ABOUT MOTOROLA SOLUTIONS
Motorola Solutions is a global leader in mission-critical communications. Our technology platforms in communications, software, video and services make cities safer and help communities and businesses thrive. At Motorola Solutions, we are ushering in a new era in public safety and security. Learn more at www.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. ©2019 Motorola Solutions, Inc. All rights reserved.
| GAAP-1 | ||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Operations | ||||||||
| (In millions, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
| December 31, 2018 | December 31, 2017 | |||||||
| Net sales from products | $ | 1,470 | $ | 1,233 | ||||
| Net sales from services | 784 | 724 | ||||||
| Net sales | 2,254 | 1,957 | ||||||
| Costs of products sales | 652 | 519 | ||||||
| Costs of services sales | 514 | 468 | ||||||
| Costs of sales | 1,166 | 987 | ||||||
| Gross margin | 1,088 | 970 | ||||||
| Selling, general and administrative expenses | 337 | 267 | ||||||
| Research and development expenditures | 165 | 154 | ||||||
| Other charges | 22 | 7 | ||||||
| Intangibles amortization | 48 | 39 | ||||||
| Operating earnings | 516 | 503 | ||||||
| Other income (expense): | ||||||||
| Interest expense, net | (59 | ) | (47 | ) | ||||
| Other | 7 | 9 | ||||||
| Total other expense | (52 | ) | (38 | ) | ||||
| Net earnings before income taxes | 464 | 465 | ||||||
| Income tax expense | 40 | 1,039 | ||||||
| Net earnings (loss) | 424 | (574 | ) | |||||
| Less: Earnings attributable to noncontrolling interests | 1 | 1 | ||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 423 | $ | (575 | ) | |||
|
Earnings (loss) per common share: |
||||||||
| Basic: | $ | 2.58 | $ | (3.56 | ) | |||
| Diluted: | $ | 2.44 | $ | (3.56 | ) | |||
|
Weighted average common shares outstanding: |
||||||||
| Basic | 163.5 | 161.7 | ||||||
| Diluted | 173.4 | 161.7 | ||||||
| Percentage of Net Sales* | ||||||||
| Net sales from products | 65.2 | % | 63.0 | % | ||||
| Net sales from services | 34.8 | % | 37.0 | % | ||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Costs of products sales | 44.4 | % | 42.1 | % | ||||
| Costs of services sales | 65.6 | % | 64.6 | % | ||||
| Costs of sales | 51.7 | % | 50.4 | % | ||||
| Gross margin | 48.3 | % | 49.6 | % | ||||
| Selling, general and administrative expenses | 15.0 | % | 13.6 | % | ||||
| Research and development expenditures | 7.3 | % | 7.9 | % | ||||
| Other charges | 1.0 | % | 0.4 | % | ||||
| Intangibles amortization | 2.1 | % | 2.0 | % | ||||
| Operating earnings | 22.9 | % | 25.7 | % | ||||
| Other income (expense): | ||||||||
| Interest expense, net | (2.6 | )% | (2.4 | )% | ||||
| Other | 0.3 | % | 0.5 | % | ||||
| Total other expense | (2.3 | )% | (1.9 | )% | ||||
| Net earnings before income taxes | 20.6 | % | 23.8 | % | ||||
| Income tax expense | 1.8 | % | 53.1 | % | ||||
| Net earnings (loss) | 18.8 | % | (29.3 | )% | ||||
| Less: Earnings attributable to noncontrolling interests | — | % | 0.1 | % | ||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | 18.8 | % | (29.4 | )% | ||||
| * Percentages may not add up due to rounding | ||||||||
| GAAP-2 | ||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||
| Consolidated Statements of Operations | ||||||||||||
| (In millions, except per share amounts) | ||||||||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | December 31, 2016 | ||||||||||
| Net sales from products | $ | 4,463 | $ | 3,772 | $ | 3,649 | ||||||
| Net sales from services | 2,880 | 2,608 | 2,389 | |||||||||
