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8-K - FORM 8-K - Motorola Solutions, Inc.d572622d8k.htm

Exhibit 99.1

Motorola Solutions Reports Second-Quarter 2013

Financial Results

 

   

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

 

   

GAAP earnings per share (EPS) from continuing operations* of $0.94

 

   

Non-GAAP** EPS from continuing operations of $1.12

 

   

GAAP, Non-GAAP results impacted by $118 million of net tax benefits

 

   

Increases quarterly cash dividend by 19 percent to $0.31 per share

 

   

Expands share repurchase program by $2.0 billion

 

     Second Quarter  
     2013      2012      Change  

Total sales ($M)

   $ 2,107       $ 2,148         -2

GAAP operating earnings ($M)

   $ 266       $ 278         -4

Non-GAAP operating earnings ($M)

   $ 334       $ 350         -5

GAAP EPS from continuing operations

   $ 0.94       $ 0.60         57

Non-GAAP EPS from continuing operations

   $ 1.12       $ 0.70         60

Click here for printable press release and financial tables.

SCHAUMBURG, III. – July 24, 2013 – Motorola Solutions, Inc. (NYSE: MSI) announced today second-quarter 2013 sales of $2.1 billion, down 2 percent from the second quarter of 2012. Government sales were down 1 percent, while Enterprise sales declined 5 percent.

In addition, the company announced today that its board of directors has increased its regular quarterly cash dividend by 19 percent to $0.31 per share. The next quarterly dividend will be payable on Oct. 15, 2013, to stockholders of record at the close of business on Sept. 13, 2013. 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 $5.0 billion currently authorized, $4.5 billion of which has been utilized in the last 24 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 Government business performed well in the second quarter though our Enterprise business continues to be challenged primarily due to market conditions. We remain confident in the fundamental drivers of the business. We will maintain our focus on growing our revenues, managing our cost structure and exapnding our operating margins.”

GAAP operating earnings in the second quarter of 2013 were $266 million or 12.6 percent of sales, compared to $278 million or 12.9 percent of sales in the second quarter of 2012. GAAP earnings per share from continuing operations were $0.94, compared to $0.60 in the second quarter of 2012.

Non-GAAP operating earnings in the second quarter of 2013 were $334 million or 15.9 percent of sales, compared to $350 million or 16.3 percent of sales in the second quarter of 2012. Non-GAAP earnings per share from continuing operations were $1.12, compared to $0.70 in the second quarter of 2012. These GAAP and Non-GAAP earnings results include the favorable impact of $118 million of net tax benefits largely associated with the recognition of certain foreign tax credits as a result of our implementation of a holding company structure for certain non-U.S. subsidiaries. Non-


GAAP financial information excludes after-tax net charges of approximately $0.18 per diluted share related to stock-based compensation, intangible amortization and highlighted items. Details on these Non-GAAP adjustments and the use of Non-GAAP measures are included later in this press release.

During the quarter, the company generated $82 million in operating cash flow from continuing operations. The company ended the quarter with total cash*** of $3.2 billion while returning $621 million to shareholders through share repurchases and cash dividends.

Government segment sales were $1.5 billion, down 1 percent from the year-ago quarter. GAAP operating earnings were $215 million or 14.8 percent of sales compared to $197 million or 13.5 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $256 million or 17.6 percent of sales compared to $240 million or 16.4 percent of sales in the year-ago quarter.

