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8-K - FORM 8-K - Motorola Solutions, Inc.d8k.htm
EX-99.2 - PRESS RELEASE ANNOUNCING THE ELECTION OF KENNETH C. DAHLBERG, DATED JULY 27, 201 - Motorola Solutions, Inc.dex992.htm

Exhibit 99.1

Motorola Solutions Reports Second-Quarter Results

Company Raises Full Year Outlook

 

   

Announces $0.22 per share quarterly cash dividend

 

   

Board of directors authorizes up to $2.0 billion share repurchase program through 2012

 

   

Ended quarter with total cash* of $6.7 billion

 

   

Sales of $2.1 billion, up 6 percent from second-quarter 2010

 

   

Government sales of $1.3 billion, up 4 percent from second-quarter 2010

 

   

Enterprise sales of $747 million, up 11 percent from second-quarter 2010

 

(In millions, except earnings per share)

   Q2 2011      Q2 2010      Change  

Total sales

   $ 2,055       $ 1,936         6

GAAP operating earnings

   $ 170       $ 161         6

Non-GAAP operating earnings

   $ 315       $ 267         18

GAAP EPS from continuing operations**

   $ 0.17       $ 0.01         1600

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

   $ 0.57       $ 0.37         54

SCHAUMBURG, Ill. – July 28, 2011 – Motorola Solutions, Inc. (NYSE: MSI) announced today its second-quarter 2011 results highlighted by sales of $2.1 billion, up 6 percent from the second quarter of 2010 and driven by solid demand across both its Government and Enterprise segments.

In addition, the company announced today that its board of directors has authorized the initiation of a regular quarterly dividend of $0.22 per outstanding share of the company’s common stock. The first dividend will be payable on Oct. 14, 2011, to shareholders of record at the close of business on Sept. 15, 2011. As part of a broader return of capital plan, the company’s board has authorized a share repurchase program of up to $2.0 billion through the end of 2012. The company may 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 solid revenue growth and improved operating leverage further demonstrate the strength of our business. Based on this performance, we have raised our full year outlook. Additionally, the dividend and share repurchase program reinforce our commitment to return capital to shareholders while maintaining strategic flexibility.”


GAAP operating earnings in the second quarter of 2011 were $170 million or 8 percent of sales, compared to $161 million or 8 percent of sales in the second quarter of 2010. GAAP earnings per share from continuing operations** were $0.17, compared to $0.01 in the second quarter of 2010.

Non-GAAP*** operating earnings in the second quarter of 2011 were $315 million or 15 percent of sales, compared to $267 million or 14 percent of sales in the second quarter of 2010. Non-GAAP earnings per share from continuing operations were $0.57, compared to $0.37 in the second quarter of 2010. Non-GAAP financial information excludes after-tax benefits of approximately $0.40 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 2011, the company generated $102 million in operating cash flow from continuing operations. The company also retired $540 million in debt and ended the quarter with total cash* of $6.7 billion.

Government segment sales were $1.3 billion, up 4 percent from the year-ago quarter. GAAP operating earnings were $111 million or 8 percent of sales compared to $117 million or 9 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $174 million or 13 percent of sales compared to $158 million or 13 percent of sales in the year-ago quarter.

Government highlights:

 

 

Received $56 million award to implement a 700 MHz LTE Broadband Data System for the Mississippi Wireless Communication Commission

 

 

Secured multi-million dollar public safety contracts in Bucks County, Pennsylvania; Fort Worth, Texas; Lower Saxony, Germany and Shenzhen, China

 

 

Recognized for APX 7000XE P25 portable radio product design with Gold International Design Excellence Award (IDEA®), which fosters understanding of the impact of design excellence on the quality of life and the economy

Enterprise segment sales were $747 million, up 11 percent from the year-ago quarter. GAAP operating earnings were $59 million or 8 percent of sales compared to $44 million or 7 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $141 million or 19 percent of sales compared to $109 million or 16 percent of sales in the year-ago quarter.