| Net sales | 7,343 | 6,380 | 6,038 | |||||||||
| Costs of products sales | 2,035 | 1,686 | 1,649 | |||||||||
| Costs of services sales | 1,828 | 1,670 | 1,520 | |||||||||
| Costs of sales | 3,863 | 3,356 | 3,169 | |||||||||
| Gross margin | 3,480 | 3,024 | 2,869 | |||||||||
| Selling, general and administrative expenses | 1,254 | 1,025 | 1,044 | |||||||||
| Research and development expenditures | 637 | 568 | 553 | |||||||||
| Other charges (income) | 146 | (4 | ) | 111 | ||||||||
| Intangibles amortization | 188 | 151 | 113 | |||||||||
| Operating earnings | 1,255 | 1,284 | 1,048 | |||||||||
| Other income (expense): | ||||||||||||
| Interest expense, net | (222 | ) | (201 | ) | (205 | ) | ||||||
| Gains (losses) on sales of investments and businesses, net | 16 | 3 | (6 | ) | ||||||||
| Other | 53 | (10 | ) | 7 | ||||||||
| Total other expense | (153 | ) | (208 | ) | (204 | ) | ||||||
| Net earnings before income taxes | 1,102 | 1,076 | 844 | |||||||||
| Income tax expense | 133 | 1,227 | 282 | |||||||||
| Net earnings (loss) | 969 | (151 | ) | 562 | ||||||||
| Less: Earnings attributable to noncontrolling interests | 3 | 4 | 2 | |||||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 966 | $ | (155 | ) | $ | 560 | |||||
|
Earnings (loss) per common share: |
||||||||||||
| Basic: | $ | 5.95 | $ | (0.95 | ) | $ | 3.30 | |||||
| Diluted: | $ | 5.62 | $ | (0.95 | ) | $ | 3.24 | |||||
|
Weighted average common shares outstanding: |
||||||||||||
| Basic | 162.4 | 162.9 | 169.6 | |||||||||
| Diluted | 172.0 | 162.9 | 173.1 | |||||||||
| Percentage of Net Sales* | ||||||||||||
| Net sales from products | 60.8 | % | 59.1 | % | 60.4 | % | ||||||
| Net sales from services | 39.2 | % | 40.9 | % | 39.6 | % | ||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Costs of products sales | 45.6 | % | 44.7 | % | 45.2 | % | ||||||
| Costs of services sales | 63.5 | % | 64.0 | % | 63.6 | % | ||||||
| Costs of sales | 52.6 | % | 52.6 | % | 52.5 | % | ||||||
| Gross margin | 47.4 | % | 47.4 | % | 47.5 | % | ||||||
| Selling, general and administrative expenses | 17.1 | % | 16.1 | % | 17.3 | % | ||||||
| Research and development expenditures | 8.7 | % | 8.9 | % | 9.2 | % | ||||||
| Other charges | 2.0 | % | (0.1 | )% | 1.8 | % | ||||||
| Intangibles amortization | 2.6 | % | 2.4 | % | 1.9 | % | ||||||
| Operating earnings | 17.1 | % | 20.1 | % | 17.4 | % | ||||||
| Other income (expense): | ||||||||||||
| Interest expense, net | (3.0 | )% | (3.2 | )% | (3.4 | )% | ||||||
| Gains (losses) on sales of investments and businesses, net | 0.2 | % | — | % | (0.1 | )% | ||||||
| Other | 0.7 | % | (0.2 | )% | 0.1 | % | ||||||
| Total other expense | (2.1 | )% | (3.3 | )% | (3.4 | )% | ||||||
| Net earnings before income taxes | 15.0 | % | 16.9 | % | 14.0 | % | ||||||
| Income tax expense | 1.8 | % | 19.2 | % | 4.7 | % | ||||||
| Net earnings (loss) | 13.2 | % | (2.4 | )% | 9.3 | % | ||||||
| Less: Earnings attributable to noncontrolling interests | — | % | 0.1 | % | — | % | ||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | 13.2 | % | (2.4 | )% | 9.3 | % | ||||||
| * Percentages may not add up due to rounding | ||||||||||||
| GAAP-3 | ||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In millions) | ||||||||
| December 31, 2018 | December 31, 2017 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 1,246 | $ | 1,205 | ||||
| Restricted cash | 11 | 63 | ||||||
| Total cash and cash equivalents | 1,257 | 1,268 | ||||||
| Accounts receivable, net | 1,293 | 1,523 | ||||||
| Contract assets | 1,012 | — | ||||||