Government highlights:

 

   

Secured multi-million dollar contracts with U.S. customers such as cities of Baltimore and Phoenix, Caroline County in Virginia, Carroll County in Maryland, Chautauqua County in New York, Clinton County in Ohio, Maricopa County in Arizona, Northumberland County in Pennsylvania, Somerset County in New Jersey, State of Mississippi, East Bay Communications, Entergy, Imperial Irrigation District and Port of Seattle

 

   

Secured multi-million dollar contracts with international customers such as York Region and Quebec Government in Canada; MTRC Shatin Central Line in Hong Kong; Sea-Aeroporti in Italy; Kuwait Ministry of Defense; Singapore Ministry of Home Affairs; Taiwan Coast Guard and Taiwan High Speed Rail; as well as Chongqing Metro, Hangzhou Metro and Ningbo Metro in China

 

   

Expanded the company’s command and control portfolio by introducing PremierOne™ Next Generation 9-1-1 Call Control solution for incident management operations

 

   

Introduced the next generation of Terrestrial Trunked Radio (TETRA) base stations, which allow public safety agencies to deploy TETRA today and be future-ready to facilitate a cost-effective and staged migration to a unified TETRA and Long-Term Evolution (LTE) network

Enterprise segment sales were $656 million, down 5 percent from the year-ago quarter. Excluding Psion, sales were down 12 percent. GAAP operating earnings were $51 million or 7.8 percent of sales compared to $81 million or 11.8 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $78 million or 11.9 percent of sales compared to $110 million or 16.0 percent of sales in the year-ago quarter.

Enterprise highlights:

 

   

Secured contracts with key customers such as L.L.Bean, United States Cold Storage, Canadian Tire, Australia Post, Kmart Australia, Coles Supermarkets in Australia, Tesco in the U.K., FamilyMart in Japan, Colombia Movil, China Post, China Deppon Logistics and Correos in Spain

 

   

Introduced Mobility Lifecycle Management service aimed at enterprises that want to use mobile devices to transform their business operations, leaving the complex task of lifecycle management to a trusted adviser who can deliver predictable performance and cost


   

Introduced the MC9200 mobile computer, which is capable of supporting the latest mobile enterprise applications in demanding environments such as warehouses, loading docks and manufacturing shop floors

 

   

Announced three new products that provide enhanced productivity in the most challenging customer environments, including the busiest warehouses and coldest supply chains: the Psion Omnii XT15f rugged handheld, and the VH10 and VH10f vehicle-mounted mobile computers

Third-Quarter and Full-Year Outlook

Motorola Solutions’ outlook for the third quarter of 2013 is for revenues that are flat to down 3 percent compared with the third quarter of 2012 and Non-GAAP earnings per share from continuing operations of $0.97 to $1.02 per share. The third quarter of 2013 Non-GAAP per share outlook assumes an ongoing tax rate of 10 to 13 percent. For the full-year 2013, the company now expects revenues that are flat to up 1 percent compared with 2012. The company still expects to achieve Non-GAAP operating margins of approximately 18 percent of sales. This outlook excludes stock-based compensation, intangible amortization and charges associated with items typically highlighted by the company in its quarterly earnings releases.

Consolidated GAAP Results

A comparison of results from operations is as follows:

 

     Second Quarter  
     2013      2012  

Net sales ($M)

   $ 2,107       $ 2,148   

Gross margin ($M)

     1,029         1,060   

Operating earnings ($M)

     266         278   

Earnings from continuing operations ($M)

     258         177   

Net earnings ($M)

     258         182   

Diluted EPS from continuing operations

   $ 0.94       $ 0.60   

Weighted average diluted common shares outstanding (in millions)

     274.7         296.1   


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

The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense.

 

     Second Quarter  
(per diluted common share)    2013      2012  
GAAP Earnings per Common Share from Continuing Operations*    $ 0.94       $ 0.60   
Highlighted Items:      

Reorganization of business charges

   $ 0.08       $ 0.03   

Tax expense from audit settlements and agreements

   $ 0.00       $ (0.04

Total Highlighted Items

   $ 0.08       $ (0.01

Stock-based compensation expense

   $ 0.09       $ 0.10   

Intangible assets amortization expense

   $ 0.01       $ 0.01   

Total Stock-Based Compensation Expense and Intangible Assets Amortization Expense

