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 Nine Months Ended September 28, September 29, September 28, September 29, Other charges (income): Intangibles amortization (Note 15) $ 52 $ 46 $ 154 $ 140 Reorganization of business (Note 14) 15 21 27 46 Environmental reserve expense — 57 — 57 Loss (gain) on legal settlements (5 ) 2 (5 ) 3 Acquisition-related transaction fees 1 — 4 17 $ 63 $ 126 $ 180 $ 263 During the nine months ended September 28, 2019 , the Company recognized $4 million of acquisition-related transaction fees compared to $17 million for the Avigilon and Plant acquisitions during the nine months ended September 29, 2018 . During the third quarter of 2018, the Company revised the estimate of a liability related to a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) incurred by a legacy business. It is the Company’s policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. During the third quarter of 2018, the Company became aware of additional remediation requirements for the Superfund site. As such, the Company recorded a charge of $57 million during the third quarter of 2018 which was primarily due to: (i) changes in the expected timeline of the remediation activities to 30 years and (ii) additional costs for further remediation efforts, increasing the reserve to $107 million . Given the timing and amount of the future cash payments are fixed or reliably determinable, the Company discounted the cash flows used in estimating this accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is $4 million and is included in the “Accrued liabilities” statement line and the non-current portion is included in the “Other liabilities” statement line within the Company's Condensed Consolidated Balance Sheet. Other Income (Expense) Interest expense, net, and Other, net, both included in Other income (expense), consist of the following: Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Interest income (expense), net: Interest expense $ (60 ) $ (62 ) $ (178 ) $ (178 ) Interest income 6 3 13 15 $ (54 ) $ (59 ) $ (165 ) $ (163 ) Other,net: Net periodic pension and postretirement benefit (Note 8) $ 17 $ 18 $ 50 $ 58 Gain from the extinguishment of 2.00% senior convertible notes (Note 5) 4 6 4 6 Loss from the extinguishment of long-term debt (Note 5) (7 ) — (50 ) — Investment impairments (Note 4) (5 ) — (16 ) — Foreign currency gain (loss) 3 (14 ) (7 ) (14 ) Gain (loss) on derivative instruments (9 ) 8 (16 ) (15 ) Gains on equity method investments 2 1 3 2 Fair value adjustments to equity investments (Note 4) (18 ) 7 (3 ) 7 Other 2 3 13 1 $ (11 ) $ 29 $ (22 ) $ 45 During the three months ended September 28, 2019 , the Company recognized a foreign currency gain of $3 million , primarily driven by the Euro, the British Pound, and the Norwegian Kroner, and a loss of $9 million on derivative instruments put in place to manage foreign exchange risk related to currency fluctuations. During the nine months ended September 28, 2019 , the Company recognized a foreign currency loss of $7 million , primarily related to the Israeli Shekel, Brazilian real, the Australian dollar, and the Canadian dollar, and a loss of $16 million on derivative instruments put in place to minimize the foreign exchange risk related to currency fluctuations. During the three and nine months ended September 29, 2018 , the Company recognized a foreign currency loss of $14 million , primarily driven by the Brazilian real, the Euro, the Australian dollar and the Argentinian peso. During the three and nine months ended September 29, 2018 , the Company recognized a gain of $8 million and a loss of $15 million , respectively, on derivative instruments put in place to manage foreign exchange risk related to currency fluctuations. The loss on derivative instruments during the nine months ended September 29, 2018 , includes a loss of $14 million on foreign currency derivatives put in place to minimize the exposure to the Canadian dollar related to the acquisition of Avigilon. 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 Nine Months Ended September 28, September 29, September 28, September 29, Basic earnings per common share: Earnings $ 267 $ 247 $ 625 $ 544 Weighted average common shares outstanding 166.7 162.6 165.3 162.0 Per share amount $ 1.60 $ 1.52 $ 3.78 $ 3.36 Diluted earnings per common share: Earnings $ 267 $ 247 $ 625 $ 544 Weighted average common shares outstanding 166.7 162.6 165.3 162.0 Add effect of dilutive securities: Share-based awards 4.8 4.6 4.7 4.2 2.00% senior convertible notes 4.9 5.4 5.7 5.4 1.75% senior convertible notes — — — — Diluted weighted average common shares outstanding 176.4 172.6 175.7 171.6 Per share amount $ 1.51 $ 1.43 $ 3.56 $ 3.17 In the computation of diluted earnings per common share for the three months ended September 28, 2019 , the assumed exercise of 19,584 employee stock options were excluded because their inclusion would have been antidilutive. In the computation of the diluted earnings per common share for the nine months ended September 28, 2019 , the assumed exercise of 0.3 million employee stock options were excluded because their inclusion would have been antidilutive. For the three months ended September 29, 2018 , the assumed exercise of 0.2 million employee stock options, were excluded because their inclusion would have been antidilutive. For the nine months ended September 29, 2018 , the assumed exercise of 3.2 million options, were excluded because their inclusion would have been antidilutive. On September 5, 2019, the Company issued $1.0 billion of 1.75% senior convertible notes which mature in September 15, 2024 ("New Senior Convertible Notes"). The notes are convertible based on a conversion rate of 4.9140 per $1,000 principal amount (which is equal to an initial conversion price of $203.50 per share). See discussion in Note 5. In the event of conversion, the Company intends to settle the principal amount of the New Senior Convertible Notes in cash. Because of the Company’s intention to settle the par value of the New Senior Convertible Notes in cash, Motorola Solutions does not reflect any shares underlying the New Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price. 