| Inventories, net | 356 | 327 | ||||||
| Other current assets | 354 | 832 | ||||||
| Total current assets | 4,272 | 3,950 | ||||||
| Property, plant and equipment, net | 895 | 856 | ||||||
| Investments | 169 | 247 | ||||||
| Deferred income taxes | 985 | 1,023 | ||||||
| Goodwill | 1,514 | 938 | ||||||
| Intangible assets | 1,230 | 861 | ||||||
| Other assets | 344 | 333 | ||||||
| Total assets | $ | 9,409 | $ | 8,208 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current portion of long-term debt | $ | 31 | $ | 52 | ||||
| Accounts payable | 592 | 593 | ||||||
| Contract liabilities | 1,263 | — | ||||||
| Accrued liabilities | 1,210 | 2,286 | ||||||
| Total current liabilities | 3,096 | 2,931 | ||||||
| Long-term debt | 5,289 | 4,419 | ||||||
| Other liabilities | 2,300 | 2,585 | ||||||
| Total Motorola Solutions, Inc. stockholders’ equity (deficit) | (1,293 | ) | (1,742 | ) | ||||
| Noncontrolling interests | 17 | 15 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,409 | $ | 8,208 | ||||
| GAAP-4 | ||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In millions) | ||||||||
| Three Months Ended | ||||||||
| December 31, 2018 | December 31, 2017 | |||||||
| Operating | ||||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 423 | $ | (575 | ) | |||
| Earnings attributable to noncontrolling interests | 1 | 1 | ||||||
| Net earnings (loss) | 424 | (574 | ) | |||||
| Adjustments to reconcile Net earnings (loss) to Net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 93 | 89 | ||||||
| Non-cash other charges | — | 3 | ||||||
| Non-U.S. pension settlement loss | — | 2 | ||||||
| Share-based compensation expense | 20 | 17 | ||||||
| Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | ||||||||
| Accounts receivable | (124 | ) | (141 | ) | ||||
| Inventories | 10 | 37 | ||||||
| Other current assets and contract assets | (114 | ) | 42 | |||||
| Accounts payable, accrued liabilities, and contract liabilities | 441 | 338 | ||||||
| Other assets and liabilities | 72 | (54 | ) | |||||
| Deferred income taxes | (10 | ) | 1,002 | |||||
| Net cash provided by operating activities | 812 | 761 | ||||||
| Investing | ||||||||
| Acquisitions and investments, net | (6 | ) | (21 | ) | ||||
| Proceeds from sales of investments | 5 | 9 | ||||||
| Capital expenditures | (69 | ) | (21 | ) | ||||
| Net cash used for investing activities | (70 | ) | (33 | ) | ||||
| Financing | ||||||||
| Repayment of debt | (311 | ) | (7 | ) | ||||
| Net proceeds from issuance of debt | 195 | 3 | ||||||
| Issuance of common stock | 29 | 21 | ||||||
| Purchase of common stock | (66 | ) | (125 | ) | ||||
| Payment of dividends | (85 | ) | (76 | ) | ||||
| Deferred acquisition costs | (76 | ) | (2 | ) | ||||
| Net cash used for financing activities | (314 | ) | (186 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (22 | ) | 9 | |||||
| Net increase in cash and cash equivalents | 406 | 551 | ||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 851 | 717 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 1,257 | $ | 1,268 | ||||
| Financial Ratios: | ||||||||
| Free cash flow* | $ | 743 | $ | 740 | ||||
| *Free cash flow = Net cash provided by operating activities - Capital Expenditures | ||||||||
| GAAP-5 | ||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (In millions) | ||||||||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | December 31, 2016 | ||||||||||
| Operating | ||||||||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 966 | $ | (155 | ) | $ | 560 | |||||
| Earnings attributable to noncontrolling interests | 3 | 4 | 2 | |||||||||