   $ 0.10       $ 0.11   
Total Non-GAAP Adjustments    $ 0.18       $ 0.10   
Non-GAAP Earnings per Common Share    $ 1.12       $ 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 24. 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 the full year of 2013, payment of a regular quarterly dividend and purchases of shares under the company’s share repurchase program. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 8 through 19 in Item 1A of Motorola Solutions, Inc.’s 2012 Annual Report on Form 10-K and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions and factors that may impact forward-looking statements include, but are not limited to: (1) the economic outlook for the government and enterprise communications industries; (2) the level of demand for the company’s products, particularly if businesses and governments defer or cancel purchases in response to tighter credit; (3) the company’s ability to introduce new products and technologies in a timely manner; (4) negative impact on the company’s business from global economic conditions, including sequestration in the United States, which may include: (i) continued deferment or cancellation of purchase orders by customers; (ii) the inability of customers to obtain financing for purchases of the company’s products; (iii) increased demand to provide vendor financing to customers; (iv) increased financial pressures on third-party


dealers, distributors and retailers; (v) the viability of the company’s suppliers that may no longer have access to necessary financing; (vi) counterparty failures negatively impacting the company’s financial position; (vii) changes in the value of investments held by the company’s pension plan and other defined benefit plans, which could impact future required or voluntary pension contributions; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (5) the impact of foreign currency fluctuations on the company when competing for business in foreign markets; (6) the outcome of currently ongoing and future tax matters; (7) the company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (8) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (9) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including Psion and those that may occur in the future; (10) risks related to the company’s manufacturing and business operations in foreign countries; (11) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (12) exposure under large systems and managed services contracts, including risks related to the fact that certain customers require that the company build, own and operate their systems, often over a multi-year period; (13) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (14) variability in income received from licensing the company’s intellectual property to others, as well as expenses incurred when the company licenses intellectual property from others; (15) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (16) the impact of the percentage of cash and cash equivalents held outside of the United States; (17) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) the ability of the company to repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (19) the impact of changes in governmental policies, laws or regulations; (20) negative consequences from the company’s outsourcing of various activities, including certain business operations, information technology and administrative functions; and (21) the impact of our multi-year phased upgrade and consolidation of our enterprise resource planning systems into a single global platform. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

Definitions

 

* Amounts attributable to Motorola Solutions, Inc. common shareholders

 

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

 

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

About Motorola Solutions

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


Media Contacts

Nick Sweers

Motorola Solutions

+1 847-576-2462

nicholas.sweers@motorolasolutions.com

Tama McWhinney

Motorola Solutions

+1 847-538-1865

tama.mcwhinney@motorolasolutions.com

Investor Contacts

Shep Dunlap

Motorola Solutions

+1 847-576-6899

shep.dunlap@motorolasolutions.com

Jason Winkler

Motorola Solutions

+1 847-576-4995

jason.winkler@motorolasolutions.com

MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2013 Motorola Solutions, Inc. All rights reserved.


GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

     Three Months Ended  
     June 29, 2013     June 30, 2012  

Net sales from products

   $ 1,479      $ 1,563   

Net sales from services

     628        585   
  

 

 

   

 

 

 

Net sales

     2,107        2,148   

Costs of products sales

     695        712   

Costs of services sales

     383        376   
  

 

 

   

 

 

 

Costs of sales

     1,078        1,088   
  

 

 

   

 

 

 

Gross margin

     1,029        1,060   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     470        496   

Research and development expenditures

     268        269   

Other charges

     19        11   

Intangibles amortization

     6        6   
  

 

 

   

 

 

 

Operating earnings

     266        278   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     (32     (16

Gain on sales of investments and businesses, net

     —          3   

Other

     (10     (25
  

 

 

   

 

 

 

Total other expense

     (42     (38
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     224        240   

Income tax expense (benefit)

     (38     63   
  

 

 

   

 

 

 

Earnings from continuing operations

     262        177   

Earnings from discontinued operations, net of tax

     —          5   
  

 

 

   

 

 

 

Net earnings

     262        182   

Less: Earnings attributable to noncontrolling interests

     4        —     
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 258      $ 182   
  

 

 

   

 

 

 

