Other Financial Data | Other Financial Data Statements of Operations Information Other Charges Other charges (income) included in Operating earnings consist of the following: Three Months Ended Nine Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Other charges: Intangibles amortization (Note 15) $ 56 $ 54 $ 172 $ 158 Reorganization of business (Note 14) 2 10 22 48 Operating lease asset impairments — — 7 — Acquisition-related transaction fees 2 5 6 8 Losses on legal settlements — — 3 9 Fixed asset impairment — — — 5 Gain on sale of property, plant and equipment — — — (50) Other — — (1) — $ 60 $ 69 $ 209 $ 178 During the nine months ended October 2, 2021, the Company recognized $7 million of operating lease asset impairments relating to the consolidation of acquired U.S. manufacturing and distribution facilities. This loss has been recognized in Other charges in the Company's Condensed Consolidated Statements of Operations. During the nine months ended September 26, 2020, the Company recorded a $50 million gain on the sale of a manufacturing facility in Europe. This gain has been recognized in Other charges in the Company's Condensed Consolidated Statements of Operations. 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Interest income (expense), net: Interest expense $ (58) $ (60) $ (160) $ (175) Interest income 2 2 6 8 $ (56) $ (58) $ (154) (167) Other, net: Net periodic pension and postretirement benefit (Note 8) $ 31 $ 20 $ 91 $ 60 Loss from the extinguishment of long-term debt (Note 5) — (56) (18) (56) Foreign currency gain (loss) 5 (15) 13 (19) Gain (loss) on derivative instruments (10) 10 (19) 6 Gains on equity method investments 1 1 5 1 Fair value adjustments to equity investments (18) (4) (5) 1 Other 1 2 3 (1) $ 10 $ (42) $ 70 $ (8) 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Basic earnings per common share: Earnings $ 307 $ 205 $ 844 $ 537 Weighted average common shares outstanding 169.2 169.7 169.3 170.1 Per share amount $ 1.81 $ 1.21 $ 4.98 $ 3.16 Diluted earnings per common share: Earnings $ 307 $ 205 $ 844 $ 537 Weighted average common shares outstanding 169.2 169.7 169.3 170.1 Add effect of dilutive securities: Share-based awards 4.3 3.8 3.9 4.2 1.75% senior convertible notes 0.6 — 0.2 — Diluted weighted average common shares outstanding 174.1 173.5 173.4 174.3 Per share amount $ 1.76 $ 1.18 $ 4.87 $ 3.08 In the computation of diluted earnings per common share for the nine months ended October 2, 2021, the assumed exercise of 0.2 million options, including 0.1 million subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share for the three months ended September 26, 2020, the assumed exercise of 0.5 million options, including 0.2 million subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive. For the nine months ended September 26, 2020, the assumed exercise of 0.4 million options, including 0.1 million subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive. As of October 2, 2021, the Company had $1.0 billion of 1.75% Senior Convertible Notes outstanding which mature on September 15, 2024 ("Senior Convertible Notes"). The notes became fully convertible as of September 5, 2021. 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), adjusted for dividends declared through the date of settlement. 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 principal amount of the Senior Convertible Notes in cash, the Company did 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 exceeded the conversion price, which first occurred for the period ended October 2, 2021. The Company included the number of shares that would be issuable upon conversion (under the treasury stock method of accounting for share dilution) in the Company’s computation of diluted earnings per share, based on the amount by which the average stock price exceeded the conversion price for the period ended October 2, 2021. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of October 2, 2021 was $188 million. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following: October 2, 2021 December 31, 2020 Accounts receivable $ 1,267 $ 1,465 Less allowance for credit losses (71) (75) $ 1,196 $ 1,390 Inventories, Net Inventories, net, consist of the following: October 2, 2021 December 31, 2020 Finished goods $ 251 $ 271 Work-in-process and production materials 484 360 735 631 Less inventory reserves (131) (123) $ 604 $ 508 Other Current Assets Other current assets consist of the following: October 2, 2021 December 31, 2020 Current contract cost assets (Note 2) $ 26 $ 23 Tax-related deposits 44 52 Other 182 167 $ 252 $ 242 Property, Plant and Equipment, Net Property, plant and equipment, net, consist of the following: October 2, 2021 December 31, 2020 Land $ 5 $ 6 Leasehold improvements 474 439 Machinery and equipment 2,390 2,276 2,869 2,721 Less accumulated depreciation (1,848) (1,699) $ 1,021 $ 1,022 Depreciation expense for both the three months ended October 2, 2021 and September 26, 2020 was $49 million. Depreciation expense for the nine months ended October 2, 2021 and September 26, 2020 was $153 million and $142 million, respectively. Investments Investments consist of the following: October 2, 2021 December 31, 2020 Common stock $ 67 $ 19 Strategic investments, at cost 41 46 Company-owned life insurance policies 81 77 Equity method investments 25 16 $ 214 $ 158 On July 16, 2021, the Company paid $50 million for equity securities of NewHold Investment Corp. ("NHIC"), a special purpose acquisition company (SPAC) that completed a business combination with Evolv Technologies, Inc. After the business combination, NHIC was renamed “Evolv Technologies Holdings, Inc.” (together with its subsidiaries, “Evolv”). Evolv is a global leader in weapons detection security screening. The equity securities are carried at fair value with changes in fair value recorded in Other, net within Other income (expense). During the three months ended October 2, 2021, the Company recognized a loss of $20 million in Other income (expense) related to a decrease in the fair value of the investment. Other Assets Other assets consist of the following: October 2, 2021 December 31, 2020 Defined benefit plan assets $ 348 $ 283 Non-current contract cost assets (Note 2) 113 105 Other 69 94 $ 530 $ 482 Accrued Liabilities Accrued liabilities consist of the following: October 2, 2021 December 31, 2020 Compensation $ 264 $ 291 Tax liabilities 107 147 Dividend payable 120 120 Trade liabilities 185 164 Operating lease liabilities (Note 3) 125 126 Other 464 463 $ 1,265 $ 1,311 Other Liabilities Other liabilities consist of the following: October 2, 2021 December 31, 2020 Defined benefit plans $ 1,465 $ 1,578 Non-current contract liabilities (Note 2) 309 283 Deferred income taxes 170 180 Other 289 322 $ 2,233 $ 2,363 Stockholders’ Equity (Deficit) Share Repurchase Program: During the three and nine months ended October 2, 2021, the Company repurchased approximately 0.6 million and 2.0 million shares at an average price of $234.18 and $199.88 per share for an aggregate of $137 million and $409 million, respectively, including transaction costs. The Company paid $125 million and $397 million to settle share repurchases during the three and nine months ended October 2, 2021, respectively. In May of 2021, the Board of Directors approved a $2.0 billion increase to the share repurchase program. As of October 2, 2021, the Company had $2.2 billion of authority available for future repurchases. Payment of Dividends: During the three months ended October 2, 2021 and September 26, 2020, the Company paid $120 million and $109 million, respectively, in cash dividends to holders of its common stock. During the nine months ended October 2, 2021 and September 26, 2020, the Company paid $362 million and $327 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $120 million 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 October 2, 2021 and September 26, 2020: Three Months Ended Nine Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Foreign Currency Translation Adjustments: Balance at beginning of period $ (335) $ (470) $ (360) $ (410) Other comprehensive income (loss) before reclassification adjustment (47) 34 (24) (27) Tax benefit (expense) 3 (4) 5 (3) Other comprehensive income (loss), net of tax (44) 30 (19) (30) Balance at end of period $ (379) $ (440) $ (379) $ (440) Defined Benefit Plans: Balance at beginning of period $ (2,053) $ (2,005) $ (2,086) $ (2,030) Reclassification adjustment - Actuarial net losses into Other income (Note 8) 22 20 65 58 Reclassification adjustment - Prior service benefits into Other income (Note 8) (2) (4) (6) (12) Tax benefit (4) (4) (10) (9) Other comprehensive income, net of tax 16 12 49 37 Balance at end of period $ (2,037) $ (1,993) $ (2,037) $ (1,993) Total Accumulated other comprehensive loss $ (2,416) $ (2,433) $ (2,416) $ (2,433) |