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 $203.50 . For the period ended September 28, 2019 , there was no dilutive effect of the New Senior Convertible Notes on diluted earnings per share attributable to Motorola Solutions, Inc. as the average stock price for the period outstanding was below the conversion price. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following: September 28, December 31, Accounts receivable $ 1,345 $ 1,344 Less allowance for doubtful accounts (50 ) (51 ) $ 1,295 $ 1,293 Inventories, Net Inventories, net, consist of the following: September 28, December 31, Finished goods $ 221 $ 206 Work-in-process and production materials 380 293 601 499 Less inventory reserves (141 ) (143 ) $ 460 $ 356 Other Current Assets Other current assets consist of the following: September 28, December 31, Current contract cost assets (Note 2) $ 28 $ 30 Tax-related deposits 111 138 Other 199 186 $ 338 $ 354 Property, Plant and Equipment, Net Property, plant and equipment, net, consists of the following: September 28, December 31, Land $ 15 $ 10 Leasehold improvements 404 362 Machinery and equipment 1,961 1,886 2,380 2,258 Less accumulated depreciation (1,417 ) (1,363 ) $ 963 $ 895 Depreciation expense for the three months ended September 28, 2019 and September 29, 2018 was $47 million and $43 million , respectively. Depreciation expense for the nine months ended September 28, 2019 and September 29, 2018 was $136 million and $127 million , respectively. Investments Investments consist of the following: September 28, December 31, 2018 Corporate bonds $ — $ 1 Common stock 22 19 Strategic investments, at cost 40 62 Company-owned life insurance policies 78 75 Equity method investments 19 12 $ 159 $ 169 Strategic investments include investments in non-public technology startup companies. Strategic investments do not have a readily determinable fair value and are recorded at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. The Company did not recognize any significant adjustments to the recorded cost basis during the nine months ended September 28, 2019 , with the exception of one company becoming publicly-traded during the second quarter, which required the investment to be reclassified to common stock. The Company’s common stock portfolio reflects investments in publicly-traded companies within the communications services sector and is valued utilizing active market prices for similar instruments. During the three and nine months ended September 28, 2019 , the Company recognized losses of $18 million and $3 million , respectively, in Other income (expense) related to a decrease in the fair value of the investments. During the three months ended September 28, 2019 , the Company recognized no gains or losses on the sale of investments and businesses, compared to gains of $6 million , during the three months ended September 29, 2018 . During the nine months ended September 28, 2019 , Gains on the sale of investments and businesses, net were $4 million , compared to $16 million , during the nine months ended September 29, 2018 . During the three and nine months ended September 28, 2019 , the Company recorded investment impairment charges of $5 million and $16 million , respectively, representing other-than-temporary declines in the value of the Company’s strategic investments portfolio. There were no investment impairments recorded during the three and nine months ended September 29, 2018 . Investment impairment charges are included in Other within Other income (expense) in the Company’s Condensed Consolidated Statements of Operations. Other Assets Other assets consist of the following: September 28, December 31, Defined benefit plan assets $ 175 $ 135 Tax receivable — 39 Non-current contract cost assets (Note 2) 102 98 Other 56 72 $ 333 $ 344 Accrued Liabilities Accrued liabilities consist of the following: September 28, December 31, Compensation $ 313 $ 324 Tax liabilities 86 111 Dividend payable 98 93 Trade liabilities 156 185 Operating lease liabilities (Note 3) 118 — Other 488 497 $ 1,259 $ 1,210 Other Liabilities Other liabilities consist of the following: September 28, December 31, Defined benefit plans $ 1,480 $ 1,557 Non-current contract liabilities (Note 2) 253 214 Unrecognized tax benefits 52 51 Deferred income taxes 172 201 Other 233 277 $ 2,190 $ 2,300 Stockholders’ Equity Share Repurchase Program: During the nine months ended September 28, 2019 , the Company paid an aggregate of $170 million , including transaction costs, to repurchase approximately 1.4 million shares at an average price of $122.31 per share. As of September 28, 2019 , the Company had used approximately $12.6 billion of the share repurchase authority to repurchase shares, leaving $1.4 billion of authority available for future repurchases. Payment of Dividends: During the three months ended September 28, 2019 and September 29, 2018 , the Company paid $94 million and $84 million , respectively, in cash dividends to holders of its common stock. During the nine months ended September 28, 2019 and September 29, 2018 , the Company paid $281 million and $252 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 nine months ended September 28, 2019 and September 29, 2018 : Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Foreign Currency Translation Adjustments: Balance at beginning of period $ (437 ) $ (391 ) $ (444 ) $ (353 ) Other comprehensive loss before reclassification adjustment (33 ) (3 ) (23 ) (33 ) Tax expense — (1 ) (3 ) (9 ) Other comprehensive loss, net of tax (33 ) (4 ) (26 ) (42 ) Balance at end of period $ (470 ) $ (395 ) $ (470 ) $ (395 ) Available-for-Sale Securities: Balance at beginning of period $ — $ — $ — $ 6 Reclassification adjustment into Gains on sales of investments and businesses, net — — — (8 ) Tax benefit — — — 2 Other comprehensive loss, net of tax — — — (6 ) Balance at end of period $ — $ — $ — $ — Defined Benefit Plans: Balance at beginning of period $ (2,300 ) $ (2,189 ) $ (2,321 ) $ (2,215 ) Reclassification adjustment - Actuarial net losses into Other income (expense) 16 20 50 57 Reclassification adjustment - Prior service benefits into Other income (expense) (4 ) (4 ) (11 ) (11 ) Tax expense (1 ) (3 ) (7 ) (7 ) Other comprehensive income, net of tax 11 13 32 39 Balance at end of period $ (2,289 ) $ (2,176 ) $ (2,289 ) $ (2,176 ) Total Accumulated other comprehensive loss $ (2,759 ) $ (2,571 ) $ (2,759 ) $ (2,571 ) |