Motorola Solutions (MSI) 10-Q 4 Nov 09 2009 Q3 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (USD $)
In Millions, unless otherwise specified	3 Months Ended Oct. 03, 2009	3 Months Ended Sep. 27, 2008	9 Months Ended Oct. 03, 2009	9 Months Ended Sep. 27, 2008
Net sales	$5,453	$7,480	$16,321	$23,010
Costs of sales	3,645	5,677	11,307	16,737
Gross margin	1,808	1,803	5,014	6,273
Selling, general and administrative expenses	800	1,044	2,491	3,342
Research and development expenditures	768	999	2,390	3,101
Other charges	112	212	444	546
Operating earnings (loss)	128	(452)	(311)	(716)
Other income (expense):
Interest income (expense), net	(49)	18	(114)	6
Gain on sales of investments and businesses, net	21	7	31	65
Other	(64)	(167)	29	(264)
Total other income (expense)	(92)	(142)	(54)	(193)
Earnings (loss) from continuing operations before income taxes	36	(594)	(365)	(909)
Income tax expense (benefit)	14	(203)	(134)	(325)
Loss from continuing operations	22	(391)	(231)	(584)
Earnings from discontinued operations, net of tax	0	0	60	0
Net earnings (loss)	22	(391)	(171)	(584)
Less: Earnings attributable to noncontrolling interests	10	6	22	3
Net earnings (loss) attributable to Motorola, Inc.	12	(397)	(193)	(587)
Amounts attributable to Motorola, Inc. common shareholders:
Earnings (loss) from continuing operations, net of tax	12	(397)	(253)	(587)
Earnings from discontinued operations, net of tax	0	0	60	0
Net loss attributable to Motorola, Inc.	$12	($397)	($193)	($587)
Basic:
Continuing operations	0.01	-0.18	-0.11	-0.26
Discontinued operations	$0	$0	0.03	$0
Earnings Per Share, Basic	0.01	-0.18	-0.08	-0.26
Diluted:
Continuing operations	0.01	-0.18	-0.11	-0.26
Discontinued operations	$0	$0	0.03	$0
Earnings Per Share, Diluted	0.01	-0.18	-0.08	-0.26
Weighted average common shares outstanding:
Basic	2299.6	2265.9	2290.8	2262.1
Diluted	2319.5	2265.9	2290.8	2262.1
Dividends paid per share	0	0.05	0.05	0.15

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Millions	Oct. 03, 2009	Dec. 31, 2008
ASSETS
Cash and cash equivalents	$3,050	$3,064
Sigma Fund	4,050	3,690
Short-term investments	15	225
Accounts receivable, net	3,402	3,493
Inventories, net	1,523	2,659
Deferred income taxes	1,108	1,092
Other current assets	2,177	3,140
Total current assets	15,325	17,363
Property, plant and equipment, net	2,224	2,442
Sigma Fund	75	466
Investments	491	517
Deferred income taxes	2,327	2,428
Goodwill	2,823	2,837
Other assets	1,784	1,816
Total assets	25,049	27,869
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable and current portion of long-term debt	24	92
Accounts payable	2,212	3,188
Accrued liabilities	5,364	7,340
Total current liabilities	7,600	10,620
Long-term debt	3,901	4,092
Other liabilities	3,631	3,562
Stockholders' Equity
Preferred stock, $100 par value	0	0
Common stock: 10/03/09 - $.01 par value; 12/31/08 - $3 par value Issued shares: 10/03/09 - 2,313.0; 12/31/08 - 2,276.9 Outstanding shares: 10/03/09 - 2,310.9; 12/31/08 - 2,276.5	23	6,831
Additional paid-in capital	8,128	1,003
Retained earnings	3,685	3,878
Accumulated other comprehensive loss	(2,026)	(2,205)
Total Motorola, Inc. stockholders' equity	9,810	9,507
Noncontrolling interests	107	88
Total stockholders' equity	9,917	9,595
Total liabilities and stockholders' equity	$25,049	$27,869

