Motorola Solutions Reports Third-Quarter Results
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Motorola Solutions Reports Third-Quarter Results

Record Third Quarter in Sales and Operating Earnings

SCHAUMBURG, Ill. — (BUSINESS WIRE) — October 27, 2011 — Motorola Solutions, Inc. (NYSE: MSI):

(In millions, except earnings per share)

 

Q3 2011

 

Q3 2010

 

Change

Total sales   $2,105   $1,908   10%
GAAP operating earnings   $253   $211   20%
Non-GAAP operating earnings   $358   $289   24%
GAAP EPS from continuing operations**   $0.45   $(0.04)   --
Non-GAAP*** EPS from continuing operations**   $0.65   $0.54   20%
     

Click here for printable press release and financial tables.

Motorola Solutions, Inc. (NYSE: MSI) announced today its third-quarter 2011 results highlighted by sales of $2.1 billion, up 10 percent from the third quarter of 2010 and driven by solid demand in all regions across both its Government and Enterprise segments.

“Our customers continue to invest in solutions that increase revenues and improve operating efficiency,” said Greg Brown, chairman and CEO of Motorola Solutions. “In addition to our robust growth this quarter, we returned significant capital to shareholders. We repurchased $744 million of stock, initiated our dividend and generated very strong operating cash flow.”

GAAP operating earnings in the third quarter of 2011 were $253 million or 12 percent of sales, compared to $211 million or 11 percent of sales in the third quarter of 2010. GAAP earnings per share from continuing operations** were $0.45, compared to a GAAP loss of $0.04 in the third quarter of 2010.

Non-GAAP*** operating earnings in the third quarter of 2011 were $358 million or 17 percent of sales, compared to $289 million or 15 percent of sales in the third quarter of 2010. Non-GAAP earnings per share from continuing operations were $0.65, compared to $0.54 in the third quarter of 2010. Non-GAAP financial information excludes after-tax benefits of approximately $0.20 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 third quarter of 2011, the company generated $477 million in operating cash flow from continuing operations. The company ended the quarter with total cash* of $6.3 billion while returning $744 million to shareholders through share repurchases during the quarter.

Government segment sales were $1.4 billion, up 9 percent from the year-ago quarter. GAAP operating earnings were $185 million or 13 percent of sales compared to $159 million or 13 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $223 million or 16 percent of sales compared to $175 million or 14 percent of sales in the year-ago quarter.

Government highlights:

Enterprise segment sales were $726 million, up 13 percent from the year-ago quarter. GAAP operating earnings were $68 million or 9 percent of sales compared to $52 million or 8 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $135 million or 19 percent of sales compared to $114 million or 18 percent of sales in the year-ago quarter.

Enterprise highlights:

Results from Discontinued Operations

The third-quarter net loss from discontinued operations was $24 million, which substantially relates to an after-tax charge for an expected purchase price adjustment associated with the sale of the company’s Networks business in the second quarter of 2011.

Fourth-Quarter and Full-Year 2011 Outlook

The company has raised its expected full-year revenue outlook to approximately 7 percent growth with operating earnings of approximately 16.5 percent of sales. Fourth-quarter sales are expected to grow between 2 and 3 percent compared with the fourth quarter of 2010 and approximately 7 percent compared with the third quarter of 2011. Earnings per share from continuing operations are expected to be $0.78 to $0.83. This outlook excludes stock-based compensation expense, intangible assets amortization expense and charges associated with items of the variety typically highlighted by the company in its quarterly earnings releases.

Consolidated GAAP Results

A comparison of results from operations is as follows:

    Third Quarter
(In millions, except per share amounts)  

2011

 

2010

Net sales $2,105   $1,908
Gross margin 1,060 964
Operating earnings 253 211
Earnings from continuing operations** 152 (13)
Net earnings ** 128 110
 
Diluted earnings per common share from continuing operations: ** $0.45 $(0.04)
 
Weighted average diluted common shares outstanding   339.5   334.1
 

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 for the third quarter of 2011.

   

Third Quarter

(per diluted common share)

2011

     
GAAP Earnings per Common Share from Continuing Operations   $0.45
 
Highlighted Items:
Reorganization of business charges 0.02
     
Total Highlighted Items   0.02
 
Stock-based compensation expense 0.09
Intangible assets amortization expense   0.09
Stock-Based Compensation Expense and Intangible Assets Amortization Expense   0.18
     
Total Non-GAAP Adjustments   0.20
     
Non-GAAP Earnings per Common Share   $0.65
 

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, Oct. 27. 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 fourth 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 the flooding that is currently occurring in Thailand; (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

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.