Enterprise highlights:

 

   

Continued strong growth in the regions and vertical markets, especially in retail with major mobile computing contracts such as Macy’s in North America, a leading Russian retailer, a major supermarket in the Netherlands and two major retailers in France

 

   

Received “Strong Positive” rating in Gartner’s Rugged Handheld Computer MarketScope

 

   

Expanded and scaled WiNG 5 wireless LAN portfolio by introducing a powerful NOC controller and high-performance 802.11n access points that help enterprise and government customers support rapid growth of wireless devices and multimedia applications in their organizations


Results from Discontinued Operations

Second-quarter net earnings from discontinued operations were $291 million, which substantially relate to operations of the Networks business that Motorola Solutions sold to Nokia Siemens Networks on April 29, 2011 for net cash proceeds in excess of $1 billion.

Third-Quarter and Full Year 2011 Outlook

The company expects to see growth across both government and enterprise segments. Third-quarter sales are expected to grow between 7 and 8 percent over the third quarter of 2010 with EPS from continuing operations of $0.56 to $0.61. 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. The company now expects full-year revenue growth of 5.5 to 6 percent with operating earnings of approximately 16.5 percent of sales.

Consolidated GAAP Results

A comparison of results from operations is as follows:

 

     Second Quarter  

(In millions, except per share amounts)

   2011      2010  

Net sales

   $ 2,055       $ 1,936   

Gross margin

     1,039         965   

Operating earnings

     170         161   

Earnings from continuing operations**

     58         3   

Net earnings **

     349         162   

Diluted earnings per common share from continuing operations: **

   $ 0.17       $ 0.01   

Weighted average diluted common shares outstanding

     348.5         337.9   
  

 

 

    

 

 

 

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 2011.

 

(per diluted common share)

   Second Quarter
2011
 

GAAP Earnings per Common Share

   $ 0.17   

Highlighted Items:

  

Debt extinguishment loss

     0.14   

Reorganization of business charges

     0.04   

Legal matters, net

     0.08   

Pension plan adjustments, net

     (0.03
  

 

 

 

Total Highlighted Items

     0.23   
  

 

 

 

Stock-based compensation expense

     0.08   

Intangible assets amortization expense

     0.09   
  

 

 

 

Stock-Based Compensation Expense and Intangible Assets Amortization Expense

     0.17   
  

 

 

 

Total Non-GAAP Adjustments

     0.40   
  

 

 

 

Non-GAAP Earnings per Common Share

   $ 0.57   
  

 

 

 


Conference Call and Webcast

Motorola Solutions will host its quarterly conference call beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time) on Thursday, July 28. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.

Use of Non-GAAP Financial Information

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

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


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

Intangible assets amortization expense: The company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net income measurements, primarily because it represents a significant non-cash expense and because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company’s acquisitions. Investors should note that the use of intangible assets contributed to the company’s revenues earned during the periods presented and will contribute to the company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.

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

Business Risks

This press release contains “forward-looking statements” within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, the timing and ability to repurchase shares under the share repurchase program, our ability to pay future dividends, and Motorola Solutions’ financial outlook for the third quarter and full year of 2011. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 12 through 25 in Item 1A of Motorola Solutions, Inc.’s 2010 Annual Report on Form 10-K, on page 46 in Item 1A of Motorola Solutions, Inc.’s First Quarter Quarterly Report on Form 10-Q, and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions and factors that may impact forward-looking statements include, but are not limited to: (1) possible negative effects on the company’s business operations, financial performance or assets as a result of the separation into two independent, publicly traded companies, which may include: (i) diminished purchasing leverage and increased exposure to market fluctuations as a result of being a smaller, more focused company, (ii) ongoing obligations relating to certain debt and pension liabilities and certain corporate litigation matters retained by Motorola Solutions after the separation, and (iii) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (2) the economic outlook for the government and enterprise communications industries; (3) the level of demand for the company’s products,


particularly if businesses and governments defer purchases in response to tighter credit; (4) the company’s ability to introduce new products and technologies in a timely manner; (5) unexpected negative consequences from the company’s restructuring and cost reduction activities; (6) negative impact on the company’s business from global economic conditions, which may include: (i) the inability of customers to obtain financing for purchases of the company’s products; (ii) the viability of the company’s suppliers that may no longer have access to necessary financing; (iii) changes in the value of investments held by the company’s pension plan and other defined benefit plans; (iv) fair and/or actual value of the company’s debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the company’s financial position; and (vi) difficulties or increased costs for the company in obtaining financing; (7) the company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions and recent events in Japan; (8) risks related to dependence on certain key suppliers; (9) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (10) risks related to the company’s manufacturing and business operations in foreign countries; (11) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (12) risks related to the fact that certain customers require that the company build, own and operate their systems, often over a multi-year period; (13) variability in income received from licensing the company’s intellectual property to others, as well as expenses incurred when the company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the company when competing for business in foreign markets; (16) the impact of the increased percentage of cash and cash equivalents held outside of the United States; (17) the ability of the company to repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

Definitions

 

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

Gartner, Inc., MarketScope for the Ruggedized Handheld-Computer Market (Global), Tim Zimmerman, Ken Dulaney, William Clark, March 25, 2011.

