Other Financial Data | 9 Months Ended |
Sep. 28, 2013 |
Other Financial Data [Abstract] | |
Other Financial Data | Other Financial Data |
Statement of Operations Information |
Other Charges |
Other charges included in Operating earnings consist of the following: |
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| Three Months Ended | | Nine Months Ended | | | | |
| September 28, | | September 29, | | September 28, | | September 29, | | | | |
2013 | 2012 | 2013 | 2012 | | | | |
Other charges: | | | | | | | | | | | |
Intangibles amortization | $ | 8 | | | $ | 6 | | | $ | 20 | | | $ | 18 | | | | | |
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Reorganization of businesses | 24 | | | 10 | | | 55 | | | 30 | | | | | |
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| $ | 32 | | | $ | 16 | | | $ | 75 | | | $ | 48 | | | | | |
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Other Income (Expense) |
Interest expense, net, and Other, both included in Other income (expense), consist of the following: |
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| Three Months Ended | | Nine Months Ended | | | | |
| September 28, | | September 29, | | September 28, | | September 29, | | | | |
2013 | 2012 | 2013 | 2012 | | | | |
Interest income (expense), net: | | | | | | | | | | | |
Interest expense | $ | (33 | ) | | $ | (29 | ) | | $ | (100 | ) | | $ | (79 | ) | | | | |
Interest income | 4 | | | 13 | | | 15 | | | 33 | | | | | |
| | | |
| $ | (29 | ) | | $ | (16 | ) | | $ | (85 | ) | | $ | (46 | ) | | | | |
Other: | | | | | | | | | | | |
Loss from the extinguishment of long-term debt | $ | — | | | $ | — | | | $ | — | | | $ | (6 | ) | | | | |
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Investment impairments | (1 | ) | | (6 | ) | | (5 | ) | | (8 | ) | | | | |
Foreign currency loss | (4 | ) | | — | | | (8 | ) | | (11 | ) | | | | |
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Gains on equity method investments | 8 | | | 2 | | | 7 | | | 4 | | | | | |
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Other | 2 | | | 1 | | | 7 | | | 3 | | | | | |
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| $ | 5 | | | $ | (3 | ) | | $ | 1 | | | $ | (18 | ) | | | | |
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Earnings Per Common Share |
The computation of basic and diluted earnings per common share attributable to Motorola Solutions, Inc. common stockholders is as follows: |
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| Earnings from Continuing Operations | | Net Earnings | | | | |
Three Months Ended | September 28, | | September 29, | | September 28, | | September 29, | | | | |
2013 | 2012 | 2013 | 2012 | | | | |
Basic earnings per common share: | | | | | | | | | | | |
Earnings | $ | 307 | | | $ | 206 | | | $ | 307 | | | $ | 206 | | | | | |
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Weighted average common shares outstanding | 262.2 | | | 283.1 | | | 262.2 | | | 283.1 | | | | | |
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Per share amount | $ | 1.17 | | | $ | 0.73 | | | $ | 1.17 | | | $ | 0.73 | | | | | |
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Diluted earnings per common share: | | | | | | | | | | | |
Earnings | $ | 307 | | | $ | 206 | | | $ | 307 | | | $ | 206 | | | | | |
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Weighted average common shares outstanding | 262.2 | | | 283.1 | | | 262.2 | | | 283.1 | | | | | |
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Add effect of dilutive securities: | | | | | | | | | | | |
Share-based awards | 3.1 | | | 4.3 | | | 3.1 | | | 4.3 | | | | | |
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Diluted weighted average common shares outstanding | 265.3 | | | 287.4 | | | 265.3 | | | 287.4 | | | | | |
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Per share amount | $ | 1.16 | | | $ | 0.72 | | | $ | 1.16 | | | $ | 0.72 | | | | | |
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| Earnings from Continuing Operations | | Net Earnings | | | | |
Nine Months Ended | September 28, | | September 29, | | September 28, | | September 29, | | | | |
2013 | 2012 | 2013 | 2012 | | | | |
Basic earnings per common share: | | | | | | | | | | | |
Earnings | $ | 757 | | | $ | 542 | | | $ | 757 | | | $ | 545 | | | | | |
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Weighted average common shares outstanding | 268.7 | | | 296.1 | | | 268.7 | | | 296.1 | | | | | |
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Per share amount | $ | 2.82 | | | $ | 1.83 | | | $ | 2.82 | | | $ | 1.84 | | | | | |
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Diluted earnings per common share: | | | | | | | | | | | |
Earnings | $ | 757 | | | $ | 542 | | | $ | 757 | | | $ | 545 | | | | | |