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets [Parenthetical] (USD $)
Share data in Millions, except Per Share data	Oct. 03, 2009	Dec. 31, 2008
Condensed Consolidated Balance Sheets [Parenthetical]
Preferred Stock, Par or Stated Value Per Share	$100	$100
Common Stock, Par or Stated Value Per Share	0.01	$3
Common Stock, Shares, Issued	2,313	2276.9
Common Stock, Shares, Outstanding	2310.9	2276.5

2_Condensed Consolidated Statem

Condensed Consolidated Statement of Stockholders' Equity (USD $)
In Millions	Common stock and Additional Paid-in Capital	Common Stock and Additional Paid-in Capital	Fair Value Adjustment to Available for Sale Securities, Net of Tax	Foreign Currency Translation Adjustments, Net of Tax	Retirement Benefits Adjustments, Net of Tax	Other Items, Net of Tax	Retained Earnings	Noncontrolling Interest	Comprehensive Earnings (Loss)	Total
Balances at Dec. 31, 2008		$7,834	$2	($133)	($2,067)	($7)	$3,878	$88		$9,595
Shares, Balance at Dec. 31, 2008	2276.9
Issuance of common stock and stock options exercised, shares	36.1
Net loss							(193)	22	(171)	(171)
Net unrealized gain on securities (net of tax of $49)			84						84
Foreign currency translation adjustments (net of tax of $1)				46					46
Amortization of retirement benefit adjustments (net of tax of $25)					45				45
Issuance of common stock and stock options exercised, value		101
Tax shortfalls from stock-based compensation		(13)
Share-based compensation expense		229
Net gain on derivative instruments (net of tax of $3)						4			4
Shares, Balance at Oct. 03, 2009	2,313
Balances at Oct. 03, 2009		$8,151	$86	($87)	($2,022)	($3)	$3,685	$107	$8	$9,917

3_Condensed Consolidated Statem

Condensed Consolidated Statement of Stockholders' Equity [Parenthetical] (USD $)
In Millions	7/5/2009 - 10/3/2009
Condensed Consolidated Statement of Stockholders' Equity [Parenthetical]
Tax effect net unrealized gain on securities	$49
Tax effect foreign currency translation adjustment	1
Tax effect amortization of retirement benefit adjustments	25
Tax effect net gain on derivative instruments	$3

4_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	9 Months Ended Oct. 03, 2009	9 Months Ended Sep. 27, 2008
Operating
Net loss attributable to Motorola, Inc.	($193)	($587)
Less: Earnings attributable to noncontrolling interests	22	3
Net loss	(171)	(584)
Earnings from discontinued operations, net of tax	60	0
Loss from continuing operations	(231)	(584)
Adjustments to reconcile loss from continuing operations to net cash provided by (used for) operating activities:
Depreciation and amortization	571	624
Non-cash other charges (income)	44	596
Share-based compensation expense	225	220
Gain on sales of investments and businesses, net	(31)	(65)
Gain from the extinguishment of long-term debt	(67)	0
Deferred income taxes	(114)	(497)
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	84	1,044
Inventories	1,126	(46)
Other current assets	960	(194)
Accounts payable and accrued liabilities	(2,782)	(524)
Other assets and liabilities	(33)	(533)
Net cash provided by (used for) operating activities	(248)	41
Investing
Acquisitions and investments, net	(30)	(180)
Proceeds from sales of investments and businesses, net	280	83
Distributions from investments	0	112
Capital expenditures	(189)	(387)
Proceeds from sales of property, plant and equipment	27	121
Proceeds from sales of Sigma Fund investments, net	98	1,122
Proceeds from sales (purchases) of short-term investments	209	(123)
Net cash provided by investing activities	395	748
Financing
Repayment of short-term borrowings, net	(71)	(37)
Repayments of debt	(130)	(114)
Issuance of common stock	110	86
Purchase of common stock	0	(138)
Payments of dividends	(114)	(340)
Distribution to discontinued operations	0	(26)
Other, net	7	1
Net cash used for financing activities	(198)	(568)
Effect of exchange rate changes on cash and cash equivalents	37	1
Net increase (decrease) in cash and cash equivalents	(14)	222
Cash and cash equivalents, beginning of period	3,064	2,752
Cash and cash equivalents, end of period	3,050	2,974
Cash paid during the period for:
Interest, net	216	147
Income taxes, net of refunds	$109	$287