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.


About Gartner’s MarketScope

The MarketScope is copyrighted 2011 by Gartner, Inc. and is reused with permission. The MarketScope is an evaluation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the MarketScope, and does not advise technology users to select only those vendors with the highest rating. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Media Contacts

Nick Sweers

Motorola Solutions

+1 847-576-2462

nicholas.sweers@motorolasolutions.com

Tama McWhinney

Motorola Solutions

+1 847-538-1865

tama.mcwhinney@motorolasolutions.com

Investor Contacts

Shep Dunlap

Motorola Solutions

+1 847-576-6899

shep.dunlap@motorolasolutions.com

Jason Winkler

Motorola Solutions

+1 847-576-4995

jason.winkler@motorolasolutions.com

MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2011 Motorola Solutions, Inc. All rights reserved.


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

    Three Months Ended  
    July 2, 2011         July 3, 2010  

Net sales from products

  $ 1,524        $ 1,438   

Net sales from services

    531          498   

Net sales

    2,055          1,936   

 

Costs of products sales

    685          656   

Costs of services sales

    331          315   

 

Costs of sales

    1,016          971   

Gross margin

    1,039          965   

Selling, general and administrative expenses

    492          471   

Research and development expenditures

    271          269   

Other charges

    56          14   

Intangibles amortization

    50          50   

Operating earnings

    170          161   

Other income (expense):

         

Interest expense, net

    (21       (35

Gain on sales of investments and businesses, net

    1          33   

Other

    (77       (30

Total other income (expense)

    (97       (32

 

Earnings from continuing operations before income taxes

    73          129   

 

Income tax expense

    17          122   

Earnings from continuing operations

    56          7   

 

Earnings from discontinued operations, net of tax

    291          159   

Net earnings

    347          166   

 

Less: Earnings (loss) attributable to noncontrolling interests

    (2       4   

Net earnings attributable to Motorola Solutions, Inc.

  $ 349        $ 162   

Amounts attributable to Motorola Solutions, Inc. common shareholders

         

Earnings from continuing operations, net of tax

  $ 58        $ 3   

Earnings from discontinued operations, net of tax

    291          159   

Net earnings

  $ 349        $ 162   

 

Earnings per common share

         

Basic:

         

Continuing operations

  $ 0.17        $ 0.01   

Discontinued operations

    0.85          0.48   
  $ 1.02        $ 0.49   
   

Diluted:

         

Continuing operations

  $ 0.17        $ 0.01   

Discontinued operations

    0.83          0.47   
  $ 1.00        $ 0.48   

Weighted average common shares outstanding

         

Basic

    341.2          332.7   

Diluted

    348.5          337.9   
     
    Percentage of Net Sales*  

Net sales from products

    74.2       74.3

Net sales from services

    25.8       25.7

Net sales

    100       100

Costs of products sales

    44.9       45.6

Costs of services sales

    62.3       63.3

Costs of sales

    49.4       50.2
                 

Gross margin

    50.6       49.8

Selling, general and administrative expenses

    23.9       24.3

Research and development expenditures

    13.2       13.9

Other charges

    2.7       0.7

Intangibles amortization

    2.4       2.6

Operating earnings

    8.3       8.3

Other income (expense):

         

Interest expense, net

    -1.0       -1.8

Gain on sales of investments and businesses, net

    0.0       1.7

Other

    -3.7       -1.5

Total other income (expense)

    -4.7       -1.7

Earnings from continuing operations before income taxes

    3.6       6.7

Income tax expense

    0.8       6.3

Earnings from continuing operations

    2.7       0.4

Earnings from discontinued operations, net of tax

    14.2       8.2

Net earnings

    16.9       8.6

Less: Earnings (loss) attributable to noncontrolling interests

    -0.1       0.2

Net earnings attributable to Motorola Solutions, Inc.