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Weighted average common shares outstanding | 268.7 | | | 296.1 | | | 268.7 | | | 296.1 | | | | | |
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Add effect of dilutive securities: | | | | | | | | | | | |
Share-based awards | 4.8 | | | 5.4 | | | 4.8 | | | 5.4 | | | | | |
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Diluted weighted average common shares outstanding | 273.5 | | | 301.5 | | | 273.5 | | | 301.5 | | | | | |
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Per share amount | $ | 2.77 | | | $ | 1.8 | | | $ | 2.77 | | | $ | 1.81 | | | | | |
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In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three and nine months ended September 28, 2013, the assumed exercise of 5.6 million and 4.8 million stock options, respectively, were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share from both continuing operations and on a net earnings basis for the three and nine months ended September 29, 2012, the assumed exercise of 6.1 million and 6.0 million stock options, respectively, were excluded because their inclusion would have been antidilutive. |
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Balance Sheet Information |
Cash and Cash Equivalents |
The Company’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) were $1.7 billion at September 28, 2013 and $1.5 billion at December 31, 2012. Of these amounts, $63 million at both September 28, 2013 and December 31, 2012 was restricted. |
Sigma Fund |
The Sigma Fund consists of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Cash | $ | 261 | | | $ | 149 | | | | | | | | | | | | | |
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U.S. government, agency, and government-sponsored enterprise obligations | 906 | | | 1,984 | | | | | | | | | | | | | |
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| $ | 1,167 | | | $ | 2,133 | | | | | | | | | | | | | |
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Investments |
Investments consist of the following: |
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| Recorded Value | | Less | | |
September 28, 2013 | Short-term | | Investments | | Unrealized | | Unrealized | | Cost |
Investments | Gains | Loss | Basis |
Available-for-sale securities: | | | | | | | | | |
U.S. government, agency and government-sponsored enterprise obligations | $ | — | | | $ | 17 | | | $ | — | | | $ | (1 | ) | | $ | 18 | |
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Corporate bonds | 2 | | | 6 | | | — | | | — | | | 8 | |
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Mortgage-backed securities | — | | | 2 | | | — | | | — | | | 2 | |
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Common stock and equivalents | — | | | 11 | | | 4 | | | — | | | 7 | |
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| 2 | | | 36 | | | 4 | | | (1 | ) | | 35 | |
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Other securities, at cost | — | | | 206 | | | — | | | — | | | 206 | |
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Equity method investments | — | | | 17 | | | — | | | — | | | 17 | |
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| $ | 2 | | | $ | 259 | | | $ | 4 | | | $ | (1 | ) | | $ | 258 | |
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| Recorded Value | | Less | | |
December 31, 2012 | Short-term | | Investments | | Unrealized | | Unrealized | | Cost |
Investments | Gains | Loss | Basis |
Available-for-sale securities: | | | | | | | | | |
U.S. government, agency and government-sponsored enterprise obligations | $ | — | | | $ | 15 | | | $ | — | | | $ | — | | | $ | 15 | |
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Corporate bonds | 2 | | | 11 | | | — | | | — | | | 13 | |
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Mortgage-backed securities | — | | | 2 | | | — | | | — | | | 2 | |
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Common stock and equivalents | — | | | 10 | | | 3 | | | — | | | 7 | |
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| 2 | | | 38 | | | 3 | | | — | | | 37 | |
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Other securities, at cost | — | | | 189 | | | — | | | — | | | 189 | |
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Equity method investments | — | | | 13 | | | — | | | — | | | 13 | |
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| $ | 2 | | | $ | 240 | | | $ | 3 | | | $ | — | | | $ | 239 | |
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The Company reclassified $96 million of cash surrender values of its split-dollar value life insurance plans, as of December 31, 2012, from Other assets to Investments, to conform to the balance sheet presentation as of September 28, 2013. |
