Document And Entity Information
Document And Entity Information | 6 Months Ended |
Jul. 01, 2017shares | |
Document And Entity Information [Abstract] | |
Entity Registrant Name | Motorola Solutions, Inc. |
Entity Central Index Key | 68,505 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jul. 1, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 162,653,552 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Income Statement [Abstract] | ||||
Net sales from products | $ 848 | $ 801 | $ 1,551 | $ 1,503 |
Net sales from services | 649 | 629 | 1,226 | 1,120 |
Net sales | 1,497 | 1,430 | 2,777 | 2,623 |
Costs of products sales | 392 | 361 | 739 | 726 |
Costs of services sales | 415 | 393 | 778 | 718 |
Costs of sales | 807 | 754 | 1,517 | 1,444 |
Gross margin | 690 | 676 | 1,260 | 1,179 |
Selling, general and administrative expenses | 242 | 240 | 475 | 475 |
Research and development expenditures | 138 | 138 | 273 | 274 |
Other charges | 53 | 74 | 79 | 107 |
Operating earnings | 257 | 224 | 433 | 323 |
Other income (expense): | ||||
Interest expense, net | (51) | (54) | (102) | (103) |
Gains (losses) on sales of investments and businesses, net | (1) | 1 | 2 | (20) |
Other | 0 | (4) | (9) | (11) |
Total other expense | (52) | (57) | (109) | (134) |
Net earnings before income taxes | 205 | 167 | 324 | 189 |
Income tax expense | 73 | 59 | 114 | 64 |
Net earnings | 132 | 108 | 210 | 125 |
Less: Earnings attributable to noncontrolling interests | 1 | 1 | 2 | 1 |
Net earnings attributable to Motorola Solutions, Inc. | $ 131 | $ 107 | $ 208 | $ 124 |
Earnings per common share: | ||||
Basic (in US$ per share) | $ 0.80 | $ 0.62 | $ 1.27 | $ 0.72 |
Diluted (in US$ per share) | $ 0.78 | $ 0.61 | $ 1.23 | $ 0.71 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 163.1 | 171.9 | 163.7 | 173 |
Diluted (in shares) | 169 | 174.8 | 169.5 | 175.7 |
Dividends declared per share (in US$ per share) | $ 0.47 | $ 0.41 | $ 0.94 | $ 0.82 |
Condensed Consolidated Stateme3
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 132 | $ 108 | $ 210 | $ 125 |
Other comprehensive income (loss), net of tax (Note 2): | ||||
Foreign currency translation adjustments | 47 | (98) | 81 | (85) |
Marketable securities | 4 | (1) | 4 | 3 |
Defined benefit plans | 14 | 56 | 33 | 60 |
Total other comprehensive income (loss), net of tax | 65 | (43) | 118 | (22) |
Comprehensive income | 197 | 65 | 328 | 103 |
Less: Earnings attributable to noncontrolling interests | 1 | 1 | 2 | 1 |
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ 196 | $ 64 | $ 326 | $ 102 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 742 | $ 967 |
Restricted cash | 63 | 63 |
Total cash and cash equivalents | 805 | 1,030 |
Accounts receivable, net | 1,211 | 1,410 |
Inventories, net | 391 | 273 |
Other current assets | 804 | 755 |
Total current assets | 3,211 | 3,468 |
Property, plant and equipment, net | 859 | 789 |
Investments | 248 | 238 |
Deferred income taxes | 2,160 | 2,219 |
Goodwill | 749 | 728 |
Intangible assets | 868 | 821 |
Other assets | 200 | 200 |
Total assets | 8,295 | 8,463 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Current portion of long-term debt | 46 | 4 |
Accounts payable | 440 | 553 |
Accrued liabilities | 1,924 | 2,111 |
Total current liabilities | 2,410 | 2,668 |
Long-term debt | 4,421 | 4,392 |
Other liabilities | 2,440 | 2,355 |
Stockholders’ Equity | ||
Preferred stock, $100 par value | 0 | 0 |
Common stock, $.01 par value: Authorized shares: 600.0; Issued shares: 7/1/17—163.1; 12/31/16—165.5; Outstanding shares: 7/1/17—162.7; 12/31/16—164.7 | 2 | 2 |
Additional paid-in capital | 264 | 203 |
Retained earnings | 945 | 1,148 |
Accumulated other comprehensive loss | (2,199) | (2,317) |
Total Motorola Solutions, Inc. stockholders’ equity (deficit) | (988) | (964) |
Noncontrolling interests | 12 | 12 |
Total stockholders’ equity (deficit) | (976) | (952) |
Total liabilities and stockholders’ equity | $ 8,295 | $ 8,463 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 01, 2017 | Dec. 31, 2016 |
Stockholders’ Equity | ||
Preferred stock par value (in US$ per share) | $ 100 | $ 100 |
Common stock par value (in US$ per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock issued (in shares) | 163,100,000 | 165,500,000 |
Common stock outstanding (in shares) | 162,700,000 | 164,700,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | $ 125 | ||||
Other comprehensive income | (22) | ||||
Balance at end of period at Jul. 02, 2016 | $ (1,888) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 108 | ||||
Other comprehensive income | (43) | ||||
Balance at end of period at Jul. 02, 2016 | (1,888) | ||||
Balance (in shares) at Dec. 31, 2016 | 165.5 | ||||
Balance at beginning of period at Dec. 31, 2016 | (952) | $ 205 | (2,317) | $ 1,148 | $ 12 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 210 | 208 | 2 | ||
Other comprehensive income | $ 118 | 118 | |||
Issuance of common stock and stock options exercised (in shares) | 0.8 | ||||
Issuance of common stock and stock options exercised | $ 28 | ||||
Share repurchase program (in shares) | (3.2) | (3.2) | |||
Share repurchase program | (258) | ||||
Share-based compensation expense | $ 33 | ||||
Dividends declared | (153) | (2) | |||
Balance (in shares) at Jul. 01, 2017 | 163.1 | ||||
Balance at end of period at Jul. 01, 2017 | $ (976) | $ 266 | (2,199) | 945 | 12 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 132 | ||||
Other comprehensive income | 65 | ||||
Balance (in shares) at Jul. 01, 2017 | 163.1 | ||||
Balance at end of period at Jul. 01, 2017 | $ (976) | $ 266 | $ (2,199) | $ 945 | $ 12 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 01, 2017 | Jul. 02, 2016 | |
Operating | ||
Net earnings attributable to Motorola Solutions, Inc. | $ 208 | $ 124 |
Earnings attributable to noncontrolling interests | 2 | 1 |
Net earnings | 210 | 125 |
Adjustments to reconcile Net earnings to Net cash provided by operating activities: | ||
Depreciation and amortization | 166 | 144 |
Non-cash other charges | 21 | 35 |
Non-U.S. pension settlement loss | 25 | 0 |
Share-based compensation expense | 33 | 35 |
Losses (gains) on sales of investments and businesses, net | (2) | 20 |
Deferred income taxes | 63 | 71 |
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | ||
Accounts receivable | 251 | 327 |
Inventories | (112) | (2) |
Other current assets | (21) | (65) |
Accounts payable and accrued liabilities | (340) | (362) |
Other assets and liabilities | 21 | (24) |
Net cash provided by operating activities | 315 | 304 |
Investing | ||
Acquisitions and investments, net | (140) | (1,120) |
Proceeds from sales of investments and businesses, net | 72 | 553 |
Capital expenditures | (121) | (143) |
Proceeds from sales of property, plant and equipment | 0 | 46 |
Net cash used for investing activities | (189) | (664) |
Financing | ||
Repayment of debt | (6) | (2) |
Net proceeds from issuance of debt | 0 | 673 |
Proceeds from financing through capital leases | 7 | 0 |
Issuance of common stock | 28 | 40 |
Purchase of common stock | (258) | (619) |
Payment of dividends | (154) | (143) |
Payment of dividend to non-controlling interest | (2) | 0 |
Net cash used for financing activities | (385) | (51) |
Effect of exchange rate changes on cash and cash equivalents | 34 | (24) |
Net decrease in cash and cash equivalents | (225) | (435) |
Cash and cash equivalents, beginning of period | 1,030 | 1,980 |
Cash and cash equivalents, end of period | 805 | 1,545 |
Cash paid during the period for: | ||
Interest, net | 88 | 94 |
Income and withholding taxes, net of refunds | $ 47 | $ 54 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements as of July 1, 2017 and for the three and six months ended July 1, 2017 and July 2, 2016 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statement of stockholders' equity, and statements of cash flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2016 . The results of operations for the three and six months ended July 1, 2017 are not necessarily indicative of the operating results to be expected for the full year. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Recent Developments On July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1. On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." This new standard will replace the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity expects to receive for those goods and services. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates and changes in those estimates. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date" that delayed the effective date of ASU 2014-09 by one year to January 1, 2018, as the Company’s annual reporting period begins after December 15, 2017. The Company has continued to analyze the impact of the new standard on its financial results based on an inventory of the Company's current contracts with customers. The Company has obtained an understanding of the new standard and currently believes that it will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of its contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method. Under the new standard, the Company must identify the distinct promises to transfer goods and/or services within its contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, the Company has considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact the Company's percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's percentage of completion contracts, it will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in the Company's contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services. In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While the Company may have contracts which fall under these rules in the current standard, it has not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, the Company does not anticipate a significant acceleration of revenue upon applying the new standard to its current contracts under these fact patterns. The Company continues to evaluate the impact of ASU No. 2014-09 on its financial results and prepare for the adoption of the standard on January 1, 2018, including readying its internal processes and control environment for new requirements, particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. The Company expects to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases," which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. The ASU is effective for the Company January 1, 2019 and interim periods within that reporting period. The ASU prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The Company intends to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows. In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The Company intends to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for the Company January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. The Company does not anticipate significant changes to the Company's financial statements and related disclosures from adoption of the ASU. In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. The Company intends to adopt this ASU on January 1, 2018. Upon adoption, the Company plans to update the presentation of net periodic cost (benefit) accordingly, noting all components of the Company's net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively. |
Other Financial Data
Other Financial Data | 6 Months Ended |
Jul. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Financial Data | Other Financial Data Statements of Operations Information Other Charges (Income) Other charges (income) included in Operating earnings consist of the following: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Other charges: Intangibles amortization $ 37 $ 38 $ 73 $ 52 Reorganization of business 1 19 16 25 Building impairment — 17 8 17 Non-U.S. pension settlement loss 16 — 25 — Legal settlements (1 ) — (44 ) — Acquisition-related transaction fees — — 1 13 $ 53 $ 74 $ 79 $ 107 During the six months ended July 1, 2017 , the Company recognized a net gain of $44 million related to legal settlements. Of this amount, $42 million relates to the recovery, through legal procedures to seize and liquidate assets, of financial receivables owed to the Company by a former customer of its legacy Networks business. The net gain of $42 million was based on $52 million of proceeds received, net $10 million of fees owed to third parties for their involvement in the recovery. Other Income (Expense) Interest expense, net, and Other, both included in Other income (expense), consist of the following: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Interest income (expense), net: Interest expense $ (55 ) $ (59 ) $ (109 ) $ (111 ) Interest income 4 5 7 8 $ (51 ) $ (54 ) $ (102 ) $ (103 ) Other: Foreign currency gain (loss) $ (20 ) $ 14 $ (22 ) $ 27 Gain (loss) on derivative instruments 18 (18 ) 11 (30 ) Gains on equity method investments 1 — — 2 Realized foreign currency loss on acquisition — — — (10 ) Other 1 — 2 — $ — $ (4 ) $ (9 ) $ (11 ) Earnings Per Common Share The computation of basic and diluted earnings per common share is as follows: Amounts attributable to Motorola Solutions, Inc. common stockholders Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Basic earnings per common share: Earnings $ 131 $ 107 $ 208 $ 124 Weighted average common shares outstanding 163.1 171.9 163.7 173.0 Per share amount $ 0.80 $ 0.62 $ 1.27 $ 0.72 Diluted earnings per common share: Earnings $ 131 $ 107 $ 208 $ 124 Weighted average common shares outstanding 163.1 171.9 163.7 173.0 Add effect of dilutive securities: Share-based awards 3.1 2.4 3.2 2.4 Senior Convertible Notes 2.8 0.5 2.6 0.3 Diluted weighted average common shares outstanding 169.0 174.8 169.5 175.7 Per share amount $ 0.78 $ 0.61 $ 1.23 $ 0.71 In the computation of diluted earnings per common share for the three months ended July 1, 2017 , the assumed exercise of 2.1 million options, including 1.8 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive. For the six months ended July 1, 2017 , the assumed exercise of 2.4 million options, including 2.0 million subject to market-based contingent stock agreements, were excluded because their inclusion would have been antidilutive. For the three months ended July 2, 2016 , the assumed exercise of 2.3 million options, including 2.1 million subject to market-based contingent stock agreements, and the assumed vesting of 0.6 million restricted stock units ("RSUs") were excluded because their inclusion would have been antidilutive. For the six months ended July 2, 2016 , the assumed exercise of 3.2 million options, including 2.1 million subject to market-based contingent stock agreements, and the assumed vesting of 0.6 million RSUs were excluded because their inclusion would have been antidilutive. On August 25, 2015, the Company issued $1.0 billion of 2% Senior Convertible Notes which mature in September 2020 (the "Senior Convertible Notes"). The notes are convertible based on a conversion rate of 14.5985 per $1,000 principal amount (which is equal to an initial conversion price of $68.50 per share). In the event of conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash. Because of the Company’s intention to settle the par value of the Senior Convertible Notes in cash upon conversion, the Company does not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price. In this case, only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) will be included, which is based upon the amount by which the average stock price exceeds the conversion price of $68.50 . For the three and six months ended July 1, 2017 , the dilutive impact of the Senior Convertible Notes was 2.8 million shares and 2.6 million shares, respectively. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following: July 1, December 31, Accounts receivable $ 1,250 $ 1,454 Less allowance for doubtful accounts (39 ) (44 ) $ 1,211 $ 1,410 Inventories, Net Inventories, net, consist of the following: July 1, December 31, Finished goods $ 197 $ 151 Work-in-process and production materials 321 253 518 404 Less inventory reserves (127 ) (131 ) $ 391 $ 273 Other Current Assets Other current assets consist of the following: July 1, December 31, Available-for-sale securities $ 50 $ 46 Costs and earnings in excess of billings 529 495 Tax-related refunds receivable 110 90 Other 115 124 $ 804 $ 755 Property, Plant and Equipment, Net Property, plant and equipment, net, consists of the following: July 1, December 31, Land $ 10 $ 12 Building 267 306 Machinery and equipment 2,078 1,921 2,355 2,239 Less accumulated depreciation (1,496 ) (1,450 ) $ 859 $ 789 Depreciation expense for the three months ended July 1, 2017 and July 2, 2016 was $49 million and $44 million , respectively. Depreciation expense for the six months ended July 1, 2017 and July 2, 2016 was $93 million and $92 million , respectively. Investments Investments consist of the following: July 1, 2017 Cost Unrealized Investments Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ 56 $ — $ 56 Corporate bonds 5 — 5 Common stock 5 7 12 66 7 73 Other investments 210 — 210 Equity method investments 15 — 15 $ 291 $ 7 $ 298 Less: current portion of available-for-sale securities 50 $ 248 December 31, 2016 Cost Unrealized Investments Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ 51 $ — $ 51 Corporate bonds 5 — 5 56 — 56 Other investments 211 — 211 Equity method investments 17 — 17 $ 284 $ — $ 284 Less: current portion of available-for-sale securities 46 $ 238 Other investments include strategic investments in non-public technology-driven startup companies recorded at cost of $74 million and $76 million , and insurance policies recorded at their cash surrender value of $136 million and $135 million , at July 1, 2017 and December 31, 2016 . During the three months ended July 1, 2017 , the Company recognized a loss on the sale of investments and businesses of $1 million , compared to a gain of $1 million during the three months ended July 2, 2016 . During the six months ended July 1, 2017 , the Company recognized a gain on the sale of investments and businesses of $2 million , compared to a loss of $20 million during the six months ended July 2, 2016 , of which, $19 million was associated with the sale of United Kingdom treasury securities. Other Assets Other assets consist of the following: July 1, December 31, Long-term receivables 35 49 Defined benefit plan assets 125 102 Other 40 49 $ 200 200 Accrued Liabilities Accrued liabilities consist of the following: July 1, December 31, Deferred revenue $ 427 $ 439 Compensation 171 250 Billings in excess of costs and earnings 387 434 Tax liabilities 134 111 Dividend payable 76 77 Trade liabilities 174 180 Other 555 620 $ 1,924 $ 2,111 Other Liabilities Other liabilities consist of the following: July 1, December 31, Defined benefit plans $ 1,800 $ 1,799 Deferred revenue 164 115 Unrecognized tax benefits 39 39 Deferred income taxes 139 121 Deferred consideration (Note 13) 78 72 Other 220 209 $ 2,440 $ 2,355 Stockholders’ Equity Share Repurchase Program: Through actions taken on July 28, 2011, January 30, 2012, July 25, 2012, July 22, 2013, November 3, 2014, and August 3, 2016, the Board of Directors has authorized the Company to repurchase in the aggregate up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. During the six months ended July 1, 2017 , the Company paid an aggregate of $258 million , including transaction costs, to repurchase approximately 3.2 million shares at an average price of $81.66 per share. As of July 1, 2017 , the Company had used approximately $12.1 billion of the share repurchase authority, including transaction costs, to repurchase shares, leaving $1.9 billion of authority available for future repurchases. Payment of Dividends: During the three months ended July 1, 2017 and July 2, 2016 , the Company paid $77 million and $72 million , respectively, in cash dividends to holders of its common stock. During the six months ended July 1, 2017 and July 2, 2016 , the Company paid $154 million and $143 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, including amounts reclassified into income, and the affected line items in the condensed consolidated statements of operations during the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Foreign Currency Translation Adjustments: Balance at beginning of period $ (460 ) $ (253 ) $ (494 ) $ (266 ) Other comprehensive income (loss) before reclassification adjustment 47 (98 ) 84 (84 ) Tax expense — — (3 ) (1 ) Other comprehensive income (loss), net of tax 47 (98 ) 81 (85 ) Balance at end of period $ (413 ) $ (351 ) $ (413 ) $ (351 ) Available-for-Sale Securities: Balance at beginning of period $ — $ 1 $ — $ (3 ) Other comprehensive income (loss) before reclassification adjustment 7 (2 ) 7 (2 ) Tax (expense) benefit (3 ) 1 (3 ) 1 Other comprehensive income (loss) before reclassification adjustment, net of tax 4 (1 ) 4 (1 ) Reclassification adjustment into Gains (losses) on sales of investments and businesses, net — — — 6 Tax benefit — — — (2 ) Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax — — — 4 Other comprehensive income (loss), net of tax 4 (1 ) 4 3 Balance at end of period $ 4 $ — $ 4 $ — Defined Benefit Plans: Balance at beginning of period (1,804 ) (1,593 ) $ (1,823 ) $ (1,597 ) Other comprehensive income (loss) before reclassification adjustment (11 ) 53 (11 ) 53 Tax expense — (16 ) — (16 ) Other comprehensive income (loss) before reclassification adjustment, net of tax (11 ) 37 (11 ) 37 Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses 16 18 32 28 Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses (4 ) (7 ) (8 ) (13 ) Reclassification adjustment - Non-U.S. pension settlement loss into Other charges 16 — 25 — Tax expense (benefit) (3 ) 8 (5 ) 8 Reclassification adjustment into Operating earnings, net of tax 25 19 44 23 Other comprehensive income, net of tax 14 56 33 60 Balance at end of period $ (1,790 ) $ (1,537 ) $ (1,790 ) $ (1,537 ) Total Accumulated other comprehensive loss $ (2,199 ) $ (1,888 ) $ (2,199 ) $ (1,888 ) |
Debt and Credit Facilities
Debt and Credit Facilities | 6 Months Ended |
Jul. 01, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Credit Facilities | Debt and Credit Facilities On April 25, 2017, the Company entered into a $2.2 billion syndicated, unsecured revolving credit facility expiring April 2022, which can be used for borrowing and letters of credit (the "2017 Motorola Solutions Credit Agreement"). The 2017 Motorola Solutions Credit Agreement replaces the 2014 Motorola Solutions Credit Agreement. The 2017 Motorola Solutions Credit Agreement has a $500 million letter of credit sub-limit with $450 million of fronting commitments. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate, at the Company's option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes. Under the 2017 Motorola Solutions Credit Agreement, the Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2017 Motorola Solutions Credit Agreement. The Company was in compliance with it financial covenants as of July 1, 2017. The Company did not borrow or issue any letters of credit under the 2017 Motorola Solutions Credit Agreement during the three months ended July 1, 2017. On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2% Senior Convertible Notes which mature in September 2020. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances including, for example, if the volume weighted average price of the Company's stock exceeds $85 for ten consecutive trading days, then up to 20% of the notes may be transferred, and then subsequently converted to shares of Company stock by such transferee. The notes are convertible based on a conversion rate of 14.5985 per $1,000 principal amount (which is equal to an initial conversion price of $68.50 per share). During the three months ended July 1, 2017, the volume weighted average price of the Company's stock exceeded $85 for ten consecutive trading days, making 20% of Senior Convertible Notes convertible. In the event of conversion, the notes may be settled in either cash or stock, at the Company's discretion. The Company intends to settle the principal amount of the Senior Convertible Notes in cash. |
Risk Management
Risk Management | 6 Months Ended |
Jul. 01, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Risk Management | Risk Management Foreign Currency Risk As of July 1, 2017 , the Company had outstanding foreign exchange contracts with notional amounts totaling $590 million , compared to $717 million outstanding at December 31, 2016 . The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions. The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of July 1, 2017 , and the corresponding positions as of December 31, 2016 : Notional Amount Net Buy (Sell) by Currency July 1, December 31, Euro $ 161 $ 122 British Pound 149 246 Chinese Renminbi (81 ) (108 ) Australian Dollar (50 ) (51 ) Brazilian Real (45 ) (56 ) During the six months ended July 1, 2017 , the Company entered into forward contracts to sell £50 million , expiring in December 2017. The forward contracts have been designated as a net investment hedge which is in place to partially hedge the Company's British Pound foreign currency exposure on its net investment in Airwave Solutions Limited. The gains and losses on the Company's net investment in pound-denominated foreign operations, driven by changes in foreign exchange rates, are economically offset by movements in the fair values of the forward contracts designated as net investment hedges. Any changes in fair value of the net investment hedges are reflected as a component of Accumulated other comprehensive loss. As of July 1, 2017 , the fair value of the derivative contract was $2 million . Interest Rate Risk One of the Company’s European subsidiaries has Euro-denominated loans. The interest on the Euro-denominated loans is variable. The Company has interest rate swap agreements in place which change the characteristics of interest rate payments from variable to maximum fixed-rate payments. The interest rate swaps are not designated as a hedge. As such, changes in the fair value of the interest rate swaps are included in Other income (expense) in the Company’s condensed consolidated statements of operations. The fair value of the interest rate swaps liability was de minimus at both July 1, 2017 and December 31, 2016 . Counterparty Risk The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of July 1, 2017 , all of the counterparties have investment grade credit ratings. As of July 1, 2017 , the Company had $6 million of exposure to aggregate net credit risk with all counterparties. The following tables summarize the fair values and locations in the condensed consolidated balance sheets of all derivative financial instruments held by the Company as of July 1, 2017 and December 31, 2016 : Fair Values of Derivative Instruments Assets Liabilities July 1, 2017 Fair Value Balance Sheet Location Fair Value Balance Sheet Location Derivatives designated as hedging instruments: Foreign exchange contracts $ — Other assets $ 2 Other liabilities Derivatives not designated as hedging instruments: Foreign exchange contracts $ 6 Other current assets $ 4 Accrued liabilities Total derivatives $ 6 $ 6 Fair Values of Derivative Instruments Assets Liabilities December 31, 2016 Fair Value Balance Sheet Location Fair Value Balance Sheet Location Derivatives not designated as hedging instruments: Foreign exchange contracts $ 9 Other current assets $ 32 Accrued liabilities The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended Balance Sheet Location Derivatives Designated as Hedging Instruments July 1, July 2, July 1, July 2, Foreign exchange contracts $ (2 ) $ — $ (2 ) $ — Other comprehensive income (loss) The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended Statements of Operations Location Gain (loss) on Derivative Instruments July 1, July 2, July 1, July 2, Foreign exchange contracts 18 (18 ) 11 (30 ) Other income (expense) |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods. The following table provides details of income taxes: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Net earnings before income taxes $ 205 $ 167 $ 324 $ 189 Income tax expense 73 59 114 64 Effective tax rate 36 % 35 % 35 % 34 % The Company recorded $73 million of net tax expense during the three months ended July 1, 2017 , resulting in an effective tax rate of 36% , compared to $59 million of net tax expense during the three months ended July 2, 2016 , resulting in an effective tax rate of 35% . The effective tax rate in the second quarter of 2017 was greater than the U.S. statutory tax rate of 35% partly due to change of estimates between provision and the filing of tax returns in foreign jurisdictions. The effective tax rate in the second quarter of 2016 was equal to the U.S. statutory tax rate of 35% . The Company recorded $114 million of net tax expense during the six months ended July 1, 2017 , resulting in an effective tax rate of 35% , compared to $64 million of net tax expense during the six months ended July 2, 2016 , resulting in an effective tax rate of 34% . The effective tax rate in the first half of 2017 was equal to the U.S. statutory tax rate of 35% . The effective tax rate in the first half of 2016 was lower than the U.S. statutory tax rate of 35% partly due to the recognition of excess tax benefits on share-based compensation. |