    17.0       8.4

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

     Six Months Ended  
     July 2, 2011          July 3, 2010  

Net sales from products

   $  2,948         $  2,729   

Net sales from services

     991           947   

Net sales

     3,939           3,676   

 

Costs of products sales

     1,341           1,250   

Costs of services sales

     617           608   

Costs of sales

     1,958           1,858   

 

Gross margin

     1,981           1,818   

Selling, general and administrative expenses

     960           925   

Research and development expenditures

     520           527   

Other charges (income)

     61           (16

Intangibles amortization

     100           101   

Operating earnings

     340           281   

 

Other income (expense):

           

Interest expense, net

     (41        (68

Gain on sales of investments and businesses, net

     19           40   

Other

     (72        (15

Total other income (expense)

     (94        (43

 

Earnings from continuing operations before income taxes

     246           238   

 

Income tax expense (benefit)

     (169        135   

 

Earnings from continuing operations

     415           103   

 

Earnings from discontinued operations, net of tax

     423           131   

Net earnings

     838           234   

 

Less: Earnings (loss) attributable to noncontrolling interests

     (8        3   

Net earnings attributable to Motorola Solutions, Inc.

   $ 846         $ 231   

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

           

Earnings from continuing operations, net of tax

   $ 423         $ 100   

Earnings from discontinued operations, net of tax

     423           131   

Net earnings

   $ 846         $ 231   
   

Earnings per common share

           

Basic:

           

Continuing operations

   $ 1.24         $ 0.30   

Discontinued operations

     1.25           0.40   
   $ 2.49         $ 0.70   

Diluted:

           

Continuing operations

   $ 1.22         $ 0.30   

Discontinued operations

     1.22           0.39   
   $ 2.44         $ 0.69   
   

Weighted average common shares outstanding

           

Basic

     339.3           331.7   

Diluted

     346.3           336.1   
       
     Percentage of Net Sales*  

Net sales from products

     74.8        74.2

Net sales from services

     25.2        25.8

Net sales

     100        100

Costs of products sales

     45.5        45.8

Costs of services sales

     62.3        64.2

Costs of sales

     49.7        50.5
                   

Gross margin

     50.3        49.5

 

Selling, general and administrative expenses

     24.4        25.2

Research and development expenditures

     13.2        14.3

Other charges (income)

     1.5        -0.4

Intangibles amortization

     2.5        2.7

Operating earnings

     8.6        7.6

 

Other income (expense):

           

Interest expense, net

     -1.0        -1.8

Gain on sales of investments and businesses, net

     0.5        1.1

Other

     -1.8        -0.4

Total other income (expense)

     -2.4        -1.2

Earnings from continuing operations before income taxes

     6.2        6.5

Income tax expense (benefit)

     -4.3        3.7

Earnings from continuing operations

     10.5        2.8

 

Earnings from discontinued operations, net of tax

     10.7        3.6

Net earnings

     21.3        6.4

 

Less: Earnings (loss) attributable to noncontrolling interests

     -0.2        0.1

Net earnings attributable to Motorola Solutions, Inc.

     21.5        6.3

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

   

July 2,

2011

        

December 31,

2010

 

Assets

          

Cash and cash equivalents

  $ 2,203         $ 4,208   

Sigma Fund and short-term investments

    4,424           4,655   

Accounts receivable, net

    1,546           1,547   

Inventories, net

    522           521   

Deferred income taxes

    729           871   

Other current assets

    729           748   

Current assets held for disposition

    116           4,604   

Total current assets

    10,269           17,154   
   

Property, plant and equipment, net

    899           922   

Sigma Fund

    28           70   

Investments

    175           172   

Deferred income taxes

    2,063           1,920   

Goodwill

    1,429           1,429   

Other assets

    641           734   

Non-current assets held for disposition

    93           3,176   

Total assets

  $ 15,597         $ 25,577   
   

Liabilities and Stockholders’ Equity

          

Notes payable and current portion of long-term debt

  $ 606         $ 605   

Accounts payable

    625           731   

Accrued liabilities

    2,790           2,574   

Current liabilities held for disposition

    110           4,800   

Total current liabilities

    4,131           8,710   
   

Long-term debt

    1,548           2,098   

Other liabilities

    3,015           3,045   

Non-current liabilities held for disposition

    79           737   
   

Total Motorola Solutions, Inc. stockholders’ equity

    6,739           10,885   
   

Noncontrolling interests

    85           102   
   

Total liabilities and stockholders’ equity

  $         15,597         $         25,577   

Financial Ratios:

      

Total cash*

  $ 6,655         $ 8,933   

Net cash**

    4,501           6,230   

 

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


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Three Months Ended      
     July 2, 2011              July 3, 2010  

Operating

           

Net earnings attributable to Motorola Solutions, Inc.