Amounts attributable to Motorola Solutions, Inc. common shareholders

    

Earnings from continuing operations, net of tax

   $ 258      $ 177   

Earnings from discontinued operations, net of tax

     —          5   
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 258      $ 182   
  

 

 

   

 

 

 
Earnings per common share     

Basic:

    

Continuing operations

   $ 0.96      $ 0.61   

Discontinued operations

     —          0.02   
  

 

 

   

 

 

 
   $ 0.96      $ 0.63   
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 0.94      $ 0.60   

Discontinued operations

     —          0.01   
  

 

 

   

 

 

 
   $ 0.94      $ 0.61   
  

 

 

   

 

 

 
Weighted average common shares outstanding     

Basic

     269.5        290.6   

Diluted

     274.7        296.1   
     Percentage of Net Sales*  

Net sales from products

     70.2     72.8

Net sales from services

     29.8     27.2
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     47.0     45.6

Costs of services sales

     61.0     64.3
  

 

 

   

 

 

 

Costs of sales

     51.2     50.7
  

 

 

   

 

 

 

Gross margin

     48.8     49.3
  

 

 

   

 

 

 

Selling, general and administrative expenses

     22.3     23.1

Research and development expenditures

     12.7     12.5

Other charges

     0.9     0.5

Intangibles amortization

     0.3     0.3
  

 

 

   

 

 

 

Operating earnings

     12.6     12.9
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     -1.5     -0.7

Gain on sales of investments and businesses, net

     0.0     0.1

Other

     -0.5     -1.2
  

 

 

   

 

 

 

Total other expense

     -2.0     -1.8
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     10.6     11.2

Income tax expense (benefit)

     -1.8     2.9
  

 

 

   

 

 

 

Earnings from continuing operations

     12.4     8.2

Earnings from discontinued operations, net of tax

     0.0     0.2
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     12.2     8.5
  

 

 

   

 

 

 

 

* 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 29, 2013     June 30, 2012  

Net sales from products

   $ 2,860      $ 3,007   

Net sales from services

     1,220        1,097   
  

 

 

   

 

 

 

Net sales

     4,080        4,104   

Costs of products sales

     1,346        1,370   

Costs of services sales

     750        701   
  

 

 

   

 

 

 

Costs of sales

     2,096        2,071   
  

 

 

   

 

 

 

Gross margin

     1,984        2,033   
  

 

 

   

 

 

 

Selling, general and administrative expenses

     930        968   

Research and development expenditures

     530        523   

Other charges

     30        20   

Intangibles amortization

     12        12   
  

 

 

   

 

 

 

Operating earnings

     482        510   
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     (57     (30

Gain on sales of investments and businesses, net

     7        20   

Other

     (3     (16
  

 

 

   

 

 

 

Total other expense

     (53     (26
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     429        484   

Income tax expense (benefit)

     (25     148   
  

 

 

   

 

 

 

Earnings from continuing operations

     454        336   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Net earnings

     454        339   

Less: Earnings attributable to noncontrolling interests

     4        —     
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 450      $ 339   
  

 

 

   

 

 

 
Amounts attributable to Motorola Solutions, Inc. common shareholders     

Earnings from continuing operations, net of tax

   $ 450      $ 336   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

   $ 450      $ 339   
  

 

 

   

 

 

 

Earnings per common share

    

Basic:

    

Continuing operations

   $ 1.66      $ 1.11   

Discontinued operations

     —          0.01   
  

 

 

   

 

 

 
   $ 1.66      $ 1.12   
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 1.62      $ 1.09   

Discontinued operations

     —          0.01   
  

 

 

   

 

 

 
   $ 1.62      $ 1.10   
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     271.9        302.1   

Diluted

     277.7        308.1   
     Percentage of Net Sales*  

Net sales from products

     70.1     73.3

Net sales from services

     29.9     26.7
  

 

 

   

 

 

 

Net sales

     100     100
  

 

 

   

 

 

 