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.

     
GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
     
Three Months Ended
October 1, 2011 October 2, 2010
Net sales from products $ 1,572 $ 1,413
Net sales from services   533     495  
Net sales 2,105 1,908
 
Costs of products sales 695 624
Costs of services sales   350     320  
Costs of sales 1,045 944
   
Gross margin   1,060     964  
 
Selling, general and administrative expenses 475 457
Research and development expenditures 272 262
Other charges (income) 10 (17 )
Intangibles amortization   50     51  
Operating earnings   253     211  
 
Other income (expense):
Interest expense, net (18 ) (29 )
Gain on sales of investments and businesses, net 2 4
Other   -     6  
Total other income (expense)   (16 )   (19 )
Earnings from continuing operations before income taxes 237 192
Income tax expense   84     203  
Earnings (loss) from continuing operations 153 (11 )
 
Earnings (loss) from discontinued operations, net of tax   (24 )   123  
Net earnings 129 112
 
Less: Earnings attributable to noncontrolling interests   1     2  
Net earnings attributable to Motorola Solutions, Inc. $ 128   $ 110  
 
Amounts attributable to Motorola Solutions, Inc. common shareholders
Earnings (loss) from continuing operations, net of tax $ 152 $ (13 )
Earnings (loss) from discontinued operations, net of tax   (24 )   123  
Net earnings $ 128   $ 110  
 

Earnings (loss) per common share

Basic:
Continuing operations $ 0.45 $ (0.04 )
Discontinued operations   (0.07 )   0.37  
$ 0.38   $ 0.33  
 
Diluted:
Continuing operations $ 0.45 $ (0.04 )
Discontinued operations   (0.07 )   0.37  
$ 0.38   $ 0.33  
 

Weighted average common shares outstanding

Basic 335.4 334.1
Diluted   339.5     334.1  
 
     
Percentage of Net Sales*
Net sales from products 74.7 % 74.1 %
Net sales from services   25.3 %   25.9 %
Net sales   100 %   100 %
 
Costs of products sales 44.2 % 44.2 %
Costs of services sales   65.7 %   64.6 %
Costs of sales   49.6 %   49.5 %
   
Gross margin   50.4 %   50.5 %
 
Selling, general and administrative expenses 22.6 % 24.0 %
Research and development expenditures 12.9 % 13.7 %
Other charges (income) 0.5 % -0.9 %
Intangibles amortization   2.4 %   2.7 %
Operating earnings   12.0 %   11.1 %
 
Other income (expense):
Interest expense, net -0.9 % -1.5 %
Gain on sales of investments and businesses, net 0.1 % 0.2 %
Other   0.0 %   0.3 %
Total other income (expense)   -0.8 %   -1.0 %
Earnings from continuing operations before income taxes 11.3 % 10.1 %
Income tax expense   4.0 %   10.6 %
Earnings (loss) from continuing operations 7.3 % -0.6 %
 
Earnings (loss) from discontinued operations, net of tax   -1.1 %   6.4 %
Net earnings 6.1 % 5.9 %
 
Less: Earnings attributable to noncontrolling interests   0.0 %   0.1 %
Net earnings attributable to Motorola Solutions, Inc.   6.1 %   5.8 %
 
* Percentages may not add up due to rounding
     
GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
     
Nine Months Ended
October 1, 2011 October 2, 2010
Net sales from products $ 4,445 $ 4,056
Net sales from services   1,524     1,442  
Net sales 5,969 5,498
 
Costs of products sales 2,001 1,833
Costs of services sales   967     928  
Costs of sales 2,968 2,761
   
Gross margin   3,001     2,737  
 
Selling, general and administrative expenses 1,425 1,369
Research and development expenditures 775 772
Other charges (income) 71 (33 )
Intangibles amortization   150     152  
Operating earnings   580     477  
 
Other income (expense):
Interest expense, net (59 ) (97 )
Gain on sales of investments and businesses, net 21 44
Other   (72 )   (9 )
Total other income (expense)   (110 )   (62 )
Earnings from continuing operations before income taxes 470 415
Income tax expense (benefit)   (91 )   332  
Earnings from continuing operations 561 83
 