   $ 349         $ 162   

Earnings (loss) attributable to the noncontrolling interests

     (2        4   

Net earnings

     347           166   

Earnings from discontinued operations, net of tax

     291           159   

Earnings from continuing operations

     56           7   

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

           

Depreciation and amortization

     90           85   

Non-cash other charges (income)

     53           (5

Share-based compensation expense

     39           36   

Gain on sales of investments and businesses, net

     (1        (33

Loss from the extinguishment of long-term debt

     81           12   

Deferred income taxes

     104           237   

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

           

Accounts receivable

     (87        (227

Inventories

     (2        (21

Other current assets

     22           80   

Accounts payable and accrued liabilities

     (117        53   

Other assets and liabilities

     (136        (121

Net cash provided by operating activities from continuing operations

     102           103   

Investing

           

Acquisitions and investments, net

     (2        (3

Proceeds from sales of investments and businesses, net

     1,026           221   

Capital expenditures

     (33        (37

Proceeds from sales of property, plant and equipment

     3           —     

Purchases of Sigma Fund investments, net

     (975        (132

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

     6           (19

Net cash provided by investing activities from continuing operations

     25           30   

Financing

           

Repayment of short-term borrowings, net

     —             (1

Repayment of debt

     (616        (480

Issuance of common stock

     58           5   

Distribution from (to) discontinued operations

     (136        133   

Net cash used for financing activities from continuing operations

     (694        (343

Discontinued Operations

           

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

     (153        143   

Net cash used for investing activities from discontinued operations

     (2        (39

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

     136           (133

 

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

     19           29   

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

     —             —     

 

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

     6           (85

Net decrease in cash and cash equivalents

     (561        (295

Cash and cash equivalents, beginning of period

     2,764           3,188   

Cash and cash equivalents, end of period

   $ 2,203         $ 2,893   

Financial Ratios:

       

Free cash flow*

   $ 69         $ 66   

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


Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Six Months Ended  
     July 2, 2011          July 3, 2010  

Operating

           

Net earnings attributable to Motorola Solutions, Inc.

   $             846         $             231   

Earnings (loss) attributable to the noncontrolling interests

     (8        3   

Net earnings

     838           234   

Earnings from discontinued operations, net of tax

     423           131   

Earnings from continuing operations

     415           103   

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

           

Depreciation and amortization

     181           172   

Non-cash other charges (income)

     45           (37

Share-based compensation expense

     78           69   

Gain on sales of investments and businesses, net

     (19        (40

Loss from the extinguishment of long-term debt

     81           12   

Deferred income taxes

     (10        255   

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

           

Accounts receivable

     88           (32

Inventories

     (12        (36

Other current assets

     9           10   

Accounts payable and accrued liabilities

     (338        (144

Other assets and liabilities

     (185        (170

Net cash provided by operating activities from continuing operations

     333           162   

Investing

           

Acquisitions and investments, net

     (2        (6

Proceeds from sales of investments and businesses, net

     1,078           239   

Capital expenditures

     (60        (74

Proceeds from sales of property, plant and equipment

     4           27   

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

     266           (248

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

     6           (23

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

     1,292           (85

Financing

           

Repayment of short-term borrowings, net

     —             (5

Repayment of debt

     (616        (481

Distribution of Motorola Mobility

     (3,200        —     

Issuance of common stock

     128           68   

Distribution from discontinued operations

     75           531   

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

     (3,613        113   

Discontinued Operations

           

Net cash provided by operating activities from discontinued operations

     38           567   

Net cash used for investing activities from discontinued operations

     (8        (88

Net cash used for financing activities from discontinued operations

     (75        (531
     

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

     45           52   

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

     —             —     
     

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

     (17        (166

Net increase (decrease) in cash and cash equivalents

     (2,005        24   

Cash and cash equivalents, beginning of period

     4,208           2,869   

Cash and cash equivalents, end of period

   $ 2,203         $ 2,893   

Financial Ratios:

       

Free cash flow*

   $ 273         $ 88   

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

 


Motorola Solutions, Inc. and Subsidiaries

Segment Information

(In millions)

Summarized below are the Company’s Net sales and Operating earnings by reportable segment for the three and six months ended July 2, 2011 and July 3, 2010.