| Net earnings (loss) | 969 | (151 | ) | 562 | ||||||||
| Adjustments to reconcile Net earnings (loss) to Net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 360 | 343 | 295 | |||||||||
| Non-cash other charges | 56 | 32 | 54 | |||||||||
| Non-U.S. pension settlement loss | — | 48 | 26 | |||||||||
| Share-based compensation expense | 73 | 66 | 68 | |||||||||
| Loss (gains) on sales of investments and businesses, net | (16 | ) | (3 | ) | 6 | |||||||
| Loss (gain) from the extinguishment of long term debt | (6 | ) | — | 2 | ||||||||
| Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | ||||||||||||
| Accounts receivable | 62 | (60 | ) | (6 | ) | |||||||
| Inventories | 71 | (46 | ) | 6 | ||||||||
| Other current assets and contract assets | (251 | ) | (99 | ) | (185 | ) | ||||||
| Accounts payable, accrued liabilities, and contract liabilities | 271 | 160 | 241 | |||||||||
| Other assets and liabilities | (523 | ) | (44 | ) | (117 | ) | ||||||
| Deferred income taxes | 9 | 1,100 | 213 | |||||||||
| Net cash provided by operating activities | 1,075 | 1,346 | 1,165 | |||||||||
| Investing | ||||||||||||
| Acquisitions and investments, net | (1,164 | ) | (404 | ) | (1,474 | ) | ||||||
| Proceeds from sales of investments | 95 | 183 | 670 | |||||||||
| Capital expenditures | (197 | ) | (227 | ) | (271 | ) | ||||||
| Proceeds from sales of property, plant and equipment | — | — | 73 | |||||||||
| Net cash used for investing activities | (1,266 | ) | (448 | ) | (1,002 | ) | ||||||
| Financing | ||||||||||||
| Repayment of debt | (723 | ) | (21 | ) | (686 | ) | ||||||
| Net proceeds from issuance of debt | 1,490 | 10 | 673 | |||||||||
| Issuance of common stock | 168 | 82 | 93 | |||||||||
| Purchase of common stock | (132 | ) | (483 | ) | (842 | ) | ||||||
| Payment of dividends | (337 | ) | (307 | ) | (280 | ) | ||||||
| Payment of dividends to non-controlling interest | (1 | ) | (1 | ) | — | |||||||
|
Settlement of conversion premium on convertible debt |
(169 | ) | — | — | ||||||||
| Deferred acquisition costs | (76 | ) | (2 | ) | — | |||||||
| Net cash provided by (used for) financing activities | 220 | (722 | ) | (1,042 | ) | |||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (40 | ) | 62 | (71 | ) | |||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (11 | ) | 238 | (950 | ) | |||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 1,268 | 1,030 | 1,980 | |||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 1,257 | $ | 1,268 | $ | 1,030 | ||||||
| Financial Ratios: | ||||||||||||
| Free cash flow* | $ | 878 | $ | 1,119 | $ | 894 | ||||||
| *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 | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 1,670 | $ | 1,437 | 16 | % | ||||||
| Services and Software | 584 | 520 | 12 | % | ||||||||
| Total Motorola Solutions | $ | 2,254 | $ | 1,957 | 15 | % | ||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 5,100 | $ | 4,513 | 13 | % | ||||||
| Services and Software | 2,243 | 1,867 | 20 | % | ||||||||
| Total Motorola Solutions | $ | 7,343 | $ | 6,380 | 15 | % | ||||||
| Operating Earnings | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 405 | $ | 416 | (3 | )% | ||||||
| Services and Software | 111 | 87 | 28 | % | ||||||||
| Total Motorola Solutions | $ | 516 | $ | 503 | 3 | % | ||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 854 | $ | 969 | (12 | )% | ||||||
| Services and Software | 401 | 315 | 27 | % | ||||||||
| Total Motorola Solutions | $ | 1,255 | $ | 1,284 | (2 | )% | ||||||