Retirement and Other Employee B
Retirement and Other Employee Benefits | 6 Months Ended |
Jul. 01, 2017 | |
Retirement Benefits [Abstract] | |
Retirement and Other Employee Benefits | Retirement and Other Employee Benefits Pension and Postretirement Health Care Benefits Plans The net periodic costs (benefits) for Pension and Postretirement Health Care Benefits Plans were as follows: U.S. Pension Benefit Plans Non U.S. Pension Benefit Plans Postretirement Health Care Benefits Plan Three Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Service cost $ — $ — $ 1 $ 2 $ — $ — Interest cost 46 46 10 14 1 1 Expected return on plan assets (57 ) (55 ) (24 ) (24 ) (3 ) (3 ) Amortization of: Unrecognized net loss 11 9 4 3 1 2 Unrecognized prior service benefit — — — — (4 ) (7 ) Settlement loss — — 16 — — — Net periodic pension cost (benefit) $ — $ — $ 7 $ (5 ) $ (5 ) $ (7 ) U.S. Pension Benefit Plans Non U.S. Pension Benefit Plans Postretirement Health Care Benefits Plan Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Service cost $ — $ — $ 2 $ 4 $ — $ — Interest cost 92 91 20 28 2 2 Expected return on plan assets (115 ) (110 ) (47 ) (48 ) (6 ) (5 ) Amortization of: Unrecognized net loss 22 19 8 6 2 3 Unrecognized prior service benefit — — — — (8 ) (13 ) Settlement loss — — 25 — — — Net periodic cost (benefit) $ (1 ) $ — $ 8 $ (10 ) $ (10 ) $ (13 ) During the six months ended July 1, 2017 , the Company offered lump-sum settlements to certain participants in the Non-US defined benefit plan within the United Kingdom. The lump-sum settlements were targeted to certain participants who had accrued a pension benefit, but had not yet started receiving pension benefit payments. As of June 30, 2017, the window for the participant registration in the program has closed. However, the Company expects to account for continuing settlements through the third quarter of 2017, as remaining lump-sum settlements are paid to participants. As a result of the actions taken through the first half of 2017, the Company recorded a settlement loss of $16 million and $25 million during the three and six months ended July 1, 2017 , which is recorded within Other Charges within the condensed consolidated statement of operations. During the six months ended July 2, 2016 , the Company made an amendment to the Postretirement Health Care Benefits Plan (the “Amendment”). As a result of the Amendment, all eligible retirees under the age of 65 will be provided an annual subsidy per household, versus per individual, toward the purchase of their own health care coverage from private insurance companies and for the reimbursement of eligible health care expenses. The Amendment to the Postretirement Health Care Benefits Plan required a remeasurement of the plan, resulting in a $53 million reduction in the Accumulated Postretirement Benefit Obligation. A substantial portion of the decrease is related to a prior service credit and will be recognized as a credit to the condensed consolidated statements of operations over approximately five years , or the period in which the remaining employees eligible for the plan will qualify for benefits under the plan. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 6 Months Ended |
Jul. 01, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans Compensation expense for the Company’s share-based compensation plans was as follows: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Share-based compensation expense included in: Costs of sales $ 2 $ 2 $ 4 $ 4 Selling, general and administrative expenses 11 12 22 24 Research and development expenditures 3 4 7 7 Share-based compensation expense included in Operating earnings 16 18 33 35 Tax benefit 5 6 11 11 Share-based compensation expense, net of tax $ 11 $ 12 $ 22 $ 24 Decrease in basic earnings per share $ (0.07 ) $ (0.07 ) $ (0.13 ) $ (0.14 ) Decrease in diluted earnings per share $ (0.07 ) $ (0.07 ) $ (0.13 ) $ (0.14 ) During the six months ended July 1, 2017 , the Company granted 0.5 million RSUs and 0.1 million market stock units ("MSUs") with an aggregate grant-date fair value of $39 million and $6 million , respectively, and 0.3 million stock options and 0.6 million performance options ("POs") with an aggregate grant-date fair value of $5 million and $9 million , respectively. Share-based compensation expense will generally be recognized over the vesting period of three years . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Fair value is measured using the fair value hierarchy and related valuation methodologies as defined in the authoritative literature. This guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions about current market conditions. The fair value hierarchy and related valuation methodologies are as follows: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets. Level 3—Valuations derived from valuation techniques, in which one or more significant inputs are unobservable. The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of July 1, 2017 and December 31, 2016 were as follows: July 1, 2017 Level 1 Level 2 Total Assets: Foreign exchange derivative contracts $ — $ 6 $ 6 Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ — $ 56 $ 56 Corporate bonds — 5 5 Common stock 12 — 12 Liabilities: Foreign exchange derivative contracts $ — $ 6 $ 6 December 31, 2016 Level 2 Total Assets: Foreign exchange derivative contracts $ 9 $ 9 Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations 51 51 Corporate bonds 5 5 Liabilities: Foreign exchange derivative contracts $ 32 $ 32 The Company had no Level 3 holdings as of July 1, 2017 or December 31, 2016 . At July 1, 2017 and December 31, 2016 , the Company had $298 million and $309 million , respectively, of investments in money market prime and government funds (Level 1) classified as Cash and cash equivalents in its condensed consolidated balance sheets. The money market funds had quoted market prices that are equivalent to par. Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at July 1, 2017 and December 31, 2016 was $4.6 billion and $4.5 billion (Level 2), respectively. All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values. |
Long-term Financing and Sales o
Long-term Financing and Sales of Receivables | 6 Months Ended |
Jul. 01, 2017 | |
Receivables [Abstract] | |
Long-term Financing and Sales of Receivables | Long-term Financing and Sales of Receivables Long-term Financing Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following: July 1, December 31, Long-term receivables $ 48 $ 63 Less current portion (13 ) (14 ) Non-current long-term receivables $ 35 $ 49 The current portion of long-term receivables is included in Accounts receivable, net and the non-current portion of long-term receivables is included in Other assets in the Company’s condensed consolidated balance sheets. The Company had outstanding commitments to provide long-term financing to third parties totaling $209 million at July 1, 2017 , compared to $125 million at December 31, 2016 . During the six months ended July 1, 2017 , the Company agreed to provide long-term financing to one customer in the amount of $75 million . Sales of Receivables The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Accounts receivable sales proceeds $ 61 $ 5 $ 80 $ 7 Long-term receivables sales proceeds 22 70 68 134 Total proceeds from receivable sales $ 83 $ 75 $ 148 $ 141 At July 1, 2017 , the Company had retained servicing obligations for $775 million of long-term receivables, compared to $774 million at December 31, 2016 . Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables. Credit Quality of Financing Receivables and Allowance for Credit Losses An aging analysis of financing receivables at July 1, 2017 and December 31, 2016 is as follows: July 1, 2017 Total Long-term Receivable Current Billed Due Past Due Over 90 Days Municipal leases secured tax exempt $ 21 $ 1 $ 2 Commercial loans and leases secured 27 — — Long-term receivables, including current portion $ 48 $ 1 $ 2 December 31, 2016 Total Long-term Receivable Current Billed Due Past Due Over 90 Days Municipal leases secured tax exempt $ 20 $ — $ — Commercial loans and leases secured 43 — 2 Long-term receivables, including current portion $ 63 $ — $ 2 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Matters The Company is a defendant in various lawsuits, claims, and actions, which arise in the normal course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations. However, an unfavorable resolution could have a material adverse effect on the Company's consolidated financial position, liquidity, or results of operations in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition. Other Indemnifications The Company is a party to a variety of agreements pursuant to which it is obligated to indemnify the other party with respect to certain matters. In indemnification cases, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claims. In some instances, the Company may have recourse against third parties for certain payments made by the Company. Some of these obligations arise as a result of divestitures of the Company's assets or businesses and require the Company to indemnify the other party against losses arising from breaches of representations and warranties and covenants and, in some cases, the settlement of pending obligations. The Company's obligations under divestiture agreements for indemnification based on breaches of representations and warranties are generally limited in terms of duration and to amounts not in excess of a percentage of the contract value. The Company had no accruals for any such obligations at July 1, 2017 . In addition, the Company may provide indemnifications for losses that result from the breach of general warranties contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these agreements. |
Segment Information
Segment Information | 6 Months Ended |
Jul. 01, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company conducts its business globally and manages it through the following two segments: Products: The Products segment is comprised of Devices and Systems. Devices includes two-way portable and vehicle-mounted radios, accessories, software features, and upgrades. Systems includes the radio network core and central processing software, base stations, consoles, repeaters, and software applications and features. The primary customers of the Products segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and manage a mobile workforce. Services: The Services segment provides a full set of offerings for government, public safety and commercial communication networks including: (i) Integration services, (ii) Managed & Support services, and (iii) iDEN services. Integration services includes implementation, optimization, and integration of networks, devices, software, and applications. Managed & Support services includes a continuum of service offerings beginning with repair, technical support and hardware maintenance. More advanced offerings include network monitoring, software maintenance and cyber security services. Managed services offerings range from partial or full operation of customer owned networks to operation of Motorola Solutions owned networks. Services are provided across all radio network technologies, Command Center Consoles and Smart Public Safety Solutions. iDEN services consists primarily of hardware and software maintenance services for our legacy iDEN customers. The following table summarizes Net sales by segment: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Products $ 848 $ 801 $ 1,551 $ 1,503 Services 649 629 1,226 1,120 $ 1,497 $ 1,430 $ 2,777 $ 2,623 The following table summarizes the Operating earnings by segment: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Products $ 168 $ 129 $ 257 $ 179 Services 89 95 176 144 Operating earnings 257 224 433 323 Total other expense (52 ) (57 ) (109 ) (134 ) Earnings before income taxes $ 205 $ 167 $ 324 $ 189 |
Reorganization of Business
Reorganization of Business | 6 Months Ended |
Jul. 01, 2017 | |
Restructuring and Related Activities [Abstract] | |