 

Net Sales

 

     Three Months Ended             
                              
     July 2, 2011          July 3, 2010          % Change  

Government

   $ 1,308         $ 1,262           4

Enterprise

     747           674           11

Company Total

   $ 2,055         $ 1,936           6
                              
     Six Months Ended             
                              
     July 2, 2011          July 3, 2010          % Change  

Government

   $ 2,497         $ 2,394           4

Enterprise

     1,442           1,282           12

Company Total

   $ 3,939         $ 3,676           7
            
Operating Earnings   
            
     Three Months Ended             
                              
     July 2, 2011          July 3, 2010          % Change  

Government

   $ 111         $ 117           -5

Enterprise

     59           44           34

Company Total

   $ 170         $ 161           6
                              
     Six Months Ended             
                              
     July 2, 2011          July 3, 2010          % Change  

Government

   $ 215         $ 209           3

Enterprise

     125           72           74

Company Total

   $ 340         $ 281           21


Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Adjustments Bridge

(In millions, except per share amounts)

 

    

Three Months Ended

July 2, 2011

        

Three Months Ended

July 3, 2010

 
     GAAP Results          Non-GAAP
Adjustments and
Discontinued
Operations
         Non-GAAP Results          GAAP Results          Non-GAAP
Adjustments and
Discontinued
Operations
         Non-GAAP Results  

Net sales

   $ 2,055         $ —           $ 2,055         $ 1,936         $ —           $ 1,936   

Costs of sales

     1,016           5           1,011           971           10           961   

Gross margin

     1,039           (5        1,044           965           (10        975   
           

Selling, general and administrative expenses

     492           25           467           471           21           450   

Research and development expenditures

     271           9           262           269           11           258   

Other charges

     56           56           —             14           14           —     

Intangibles amortization

     50           50           —             50           50           —     

Operating earnings

     170           (145        315           161           (106        267   
           

Other income (expense):

                                       

Interest expense, net

     (21        —             (21        (35        —             (35

Gain on sales of investments and businesses, net

     1           —             1           33           31           2   

Other

     (77        (81        4           (30        —             (30

Total other income (expense)

     (97        (81        (16        (32        31           (63
           

Earnings from continuing operations before income taxes

     73           (226        299           129           (75        204   
           

Income tax expense

     17           (84        101           122           46           76   

Earnings from continuing operations

     56           (142        198           7           (121        128   
           

Earnings from discontinued operations, net of tax

     291           291           —             159           159           —     

Net earnings

     347           149           198           166           38           128   
           

Less: Earnings (loss) attributable to noncontrolling interests

     (2        —             (2        4           —             4   

Net earnings attributable to Motorola Solutions, Inc.

   $ 349         $ 149         $ 200         $ 162         $ 38         $ 124   
           

Amounts attributable to Motorola Solutions, Inc. common shareholders

                                       

Earnings from continuing operations, net of tax

   $ 58         $ (142      $ 200         $ 3         $ (121      $ 124   

Earnings from discontinued operations, net of tax

     291           291           —             159           159           —     

Net earnings

   $ 349         $ 149         $ 200         $ 162         $ 38         $ 124   
           

Earnings per common share

                                       

Basic:

                                       

Continuing operations

   $ 0.17         $ (0.42      $ 0.59         $ 0.01         $ (0.36      $ 0.37   

Discontinued operations

     0.85           0.85           —             0.48           0.48           —     
   $ 1.02         $ 0.43         $ 0.59         $ 0.49         $ 0.12         $ 0.37   

Diluted:

                                       

Continuing operations

   $ 0.17         $ (0.40      $ 0.57         $ 0.01         $ (0.36      $ 0.37   

Discontinued operations

     0.83           0.83           —             0.47           0.47           —     
   $ 1.00         $ 0.43         $ 0.57         $ 0.48         $ 0.11         $ 0.37   

Weighted average common shares outstanding

                                       

Basic

     341.2           341.2           341.2           332.7           332.7           332.7   

Diluted

     348.5           348.5           348.5           337.9           337.9           337.9   
                           