| Operating Earnings % | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||
| Products and Systems Integration | 24.3 | % | 28.9 | % | ||||||||
| Services and Software | 19.0 | % | 16.7 | % | ||||||||
| Total Motorola Solutions | 22.9 | % | 25.7 | % | ||||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||
| Products and Systems Integration | 16.7 | % | 21.5 | % | ||||||||
| Services and Software | 17.9 | % | 16.9 | % | ||||||||
| Total Motorola Solutions | 17.1 | % | 20.1 | % | ||||||||
|
|
Non-GAAP-1 | |||||||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||||||||
| Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expense, and Highlighted Items) | ||||||||||||||||||
| Q1 2018 | ||||||||||||||||||
| PBT | Tax | PAT | ||||||||||||||||
| Non-GAAP Adjustments | Statement Line | (Inc)/Exp | Inc/(Exp) | (Inc)/Exp | EPS impact | |||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 17 | $ | 4 | $ | 13 | $ | 0.08 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 13 | 3 | 10 | 0.06 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 41 | 8 | 33 | 0.19 | |||||||||||||
| Loss on legal settlements | Other charges | 1 | — | 1 | 0.01 | |||||||||||||
| Loss on derivative instruments related to Avigilon purchase | Other expense | 14 | 4 | 10 | 0.06 | |||||||||||||
| Release of FIN 48 reserve | Income tax expense | — | 1 | (1 | ) | (0.01 | ) | |||||||||||
| Sale of investments | (Gain) or Loss on Sales of Investments and Businesses, net | (11 | ) | (3 | ) | (8 | ) | (0.05 | ) | |||||||||
| Acquisition-related transaction fees | Other charges | 17 | 5 | 12 | 0.07 | |||||||||||||
| Total impact on Net earnings | $ | 92 | $ | 22 | $ | 70 | $ | 0.41 | ||||||||||
| Q2 2018 | ||||||||||||||||||
| PBT | Tax | PAT | ||||||||||||||||
| Non-GAAP Adjustments | Statement Line | (Inc)/Exp | Inc/(Exp) | (Inc)/Exp | EPS impact | |||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 17 | $ | 4 | $ | 13 | $ | 0.08 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 25 | 6 | 19 | 0.10 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 53 | 12 | 41 | 0.23 | |||||||||||||
| Avigilon purchase accounting adjustment | Cost of sales | 10 | 3 | 7 | 0.04 | |||||||||||||
| Sale of investments | (Gain) or Loss on Sales of Investments and Businesses, net | 1 | — | 1 | 0.01 | |||||||||||||
| Loss on foreign currency related to Avigilon purchase | Other expense | 1 | — | 1 | 0.01 | |||||||||||||
| FIN 48 reserve | Income tax expense | — | (1 | ) | 1 | 0.01 | ||||||||||||
| State audit settlement | Income tax expense | — | 12 | (12 | ) | (0.07 | ) | |||||||||||
| Total impact on Net earnings | $ | 107 | $ | 36 | $ | 71 | $ | 0.41 | ||||||||||
| Q3 2018 | ||||||||||||||||||
| PBT | Tax | PAT | ||||||||||||||||
| Non-GAAP Adjustments | Statement Line | (Inc)/Exp | Inc/(Exp) | (Inc)/Exp | EPS impact | |||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 19 | $ | 5 | $ | 14 | $ | 0.08 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 25 | 6 | 19 | 0.11 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 46 | 10 | 36 | 0.21 | |||||||||||||
| Avigilon purchase accounting adjustment | Cost of sales | 9 | 2 | 7 | 0.04 | |||||||||||||
| Gain from the extinguishment of convertible debt | Other income | (6 | ) | — | (6 | ) | (0.03 | ) | ||||||||||
| Fair value adjustments to equity investments | Other income | (7 | ) | (2 | ) | (5 | ) | (0.03 | ) | |||||||||
| Loss on legal settlement | Other charges | 2 | 1 | 1 | 0.01 | |||||||||||||
| Environmental reserve expense | Other charges | 57 | 14 | 43 | 0.25 | |||||||||||||