Reorganization of Business | Reorganization of Business 2017 Charges During the three months ended July 1, 2017 , the Company recorded net reorganization of business charges of $3 million including $1 million of charges in Other charges and $2 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $3 million were charges of $8 million related to employee separation costs, partially offset by $5 million of reversals for accruals no longer needed. During the six months ended July 1, 2017 , the Company recorded net reorganization of business charges of $22 million including $16 million of charges in Other charges and $6 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $22 million were charges of $23 million for employee separation costs and $4 million for exit costs, partially offset by $5 million of reversals for accruals no longer needed. The following table displays the net charges incurred by segment: July 1, 2017 Three Months Ended Six Months Ended Products $ 3 $ 16 Services — 6 $ 3 $ 22 The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2017 to July 1, 2017 : January 1, 2017 Additional Charges Adjustments Amount Used July 1, 2017 Exit costs $ 7 $ 4 $ — $ (1 ) $ 10 Employee separation costs 95 23 (5 ) (55 ) 58 $ 102 $ 27 $ (5 ) $ (56 ) $ 68 Exit Costs At January 1, 2017 , the Company had $7 million of accruals for exit costs. During the six months ended July 1, 2017 , there were $4 million of additional charges and $1 million of cash payments related to the exit of leased facilities. The remaining accrual of $10 million , which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017 , primarily represents future cash payments for lease obligations that are expected to be paid over a number of years. Employee Separation Costs At January 1, 2017 , the Company had an accrual of $95 million for employee separation costs. The 2017 additional charges of $23 million represent severance costs for approximately 300 employees. The adjustment of $5 million reflects reversals for accruals no longer needed. The $55 million used reflects cash payments to severed employees. The remaining accrual of $58 million , which is included in Accrued liabilities in the Company’s condensed consolidated balance sheets at July 1, 2017 , is expected to be paid, primarily within one year, to approximately 500 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments. 2016 Charges During the three months ended July 2, 2016 , the Company recorded net reorganization of business charges of $44 million including $36 million of charges in Other charges and $8 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $44 million were charges of: (i) $22 million of charges related to employee separation costs, (ii) $17 million for a building impairment, and (iii) $5 million for exit costs. During the six months ended July 2, 2016 , the Company recorded net reorganization of business charges of $67 million including $42 million of charges in Other charges and $25 million of charges in Cost of sales in the Company's condensed consolidated statements of operations. Included in the $67 million were charges of: (i) $46 million related to employee separation costs, (ii) $20 million for impairments, including $17 million for a building impairment and $3 million for the impairment of the corporate aircraft, and (iii) $5 million for exit costs, partially offset by $4 million of reversals for accruals no longer needed. The following table displays the net charges incurred by segment: July 2, 2016 Three Months Ended Six Months Ended Products $ 33 $ 54 Services 11 13 $ 44 $ 67 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jul. 01, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company's condensed consolidated financial statements for the period subsequent to the date of acquisition. Guardian Digital Communications Limited On February 19, 2016, the Company completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited (collectively referred to as "Airwave"), the largest private operator of a public safety network in the world. All of the outstanding equity of Airwave was acquired for the sum of £1 , after which the Company invested into Airwave £698 million , net of cash acquired, or approximately $1.0 billion , to settle all third party debt. The Company will make a deferred cash payment of £64 million on November 15, 2018. The acquisition of Airwave enables the Company to geographically diversify its global Managed & Support services offerings, while offering a proven service delivery platform to build on for providing innovative, leading, mission-critical communications solutions and services to customers. The acquisition of Airwave has been accounted for at fair value as of the acquisition date, based on the fair value of the total consideration transferred which has been attributed to all identifiable assets acquired and liabilities assumed and measured at fair value. The total consideration for the acquisition of Airwave was approximately $1.1 billion , consisting of cash payments of $1.0 billion , net of cash acquired, and deferred consideration valued at fair value on the date of the acquisition of $82 million . The fair value of deferred consideration has been determined based on its net present value, calculated using a discount rate of 4.2% , which is reflective of the credit standing of the combined entity. The following table summarizes fair values of assets acquired and liabilities assumed as of the February 19, 2016 acquisition date: Cash $ 86 Accounts receivable, net 55 Other current assets 36 Property, plant and equipment, net 245 Deferred income taxes 82 Accounts payable (18 ) Accrued liabilities (181 ) Other liabilities (289 ) Goodwill 191 Intangible assets 875 Total consideration $ 1,082 Net present value of deferred consideration payment to former owners (82 ) Net cash consideration at purchase $ 1,000 Acquired intangible assets consist of $846 million of customer relationships and $29 million of trade names. All intangibles have a useful life of seven years , over which amortization expense will be recognized on a straight line basis. Acquired goodwill of $191 million is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes. Other Acquisitions On July 28, 2017, the Company announced its intention to purchase Plant Holdings, Inc., which owns the Airbus DS Communications business. This acquisition will expand the Company's software portfolio in the Command Center with additional solutions for Next Gen 9-1-1. On May 1, 2017, the Company announced its intention to purchase Kodiak Networks, a provider of broadband push-to-talk (PTT) for commercial customers. The acquisition of Kodiak Networks reflects Motorola Solutions' strategy to build its communications and collaboration software portfolio. The acquisition is expected to be completed later this year. On March 13, 2017, the Company completed the acquisition of Interexport, a company that provides Managed & Support services for communications systems to public safety and commercial customers in Chile, for a gross purchase price of $ 98 billion Chilean Pesos, or approximately $147 million U.S. Dollars based on cash proceeds of $55 million , net of cash acquired, and assumed liabilities of $92 million , primarily related to capital leases. As a result of the acquisition, the Company recognized $7 million of goodwill, $61 million of identifiable intangible assets, $70 million of acquired property, plant and equipment and $9 million of net other tangible assets. The estimated identifiable intangible assets were classified as $56 million of customer-related intangibles and $5 million of other intangibles and will be amortized over a period of seven years . On November 10, 2016, the Company completed the acquisition of Spillman Technologies, Inc., a provider of comprehensive law enforcement and public safety software solutions, for a gross purchase price of $221 million . As a result of the acquisition, the Company recognized $144 million of goodwill, $115 million of identifiable intangible assets, and $38 million of acquired liabilities. The identifiable intangible assets were classified as $49 million of completed technology, $59 million of customer-related intangibles, and $7 million of other intangibles and will be amortized over a period of seven to ten years . During the year ended December 31, 2016, the Company completed the acquisition of several software and service-based providers for a total of $30 million , recognizing $6 million of goodwill, $15 million of intangible assets, and $9 million of tangible net assets related to these acquisitions. Under the preliminary purchase accounting, the $15 million of identifiable intangible assets were classified as: (i) $7 million of completed technology and (ii) $8 million of customer-related intangibles and will be amortized over a period of five years . During the first quarter of 2017, the Company completed the purchase accounting and recorded an additional $11 million completed technology intangible asset that will be amortized over a period of eight years . Intangible Assets Amortized intangible assets were comprised of the following: July 1, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Completed technology $ 128 $ 46 $ 116 $ 38 Patents 8 7 8 6 Customer-related 918 167 810 101 Other intangibles 54 20 49 17 $ 1,108 $ 240 $ 983 $ 162 Amortization expense on intangible assets was $37 million for the three months ended July 1, 2017 and $73 million for the six months ended July 1, 2017 . Amortization expense on intangible assets was $38 million for the three months ended July 2, 2016 and $52 million for the six months ended July 2, 2016 . The increase in amortization expense is primarily due to the acquisition of Airwave, Spillman Technologies, Inc. and Interexport. As of July 1, 2017 , annual amortization expense is estimated to be $144 million in 2017 , $148 million in 2018 , $147 million in 2019 , $144 million in 2020 , $143 million in 2021 , and $140 million in 2022 . Amortized intangible assets, excluding goodwill, were comprised of the following by segment: July 1, 2017 December 31, 2016 Gross Accumulated Gross Accumulated Products $ 178 $ 73 $ 178 $ 63 Services 930 167 805 99 $ 1,108 $ 240 $ 983 $ 162 Goodwill The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2017 to July 1, 2017 : Products Services Total Balance as of January 1, 2017 Goodwill, net of impairment losses $ 316 $ 412 $ 728 Goodwill acquired — 7 7 Purchase accounting adjustments 1 3 4 Foreign currency — 10 10 Balance as of July 1, 2017 Goodwill, net of impairment losses $ 317 $ 432 $ 749 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jul. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The condensed consolidated financial statements as of July 1, 2017 and for the three and six months ended July 1, 2017 and July 2, 2016 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statement of stockholders' equity, and statements of cash flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2016 . The results of operations for the three and six months ended July 1, 2017 are not necessarily indicative of the operating results to be expected for the full year. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." This new standard will replace the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenue for the transfer of goods and services equal to the amount an entity expects to receive for those goods and services. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates and changes in those estimates. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date" that delayed the effective date of ASU 2014-09 by one year to January 1, 2018, as the Company’s annual reporting period begins after December 15, 2017. The Company has continued to analyze the impact of the new standard on its financial results based on an inventory of the Company's current contracts with customers. The Company has obtained an understanding of the new standard and currently believes that it will retain much of the same accounting treatment used to recognize revenue under current standards. Revenue on a significant portion of its contracts is currently recognized under percentage of completion accounting, applying a cost-to-cost method. Under the new standard, the Company must identify the distinct promises to transfer goods and/or services within its contracts using certain factors. For contracts that are currently recognized under percentage of completion accounting, the Company has considered the factors used to determine whether promises made in the contract are distinct and determined that devices represent distinct goods. Accordingly, adoption of the new standard will impact the Company's percentage of completion contracts that include devices, with the resulting impact being revenue recognized earlier as control of the devices transfers to the customer at a point in time rather than over time. For the remaining promised goods and services within the Company's percentage of completion contracts, it will continue to recognize revenue on these contracts using a cost-to-cost method based on the continuous transfer of control to the customer over time. Transfer of control in the Company's contracts is demonstrated by creating a customized asset for customers, in conjunction with contract terms which provide the right to receive payment for goods and services. In addition, the standard may generally cause issuers to accelerate revenue recognition in contracts which were previously limited by software revenue recognition rules. While the Company may have contracts which fall under these rules in the current standard, it has not historically deferred significant amounts of revenue under these rules as many arrangements are single-element software arrangements or sales of software with a tangible product which falls out of the scope of the current software rules. Based on the contracts currently in place, the Company does not anticipate a significant acceleration of revenue upon applying the new standard to its current contracts under these fact patterns. The Company continues to evaluate the impact of ASU No. 2014-09 on its financial results and prepare for the adoption of the standard on January 1, 2018, including readying its internal processes and control environment for new requirements, particularly around enhanced disclosures, under the new standard. The standard allows for both retrospective and modified retrospective methods of adoption. The Company expects to adopt this standard under the modified retrospective method of adoption, which recognizes the cumulative effect of transition as an adjustment to retained earnings for contracts that are not completed as of the adoption date, without restating prior period financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases," which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. The ASU is effective for the Company January 1, 2019 and interim periods within that reporting period. The ASU prescribes the use of a modified retrospective method upon adoption, which requires all prior periods presented in the financial statements to be restated, with a cumulative adjustment to retained earnings as of the beginning of the earliest period presented. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The Company intends to adopt this ASU January 1, 2018. Upon adoption, the ASU requires a retrospective application unless it is determined that it is impractical to do so, in which case it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows. In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory,” as part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. This ASU eliminates the current application of deferring the income tax effect of intra-entity asset transfers, other than inventory, until the transferred asset is sold to a third party or otherwise recovered through use and will require entities to recognize tax expense when the transfer occurs. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The Company intends to adopt the ASU January 1, 2018. The ASU requires a modified retrospective application with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures. In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. The ASU is effective for the Company January 1, 2018 with early adoption permitted. Upon adoption, the ASU requires the retrospective application. The Company does not anticipate significant changes to the Company's financial statements and related disclosures from adoption of the ASU. In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendments in this update require that an employer disaggregate the service cost component from the other components of net periodic cost (benefit) and report that component in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of net periodic cost (benefit) are required to be presented in the statement of operations separately from the service cost component and outside of operating earnings. The amendment also allows for the service cost component of net periodic cost (benefit) to be eligible for capitalization when applicable. The guidance will be effective for the Company on January 1, 2018 and interim periods within that reporting period; early adoption permitted. The guidance on the income statement presentation of the components of net periodic cost (benefit) must be applied retrospectively, while the guidance limiting the capitalization of net periodic cost (benefit) in assets to the service cost component must be applied prospectively. The Company intends to adopt this ASU on January 1, 2018. Upon adoption, the Company plans to update the presentation of net periodic cost (benefit) accordingly, noting all components of the Company's net periodic cost (benefit), with the exception of the service cost component, will be presented outside of operating earnings. The estimated impact of adoption of the ASU will be a reclassification of certain components of net periodic benefit from operating earnings to other income (expense) in the amount of $37 million and $29 million for the years ended December 31, 2017 and December 31, 2016, respectively. |
Other Financial Data (Tables)
Other Financial Data (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Charges (Income) | Other charges (income) included in Operating earnings consist of the following: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Other charges: Intangibles amortization $ 37 $ 38 $ 73 $ 52 Reorganization of business 1 19 16 25 Building impairment — 17 8 17 Non-U.S. pension settlement loss 16 — 25 — Legal settlements (1 ) — (44 ) — Acquisition-related transaction fees — — 1 13 $ 53 $ 74 $ 79 $ 107 |
Other Income (Expense) | Interest expense, net, and Other, both included in Other income (expense), consist of the following: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Interest income (expense), net: Interest expense $ (55 ) $ (59 ) $ (109 ) $ (111 ) Interest income 4 5 7 8 $ (51 ) $ (54 ) $ (102 ) $ (103 ) Other: Foreign currency gain (loss) $ (20 ) $ 14 $ (22 ) $ 27 Gain (loss) on derivative instruments 18 (18 ) 11 (30 ) Gains on equity method investments 1 — — 2 Realized foreign currency loss on acquisition — — — (10 ) Other 1 — 2 — $ — $ (4 ) $ (9 ) $ (11 ) |
Earnings Per Common Share | The computation of basic and diluted earnings per common share is as follows: Amounts attributable to Motorola Solutions, Inc. common stockholders Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Basic earnings per common share: Earnings $ 131 $ 107 $ 208 $ 124 Weighted average common shares outstanding 163.1 171.9 163.7 173.0 Per share amount $ 0.80 $ 0.62 $ 1.27 $ 0.72 Diluted earnings per common share: Earnings $ 131 $ 107 $ 208 $ 124 Weighted average common shares outstanding 163.1 171.9 163.7 173.0 Add effect of dilutive securities: Share-based awards 3.1 2.4 3.2 2.4 Senior Convertible Notes 2.8 0.5 2.6 0.3 Diluted weighted average common shares outstanding 169.0 174.8 169.5 175.7 Per share amount $ 0.78 $ 0.61 $ 1.23 $ 0.71 |
Accounts Receivable, Net | Accounts receivable, net, consists of the following: July 1, December 31, Accounts receivable $ 1,250 $ 1,454 Less allowance for doubtful accounts (39 ) (44 ) $ 1,211 $ 1,410 Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following: July 1, December 31, Long-term receivables $ 48 $ 63 Less current portion (13 ) (14 ) Non-current long-term receivables $ 35 $ 49 |
Inventories, Net | Inventories, net, consist of the following: July 1, December 31, Finished goods $ 197 $ 151 Work-in-process and production materials 321 253 518 404 Less inventory reserves (127 ) (131 ) $ 391 $ 273 |
Other Current Assets | Other current assets consist of the following: July 1, December 31, Available-for-sale securities $ 50 $ 46 Costs and earnings in excess of billings 529 495 Tax-related refunds receivable 110 90 Other 115 124 $ 804 $ 755 |
Property, Plant And Equipment, Net | Property, plant and equipment, net, consists of the following: July 1, December 31, Land $ 10 $ 12 Building 267 306 Machinery and equipment 2,078 1,921 2,355 2,239 Less accumulated depreciation (1,496 ) (1,450 ) $ 859 $ 789 |
Investments | Investments consist of the following: July 1, 2017 Cost Unrealized Investments Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ 56 $ — $ 56 Corporate bonds 5 — 5 Common stock 5 7 12 66 7 73 Other investments 210 — 210 Equity method investments 15 — 15 $ 291 $ 7 $ 298 Less: current portion of available-for-sale securities 50 $ 248 December 31, 2016 Cost Unrealized Investments Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ 51 $ — $ 51 Corporate bonds 5 — 5 56 — 56 Other investments 211 — 211 Equity method investments 17 — 17 $ 284 $ — $ 284 Less: current portion of available-for-sale securities 46 $ 238 |
Other Assets | Other assets consist of the following: July 1, December 31, Long-term receivables 35 49 Defined benefit plan assets 125 102 Other 40 49 $ 200 200 |
Accrued Liabilities | Accrued liabilities consist of the following: July 1, December 31, Deferred revenue $ 427 $ 439 Compensation 171 250 Billings in excess of costs and earnings 387 434 Tax liabilities 134 111 Dividend payable 76 77 Trade liabilities 174 180 Other 555 620 $ 1,924 $ 2,111 |
Other Liabilities | Other liabilities consist of the following: July 1, December 31, Defined benefit plans $ 1,800 $ 1,799 Deferred revenue 164 115 Unrecognized tax benefits 39 39 Deferred income taxes 139 121 Deferred consideration (Note 13) 78 72 Other 220 209 $ 2,440 $ 2,355 |
Changes in Accumulated Other Comprehensive Loss | The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the condensed consolidated statements of operations during the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Foreign Currency Translation Adjustments: Balance at beginning of period $ (460 ) $ (253 ) $ (494 ) $ (266 ) Other comprehensive income (loss) before reclassification adjustment 47 (98 ) 84 (84 ) Tax expense — — (3 ) (1 ) Other comprehensive income (loss), net of tax 47 (98 ) 81 (85 ) Balance at end of period $ (413 ) $ (351 ) $ (413 ) $ (351 ) Available-for-Sale Securities: Balance at beginning of period $ — $ 1 $ — $ (3 ) Other comprehensive income (loss) before reclassification adjustment 7 (2 ) 7 (2 ) Tax (expense) benefit (3 ) 1 (3 ) 1 Other comprehensive income (loss) before reclassification adjustment, net of tax 4 (1 ) 4 (1 ) Reclassification adjustment into Gains (losses) on sales of investments and businesses, net — — — 6 Tax benefit — — — (2 ) Reclassification adjustment into Gains (losses) on sales of investments and businesses, net of tax — — — 4 Other comprehensive income (loss), net of tax 4 (1 ) 4 3 Balance at end of period $ 4 $ — $ 4 $ — Defined Benefit Plans: Balance at beginning of period (1,804 ) (1,593 ) $ (1,823 ) $ (1,597 ) Other comprehensive income (loss) before reclassification adjustment (11 ) 53 (11 ) 53 Tax expense — (16 ) — (16 ) Other comprehensive income (loss) before reclassification adjustment, net of tax (11 ) 37 (11 ) 37 Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses 16 18 32 28 Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses (4 ) (7 ) (8 ) (13 ) Reclassification adjustment - Non-U.S. pension settlement loss into Other charges 16 — 25 — Tax expense (benefit) (3 ) 8 (5 ) 8 Reclassification adjustment into Operating earnings, net of tax 25 19 44 23 Other comprehensive income, net of tax 14 56 33 60 Balance at end of period $ (1,790 ) $ (1,537 ) $ (1,790 ) $ (1,537 ) Total Accumulated other comprehensive loss $ (2,199 ) $ (1,888 ) $ (2,199 ) $ (1,888 ) |
Risk Management (Tables)
Risk Management (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Largest Net Notional Amounts of The Positions to Buy or Sell Foreign Currency | The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of July 1, 2017 , and the corresponding positions as of December 31, 2016 : Notional Amount Net Buy (Sell) by Currency July 1, December 31, Euro $ 161 $ 122 British Pound 149 246 Chinese Renminbi (81 ) (108 ) Australian Dollar (50 ) (51 ) Brazilian Real (45 ) (56 ) |
Summary of Fair Values and Location In Condensed Consolidated Balance Sheet | The following tables summarize the fair values and locations in the condensed consolidated balance sheets of all derivative financial instruments held by the Company as of July 1, 2017 and December 31, 2016 : Fair Values of Derivative Instruments Assets Liabilities July 1, 2017 Fair Value Balance Sheet Location Fair Value Balance Sheet Location Derivatives designated as hedging instruments: Foreign exchange contracts $ — Other assets $ 2 Other liabilities Derivatives not designated as hedging instruments: Foreign exchange contracts $ 6 Other current assets $ 4 Accrued liabilities Total derivatives $ 6 $ 6 Fair Values of Derivative Instruments Assets Liabilities December 31, 2016 Fair Value Balance Sheet Location Fair Value Balance Sheet Location Derivatives not designated as hedging instruments: Foreign exchange contracts $ 9 Other current assets $ 32 Accrued liabilities |
Summary of Derivative Instruments and The Effect on the Condensed Consolidated Statements Of Operations | The following table summarizes the effect of derivatives designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended Balance Sheet Location Derivatives Designated as Hedging Instruments July 1, July 2, July 1, July 2, Foreign exchange contracts $ (2 ) $ — $ (2 ) $ — Other comprehensive income (loss) The following table summarizes the effect of derivatives not designated as hedging instruments on the Company's condensed consolidated financial statements for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended Statements of Operations Location Gain (loss) on Derivative Instruments July 1, July 2, July 1, July 2, Foreign exchange contracts 18 (18 ) 11 (30 ) Other income (expense) |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following table provides details of income taxes: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Net earnings before income taxes $ 205 $ 167 $ 324 $ 189 Income tax expense 73 59 114 64 Effective tax rate 36 % 35 % 35 % 34 % |
Retirement and Other Employee25