Costs of products sales

     47.1     45.6

Costs of services sales

     61.5     63.9
  

 

 

   

 

 

 

Costs of sales

     51.4     50.5
  

 

 

   

 

 

 

Gross margin

     48.6     49.5
  

 

 

   

 

 

 

Selling, general and administrative expenses

     22.8     23.6

Research and development expenditures

     13.0     12.7

Other charges

     0.7     0.5

Intangibles amortization

     0.3     0.3
  

 

 

   

 

 

 

Operating earnings

     11.8     12.4
  

 

 

   

 

 

 

Other income (expense):

    

Interest expense, net

     -1.4     -0.7

Gain on sales of investments and businesses, net

     0.2     0.5

Other

     -0.1     -0.4
  

 

 

   

 

 

 

Total other expense

     -1.3     -0.6
  

 

 

   

 

 

 

Earnings from continuing operations before income taxes

     10.5     11.8

Income tax expense (benefit)

     -0.6     3.6
  

 

 

   

 

 

 

Earnings from continuing operations

     11.1     8.2

Earnings from discontinued operations, net of tax

     0.0     0.1
  

 

 

   

 

 

 

Net earnings attributable to Motorola Solutions, Inc.

     11.0     8.3
  

 

 

   

 

 

 

 

* Percentages may not add up due to rounding


GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

 

     June 29,
2013
     December 31,
2012
 

Assets

     

Cash and cash equivalents

   $ 1,457       $ 1,468   

Sigma Fund and short-term investments

     1,759         2,135   

Accounts receivable, net

     1,707         1,881   

Inventories, net

     498         513   

Deferred income taxes

     641         604   

Other current assets

     779         800   
  

 

 

    

 

 

 

Total current assets

     6,841         7,401   
  

 

 

    

 

 

 

Property, plant and equipment, net

     830         839   

Investments

     142         144   

Deferred income taxes

     2,530         2,416   

Goodwill

     1,502         1,510   

Other assets

     315         369   
  

 

 

    

 

 

 

Total assets

   $ 12,160       $ 12,679   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current portion of long-term debt

   $ 4       $ 4   

Accounts payable

     597         705   

Accrued liabilities

     2,193         2,626   
  

 

 

    

 

 

 

Total current liabilities

     2,794         3,335   
  

 

 

    

 

 

 

Long-term debt

     2,452         1,859   

Other liabilities

     4,095         4,195   

Total Motorola Solutions, Inc. stockholders’ equity

     2,791         3,265   
  

 

 

    

 

 

 

Noncontrolling interests

     28         25   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 12,160       $ 12,679   
  

 

 

    

 

 

 

Total cash*

   $ 3,216       $ 3,603   

Net cash**

     760         1,740   

 

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


GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

 

     Three Months Ended  
     June 29, 2013     June 30, 2012  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 258      $ 182   

Earnings attributable to noncontrolling interests

     4        —     
  

 

 

   

 

 

 

Net earnings

     262        182   

Earnings from discontinued operations, net of tax

     —          5   
  

 

 

   

 

 

 

Earnings from continuing operations

     262        177   

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

    

Depreciation and amortization

     57        54   

Non-cash other income

     (4     (2

Share-based compensation expense

     34        52   

Gains on sales of investments and businesses, net

     —          (3

Loss from the extinguishment of long-term debt

     —          6   

Deferred income taxes

     (143     66   

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

    

Accounts receivable

     (68     121   

Inventories

     16        (17

Other current assets

     75        23   

Accounts payable and accrued liabilities

     (158     (134

Other assets and liabilities

     11        (89
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     82        254   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     (11     (25

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

     2        (12

Capital expenditures

     (43     (52

Proceeds from sales of property, plant and equipment

     15        9   

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

     489        114   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     452        34   
  

 

 

   

 

 

 

Financing

    

Net proceeds from issuance of debt

     —          747   

Repayment of debt

     (1     (411

Contribution to Motorola Mobility

     —          (73

Issuance of common stock

     60        33   

Purchase of common stock

     (550     (439

Excess tax benefits from share-based compensation

     9        11   

Payment of dividends

     (71     (64
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

     (553     (196
  

 

 

   

 

 

 

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

     6        (40
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (13     52   

Cash and cash equivalents, beginning of period

     1,470        1,720   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,457      $ 1,772   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ 39      $ 202   

 

* 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 29, 2013     June 30, 2012  

Operating

    

Net earnings attributable to Motorola Solutions, Inc.