Percentage of Net Sales*

                           

Net sales

     100             100        100             100

Costs of sales

     49.4             49.2        50.2             49.6

Gross margin

     50.6             50.8        49.8             50.4
       

Selling, general and administrative expenses

     23.9             22.7        24.3             23.2

Research and development expenditures

     13.2             12.7        13.9             13.3

Other charges

     2.7             0.0        0.7             0.0

Intangibles amortization

     2.4             0.0        2.6             0.0

Operating earnings

     8.3             15.3        8.3             13.8
       

Other income (expense):

                                   

Interest expense, net

     -1.0             -1.0        -1.8             -1.8

Gain on sales of investments and businesses, net

     0.0             0.0        1.7             0.1

Other

     -3.7             0.2        -1.5             -1.5

Total other income (expense)

     -4.7             -0.8        -1.7             -3.3

Earnings from continuing operations before income taxes

     3.6             14.5        6.7             10.5

Income tax expense

     0.8             4.9        6.3             3.9

Earnings from continuing operations

     2.7             9.6        0.4             6.6
       

Earnings from discontinued operations, net of tax

     14.2             0.0        8.2             0.0

Net earnings

     16.9             9.6        8.6             6.6
       

Less: Earnings (loss) attributable to noncontrolling interests

     -0.1             -0.1        0.2             0.2

Net earnings attributable to Motorola Solutions, Inc.

     17.0             9.7        8.4             6.4

* Percentages may not add up due to rounding


Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

 

Q1 2011   
                 
              TOTAL          Government          Enterprise  

Net sales

            $ 1,884         $ 1,189           $ 695   

Operating earnings

            $ 170         $ 104           $ 66   

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

   Statement Line                       

Reorganization of business charges

   Cost of sales        3           3             —     

Stock-based compensation expense

   Cost of sales        3           2             1   

Stock-based compensation expense

   SG&A and R&D        36           24             12   

Reorganization of business charges

   Other charges (income)        5           5             —     

Intangibles amortization expense

   Intangibles amortization        50           1             49   

Less: Total above-OE non-GAAP adjustments

          97           35             62   

Operating earnings after non-GAAP adjustments

            $ 267         $ 139           $ 128   
 

Operating earnings as a percentage of net sales - GAAP

          9.0        8.7        9.5

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

       14.2        11.7        18.4
                 
Q2 2011   
                 
              TOTAL          Government          Enterprise  

Net sales

            $ 2,055         $ 1,308           $ 747   

Operating earnings

            $ 170         $ 111           $ 59   

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

   Statement Line                       

Stock-based compensation expense

   Cost of sales        5           3             2   

Stock-based compensation expense

   SG&A and R&D        34           23             11   

Legal matters, net

   Other charges        48           32             16   

Reorganization of business charges

   Other charges        17           10             7   

Pension plan adjustments, net

   Other charges        (9        (6          (3

Intangibles amortization expense

   Intangibles amortization        50           1             49   

Less: Total above-OE non-GAAP adjustments

 

         

 

145

 

  

 

      

 

63

 

  

 

        

 

82

 

  

 

Operating earnings after non-GAAP adjustments

            $ 315         $ 174           $ 141   
                 

Operating earnings as a percentage of net sales - GAAP

          8.3        8.5        7.9

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

       15.3        13.3        18.9


Motorola Solutions, Inc. and Subsidiaries

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

 

Q1 2011  

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

   Intangibles amortization    $ 50       $ 18       $ 32        0.09   

Stock-based compensation expense

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

Reorganization of business charges

  

Cost of sales and Other charges (income)

     8         4         4        0.02   

Reduction in deferred tax valuation allowance

   Income tax benefit      —           244         (244     (0.71
                                     

Total continuing operations impact

      $ 97       $ 277       $ (180   $ (0.52

 

Q2 2011   

Highlighted Items

  

Statement Line

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

Debt extinguishment loss

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

Intangibles amortization expense

   Intangibles amortization      50        18         32        0.09   

Legal matters, net

   Other charges      48        18         30        0.08   

Stock-based compensation expense

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

Reorganization of business charges

   Other charges      17        4         13        0.04   

Pension plan adjustments, net

   Other charges      (9     2         (11     (0.03
                                    

Total continuing operations impact

      $ 226      $ 84       $ 142      $ 0.40