 

-7

%

Segment Totals

 

5,069

 

5,391

 

-6

%

Other and Eliminations

 

(25

)

(20

)

25

%

Company Totals

 

$

5,044

 

$

5,371

 

-6

%

 

 

 

Operating Earnings (Loss)

 

 

 

Three Months Ended
April 3, 2010

 

Three Months Ended
April 4, 2009

 

% Change from
2009

 

 

 

 

 

 

 

 

 

Mobile Devices

 

$

(192

)

$

(545

)

-65

%

Home

 

20

 

3

 

567

%

Enterprise Mobility Solutions

 

141

 

66

 

114

%

Networks

 

112

 

62

 

81

%

Segment Totals

 

81

 

(414

)

***

 

Other and Eliminations

 

(5

)

(35

)

-86

%

Company Totals

 

$

76

 

$

(449

)

***

 

 


*** Percentage change is not meaningful.