   $ 450      $ 339   

Earnings attributable to noncontrolling interests

     4        —     
  

 

 

   

 

 

 

Net earnings

     454        339   

Earnings from discontinued operations, net of tax

     —          3   
  

 

 

   

 

 

 

Earnings from continuing operations

     454        336   

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

    

Depreciation and amortization

     109        106   

Non-cash other income

     (5     (1

Share-based compensation expense

     79        95   

Gains on sales of investments and businesses, net

     (7     (20

Loss from the extinguishment of long-term debt

     —          6   

Deferred income taxes

     (154     93   

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

    

Accounts receivable

     132        262   

Inventories

     11        (8

Other current assets

     —          (77

Accounts payable and accrued liabilities

     (575     (383

Other assets and liabilities

     7        (87
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     51        322   
  

 

 

   

 

 

 

Investing

    

Acquisitions and investments, net

     (15     68   

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

     21        (67

Capital expenditures

     (89     (101

Proceeds from sales of property, plant and equipment

     15        9   

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

     376        1,277   
  

 

 

   

 

 

 

Net cash provided by investing activities from continuing operations

     308        1,186   
  

 

 

   

 

 

 

Financing

    

Net proceeds from issuance of debt

     593        747   

Repayment of debt

     (2     (411

Contribution to Motorola Mobility

     —          (73

Issuance of common stock

     100        63   

Purchase of common stock

     (907     (1,804

Excess tax benefits from share-based compensation

     18        17   

Payment of dividends

     (143     (134

Distribution to discontinued operations

     —          (11
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

     (341     (1,606
  

 

 

   

 

 

 

Discontinued Operations

    

Net cash provided by operating activities from discontinued operations

     —          2   

Net cash provided by financing activities from discontinued operations

     —          11   

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

       (13
  

 

 

   

 

 

 

Net cash provided by (used for) discontinued operations

     —          —     
  

 

 

   

 

 

 

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

     (29     (11
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (11     (109

Cash and cash equivalents, beginning of period

     1,468        1,881   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,457      $ 1,772   
  

 

 

   

 

 

 

Financial Ratios:

    

Free cash flow*

   $ (38   $ 221   

 

* 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 segment for the three and six months ended June 29, 2013 and June 30, 2012.

Net Sales

 

     Three Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 1,451       $ 1,459         -1

Enterprise

     656         689         -5
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 2,107       $ 2,148         -2
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 2,797       $ 2,760         1

Enterprise

     1,283         1,344         -5
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 4,080       $ 4,104         -1
  

 

 

    

 

 

    

 

 

 

Operating Earnings

 

     Three Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 215       $ 197         9

Enterprise

     51         81         -37
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 266       $ 278         -4
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 395       $ 347         14

Enterprise

     87         163         -47
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 482       $ 510         -5
  

 

 

    

 

 

    

 

 

 

Operating Earnings %

 

     Three Months Ended        
     June 29, 2013     June 30, 2012     % Change  

Government

     14.8     13.5     10

Enterprise

     7.8     11.8     -34
  

 

 

   

 

 

   

 

 

 

Company Total

     12.6     12.9     -2
  

 

 

   

 

 

   

 

 

 
     Six Months Ended        
     June 29, 2013     June 30, 2012     % Change  

Government

     14.1     12.6     12

Enterprise

     6.8     12.1     -44
  

 

 

   

 

 

   

 

 

 

Company Total

     11.8     12.4     -5
  

 

 

   

 

 

   

 

 

 