Retirement and Other Employee Benefits (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit Plan Costs | The net periodic costs (benefits) for Pension and Postretirement Health Care Benefits Plans were as follows: U.S. Pension Benefit Plans Non U.S. Pension Benefit Plans Postretirement Health Care Benefits Plan Three Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Service cost $ — $ — $ 1 $ 2 $ — $ — Interest cost 46 46 10 14 1 1 Expected return on plan assets (57 ) (55 ) (24 ) (24 ) (3 ) (3 ) Amortization of: Unrecognized net loss 11 9 4 3 1 2 Unrecognized prior service benefit — — — — (4 ) (7 ) Settlement loss — — 16 — — — Net periodic pension cost (benefit) $ — $ — $ 7 $ (5 ) $ (5 ) $ (7 ) U.S. Pension Benefit Plans Non U.S. Pension Benefit Plans Postretirement Health Care Benefits Plan Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Service cost $ — $ — $ 2 $ 4 $ — $ — Interest cost 92 91 20 28 2 2 Expected return on plan assets (115 ) (110 ) (47 ) (48 ) (6 ) (5 ) Amortization of: Unrecognized net loss 22 19 8 6 2 3 Unrecognized prior service benefit — — — — (8 ) (13 ) Settlement loss — — 25 — — — Net periodic cost (benefit) $ (1 ) $ — $ 8 $ (10 ) $ (10 ) $ (13 ) |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Compensation Expense | Compensation expense for the Company’s share-based compensation plans was as follows: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Share-based compensation expense included in: Costs of sales $ 2 $ 2 $ 4 $ 4 Selling, general and administrative expenses 11 12 22 24 Research and development expenditures 3 4 7 7 Share-based compensation expense included in Operating earnings 16 18 33 35 Tax benefit 5 6 11 11 Share-based compensation expense, net of tax $ 11 $ 12 $ 22 $ 24 Decrease in basic earnings per share $ (0.07 ) $ (0.07 ) $ (0.13 ) $ (0.14 ) Decrease in diluted earnings per share $ (0.07 ) $ (0.07 ) $ (0.13 ) $ (0.14 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Company's Financial Assets And Liabilities | The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of July 1, 2017 and December 31, 2016 were as follows: July 1, 2017 Level 1 Level 2 Total Assets: Foreign exchange derivative contracts $ — $ 6 $ 6 Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations $ — $ 56 $ 56 Corporate bonds — 5 5 Common stock 12 — 12 Liabilities: Foreign exchange derivative contracts $ — $ 6 $ 6 December 31, 2016 Level 2 Total Assets: Foreign exchange derivative contracts $ 9 $ 9 Available-for-sale securities: Government, agency, and government-sponsored enterprise obligations 51 51 Corporate bonds 5 5 Liabilities: Foreign exchange derivative contracts $ 32 $ 32 |
Long-term Financing and Sales28
Long-term Financing and Sales of Receivables (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Receivables [Abstract] | |
Long-Term Customer Financing | Accounts receivable, net, consists of the following: July 1, December 31, Accounts receivable $ 1,250 $ 1,454 Less allowance for doubtful accounts (39 ) (44 ) $ 1,211 $ 1,410 Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following: July 1, December 31, Long-term receivables $ 48 $ 63 Less current portion (13 ) (14 ) Non-current long-term receivables $ 35 $ 49 |
Proceeds Received From Non-Recourse Sales Of Accounts Receivable And Long-Term Receivables | The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and six months ended July 1, 2017 and July 2, 2016 : Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Accounts receivable sales proceeds $ 61 $ 5 $ 80 $ 7 Long-term receivables sales proceeds 22 70 68 134 Total proceeds from receivable sales $ 83 $ 75 $ 148 $ 141 |
Financing Receivables Aging Analysis | An aging analysis of financing receivables at July 1, 2017 and December 31, 2016 is as follows: July 1, 2017 Total Long-term Receivable Current Billed Due Past Due Over 90 Days Municipal leases secured tax exempt $ 21 $ 1 $ 2 Commercial loans and leases secured 27 — — Long-term receivables, including current portion $ 48 $ 1 $ 2 December 31, 2016 Total Long-term Receivable Current Billed Due Past Due Over 90 Days Municipal leases secured tax exempt $ 20 $ — $ — Commercial loans and leases secured 43 — 2 Long-term receivables, including current portion $ 63 $ — $ 2 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Segment Reporting [Abstract] | |
Net Sales and Operating Earnings by Segment | The following table summarizes Net sales by segment: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Products $ 848 $ 801 $ 1,551 $ 1,503 Services 649 629 1,226 1,120 $ 1,497 $ 1,430 $ 2,777 $ 2,623 The following table summarizes the Operating earnings by segment: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, Products $ 168 $ 129 $ 257 $ 179 Services 89 95 176 144 Operating earnings 257 224 433 323 Total other expense (52 ) (57 ) (109 ) (134 ) Earnings before income taxes $ 205 $ 167 $ 324 $ 189 |
Reorganization of Business (Tab
Reorganization of Business (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Reportable Segment | The following table displays the net charges incurred by segment: July 2, 2016 Three Months Ended Six Months Ended Products $ 33 $ 54 Services 11 13 $ 44 $ 67 The following table displays the net charges incurred by segment: July 1, 2017 Three Months Ended Six Months Ended Products $ 3 $ 16 Services — 6 $ 3 $ 22 |
Reorganization of Businesses Accruals | The following table displays a rollforward of the reorganization of business accruals established for lease exit costs and employee separation costs from January 1, 2017 to July 1, 2017 : January 1, 2017 Additional Charges Adjustments Amount Used July 1, 2017 Exit costs $ 7 $ 4 $ — $ (1 ) $ 10 Employee separation costs 95 23 (5 ) (55 ) 58 $ 102 $ 27 $ (5 ) $ (56 ) $ 68 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes fair values of assets acquired and liabilities assumed as of the February 19, 2016 acquisition date: Cash $ 86 Accounts receivable, net 55 Other current assets 36 Property, plant and equipment, net 245 Deferred income taxes 82 Accounts payable (18 ) Accrued liabilities (181 ) Other liabilities (289 ) Goodwill 191 Intangible assets 875 Total consideration $ 1,082 Net present value of deferred consideration payment to former owners (82 ) Net cash consideration at purchase $ 1,000 |
Intangible Assets | Amortized intangible assets were comprised of the following: July 1, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Completed technology $ 128 $ 46 $ 116 $ 38 Patents 8 7 8 6 Customer-related 918 167 810 101 Other intangibles 54 20 49 17 $ 1,108 $ 240 $ 983 $ 162 |
Amortized Intangible Assets, Excluding Goodwill, By Business Segment | Amortized intangible assets, excluding goodwill, were comprised of the following by segment: July 1, 2017 December 31, 2016 Gross Accumulated Gross Accumulated Products $ 178 $ 73 $ 178 $ 63 Services 930 167 805 99 $ 1,108 $ 240 $ 983 $ 162 |
Goodwill | The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2017 to July 1, 2017 : Products Services Total Balance as of January 1, 2017 Goodwill, net of impairment losses $ 316 $ 412 $ 728 Goodwill acquired — 7 7 Purchase accounting adjustments 1 3 4 Foreign currency — 10 10 Balance as of July 1, 2017 Goodwill, net of impairment losses $ 317 $ 432 $ 749 |
Basis of Presentation - Recent
Basis of Presentation - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment out of operating earnings | $ 257 | $ 224 | $ 433 | $ 323 | |
Reclassification adjustment to other expense | $ 0 | $ 4 | $ 9 | $ 11 | |
Forecast | Accounting Standards Update 2017-07, Year 2017 Effect | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment out of operating earnings | $ 37 | ||||
Reclassification adjustment to other expense | 37 | ||||
Forecast | Accounting Standards Update 2017-07, Year 2016 Effect | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment out of operating earnings | 29 | ||||
Reclassification adjustment to other expense | $ 29 |
Other Financial Data - Other Ch
Other Financial Data - Other Charges (Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Other charges: | ||||
Intangibles amortization | $ 37 | $ 38 | $ 73 | $ 52 |
Reorganization of business | 1 | 19 | 16 | 25 |
Building impairment | 0 | 17 | 8 | 17 |
Non-U.S. pension settlement loss | 16 | 0 | 25 | 0 |
Legal settlements | (1) | 0 | (44) | 0 |
Acquisition-related transaction fees | 0 | 0 | 1 | 13 |
Other charges | $ 53 | $ 74 | $ 79 | $ 107 |
Other Financial Data - Other 34
Other Financial Data - Other Charges (Income) - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Gain on legal settlement | $ 1 | $ 0 | $ 44 | $ 0 |
Proceeds from legal settlements, excluding fees | 42 | |||
Proceeds from legal settlements | 52 | |||
Collection fees payable | $ 10 | $ 10 |
Other Financial Data - Other In
Other Financial Data - Other Income (Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Interest income (expense), net: | ||||
Interest expense | $ (55) | $ (59) | $ (109) | $ (111) |
Interest income | 4 | 5 | 7 | 8 |
Interest income (expense), net | (51) | (54) | (102) | (103) |
Other: | ||||
Foreign currency gain (loss) | (20) | 14 | (22) | 27 |
Gain (loss) on derivative instruments | 18 | (18) | 11 | (30) |
Gains on equity method investments | 1 | 0 | 0 | 2 |
Realized foreign currency loss on acquisition | 0 | 0 | 0 | (10) |
Other | 1 | 0 | 2 | 0 |
Total other income (expense) | $ 0 | $ (4) | $ (9) | $ (11) |
Other Financial Data - Earnings
Other Financial Data - Earnings Per Common Share (Details) $ / shares in Units, shares in Millions | Aug. 25, 2015USD ($)$ / shares | Jul. 01, 2017USD ($)$ / sharesshares | Jul. 02, 2016USD ($)$ / sharesshares | Jul. 01, 2017USD ($)$ / sharesshares | Jul. 02, 2016USD ($)$ / sharesshares |
Basic earnings (loss) per common share: | |||||
Earnings | $ | $ 131,000,000 | $ 107,000,000 | $ 208,000,000 | $ 124,000,000 | |
Weighted average common shares outstanding (in shares) | 163.1 | 171.9 | 163.7 | 173 | |
Basic earnings per share amount (in US$ per share) | $ / shares | $ 0.80 | $ 0.62 | $ 1.27 | $ 0.72 | |
Diluted earnings per common share: | |||||
Earnings | $ | $ 131,000,000 | $ 107,000,000 | $ 208,000,000 | $ 124,000,000 | |
Weighted average common shares outstanding (in shares) | 163.1 | 171.9 | 163.7 | 173 | |
Add effect of dilutive securities: | |||||
Share-based awards (in shares) | 3.1 | 2.4 | 3.2 | 2.4 | |
Senior Convertible Notes (in shares) | 2.8 | 0.5 | 2.6 | 0.3 | |
Diluted weighted average common shares outstanding (in shares) | 169 | 174.8 | 169.5 | 175.7 | |
Per share amount (in US$ per share) | $ / shares | $ 0.78 | $ 0.61 | $ 1.23 | $ 0.71 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Dilutive impact of Senior Convertible Notes (in shares) | 2.8 | 0.5 | 2.6 | 0.3 | |
Senior Convertible Notes | Convertible Notes | |||||
Add effect of dilutive securities: | |||||
Senior Convertible Notes (in shares) | 2.8 | 2.6 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Debt instrument face amount | $ | $ 1,000,000,000 | ||||
Interest rate | 2.00% | ||||
Conversion rate | 0.0145985 | ||||
Effective conversion price of convertible shares (in US$ per share) | $ / shares | $ 68.50 | ||||
Dilutive impact of Senior Convertible Notes (in shares) | 2.8 | 2.6 | |||
Stock Options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares) | 2.1 | 2.3 | 2.4 | 3.2 | |
Performance Options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares) | 1.8 | 2.1 | 2 | 2.1 | |
Restricted Stock Units (RSUs) | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from computation of dilutive shares due to antidilutive nature (in shares) | 0.6 | 0.6 |
Other Financial Data - Accounts
Other Financial Data - Accounts Receivable, Net (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 1,250 | $ 1,454 |
Less allowance for doubtful accounts | (39) | (44) |
Accounts receivable, net | $ 1,211 | $ 1,410 |
Other Financial Data - Inventor
Other Financial Data - Inventories, Net (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Inventory, Net [Abstract] | ||
Finished goods | $ 197 | $ 151 |
Work-in-process and production materials | 321 | 253 |
Inventories, gross | 518 | 404 |
Less inventory reserves | (127) | (131) |
Inventories, net | $ 391 | $ 273 |
Other Financial Data - Other Cu
Other Financial Data - Other Current Assets (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Other Current Assets [Abstract] | ||
Available-for-sale securities | $ 50 | $ 46 |
Costs and earnings in excess of billings | 529 | 495 |
Tax-related refunds receivable | 110 | 90 |
Other | 115 | 124 |
Other current assets | $ 804 | $ 755 |
Other Financial Data - Property
Other Financial Data - Property, Plant And Equipment, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net [Abstract] | |||||
Land | $ 10 | $ 10 | $ 12 | ||
Building | 267 | 267 | 306 | ||
Machinery and equipment | 2,078 | 2,078 | 1,921 | ||
Property, plant and equipment, gross | 2,355 | 2,355 | 2,239 | ||
Less accumulated depreciation | (1,496) | (1,496) | (1,450) | ||
Property, plant and equipment, net | 859 | 859 | $ 789 | ||
Depreciation expense | $ 49 | $ 44 | $ 93 | $ 92 |
Other Financial Data - Investme
Other Financial Data - Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Available-for-sale securities: | |||||
Cost Basis | $ 66 | $ 66 | $ 56 | ||
Unrealized Gains | 7 | 7 | 0 | ||
Investments | 73 | 73 | 56 | ||
Other investments | 210 | 210 | 211 | ||
Equity method investments | 15 | 15 | 17 | ||
Investments, Cost Basis | 291 | 291 | 284 | ||
Investments | 298 | 298 | 284 | ||
Less: current portion of available-for-sale securities | 50 | 50 | 46 | ||
Long-term investments noncurrent | 248 | 248 | 238 | ||
Cash surrender value of life insurance | 136 | 136 | 135 | ||
Gains (losses) on sales of investments and businesses, net | (1) | $ 1 | 2 | $ (20) | |
Government, agency, and government-sponsored enterprise obligations | |||||
Available-for-sale securities: | |||||
Cost Basis | 56 | 56 | 51 | ||
Unrealized Gains | 0 | 0 | 0 | ||
Investments | 56 | 56 | 51 | ||
Corporate bonds | |||||
Available-for-sale securities: | |||||
Cost Basis | 5 | 5 | 5 | ||
Unrealized Gains | 0 | 0 | 0 | ||
Investments | 5 | 5 | 5 | ||
Common stock | |||||
Available-for-sale securities: | |||||
Cost Basis | 5 | 5 | |||
Unrealized Gains | 7 | 7 | |||
Investments | 12 | 12 | |||
United Kingdom Treasury Securities | |||||
Available-for-sale securities: | |||||
Gross realized gain (loss) on securities | $ 19 | ||||
Technology-drivent Startup Companies | |||||
Available-for-sale securities: | |||||
Other investments | $ 74 | $ 74 | $ 76 |
Other Financial Data - Other As