| Sale of investments | (Gain) or Loss on Sales of Investments and Businesses, net | (6 | ) | (1 | ) | (5 | ) | (0.03 | ) | |||||||||
| Return-to-provision adjustments as related to federal tax reform | Income tax expense | — | 16 | (16 | ) | (0.10 | ) | |||||||||||
| Total impact on Net earnings | $ | 139 | $ | 51 | $ | 88 | $ | 0.51 | ||||||||||
| Q4 2018 | ||||||||||||||||||
| PBT | Tax | PAT | ||||||||||||||||
| Non-GAAP Adjustments | Statement Line | (Inc)/Exp | Inc/(Exp) | (Inc)/Exp | EPS impact | |||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 20 | $ | 5 | $ | 15 | $ | 0.09 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 58 | 13 | 45 | 0.25 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 48 | 10 | 38 | 0.22 | |||||||||||||
| Asset impairment | Other charges | 1 | — | 1 | 0.01 | |||||||||||||
| Acquisition-related transaction fees | Other charges | 7 | 1 | 6 | 0.03 | |||||||||||||
| Fair value adjustments to equity investments | Other income | (4 | ) | (1 | ) | (3 | ) | (0.02 | ) | |||||||||
| Investment impairments | Investment impairments | 5 | 1 | 4 | 0.02 | |||||||||||||
| FIN 48 reserve, valuation allowance, and other | Income tax expense | — | 6 | (6 | ) | (0.03 | ) | |||||||||||
| Adjustments to the provisional tax expense as a result of the tax reform | Income tax expense | — | 65 | (65 | ) | (0.38 | ) | |||||||||||
| Total impact on Net earnings | $ | 135 | $ | 100 | $ | 35 | $ | 0.19 | ||||||||||
| FY 2018 | ||||||||||||||||||
| PBT | Tax | PAT | ||||||||||||||||
| Non-GAAP Adjustments | Statement Line | (Inc)/Exp | Inc/(Exp) | (Inc)/Exp | EPS impact | |||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 73 | $ | 18 | $ | 55 | $ | 0.32 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 120 | 28 | 92 | 0.53 | |||||||||||||
| Avigilon purchase accounting adjustment | Cost of sales | 19 | 5 | 14 | 0.08 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 188 | 40 | 148 | 0.86 | |||||||||||||
| Loss on legal settlements | Other charges | 3 | 1 | 2 | 0.01 | |||||||||||||
| Loss on derivative instruments related to Avigilon purchase | Other expense | 14 | 4 | 10 | 0.06 | |||||||||||||
| Gain from the extinguishment of convertible debt | Other income | (6 | ) | — | (6 | ) | (0.03 | ) | ||||||||||
| Sale of investments | (Gain) or Loss on Sales of Investments and Businesses, net | (16 | ) | (4 | ) | (12 | ) | (0.07 | ) | |||||||||
| Acquisition-related transaction fees | Other charges | 24 | 6 | 18 | 0.10 | |||||||||||||
| Fair value adjustments to equity investments | Other income | (11 | ) | (3 | ) | (8 | ) | (0.05 | ) | |||||||||
| Loss on foreign currency related to Avigilon purchase | Other expense | 2 | — | 2 | 0.01 | |||||||||||||
| Asset impairment | Other charges | 1 | — | 1 | 0.01 | |||||||||||||
| Environmental reserve expense | Other charges | 57 | 14 | 43 | 0.25 | |||||||||||||
| Investment impairments | Investment impairments | 5 | 1 | 4 | 0.02 | |||||||||||||
| FIN 48 reserve, valuation allowance, and other | Income tax expense | — | 18 | (18 | ) | (0.10 | ) | |||||||||||
| Adjustments to the provisional tax expense as a result of the tax reform | Income tax expense | — | 81 | (81 | ) | (0.47 | ) | |||||||||||
| Total impact on Net earnings | $ | 473 | $ | 209 | $ | 264 | $ | 1.53 | ||||||||||
| Non-GAAP-2 | ||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||
| Non-GAAP Segment Information | ||||||||||||
| (In millions) | ||||||||||||
| Net Sales | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 1,670 | $ | 1,437 | 16 | % | ||||||
