DEFINITIONS

¹ Amounts attributable to Motorola Solutions, Inc. common shareholders

² Free cash flow represents operating cash flow less capital expenditures

³ Net debt represents cash and cash equivalents less long-term debt, including current portion

ABOUT MOTOROLA SOLUTIONS

Motorola Solutions (NYSE: MSI) creates innovative, mission-critical communication solutions and services that help public safety and commercial customers build safer cities and thriving communities. For ongoing news, visit www.motorolasolutions.com/newsroom or subscribe to a 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. ©2016 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, 2016					October 3, 2015
Net sales from products			$	920				$	925
Net sales from services				612					497
Net sales				1,532					1,422
Costs of products sales				398					395
Costs of services sales				372					342
Costs of sales				770					737
Gross margin				762					685
Selling, general and administrative expenses				247					259
Research and development expenditures				137					153
Other charges				6					40
Intangibles amortization				31					2
Operating earnings				341					231
Other income (expense):
Interest expense, net				(54	)				(43	)
Gains on sales of investments and businesses, net				7					10
Other				(1	)				(1	)
Total other expense				(48	)				(34	)
Earnings from continuing operations before income taxes				293					197
Income tax expense				100					71
Earnings from continuing operations				193					126
Loss from discontinued operations, net of tax				—					(11	)
Net earnings				193					115
Less: Earnings attributable to noncontrolling interests				1					—
Net earnings attributable to Motorola Solutions, Inc.			$	192				$	115
Amounts attributable to Motorola Solutions, Inc. common stockholders:
Earnings from continuing operations, net of tax			$	192				$	126
Loss from discontinued operations, net of tax				—					(11	)
Net earnings attributable to Motorola Solutions, Inc.			$	192				$	115
Earnings (loss) per common share:
Basic:
Continuing operations			$	1.15				$	0.63
Discontinued operations				—					(0.05	)
			$	1.15				$	0.58
Diluted:
Continuing operations			$	1.13				$	0.63
Discontinued operations				—					(0.06	)
			$	1.13				$	0.57
Weighted average common shares outstanding:
Basic				166.3					199.2
Diluted				169.6					201.3
			Percentage of Net Sales*
Net sales from products				60.1	%				65.0	%
Net sales from services				39.9	%				35.0	%
Net sales				100.0	%				100.0	%
Costs of products sales				43.3	%				42.7	%
Costs of services sales				60.8	%				68.8	%
Costs of sales				50.3	%				51.8	%
Gross margin				49.7	%				48.2	%
Selling, general and administrative expenses				16.1	%				18.2	%
Research and development expenditures				8.9	%				10.8	%
Other charges				0.4	%				2.8	%
Intangibles amortization				2.0	%				0.1	%
Operating earnings				22.3	%				16.2	%
Other income (expense):
Interest expense, net				(3.5	)%				(3.0	)%
Gains on sales of investments and businesses, net				0.5	%				0.7	%
Other				(0.1	)%				(0.1	)%
Total other expense				(3.1	)%				(2.4	)%
Earnings from continuing operations before income taxes				19.1	%				13.9	%
Income tax expense				6.5	%				5.0	%
Earnings from continuing operations				12.6	%				8.9	%
Loss from discontinued operations, net of tax				—	%				(0.8	)%
Net earnings				12.6	%				8.1	%
Less: Earnings attributable to noncontrolling interests				0.1	%				—	%
Net earnings attributable to Motorola Solutions, Inc.				12.5	%				8.1	%
* 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, 2016					October 3, 2015
Net sales from products			$	2,423				$	2,550
Net sales from services				1,732					1,463
Net sales				4,155					4,013
Costs of products sales				1,124					1,139
Costs of services sales				1,090					993
Costs of sales				2,214					2,132
Gross margin				1,941					1,881
Selling, general and administrative expenses				722					769
Research and development expenditures				411					468
Other charges				61					33
Intangibles amortization				83					6
Operating earnings				664					605
Other income (expense):
Interest expense, net				(157	)				(122	)
Gains (losses) on sales of investments and businesses, net				(13	)				60
Other				(12	)				(3	)
Total other expense				(182	)				(65	)
Earnings from continuing operations before income taxes				482					540
Income tax expense				164					175
Earnings from continuing operations				318					365
Loss from discontinued operations, net of tax				—					(32	)
Net earnings				318					333
Less: Earnings attributable to noncontrolling interests				1					2
Net earnings attributable to Motorola Solutions, Inc.			$	317				$	331
Amounts attributable to Motorola Solutions, Inc. common stockholders:
Earnings from continuing operations, net of tax			$	317				$	363
Loss from discontinued operations, net of tax				—					(32	)
Net earnings attributable to Motorola Solutions, Inc.			$	317				$	331
Earnings (loss) per common share:
Basic:
Continuing operations			$	1.85				$	1.75
Discontinued operations				—					(0.15	)
			$	1.85				$	1.60
Diluted:
Continuing operations			$	1.82				$	1.74
Discontinued operations				—					(0.16	)
			$	1.82				$	1.58
Weighted average common shares outstanding:
Basic				171.0					207.2
Diluted				174.0					209.2
			Percentage of Net Sales*
Net sales from products				58.3	%				63.5	%
Net sales from services				41.7	%				36.5	%
Net sales				100.0	%				100.0	%
Costs of products sales				46.4	%				44.7	%
Costs of services sales				62.9	%				67.9	%
Costs of sales				53.3	%				53.1	%
Gross margin				46.7	%				46.9	%
Selling, general and administrative expenses				17.4	%				19.2	%
Research and development expenditures				9.9	%				11.7	%
Other charges				1.5	%				0.8	%
Intangibles amortization				2.0	%				0.1	%
Operating earnings				16.0	%				15.1	%
Other income (expense):
Interest expense, net				(3.8	)%				(3.0	)%
Gains (losses) on sales of investments and businesses, net				(0.3	)%				1.5	%
Other				(0.3	)%				(0.1	)%
Total other expense				(4.4	)%				(1.6	)%
Earnings from continuing operations before income taxes				11.6	%				13.5	%
Income tax expense				3.9	%				4.4	%
Earnings from continuing operations				7.7	%				9.1	%
Loss from discontinued operations, net of tax				—	%				(0.8	)%
Net earnings				7.7	%				8.3	%
Less: Earnings attributable to noncontrolling interests				—	%				—	%
Net earnings attributable to Motorola Solutions, Inc.				7.6	%				8.2	%
* Percentages may not add up due to rounding

GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
			October 1, 2016					December 31, 2015
Assets
Cash and cash equivalents			$	1,687				$	1,980
Accounts receivable, net				1,164					1,362
Inventories, net				283					296
Other current assets				670					954
Current assets held for disposition				—					27
Total current assets				3,804					4,619
Property, plant and equipment, net				780					487
Investments				238					231
Deferred income taxes				2,187					2,278
Goodwill				597					420
Other assets				1,013					271
Non-current assets held for disposition				—					40
Total assets			$	8,619				$	8,346
Liabilities and Stockholders' Equity
Current portion of long-term debt			$	5				$	4
Accounts payable				406					518
Accrued liabilities				1,750					1,671
Total current liabilities				2,161					2,193
Long-term debt				5,044					4,345
Other liabilities				2,062					1,904
Total Motorola Solutions, Inc. stockholders’ equity (deficit)				(659	)				(106	)
Noncontrolling interests				11					10
Total liabilities and stockholders’ equity			$	8,619				$	8,346
Financial Ratios:
Net cash (debt)*			$	(3,362	)			$	(2,369	)
*Net cash (debt) = 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
			October 1, 2016					October 3, 2015
Operating
Net earnings attributable to Motorola Solutions, Inc.			$	192				$	115
Earnings attributable to noncontrolling interests				1					—
Net earnings				193					115
Loss from discontinued operations, net of tax				—					(11	)
Earnings from continuing operations, net of tax				193					126
Adjustments to reconcile Earnings from continuing operations to Net cash provided by operating activities:
Depreciation and amortization				76					32
Non-cash other charges				8					38
Share-based compensation expense				16					18
Gains on sales of investments and businesses, net				(7	)				(10	)
Deferred income taxes				72					72
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable				(82	)				(88	)
Inventories				2					4
Other current assets				(37	)				10
Accounts payable and accrued liabilities				138					96
Other assets and liabilities				(31	)				3
Net cash provided by operating activities				348					301
Investing
Acquisitions and investments, net				(95	)				(57	)
Proceeds from sales of investments and businesses, net				84					39
Capital expenditures				(68	)				(50	)
Proceeds from sales of property, plant and equipment				22					1
Net cash used for investing activities				(57	)				(67	)
Financing
Repayment of debt				(1	)				(1	)
Net proceeds from issuance of debt				—					976
Issuance of common stock				41					33
Purchase of common stock				(109	)				(2,058	)
Payment of dividends				(70	)				(70	)
Net cash used for financing activities				(139	)				(1,120	)
Effect of exchange rate changes on cash and cash equivalents				(10	)				(26	)
Net increase (decrease) in cash and cash equivalents				142					(912	)
Cash and cash equivalents, beginning of period				1,545					3,112
Cash and cash equivalents, end of period			$	1,687				$	2,200
Financial Ratios:
Free cash flow*			$	280				$	251
*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, 2016					October 3, 2015
Operating
Net earnings attributable to Motorola Solutions, Inc.			$	317				$	331
Earnings attributable to noncontrolling interests				1					2
Net earnings				318					333
Loss from discontinued operations, net of tax				—					(32	)
Earnings from continuing operations, net of tax				318					365
Adjustments to reconcile Earnings from continuing operations to Net cash provided by operating activities:
Depreciation and amortization				220					113
Non-cash other charges				43					43
Non-U.S. pension curtailment gain				—					(32	)
Share-based compensation expense				52					58
Losses (gains) on sales of investments and businesses, net				13					(60	)
Deferred income taxes				143					127
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable				245					167
Inventories				—					(21	)
Other current assets				(102	)				38
Accounts payable and accrued liabilities				(224	)				(152	)
Other assets and liabilities				(56	)				(39	)
Net cash provided by operating activities				652					607
Investing
Acquisitions and investments, net				(1,215	)				(150	)
Proceeds from sales of investments and businesses, net				637					150
Capital expenditures				(211	)				(131	)
Proceeds from sales of property, plant and equipment				68					2
Net cash used for investing activities				(721	)				(129	)
Financing
Repayment of debt				(3	)				(3	)
Net proceeds from issuance of debt				673					976
Issuance of common stock				80					69
Purchase of common stock				(728	)				(2,996	)
Excess tax benefit from share-based compensation				—					1
Payment of dividends				(213	)				(218	)
Net cash used for financing activities				(191	)				(2,171	)
Effect of exchange rate changes on cash and cash equivalents				(33	)				(61	)
Net decrease in cash and cash equivalents				(293	)				(1,754	)
Cash and cash equivalents, beginning of period				1,980					3,954
Cash and cash equivalents, end of period			$	1,687				$	2,200
Financial Ratios:
Free cash flow*			$	441				$	476
*Free cash flow = Net cash provided by operating activities - Capital Expenditures

GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Net Sales
			Three Months Ended
			October 1, 2016					October 3, 2015					% Change
Products			$	920				$	925				(1	)%
Services				612					497				23	%
Total Motorola Solutions			$	1,532				$	1,422				8	%
			Nine Months Ended
			October 1, 2016					October 3, 2015					% Change
Products			$	2,423				$	2,550				(5	)%
Services				1,732					1,463				18	%
Total Motorola Solutions			$	4,155				$	4,013				4	%
Operating Earnings
			Three Months Ended
			October 1, 2016					October 3, 2015					% Change
Products			$	225				$	178				26	%
Services				116					53				119	%
Total Motorola Solutions			$	341				$	231				48	%
			Nine Months Ended
			October 1, 2016					October 3, 2015					% Change
Products			$	404				$	413				(2	)%
Services				260					192				35	%
Total Motorola Solutions			$	664				$	605				10	%
Operating Earnings %
			Three Months Ended
			October 1, 2016					October 3, 2015
Products				24.5	%				19.2	%
Services				19.0	%				10.7	%
Total Motorola Solutions				22.3	%				16.2	%
			Nine Months Ended
			October 1, 2016					October 3, 2015
Products				16.7	%				16.2	%
Services				15.0	%				13.1	%
Total Motorola Solutions				16.0	%				15.1	%

Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expense and Highlighted Items)
Q1 2016
Non-GAAP Adjustments			Statement Line			PBT (Inc)/Exp				Tax Inc/(Exp)				PAT (Inc)/Exp				EPS impact
Share-based compensation expense			Cost of sales, SG&A and R&D			$	17			$	6			$	11			$	0.06
Reorganization of business charges			Cost of sales and Other charges				23				8				15				0.08
Intangibles amortization expense			Intangibles amortization				13				3				10				0.06
Acquisition related transaction fees			Other charges				13				—				13				0.07
Loss on investment in United Kingdom treasuries			Other expense (income)				19				7				12				0.07
Realized foreign currency loss on acquisition			Other expense (income)				10				3				7				0.04
Loss on sale of Malaysia facility and operations			Other expense (income)				7				—				7				0.04
Total impact on Net earnings						$	102			$	27			$	75			$	0.42
Q2 2016
Non-GAAP Adjustments			Statement Line			PBT (Inc)/Exp				Tax Inc/(Exp)				PAT (Inc)/Exp				EPS impact
Share-based compensation expense			Cost of sales, SG&A and R&D			$	18			$	6			$	12			$	0.07
Reorganization of business charges			Cost of sales and Other charges				27				7				20				0.12
Intangibles amortization expense			Intangibles amortization				38				8				30				0.17
Building impairment			Other charges				17				6				11				0.06
Total impact on Net earnings						$	100			$	27			$	73			$	0.42
Q3 2016
Non-GAAP Adjustments			Statement Line			PBT (Inc)/Exp				Tax Inc/(Exp)				PAT (Inc)/Exp				EPS impact
Share-based compensation expense			Cost of sales, SG&A and R&D			$	17			$	5			$	12			$	0.07
Reorganization of business charges			Cost of sales and Other charges				7				2				5				0.03
Intangibles amortization expense			Intangibles amortization				31				7				24				0.14
Total impact on Net earnings						$	55			$	14			$	41			$	0.24

Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
Net Sales
			Three Months Ended
			October 1, 2016				October 3, 2015					% Change
Products			$	920			$	925				(1	)%
Services				612				497				23	%
Total Motorola Solutions			$	1,532			$	1,422				8	%
			Nine Months Ended
			October 1, 2016				October 3, 2015					% Change
Products			$	2,423			$	2,550				(5	)%
Services				1,732				1,463				18	%
Total Motorola Solutions			$	4,155			$	4,013				4	%
Non-GAAP Operating Earnings
			Three Months Ended
			October 1, 2016				October 3, 2015					% Change
Products			$	243			$	221				10	%
Services				153				71				115	%
Total Motorola Solutions			$	396			$	292				36	%
			Nine Months Ended
			October 1, 2016				October 3, 2015					% Change
Products			$	503			$	487				3	%
Services				383				221				73	%
Total Motorola Solutions			$	886			$	708				25	%
Non-GAAP Operating Earnings %
			Three Months Ended
			October 1, 2016				October 3, 2015
Products				26.4	%			23.9	%
Services				25.0	%			14.3	%
Total Motorola Solutions				25.8	%			20.5	%
			Nine Months Ended
			October 1, 2016				October 3, 2015
Products				20.8	%			19.1	%
Services				22.1	%			15.1	%
Total Motorola Solutions				21.3	%			17.6	%

Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
Q1 2016
		TOTAL				Products				Services
Net sales		$	1,193			$	702			$	491
Operating earnings ("OE")		$	100			$	51			$	49
Above-OE non-GAAP adjustments:
Share-based compensation expense			17				11				6
Reorganization of business charges			23				21				2
Intangibles amortization expense			13				1				12
Acquisition related transaction fees			13				—				13
Total above-OE non-GAAP adjustments			66				33				33
Operating earnings after non-GAAP adjustments		$	166			$	84			$	82
Operating earnings as a percentage of net sales - GAAP			8.4	%			7.3	%			10.0	%
Operating earnings as a percentage of net sales - after non-GAAP adjustments			13.9	%			12.0	%			16.7	%
Q2 2016
		TOTAL				Products				Services
Net sales		$	1,430			$	801			$	629
Operating earnings ("OE")		$	224			$	129			$	95
Above-OE non-GAAP adjustments:
Share-based compensation expense			18				12				6
Reorganization of business charges			27				21				6
Intangibles amortization expense			38				2				36
Building impairment			17				12				5
Total above-OE non-GAAP adjustments			100				47				53
Operating earnings after non-GAAP adjustments		$	324			$	176			$	148
Operating earnings as a percentage of net sales - GAAP			15.7	%			16.1	%			15.1	%
Operating earnings as a percentage of net sales - after non-GAAP adjustments			22.7	%			22.0	%			23.5	%
Q3 2016
		TOTAL				Products				Services
Net sales		$	1,532			$	920			$	612
Operating earnings ("OE")		$	341			$	225			$	116
Above-OE non-GAAP adjustments:
Share-based compensation expense			17				11				6
Reorganization of business charges			7				5				2
Intangibles amortization expense			31				2				29
Total above-OE non-GAAP adjustments			55				18				37
Operating earnings after non-GAAP adjustments		$	396			$	243			$	153
Operating earnings as a percentage of net sales - GAAP			22.3	%			24.5	%			19.0	%
Operating earnings as a percentage of net sales - after non-GAAP adjustments			25.8	%			26.4	%			25.0	%

« Previous Page 1 | 2 | 3 | 4 | 5  Next Page »