Accounts Receivable, Net |
Accounts receivable, net, consists of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Accounts receivable | $ | 1,879 | | | $ | 1,932 | | | | | | | | | | | | | |
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Less allowance for doubtful accounts | (56 | ) | | (51 | ) | | | | | | | | | | | | |
| $ | 1,823 | | | $ | 1,881 | | | | | | | | | | | | | |
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Inventories, Net |
Inventories, net, consist of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Finished goods | $ | 234 | | | $ | 244 | | | | | | | | | | | | | |
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Work-in-process and production materials | 462 | | | 432 | | | | | | | | | | | | | |
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| 696 | | | 676 | | | | | | | | | | | | | |
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Less inventory reserves | (175 | ) | | (163 | ) | | | | | | | | | | | | |
| $ | 521 | | | $ | 513 | | | | | | | | | | | | | |
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Other Current Assets |
Other current assets consist of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Costs and earnings in excess of billings | $ | 413 | | | $ | 416 | | | | | | | | | | | | | |
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Contract-related deferred costs | 111 | | | 141 | | | | | | | | | | | | | |
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Tax-related deposits and refunds receivable | 98 | | | 95 | | | | | | | | | | | | | |
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Other | 138 | | | 148 | | | | | | | | | | | | | |
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| $ | 760 | | | $ | 800 | | | | | | | | | | | | | |
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Property, Plant and Equipment, Net |
Property, plant and equipment, net, consists of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Land | $ | 37 | | | $ | 38 | | | | | | | | | | | | | |
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Building | 748 | | | 739 | | | | | | | | | | | | | |
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Machinery and equipment | 1,926 | | | 1,932 | | | | | | | | | | | | | |
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| 2,711 | | | 2,709 | | | | | | | | | | | | | |
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Less accumulated depreciation | (1,870 | ) | | (1,870 | ) | | | | | | | | | | | | |
| $ | 841 | | | $ | 839 | | | | | | | | | | | | | |
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Depreciation expense for the three months ended September 28, 2013 and September 29, 2012 was $51 million and $39 million, respectively. Depreciation expense for the nine months ended September 28, 2013 and September 29, 2012 was $148 million and $133 million, respectively. |
Other Assets |
Other assets consist of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Intangible assets | $ | 92 | | | $ | 109 | | | | | | | | | | | | | |
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Long-term receivables | 19 | | | 60 | | | | | | | | | | | | | |
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Other | 92 | | | 104 | | | | | | | | | | | | | |
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| $ | 203 | | | $ | 273 | | | | | | | | | | | | | |
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Accrued Liabilities |
Accrued liabilities consist of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Deferred revenue | $ | 766 | | | $ | 820 | | | | | | | | | | | | | |
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Compensation | 319 | | | 424 | | | | | | | | | | | | | |
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Billings in excess of costs and earnings | 211 | | | 387 | | | | | | | | | | | | | |
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Tax liabilities | 54 | | | 95 | | | | | | | | | | | | | |
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Customer reserves | 126 | | | 144 | | | | | | | | | | | | | |
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Dividend payable | 80 | | | 72 | | | | | | | | | | | | | |
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Other | 647 | | | 684 | | | | | | | | | | | | | |
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| $ | 2,203 | | | $ | 2,626 | | | | | | | | | | | | | |
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Other Liabilities |
Other liabilities consist of the following: |
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| September 28, | | December 31, | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | |
Defined benefit plans, including split dollar life insurance policies | $ | 3,270 | | | $ | 3,389 | | | | | | | | | | | | | |
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Postretirement health care benefit plan | 166 | | | 167 | | | | | | | | | | | | | |
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Deferred revenue | 311 | | | 304 | | | | | | | | | | | | | |
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Unrecognized tax benefits | 99 | | | 98 | | | | | | | | | | | | | |
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Other | 209 | | | 237 | | | | | | | | | | | | | |
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| $ | 4,055 | | | $ | 4,195 | | | | | | | | | | | | | |
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Stockholders’ Equity |
Share Repurchase Program: The Company paid an aggregate of $1.3 billion during the first nine months of 2013, including transactions costs, to repurchase approximatley 23 million shares at an average price of $58.05 per share. During the first nine months of 2012, the Company paid an aggregate of $2.1 billion, including transaction costs, to repurchase 37.1 million shares at an average price of $48.50 per share. All repurchased shares have been retired. |
On July 24, 2013, the Company announced that its Board of Directors authorized up to $2.0 billion in additional funds for share repurchase, bringing the aggregate amount of the share repurchase program to $7.0 billion. As of September 28, 2013, the Company had used approximately $4.9 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $2.1 billion of authority available for future repurchases. |
Payment of Dividends: On July 24, 2013, the Company announced that its Board of Directors approved an increase in the quarterly cash dividend from $0.26 per share to $0.31 per share of common stock. During the nine months ended September 28, 2013 and September 29, 2012, the Company paid $212 million and $197 million, respectively, in cash dividends to holders of its common stock. |
Accumulated Other Comprehensive Loss |
The following table displays the changes in Accumulated other comprehensive loss, net of tax, by component from January 1, 2013 to September 28, 2013: |
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| Gains and Losses on Cash Flow Hedges | | Unrealized Gains and Losses on Available-for-Sale Securities | | Retirement Benefit Items | | Foreign Currency Translation Adjustments | | Total |
Balance as of January 1, 2013 | $ | 1 | | | $ | 2 | | | $ | (3,211 | ) | | $ | (92 | ) | | $ | (3,300 | ) |
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Other comprehensive losses before reclassifications | (1 | ) | | — | | | — | | | (22 | ) | | (23 | ) |
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Amounts reclassified from Accumulated other comprehensive loss | $ | (1 | ) | | $ | — | | | $ | 52 | | | $ | — | | | $ | 51 | |
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Current period change in Other comprehensive income (loss) | (2 | ) | | — | | | 52 | | | (22 | ) | | 28 | |
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Balance as of September 28, 2013 | $ | (1 | ) | | $ | 2 | | | $ | (3,159 | ) | | $ | (114 | ) | | $ | (3,272 | ) |
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The following table displays the amounts reclassified from Accumulated other comprehensive loss and the affected line item in the condensed consolidated statement of operations during the three and nine months ended September 28, 2013: |
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| September 28, 2013 | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended | | | | | | | | | | | | |
Gains on cash flow hedges: | | | | | | | | | | | | | | | |
Foreign exchange contracts | $ | — | | | $ | (1 | ) | | Cost of sales | | | | | | | | | | |
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| $ | — | | | $ | (1 | ) | | Net of tax | | | | | | | | | | |
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Amortization of Retirement Benefit Items: | | | | | | | | | | | | | | | |
Prior-service costs | $ | (13 | ) | | $ | (38 | ) | | Selling, general, and administrative expenses | | | | | | | | | | |
Actuarial net losses | 39 | | | 118 | | | Selling, general, and administrative expenses | | | | | | | | | | |
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| 26 | | | 80 | | | Total before tax | | | | | | | | | | |
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| (9 | ) | | (28 | ) | | Tax expense | | | | | | | | | | |
| $ | 17 | | | $ | 52 | | | Net of tax | | | | | | | | | | |
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Total reclassifications for the period, net of tax | $ | 17 | | | $ | 51 | | | | | | | | | | | | | |
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