Other Financial Data - Other Assets (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Other Assets [Abstract] | ||
Long-term receivables | $ 35 | $ 49 |
Defined benefit plan assets | 125 | 102 |
Other | 40 | 49 |
Other assets, total | $ 200 | $ 200 |
Other Financial Data - Accrued
Other Financial Data - Accrued Liabilities (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Accrued Liabilities [Abstract] | ||
Deferred revenue | $ 427 | $ 439 |
Compensation | 171 | 250 |
Billings in excess of costs and earnings | 387 | 434 |
Tax liabilities | 134 | 111 |
Dividend payable | 76 | 77 |
Trade liabilities | 174 | 180 |
Other | 555 | 620 |
Accrued liabilities | $ 1,924 | $ 2,111 |
Other Financial Data - Other Li
Other Financial Data - Other Liabilities (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Other Liabilities [Abstract] | ||
Defined benefit plans | $ 1,800 | $ 1,799 |
Deferred revenue | 164 | 115 |
Unrecognized tax benefits | 39 | 39 |
Deferred income taxes | 139 | 121 |
Deferred consideration | 78 | 72 |
Other | 220 | 209 |
Other liabilities | $ 2,440 | $ 2,355 |
Other Financial Data - Stockhol
Other Financial Data - Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Aug. 03, 2016 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Payments for repurchased shares | $ 258,000,000 | $ 619,000,000 | |||
Number of shares repurchased (in shares) | 3.2 | ||||
Repurchase of common shares, average cost (in US$ per share) | $ 81.66 | ||||
Share repurchase authority utilized during period | $ 12,100,000,000 | ||||
Amount available for future share repurchase | $ 1,900,000,000 | 1,900,000,000 | |||
Cash dividends paid | $ 77,000,000 | $ 72,000,000 | $ 154,000,000 | $ 143,000,000 | |
Maximum | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 14,000,000,000 |
Other Financial Data - Accumula
Other Financial Data - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Balance at beginning of period | $ (952) | |||
Total other comprehensive income (loss), net of tax | $ 65 | $ (43) | 118 | $ (22) |
Balance at end of period | (976) | (976) | ||
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Balance at beginning of period | (2,317) | |||
Total other comprehensive income (loss), net of tax | 118 | |||
Balance at end of period | (2,199) | (1,888) | (2,199) | (1,888) |
Foreign Currency Translation Adjustments: | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Balance at beginning of period | (460) | (253) | (494) | (266) |
Other comprehensive income (loss) before reclassification adjustment | 47 | (98) | 84 | (84) |
Tax expense | 0 | 0 | (3) | (1) |
Total other comprehensive income (loss), net of tax | 47 | (98) | 81 | (85) |
Balance at end of period | (413) | (351) | (413) | (351) |
Available-for-Sale Securities: | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Balance at beginning of period | 0 | 1 | 0 | (3) |
Other comprehensive income (loss) before reclassification adjustment | 7 | (2) | 7 | (2) |
Tax expense | (3) | 1 | (3) | 1 |
Other comprehensive income (loss) before reclassification adjustment, net of tax | 4 | (1) | 4 | (1) |
Reclassification adjustment before tax | 0 | 0 | 0 | 6 |
Tax expense (benefit) | 0 | 0 | 0 | (2) |
Reclassification adjustment after tax | 0 | 0 | 0 | 4 |
Total other comprehensive income (loss), net of tax | 4 | (1) | 4 | 3 |
Balance at end of period | 4 | 0 | 4 | 0 |
Defined Benefit Plans: | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Balance at beginning of period | (1,804) | (1,593) | (1,823) | (1,597) |
Other comprehensive income (loss) before reclassification adjustment | (11) | 53 | (11) | 53 |
Tax expense | 0 | (16) | 0 | (16) |
Other comprehensive income (loss) before reclassification adjustment, net of tax | (11) | 37 | (11) | 37 |
Tax expense (benefit) | (3) | 8 | (5) | 8 |
Reclassification adjustment after tax | 25 | 19 | 44 | 23 |
Total other comprehensive income (loss), net of tax | 14 | 56 | 33 | 60 |
Balance at end of period | (1,790) | (1,537) | (1,790) | (1,537) |
Reclassification adjustment - Actuarial net losses into Selling, general, and administrative expenses | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Reclassification adjustment before tax | 16 | 18 | 32 | 28 |
Reclassification adjustment - Prior service benefits into Selling, general, and administrative expenses | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Reclassification adjustment before tax | (4) | (7) | (8) | (13) |
Reclassification adjustment - Non-U.S. pension settlement loss into Other charges | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Reclassification adjustment before tax | $ 16 | $ 0 | $ 25 | $ 0 |
Debt and Credit Facilities (Det
Debt and Credit Facilities (Details) | Aug. 25, 2015USD ($)trading_days$ / shares | Jul. 01, 2017USD ($) | Apr. 25, 2017USD ($) |
2017 Revolving Credit Facility | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility borrowing capacity | $ 2,200,000,000 | ||
2017 Revolving Credit Facility | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Line of credit facility borrowing capacity | $ 500,000,000 | ||
Fronting commitment sub-limit | $ 450,000,000 | ||
Convertible Notes | Senior Convertible Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument face amount | $ 1,000,000,000 | ||
Interest rate | 2.00% | ||
Minimum period from issuance to convert | 2 years | ||
Stock price trigger (in US$ per share) | $ / shares | $ 85 | ||
Threshold consecutive trading days | trading_days | 10 | ||
Percentage of debt | 20.00% | ||
Conversion rate | 0.0145985 | ||
Effective conversion price of convertible shares (in US$ per share) | $ / shares | $ 68.50 |
Risk Management - Foreign Curre
Risk Management - Foreign Currency Risk (Details) | Jul. 01, 2017USD ($)position | Jul. 01, 2017GBP (£)position | Dec. 31, 2016USD ($)position |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Number of net notional positions to buy or sell foreign currency disclosed (in number of positions) | position | 5 | 5 | 5 |
Foreign Exchange Contract | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | $ 590,000,000 | $ 717,000,000 | |
Foreign Exchange Contract | Euro | Long | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | 161,000,000 | 122,000,000 | |
Foreign Exchange Contract | British Pound | Designated as Hedging Instrument | Net Investment Hedging | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | £ | £ 50,000,000 | ||
Fair value of derivative liabilities | 2,000,000 | ||
Foreign Exchange Contract | British Pound | Long | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | 149,000,000 | 246,000,000 | |
Foreign Exchange Contract | Chinese Renminbi | Short | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | 81,000,000 | 108,000,000 | |
Foreign Exchange Contract | Australian Dollar | Short | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | 50,000,000 | 51,000,000 | |
Foreign Exchange Contract | Brazilian Real | Short | |||
Derivative [Line Items] | |||
Notional amounts of outstanding foreign exchange contracts | $ 45,000,000 | $ 56,000,000 |
Risk Management - Interest Rate
Risk Management - Interest Rate Risk (Details) - Not Designated As Hedging Instruments - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Derivative [Line Items] | ||
Fair value of derivative liabilities | $ 6 | |
Interest Rate Swap | Accrued liabilities | ||
Derivative [Line Items] | ||
Fair value of derivative liabilities | $ 0 | $ 0 |
Risk Management - Counterparty
Risk Management - Counterparty Risk (Details) $ in Millions | Jul. 01, 2017USD ($) |
Credit Concentration Risk | |
Derivative [Line Items] | |
Net credit risk with all counterparties | $ 6 |
Risk Management - Summary of Fa
Risk Management - Summary of Fair Values and Location in Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Designated as Hedging Instrument | Foreign exchange contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | $ 0 | |
Designated as Hedging Instrument | Foreign exchange contracts | Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | 2 | |
Not Designated As Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 6 | |
Fair value of derivative liabilities | 6 | |
Not Designated As Hedging Instruments | Foreign exchange contracts | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 6 | $ 9 |
Not Designated As Hedging Instruments | Foreign exchange contracts | Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | $ 4 | $ 32 |
Risk Management - Summary of De
Risk Management - Summary of Derivative Instruments and the Effect on the Condensed Consolidated Statements of Operations (Details) - Foreign exchange contracts - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Designated as Hedging Instrument | Other comprehensive income (loss) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on Derivative Instruments | $ (2) | $ 0 | $ (2) | $ 0 |
Not Designated As Hedging Instruments | Other income (expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on Derivative Instruments | $ 18 | $ (18) | $ 11 | $ (30) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Net earnings before income taxes | $ 205 | $ 167 | $ 324 | $ 189 |
Income tax expense | $ 73 | $ 59 | $ 114 | $ 64 |
Effective tax rate | 36.00% | 35.00% | 35.00% | 34.00% |
Federal income tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
Retirement and Other Employee54
Retirement and Other Employee Benefits - Pension and Postretirement Health Care Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Amortization of: | ||||
Settlement loss | $ 16 | $ 0 | $ 25 | $ 0 |
Postretirement Health Care Benefits Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 1 | 1 | 2 | 2 |
Expected return on plan assets | (3) | (3) | (6) | (5) |
Amortization of: | ||||
Unrecognized net loss | 1 | 2 | 2 | 3 |
Unrecognized prior service benefit | (4) | (7) | (8) | (13) |
Settlement loss | 0 | 0 | 0 | 0 |
Net periodic pension cost (benefit) | (5) | (7) | (10) | (13) |
U.S. | Pension Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 46 | 46 | 92 | 91 |
Expected return on plan assets | (57) | (55) | (115) | (110) |
Amortization of: | ||||
Unrecognized net loss | 11 | 9 | 22 | 19 |
Unrecognized prior service benefit | 0 | 0 | 0 | 0 |
Settlement loss | 0 | 0 | 0 | 0 |
Net periodic pension cost (benefit) | 0 | 0 | (1) | 0 |
Non U.S. | Pension Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 2 | 2 | 4 |
Interest cost | 10 | 14 | 20 | 28 |
Expected return on plan assets | (24) | (24) | (47) | (48) |
Amortization of: | ||||
Unrecognized net loss | 4 | 3 | 8 | 6 |
Unrecognized prior service benefit | 0 | 0 | 0 | 0 |
Settlement loss | 16 | 0 | 25 | 0 |
Net periodic pension cost (benefit) | $ 7 | $ (5) | $ 8 | $ (10) |
Retirement and Other Employee55
Retirement and Other Employee Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ (16) | $ 0 | $ (25) | $ 0 |
Retirement age | 65 years | |||
Reduction to accumulated postretirement benefit obligation | $ 53 | |||
Amortization period | 5 years | |||
United Kingdom | Pension Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ (16) | $ (25) |
Share-Based Compensation Plan56
Share-Based Compensation Plans - Schedule of Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense included in Operating earnings | $ 16 | $ 18 | $ 33 | $ 35 |
Tax benefit | 5 | 6 | 11 | 11 |
Share-based compensation expense, net of tax | $ 11 | $ 12 | $ 22 | $ 24 |
Decrease in basic earnings per share (in US$ per share) | $ (0.07) | $ (0.07) | $ (0.13) | $ (0.14) |
Decrease in diluted earnings per share (in US$ per share) | $ (0.07) | $ (0.07) | $ (0.13) | $ (0.14) |
Costs of sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense included in Operating earnings | $ 2 | $ 2 | $ 4 | $ 4 |
Selling, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense included in Operating earnings | 11 | 12 | 22 | 24 |
Research and development expenditures | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense included in Operating earnings | $ 3 | $ 4 | $ 7 | $ 7 |
Share-Based Compensation Plan57
Share-Based Compensation Plans - Narrative (Details) shares in Millions, $ in Millions | 6 Months Ended |
Jul. 01, 2017USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Units granted in period (in shares) | shares | 0.5 |
Aggregate grant date fair value | $ | $ 39 |
Market Stock Units (MSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Units granted in period (in shares) | shares | 0.1 |
Aggregate grant date fair value | $ | $ 6 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted in period (in shares) | shares | 0.3 |
Aggregate grant date fair value | $ | $ 5 |
Performance Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted in period (in shares) | shares | 0.6 |
Aggregate grant date fair value | $ | $ 9 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - USD ($) | Jul. 01, 2017 | Dec. 31, 2016 |
Assets: | ||
Available-for-sale securities: | $ 73,000,000 | $ 56,000,000 |
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Government, agency, and government-sponsored enterprise obligations | ||
Assets: | ||
Available-for-sale securities: | 56,000,000 | 51,000,000 |
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Corporate bonds | ||
Assets: | ||
Available-for-sale securities: | 5,000,000 | 5,000,000 |
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Common stock | ||
Assets: | ||
Available-for-sale securities: | 12,000,000 | |
Recurring basis | Estimate of Fair Value, Fair Value Disclosure | Foreign exchange contracts | ||
Assets: | ||
Foreign exchange derivative contracts | 6,000,000 | 9,000,000 |
Liabilities: | ||
Foreign exchange derivative contracts | 6,000,000 | 32,000,000 |
Recurring basis | Level 1 | Government, agency, and government-sponsored enterprise obligations | ||
Assets: | ||
Available-for-sale securities: | 0 | |
Recurring basis | Level 1 | Corporate bonds | ||
Assets: | ||
Available-for-sale securities: | 0 | |
Recurring basis | Level 1 | Common stock | ||
Assets: | ||
Available-for-sale securities: | 12,000,000 | |