Earnings from discontinued operations, net of tax   407     263  
Net earnings 968 346
 
Less: Earnings (loss) attributable to noncontrolling interests   (6 )   5  
Net earnings attributable to Motorola Solutions, Inc. $ 974   $ 341  
 
Amounts attributable to Motorola Solutions, Inc. common shareholders
Earnings from continuing operations, net of tax $ 567 $ 78
Earnings from discontinued operations, net of tax   407     263  
Net earnings $ 974   $ 341  
 

Earnings per common share

Basic:
Continuing operations $ 1.68 $ 0.23
Discontinued operations   1.21     0.80  
$ 2.89   $ 1.03  
 
Diluted:
Continuing operations $ 1.65 $ 0.23
Discontinued operations   1.19     0.78  
$ 2.84   $ 1.01  
 

Weighted average common shares outstanding

Basic 337.3 332.5
Diluted   343.4     337.1  
 
     
Percentage of Net Sales*
Net sales from products 74.5 % 73.8 %
Net sales from services   25.5 %   26.2 %
Net sales   100 %   100 %
 
Costs of products sales 45.0 % 45.2 %
Costs of services sales   63.5 %   64.4 %
Costs of sales   49.7 %   50.2 %
   
Gross margin   50.3 %   49.8 %
 
Selling, general and administrative expenses 23.9 % 24.9 %
Research and development expenditures 13.0 % 14.0 %
Other charges (income) 1.2 % -0.6 %
Intangibles amortization   2.5 %   2.8 %
Operating earnings   9.7 %   8.7 %
 
Other income (expense):
Interest expense, net -1.0 % -1.8 %
Gain on sales of investments and businesses, net 0.4 % 0.8 %
Other   -1.2 %   -0.2 %
Total other income (expense)   -1.8 %   -1.1 %
Earnings from continuing operations before income taxes 7.9 % 7.5 %
Income tax expense (benefit)   -1.5 %   6.0 %
Earnings from continuing operations 9.4 % 1.5 %
 
Earnings from discontinued operations, net of tax   6.8 %   4.8 %
Net earnings 16.2 % 6.3 %
 
Less: Earnings (loss) attributable to noncontrolling interests   -0.1 %   0.1 %
Net earnings attributable to Motorola Solutions, Inc.   16.3 %   6.2 %
 
* Percentages may not add up due to rounding
     
GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
   
October 1, December 31,
2011 2010
Assets
Cash and cash equivalents $ 1,785 $ 4,208
Sigma Fund and short-term investments 4,465 4,655
Accounts receivable, net 1,535 1,547
Inventories, net 548 521
Deferred income taxes 629 871
Other current assets 743 748
Current assets held for disposition   10   4,604
Total current assets   9,715   17,154
 
Property, plant and equipment, net 889 922
Sigma Fund 26 70
Investments 167 172
Deferred income taxes 2,074 1,920
Goodwill 1,449 1,429
Other assets 449 734
Non-current assets held for disposition   2   3,176
Total assets $ 14,771 $ 25,577
 
Liabilities and Stockholders' Equity
Notes payable and current portion of long-term debt $ 605 $ 605
Accounts payable 641 731
Accrued liabilities 2,911 2,574
Current liabilities held for disposition   12   4,800
Total current liabilities   4,169   8,710
 
Long-term debt 1,538 2,098
Other liabilities 2,906 3,045
Non-current liabilities held for disposition - 737
 
Total Motorola Solutions, Inc. stockholders' equity   6,098   10,885
 
Noncontrolling interests   60   102
 
Total liabilities and stockholders' equity $ 14,771 $ 25,577
 
 
Total cash* $ 6,276 $ 8,933
Net cash** 4,133 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
     
GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
     
Three Months Ended
October 1, 2011 October 2, 2010
Operating
Net earnings attributable to Motorola Solutions, Inc. $ 128 $ 110
Earnings attributable to the noncontrolling interests   1     2  
Net earnings 129 112
Earnings (loss) from discontinued operations, net of tax   (24 )   123  
Earnings (loss) from continuing operations 153 (11 )
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:
Depreciation and amortization 92 85
Non-cash other income (6 ) (22 )
Share-based compensation expense 45 39
Gain on sales of investments and businesses, net (2 ) (4 )
Loss from the extinguishment of long-term debt - -
Deferred income taxes 40 143
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable (6 ) (48 )
Inventories (26 ) (54 )
Other current assets (15 ) (63 )
Accounts payable and accrued liabilities 107 326
Other assets and liabilities   95     (73 )
Net cash provided by operating activities from continuing operations   477     318  
Investing
Acquisitions and investments, net (24 ) (1 )
Proceeds from sales of investments and businesses, net (14 ) (1 )
Capital expenditures (43 ) (37 )
Proceeds from sales of property, plant and equipment 2 -
Purchases of Sigma Fund investments, net (41 ) 278
Proceeds from sales of short-term investments, net   -     17  
Net cash provided by (used for) investing activities from continuing operations   (120 )   256  
Financing
Repayment of short-term borrowings, net - -
Repayment of debt (1 ) (3 )
Contribution to Motorola Mobility (75 ) -
Issuance of common stock 20 84
Purchase of common stock (744 ) -
Excess tax benefits from share-based compensation 39 -
Distribution from discontinued operations   20     104  
Net cash provided by (used for) financing activities from continuing operations   (741 )   185  
Discontinued Operations
Net cash provided by operating activities from discontinued operations 19 271
Net cash used for investing activities from discontinued operations - (72 )
Net cash used for financing activities from discontinued operations (20 ) (104 )
Effect of exchange rate changes on cash and cash equivalents from discontinued operations   1     (95 )
Net cash provided by (used for) financing activities from discontinued operations   -     -  
 
Effect of exchange rate changes on cash and cash equivalents from continuing operations   (34 )   196  
Net decrease in cash and cash equivalents (418 ) 955
Cash and cash equivalents, beginning of period   2,203     2,893  
Cash and cash equivalents, end of period $ 1,785   $ 3,848  
 
Financial Ratios:
Free cash flow* $ 434 $ 281
 
*Free cash flow = Net cash provided by operating activities - Capital expenditures
     
GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
     
Nine Months Ended
October 1, 2011 October 2, 2010
Operating
Net earnings attributable to Motorola Solutions, Inc. $ 974 $ 341
Earnings (loss) attributable to the noncontrolling interests   (6 )   5  
Net earnings 968 346
Earnings from discontinued operations, net of tax   407     263  
Earnings from continuing operations 561 83
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:
Depreciation and amortization 273 257
Non-cash other charges (income) 40 (60 )
Share-based compensation expense 123 108
Gain on sales of investments and businesses, net (21 ) (44 )
Loss from the extinguishment of long-term debt 81 12
Deferred income taxes 30 398
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable 82 (80 )
Inventories (37 ) (90 )
Other current assets (6 ) (53 )
Accounts payable and accrued liabilities (230 ) 182
Other assets and liabilities   (93 )   (242 )
Net cash provided by operating activities from continuing operations   803     471  
Investing
Acquisitions and investments, net (26 ) (7 )
Proceeds from sales of investments and businesses, net 1,064 238
Capital expenditures (103 ) (111 )
Proceeds from sales of property, plant and equipment 6 27
Purchases of Sigma Fund investments, net 225 30
Proceeds from sales (purchases) of short-term investments, net   6     (6 )
Net cash provided by investing activities from continuing operations   1,172     171  
Financing
Repayment of short-term borrowings, net - (5 )
Repayment of debt (617 ) (484 )
Contribution to Motorola Mobility (3,275 ) -
Issuance of common stock 148 152
Purchase of common stock (744 ) -
Excess tax benefits from share-based compensation 39 -
Distribution from discontinued operations   102     644  
Net cash provided by (used for) financing activities from continuing operations   (4,347 )   307  
Discontinued Operations
Net cash provided by operating activities from discontinued operations 65 847
Net cash used for investing activities from discontinued operations (8 ) (160 )
Net cash used for financing activities from discontinued operations (102 ) (644 )
 
Effect of exchange rate changes on cash and cash equivalents from discontinued operations   45     (43 )
Net cash provided by (used for) financing activities from discontinued operations   -     -  
 
Effect of exchange rate changes on cash and cash equivalents from continuing operations   (51 )   30  
Net increase (decrease) in cash and cash equivalents (2,423 ) 979
Cash and cash equivalents, beginning of period   4,208     2,869  
Cash and cash equivalents, end of period $ 1,785   $ 3,848  
 
Financial Ratios:
Free cash flow* $ 700 $ 360
 
*Free cash flow = Net cash provided by operating activities - Capital expenditures
       
GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
 

Summarized below are the Company's Net sales and Operating earnings by reportable segment for the three and nine months ended October 1, 2011 and October 2, 2010.