| Services and Software | 584 | 520 | 12 | % | ||||||||
| Total Motorola Solutions | $ | 2,254 | $ | 1,957 | 15 | % | ||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 5,100 | $ | 4,513 | 13 | % | ||||||
| Services and Software | 2,243 | 1,867 | 20 | % | ||||||||
| Total Motorola Solutions | $ | 7,343 | $ | 6,380 | 15 | % | ||||||
| Non-GAAP Operating Earnings | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 483 | $ | 435 | 11 | % | ||||||
| Services and Software | 167 | 131 | 27 | % | ||||||||
| Total Motorola Solutions | $ | 650 | $ | 566 | 15 | % | ||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | % Change | ||||||||||
| Products and Systems Integration | $ | 1,109 | $ | 1,026 | 8 | % | ||||||
| Services and Software | 631 | 480 | 31 | % | ||||||||
| Total Motorola Solutions | $ | 1,740 | $ | 1,506 | 16 | % | ||||||
| Non-GAAP Operating Earnings % | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||
| Products and Systems Integration | 28.9 | % | 30.3 | % | ||||||||
| Services and Software | 28.6 | % | 25.2 | % | ||||||||
| Total Motorola Solutions | 28.8 | % | 28.9 | % | ||||||||
| Years Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||
| Products and Systems Integration | 21.7 | % | 22.7 | % | ||||||||
| Services and Software | 28.1 | % | 25.7 | % | ||||||||
| Total Motorola Solutions | 23.7 | % | 23.6 | % | ||||||||
| Non-GAAP-3 | ||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||
| Operating Earnings after Non-GAAP Adjustments | ||||||||||||
| Q1 2018 | ||||||||||||
| Products and Systems | ||||||||||||
| TOTAL | Integration | Services and Software | ||||||||||
| Net sales | $ | 1,468 | $ | 952 | $ | 516 | ||||||
| Operating earnings ("OE") | $ | 171 | $ | 90 | $ | 81 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 17 | 12 | 5 | |||||||||
| Reorganization of business charges | 13 | 9 | 4 | |||||||||
| Intangibles amortization expense | 41 | 1 | 40 | |||||||||
| Acquisition-related transaction fees | 17 | 12 | 5 | |||||||||
| Loss on legal settlements | 1 | 1 | — | |||||||||
| Total above-OE non-GAAP adjustments | 89 | 35 | 54 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 260 | $ | 125 | $ | 135 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 11.6 | % | 9.5 | % | 15.7 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 17.7 | % | 13.1 | % | 26.2 | % | ||||||
| Q2 2018 | ||||||||||||
| Products and Systems | ||||||||||||
| TOTAL | Integration | Services and Software | ||||||||||
| Net sales | $ | 1,760 | $ | 1,189 | $ | 571 | ||||||
| Operating earnings ("OE") | $ | 273 | $ | 175 | $ | 98 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 17 | 12 | 5 | |||||||||
| Reorganization of business charges | 25 | 19 | 6 | |||||||||
| Intangibles amortization expense | 53 | 10 | 43 | |||||||||
| Avigilon purchase accounting adjustment | 10 | 10 | — | |||||||||
| Total above-OE non-GAAP adjustments | 105 | 51 | 54 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 378 | $ | 226 | $ | 152 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 15.5 | % | 14.7 | % | 17.2 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 21.5 | % | 19.0 | % | 26.6 | % | ||||||
| Q3 2018 | ||||||||||||
| Products and Systems | ||||||||||||
| TOTAL | Integration | Services and Software | ||||||||||
| Net sales | $ | 1,862 | $ | 1,288 | $ | 574 | ||||||
| Operating earnings ("OE") | $ | 294 | $ | 183 | $ | 111 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 19 | 13 | 6 | |||||||||
| Reorganization of business charges | 25 | 19 | 6 | |||||||||
| Intangibles amortization expense | 46 | 11 | 35 | |||||||||