Recurring basis | Level 1 | Foreign exchange contracts | ||
Assets: | ||
Foreign exchange derivative contracts | 0 | |
Liabilities: | ||
Foreign exchange derivative contracts | 0 | |
Recurring basis | Level 2 | Government, agency, and government-sponsored enterprise obligations | ||
Assets: | ||
Available-for-sale securities: | 56,000,000 | 51,000,000 |
Recurring basis | Level 2 | Corporate bonds | ||
Assets: | ||
Available-for-sale securities: | 5,000,000 | 5,000,000 |
Recurring basis | Level 2 | Common stock | ||
Assets: | ||
Available-for-sale securities: | 0 | |
Recurring basis | Level 2 | Foreign exchange contracts | ||
Assets: | ||
Foreign exchange derivative contracts | 6,000,000 | 9,000,000 |
Liabilities: | ||
Foreign exchange derivative contracts | 6,000,000 | 32,000,000 |
Recurring basis | Level 3 | Government, agency, and government-sponsored enterprise obligations | ||
Assets: | ||
Available-for-sale securities: | 0 | 0 |
Recurring basis | Level 3 | Corporate bonds | ||
Assets: | ||
Available-for-sale securities: | 0 | 0 |
Recurring basis | Level 3 | Common stock | ||
Assets: | ||
Available-for-sale securities: | 0 | |
Recurring basis | Level 3 | Foreign exchange contracts | ||
Assets: | ||
Foreign exchange derivative contracts | 0 | 0 |
Liabilities: | ||
Foreign exchange derivative contracts | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market mutual funds classified as cash and cash equivalents | $ 298 | $ 309 |
Estimate of Fair Value, Fair Value Disclosure | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long term debt | $ 4,600 | $ 4,500 |
Long-term Financing and Sales60
Long-term Financing and Sales of Receivables - Long-Term Financing (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Long-term receivables | $ 48 | $ 63 |
Less current portion | (13) | (14) |
Non-current long-term receivables | 35 | 49 |
Outstanding commitment to provide long-term financing to third parties | 209 | $ 125 |
Long-term financing, commitment to lend | $ 75 |
Long-term Financing and Sales61
Long-term Financing and Sales of Receivables - Sales Receivables (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Receivables [Abstract] | |||||
Accounts receivable sales proceeds | $ 61 | $ 5 | $ 80 | $ 7 | |
Long-term receivables sales proceeds | 22 | 70 | 68 | 134 | |
Total proceeds from receivable sales | 83 | $ 75 | 148 | $ 141 | |
Servicing obligations for long-term receivables | $ 775 | $ 775 | $ 774 |
Long-term Financing and Sales62
Long-term Financing and Sales of Receivables - Credit Quality of Financing Receivables and Allowance for Credit Losses (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | $ 48 | $ 63 |
Current Billed Due | 1 | 0 |
Past Due Over 90 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 2 | 2 |
Municipal leases secured tax exempt | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | 21 | 20 |
Current Billed Due | 1 | 0 |
Municipal leases secured tax exempt | Past Due Over 90 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 2 | 0 |
Commercial loans and leases secured | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Long-term Receivable | 27 | 43 |
Current Billed Due | 0 | 0 |
Commercial loans and leases secured | Past Due Over 90 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | $ 0 | $ 2 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Jul. 01, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Accrual for obligations of divestitures | $ 0 |
Segment Information - Operating
Segment Information - Operating Business Segment (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017USD ($) | Jul. 02, 2016USD ($) | Jul. 01, 2017USD ($)segment | Jul. 02, 2016USD ($) | |
Segment Reporting [Abstract] | ||||
Number of segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 1,497 | $ 1,430 | $ 2,777 | $ 2,623 |
Operating Earnings by Segment | ||||
Operating earnings | 257 | 224 | 433 | 323 |
Total other expense | (52) | (57) | (109) | (134) |
Net earnings before income taxes | 205 | 167 | 324 | 189 |
Products | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 848 | 801 | 1,551 | 1,503 |
Operating Earnings by Segment | ||||
Operating earnings | 168 | 129 | 257 | 179 |
Services | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 649 | 629 | 1,226 | 1,120 |
Operating Earnings by Segment | ||||
Operating earnings | $ 89 | $ 95 | $ 176 | $ 144 |
Reorganization of Business - Na
Reorganization of Business - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017USD ($)employee | Jul. 02, 2016USD ($) | Jul. 01, 2017USD ($)employee | Jul. 02, 2016USD ($) | Dec. 31, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||
Reorganization of business charges | $ 3 | $ 44 | $ 22 | $ 67 | |
Restructuring, additional charges | 27 | ||||
Restructuring reserve | 68 | 68 | $ 102 | ||
Restructuring charges settled with cash | 56 | ||||
Restructuring, reversal of accruals no longer needed | 5 | 4 | |||
Employee separation costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reorganization of business charges | 46 | ||||
Restructuring, additional charges | 8 | 22 | 23 | ||
Restructuring reserve | $ 58 | 58 | 95 | ||
Restructuring charges settled with cash | $ 55 | ||||
Restructuring charges in the period for total employee severance (in number of employees) | employee | 300 | ||||
Number of employees expected to be paid (in number of employees) | employee | 500 | 500 | |||
Restructuring, reversal of accruals no longer needed | $ 5 | $ 5 | |||
Exit costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring, additional charges | 5 | 4 | 5 | ||
Restructuring reserve | 10 | 10 | $ 7 | ||
Restructuring charges settled with cash | 1 | ||||
Restructuring, reversal of accruals no longer needed | 0 | ||||
Asset Impairment Due to Reorganization | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring, impairment of assets | 20 | ||||
Building | Asset Impairment Due to Reorganization | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring, impairment of assets | 17 | 17 | |||
Corporate aircraft | Asset Impairment Due to Reorganization | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring, impairment of assets | 3 | ||||
Other charges | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reorganization of business charges | 1 | 36 | 16 | 42 | |
Costs of sales | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reorganization of business charges | $ 2 | $ 8 | $ 6 | $ 25 |
Reorganization of Business - Re
Reorganization of Business - Reorganization of Businesses Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Restructuring Reserve [Roll Forward] | ||||
January 1, 2017 | $ 102 | |||
Additional Charges | 27 | |||
Adjustments | (5) | $ (4) | ||
Amount Used | (56) | |||
July 1, 2017 | $ 68 | 68 | ||
Exit costs | ||||
Restructuring Reserve [Roll Forward] | ||||
January 1, 2017 | 7 | |||
Additional Charges | $ 5 | 4 | $ 5 | |
Adjustments | 0 | |||
Amount Used | (1) | |||
July 1, 2017 | 10 | 10 | ||
Employee separation costs | ||||
Restructuring Reserve [Roll Forward] | ||||
January 1, 2017 | 95 | |||
Additional Charges | 8 | $ 22 | 23 | |
Adjustments | (5) | (5) | ||
Amount Used | (55) | |||
July 1, 2017 | $ 58 | $ 58 |
Reorganization of Business - Ne
Reorganization of Business - Net Charges Incurred by Business Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | $ 3 | $ 44 | $ 22 | $ 67 |
Products | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | 3 | 33 | 16 | 54 |
Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reorganization of business charges | $ 0 | $ 11 | $ 6 | $ 13 |
Intangible Assets and Goodwil68
Intangible Assets and Goodwill - Guardian Digital Communications Limited (Details) $ in Millions | Feb. 19, 2016USD ($) | Feb. 19, 2016GBP (£) | Jul. 01, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | ||||
Goodwill | $ 749 | $ 728 | ||
Airwave | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred, excluding third party debt paid and liabilities assumed | £ | £ 1 | |||
Aggregate purchase price | $ 1,000 | 698,000,000 | ||
Deferred cash payment | £ | £ 64,000,000 | |||
Consideration transferred | 1,100 | |||
Net present value of deferred consideration payment to former owners | $ 82 | |||
Discount rate used to calculate net present value | 4.20% | 4.20% | ||
Useful life of intangibles | 7 years | 7 years | ||
Goodwill | $ 191 | |||
Airwave | Customer Relationships | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | 846 | |||
Airwave | Trade Names | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | $ 29 |
Intangible Assets and Goodwil69
Intangible Assets and Goodwill - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Feb. 19, 2016 | Jul. 01, 2017 | Dec. 31, 2016 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Goodwill | $ 749 | $ 728 | |
Airwave | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Cash | $ 86 | ||
Accounts receivable, net | 55 | ||
Other current assets | 36 | ||
Property, plant and equipment, net | 245 | ||
Deferred income taxes | 82 | ||
Accounts payable | (18) | ||
Accrued liabilities | (181) | ||
Other liabilities | (289) | ||
Goodwill | 191 | ||
Intangible assets | 875 | ||
Total consideration | 1,082 | ||
Net present value of deferred consideration payment to former owners | (82) | ||
Net cash consideration at purchase | $ 1,000 |
Intangible Assets and Goodwil70
Intangible Assets and Goodwill - Other Acquisitions (Details) $ in Millions, CLP in Billions | Mar. 13, 2017USD ($) | Mar. 13, 2017CLP | Nov. 10, 2016USD ($) | Apr. 01, 2017USD ($) | Dec. 31, 2016USD ($) | Jul. 01, 2017USD ($) |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 728 | $ 749 | ||||
Interexport | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred | $ 147 | CLP 98 | ||||
Cash paid for acquisition | 55 | |||||
Acquired debt | 92 | |||||
Goodwill | 7 | |||||
Intangible assets | 61 | |||||
Property, plant and equipment, net | 70 | |||||
Other tangible assets | $ 9 | |||||
Useful life of intangibles | 7 years | 7 years | ||||
Interexport | Customer-related | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 56 | |||||
Interexport | Other Intangible Assets | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 5 | |||||
Spillman Technologies | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 144 | |||||
Intangible assets | 115 | |||||
Acquired liabilities | 38 | |||||
Gross purchase price | $ 221 | |||||
Spillman Technologies | Minimum | ||||||
Business Acquisition [Line Items] | ||||||
Useful life of intangibles | 7 years | |||||
Spillman Technologies | Maximum | ||||||
Business Acquisition [Line Items] | ||||||
Useful life of intangibles | 10 years | |||||
Spillman Technologies | Customer-related | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 59 | |||||
Spillman Technologies | Other Intangible Assets | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 7 | |||||
Spillman Technologies | Completed technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 49 | |||||
Business Acquisitions of Software and Service-based Providers | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | 6 | |||||
Intangible assets | $ 15 | |||||
Useful life of intangibles | 8 years | 5 years | ||||
Gross purchase price | $ 30 | |||||
Tangible assets acquired | 9 | |||||
Accounting adjustment for intangible assets acquired | $ 11 | |||||
Business Acquisitions of Software and Service-based Providers | Customer-related | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 8 | |||||
Business Acquisitions of Software and Service-based Providers | Completed technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 7 |
Intangible Assets and Goodwil71
Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 1,108 | $ 1,108 | $ 983 | ||
Accumulated Amortization | 240 | 240 | 162 | ||
Intangible Assets And Goodwill | |||||
Amortization expense on intangibles | 37 | $ 38 | 73 | $ 52 | |
Finite-Lived Intangible Assets, Future Amortization Expense | |||||
2,017 | 144 | 144 | |||
2,018 | 148 | 148 | |||
2,019 | 147 | 147 | |||
2,020 | 144 | 144 | |||
2,021 | 143 | 143 | |||
2,022 | 140 | 140 | |||
Completed technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 128 | 128 | 116 | ||
Accumulated Amortization | 46 | 46 | 38 | ||
Patents | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 8 | 8 | 8 | ||
Accumulated Amortization | 7 | 7 | 6 | ||
Customer-related | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 918 | 918 | 810 | ||
Accumulated Amortization | 167 | 167 | 101 | ||
Other intangibles | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 54 | 54 | 49 | ||
Accumulated Amortization | $ 20 | $ 20 | $ 17 |
Intangible Assets and Goodwil72
Intangible Assets and Goodwill - Amortized Intangible Assets, Excluding Goodwill, By Business Segment (Details) - USD ($) $ in Millions | Jul. 01, 2017 | Dec. 31, 2016 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,108 | $ 983 |
Accumulated Amortization | 240 | 162 |
Products | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 178 | 178 |
Accumulated Amortization | 73 | 63 |
Services | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 930 | 805 |
Accumulated Amortization | $ 167 | $ 99 |
Intangible Assets and Goodwil73
Intangible Assets and Goodwill - Carrying Amount of Goodwill (Details) $ in Millions | 6 Months Ended |
Jul. 01, 2017USD ($) | |
Goodwill Activity | |
Goodwill, net of impairment losses | $ 728 |
Goodwill acquired | 7 |
Purchase accounting adjustments | 4 |
Foreign currency | 10 |
Goodwill, net of impairment losses | 749 |
Products | |
Goodwill Activity | |
Goodwill, net of impairment losses | 316 |
Goodwill acquired | 0 |
Purchase accounting adjustments | 1 |
Foreign currency | 0 |
Goodwill, net of impairment losses | 317 |
Services | |
Goodwill Activity | |
Goodwill, net of impairment losses | 412 |
Goodwill acquired | 7 |
Purchase accounting adjustments | 3 |
Foreign currency | 10 |
Goodwill, net of impairment losses | $ 432 |