 
 
Net Sales
     
Three Months Ended
     
October 1, 2011 October 2, 2010 % Change
 
Government $ 1,379 $ 1,267 9 %
Enterprise   726   641 13 %
Company Total $ 2,105 $ 1,908 10 %
     
Nine Months Ended
     
October 1, 2011 October 2, 2010 % Change
 
Government $ 3,876 $ 3,661 6 %
Enterprise   2,093   1,837 14 %
Company Total $ 5,969 $ 5,498 9 %
 
 
Operating Earnings
     
Three Months Ended
     
October 1, 2011 October 2, 2010 % Change
 
Government $ 185 $ 159 16 %
Enterprise   68   52 31 %
Company Total $ 253 $ 211 20 %
     
Nine Months Ended
     
October 1, 2011 October 2, 2010 % Change
 
Government $ 388 $ 352 10 %
Enterprise   192   125 54 %
Company Total $ 580 $ 477 22 %
             
Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments Bridge
(In millions, except per share amounts)
                   
Three Months Ended Three Months Ended
October 1, 2011 October 2, 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 $ 2,105 $ - $ 2,105 $ 1,908 $ - $ 1,908
Costs of sales   1,045     6     1,039     944     11     933  
Gross margin   1,060     (6 )   1,066     964     (11 )   975  
 
Selling, general and administrative expenses 475 29 446 457 22 435
Research and development expenditures 272 10 262 262 11 251
Other charges 10 10 - (17 ) (17 ) -
Intangibles amortization   50     50     -     51     51     -  
Operating earnings   253     (105 )   358     211     (78 )   289  
 
Other income (expense):
Interest expense, net (18 ) - (18 ) (29 ) - (29 )
Gain on sales of investments and businesses, net 2 - 2 4 - 4
Other   -     -     -     6     -     6  
Total other income (expense)   (16 )   -     (16 )   (19 )   -     (19 )
Earnings from continuing operations before income taxes 237 (105 ) 342 192 (78 ) 270
Income tax expense (benefit)   84     (35 )   119     203     115     88  
Earnings (loss) from continuing operations 153 (70 ) 223 (11 ) (193 ) 182
 
Earnings (loss) from discontinued operations, net of tax   (24 )   (24 )   -     123     123     -  
Net earnings 129 (94 ) 223 112 (70 ) 182
 
Less: Earnings attributable to noncontrolling interests   1     -     1     2     -     2  
Net earnings attributable to Motorola Solutions, Inc. $ 128   $ (94 ) $ 222   $ 110   $ (70 ) $ 180  
 
 
Earnings (loss) from continuing operations, net of tax $ 152 $ (70 ) $ 222 $ (13 ) $ (193 ) $ 180
Earnings (loss) from discontinued operations, net of tax   (24 )   (24 )   -     123     123     -  
Net earnings $ 128   $ (94 ) $ 222   $ 110   $ (70 ) $ 180  
 

Earnings per common share

Basic:
Continuing operations $ 0.45 $ (0.21 ) $ 0.66 $ (0.04 ) $ (0.58 ) $ 0.54
Discontinued operations   (0.07 )   (0.07 )   -     0.37     0.37     -  
$ 0.38   $ (0.28 ) $ 0.66   $ 0.33   $ (0.21 ) $ 0.54  
 
Diluted:
Continuing operations $ 0.45 $ (0.20 ) $ 0.65 $ (0.04 ) $ (0.58 ) $ 0.54
Discontinued operations   (0.07 )   (0.07 )   -     0.37     0.37     -  
$ 0.38   $ (0.27 ) $ 0.65   $ 0.33   $ (0.21 ) $ 0.54  
 

Weighted average common shares outstanding

Basic 335.4 335.4 335.4 334.1 334.1 334.1
Diluted   339.5     339.5     339.5     334.1     334.1     334.1  
 