Non-GAAP-1

Motorola Solutions, Inc. and Subsidiaries

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

Q1 2013

 

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

   Intangibles amortization    $ 6       $ 2       $ 4      $ 0.01   

Stock-based compensation expense

   Cost of sales, SG&A and R&D      45         14         31        0.11   

Reorganization of business charges

  

Cost of sales and Other charges (income)

     11         3         8        0.03   

Tax benefit for prior period R&D tax credit

   Income tax expense         12         (12     (0.04

Reduction in deferred tax asset valuation allowance

   Income tax expense         11         (11     (0.04

Reduction in deferred tax liability for undistributed earnings

   Income tax expense         25         (25     (0.09
     

 

 

    

 

 

    

 

 

   

 

 

 

Total continuing operations impact

      $ 62       $ 67       $ (5   $ (0.02

Q2 2013

 

Highlighted Items

  

Statement Line

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

Intangibles amortization expense

   Intangibles amortization    $ 6       $ 2       $ 4       $ 0.01   

Stock-based compensation expense

   Cost of sales, SG&A and R&D      34         10         24         0.09   

Reorganization of business charges

  

Cost of sales and Other charges (income)

     28         6         22         0.08   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total continuing operations impact

      $ 68       $ 18       $ 50       $ 0.18   


Non-GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Segment Information

(In millions)

Net Sales

 

     Three Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 1,451       $ 1,459         -1

Enterprise

     656         689         -5
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 2,107       $ 2,148         -2
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 2,797       $ 2,760         1

Enterprise

     1,283         1,344         -5
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 4,080       $ 4,104         -1
  

 

 

    

 

 

    

 

 

 

Non-GAAP Operating Earnings

 

     Three Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 256       $ 240         7

Enterprise

     78         110         -29
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 334       $ 350         -5
  

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     June 29, 2013      June 30, 2012      % Change  

Government

   $ 473       $ 424         12

Enterprise

     139         216         -36
  

 

 

    

 

 

    

 

 

 

Company Total

   $ 612       $ 640         -4
  

 

 

    

 

 

    

 

 

 

Non-GAAP Operating Earnings %

 

     Three Months Ended        
     June 29, 2013     June 30, 2012     % Change  

Government

     17.6     16.4     7

Enterprise

     11.9     16.0     -26
  

 

 

   

 

 

   

 

 

 

Company Total

     15.9     16.3     -3
  

 

 

   

 

 

   

 

 

 
     Six Months Ended        
     June 29, 2013     June 30, 2012     % Change  

Government

     16.9     15.4     10

Enterprise

     10.8     16.1     -33
  

 

 

   

 

 

   

 

 

 

Company Total

     15.0     15.6     -4
  

 

 

   

 

 

   

 

 

 


Non-GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

Q1 2013

 

     TOTAL     Government     Enterprise  

Net sales

   $ 1,973      $ 1,346      $ 627   

Operating earnings (“OE”)

   $ 216      $ 180      $ 36   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     45        30        15   

Reorganization of business charges

     11        7        4   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     62        37        25   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 278      $ 217      $ 61   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     10.9     13.4     5.7

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

     14.1     16.1     9.7

Q2 2013

 

     TOTAL     Government     Enterprise  

Net sales

   $ 2,107      $ 1,451      $ 656   

Operating earnings

   $ 266      $ 215      $ 51   
  

 

 

   

 

 

   

 

 

 

Above-OE non-GAAP adjustments:

      

Stock-based compensation expense

     34        23        11   

Reorganization of business charges

     28        18        10   

Intangibles amortization expense

     6        —          6   
  

 

 

   

 

 

   

 

 

 

Total above-OE non-GAAP adjustments

     68        41        27   
  

 

 

   

 

 

   

 

 

 

Operating earnings after non-GAAP adjustments

   $ 334      $ 256      $ 78   
  

 

 

   

 

 

   

 

 

 

Operating earnings as a percentage of net sales - GAAP

     12.6     14.8     7.8

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

     15.9     17.6     11.9