| Avigilon purchase accounting adjustment | 9 | 9 | — | |||||||||
| Loss on legal settlement | 2 | 1 | 1 | |||||||||
| Environmental reserve expense | 57 | 40 | 17 | |||||||||
| Total above-OE non-GAAP adjustments | 158 | 93 | 65 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 452 | $ | 276 | $ | 176 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 15.8 | % | 14.2 | % | 19.3 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 24.3 | % | 21.4 | % | 30.7 | % | ||||||
| Q4 2018 | ||||||||||||
| Products and Systems | ||||||||||||
| TOTAL | Integration | Services and Software | ||||||||||
| Net sales | $ | 2,254 | $ | 1,670 | $ | 584 | ||||||
| Operating earnings ("OE") | $ | 516 | $ | 405 | $ | 111 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 20 | 14 | 6 | |||||||||
| Reorganization of business charges | 58 | 53 | 5 | |||||||||
| Intangibles amortization expense | 48 | 11 | 37 | |||||||||
| Asset impairment | 1 | — | 1 | |||||||||
| Acquisition-related transaction fees | 7 | — | 7 | |||||||||
| Total above-OE non-GAAP adjustments | 134 | 78 | 56 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 650 | $ | 483 | $ | 167 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 22.9 | % | 24.3 | % | 19.0 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 28.8 | % | 28.9 | % | 28.6 | % | ||||||
| FY 2018 | ||||||||||||
| Products and Systems | ||||||||||||
| TOTAL | Integration | Services and Software | ||||||||||
| Net sales | $ | 7,343 | $ | 5,100 | $ | 2,243 | ||||||
| Operating earnings ("OE") | $ | 1,255 | $ | 854 | $ | 401 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 73 | 50 | 23 | |||||||||
| Reorganization of business charges | 120 | 101 | 19 | |||||||||
| Intangibles amortization expense | 188 | 31 | 157 | |||||||||
| Environmental reserve expense | 57 | 40 | 17 | |||||||||
| Acquisition-related transaction fees | 24 | 12 | 12 | |||||||||
| Asset impairment | 1 | — | 1 | |||||||||
| Avigilon purchase accounting adjustment | 19 | 19 | — | |||||||||
| Loss on legal settlements | 3 | 2 | 1 | |||||||||
| Total above-OE non-GAAP adjustments | 485 | 255 | 230 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 1,740 | $ | 1,109 | $ | 631 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 17.1 | % | 16.7 | % | 17.9 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 23.7 | % | 21.7 | % | 28.1 | % | ||||||
| Non-GAAP-4 | |||||||||||
| Motorola Solutions, Inc. and Subsidiaries | |||||||||||
| Non-GAAP Organic Revenue | |||||||||||
| Total Motorola Solutions | |||||||||||
| Three Months Ended | |||||||||||
| December 31, 2018 | December 31, 2017 | % Change | |||||||||
| Net sales | $ | 2,254 | $ | 1,957 | 15 | % | |||||
| Non-GAAP adjustments: | |||||||||||
| Acquisitions | (159 | ) | — | ||||||||
| ASC 606 impact | (25 | ) | — | ||||||||
| Organic revenue | $ | 2,070 | $ | 1,957 | 6 | % | |||||
| Years Ended | |||||||||||
| December 31, 2018 | December 31, 2017 | % Change | |||||||||
| Net sales | $ | 7,343 | $ | 6,380 | 15 | % | |||||
| Non-GAAP adjustments: | |||||||||||
| Acquisitions | (516 | ) | (9 | ) | |||||||
| ASC 606 impact | (83 | ) | — | ||||||||
| Organic revenue | $ | 6,744 | $ | 6,371 | 6 | % | |||||
| Non-GAAP-5 | |||
| Motorola Solutions, Inc. and Subsidiaries | |||
|
Non-GAAP Adjusted Operating Cash Flow |
|||
|
|
|||
| Year Ended December | |||
| 31, 2018 | |||
| Net cash provided by operating activities | $ | 1,075 | |
| Voluntary, debt-funded U.S. pension contribution | 500 | ||
| Adjusted Operating cash flow | $ | 1,575 | |