 
Percentage of Net Sales*          
Net sales 100 % 100 % 100 % 100 %
Costs of sales   49.6 %   49.4 %   49.5 %   48.9 %
Gross margin   50.4 %   50.6 %   50.5 %   51.1 %
 
Selling, general and administrative expenses 22.6 % 21.2 % 24.0 % 22.8 %
Research and development expenditures 12.9 % 12.4 % 13.7 % 13.2 %
Other charges 0.5 % 0.0 % -0.9 % 0.0 %
Intangibles amortization   2.4 %   0.0 %   2.7 %   0.0 %
Operating earnings   12.0 %   17.0 %   11.1 %   15.1 %
 
Other income (expense):
Interest expense, net -0.9 % -0.9 % -1.5 % -1.5 %
Gain on sales of investments and businesses, net 0.1 % 0.1 % 0.2 % 0.2 %
Other   0.0 %   0.0 %   0.3 %   0.3 %
Total other income (expense)   -0.8 %   -0.8 %   -1.0 %   -1.0 %
Earnings from continuing operations before income taxes 11.3 % 16.2 % 10.1 % 14.2 %
Income tax expense (benefit)   4.0 %   5.7 %   10.6 %   4.6 %
Earnings (loss) from continuing operations 7.3 % 10.6 % -0.6 % 9.5 %
 
Earnings (loss) from discontinued operations, net of tax   -1.1 %   0.0 %   6.4 %   0.0 %
Net earnings 6.1 % 10.6 % 5.9 % 9.5 %
 
Less: Earnings attributable to noncontrolling interests   0.0 %   0.0 %   0.1 %   0.1 %
Net earnings attributable to Motorola Solutions, Inc.   6.1 %   10.5 %   5.8 %   9.4 %
 
* Percentages may not add up due to rounding
         
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
 
Q1 2011
       
          TOTAL Government Enterprise
Net sales $ 1,856 $ 1,189 $ 667
Operating earnings         $ 168   $ 98   $ 70  
 
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         $ 265   $ 133   $ 132  
     
Operating earnings as a percentage of net sales - GAAP 9.1 % 8.2 % 10.5 %
Operating earnings as a percentage of net sales - after non-GAAP adjustments   14.3 %   11.2 %   19.8 %
 
Q2 2011
     
          TOTAL Government Enterprise
Net sales $ 2,008 $ 1,308 $ 700
Operating earnings         $ 159   $ 105   $ 54  
 
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         $ 304   $ 168   $ 136  
     
Operating earnings as a percentage of net sales - GAAP 7.9 % 8.0 % 7.7 %
Operating earnings as a percentage of net sales - after non-GAAP adjustments   15.1 %   12.8 %   19.4 %
 
Q3 2011
     
          TOTAL Government Enterprise
Net sales $ 2,105 $ 1,379 $ 726
Operating earnings         $ 253   $ 185   $ 68  
 
Above-OE non-GAAP adjustments by P&L statement line:

Statement Line

Stock-based compensation expense Cost of sales 6 4 2
Stock-based compensation expense SG&A and R&D 39 26 13
Reorganization of business charges Other charges 10 7 3
Intangibles amortization expense Intangibles amortization   50     1     49  
Less: Total above-OE non-GAAP adjustments 105 38 67
               
Operating earnings after non-GAAP adjustments         $ 358   $ 223   $ 135  
     
Operating earnings as a percentage of net sales - GAAP 12.0 % 13.4 % 9.4 %
Operating earnings as a percentage of net sales - after non-GAAP adjustments   17.0 %   16.2 %   18.6 %
         
Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense, Stock-Based Compensation Expense and Highlighted Items)
                     
Q1 2011
 
PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp Inc/(Exp) (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
 
PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp Inc/(Exp) (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
                     
Q3 2011
 
PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp Inc/(Exp) (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 45 14 31 0.09
Reorganization of business charges Other charges   10     3   7     0.02  
Total continuing operations impact $ 105 $ 35 $ 70 $ 0.20


Contact:

Media Contacts
Nick Sweers
Motorola Solutions
+1 847-576-2462
Email Contact
or
Tama McWhinney
Motorola Solutions
+1 847-538-1865
Email Contact
or
Investor Contacts
Shep Dunlap
Motorola Solutions
+1 847-576-6899
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or
Jason Winkler
Motorola Solutions
+1 847-576-4995
Email Contact