Basis of Presentation

Basis of Presentation
	9 Months Ended Oct. 03, 2009 USD / shares
Basis of Presentation [Abstract]
Basis of Presentation	1.Basis of Presentation The condensed consolidated financial statements as of October3, 2009 and for the three and nine months ended October3, 2009 and September27, 2008, include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Companys consolidated financial position, results of operations and cash flows 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 Companys Form10-K for the year ended December31, 2008. The results of operations for the three and nine months ended October3, 2009 are not necessarily indicative of the operating results to be expected for the full year. Certain amounts in prior period financial statements and related notes have been reclassified to conform to the 2009 presentation. 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. The Company has evaluated subsequent events after October3, 2009, through the date and time the financial statements were issued on November3, 2009. In October 2009, the Financial Accounting Standards Board (FASB) issued new authoritative guidance related to the recognition of revenue for certain multiple deliverable arrangements. Under the new guidance, revenue will be allocated to the different elements in an arrangement based on relative sales price. The new guidance, which is expected to result in more multiple-deliverable arrangements being separable than under current guidance, will be effective for the Company prospectively for revenue arrangements entered into or materially modified on or after January1, 2011. In October 2009, the FASB issued new authoritative guidance which alters the scope of revenue recognition guidance for software deliverables to exclude items sold that include hardware with software that is essential to its functionality. The new guidance will be effective for the Company prospectively for revenue arrangements entered into or materially modified on or after January1, 2011. Early adoption of both standards is permitted. The Company is still assessing the potential impact of adopting this new guidance. In June 2009, the FASB issued authoritative guidance amending the accounting for transfers of financial assets. Key provisions of this amended guidance include (i)the removal of the concept of qualifying special purpose entities, (ii)the introduction of the concept of a participating interest, in circumstances in which a portion of a financial asset has been transferred, and

Discontinued Operations

Discontinued Operations
	9 Months Ended Oct. 03, 2009 USD / shares
Discontinued Operations [Abstract]
Discontinued Operations	2.Discontinued Operations During the nine months ended October3, 2009, the Company completed the sales of: (i)Good Technology, and (ii)the biometrics business, which included its Printrak trademark. Collectively, the Company received $163million in net cash and recorded a net gain on sale of the businesses of $175million before income taxes, which is included in Earnings from discontinued operations, net of tax, in the Companys condensed consolidated statements of operations. The operating results of these businesses (each of which was formerly included as part of the Enterprise Mobility Solutions segment) through the date of their respective dispositions are reported as discontinued operations in the condensed consolidated financial statements for the period ending October3, 2009. For all other applicable prior periods, the operating results of these businesses have not been reclassified as discontinued operations, since the results are not material to the Companys condensed consolidated financial statements. The following table displays summarized activity in the Companys condensed consolidated statements of operations for discontinued operations during the nine months ended October3, 2009, all of which occurred during the three months ended April4, 2009. The Company had no such activity during the three and nine months ended September27, 2008. Nine Months Ended October3, 2009 Net sales $ 19 Operating loss (11) Gains on sales of investments and businesses, net 175 Earnings before income taxes 162 Income tax expense 102 Earnings from discontinued operations, net of tax 60

Other Financial Data

Other Financial Data
	9 Months Ended Oct. 03, 2009 USD / shares
Other Financial Data [Abstract]
Other Financial Data	3.Other Financial Data Statement of Operations Information Other Charges Other charges included in Operating earnings (loss) consist of the following: Three Months Ended Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Amortization of intangible assets $ 69 $ 80 $ 210 $ 244 Environmental reserve charge 24 24 Separation-related transaction costs 19 21 19 41 Reorganization of businesses charges 31 207 124 Facility impairment 39 Asset impairments 128 128 Gain on sale of property, plant and equipment (48) (48) Legal settlements (55) 57 $ 112 $ 212 $ 444 $ 546 During the three months ended July4, 2009, the Company classified a facility as held for sale and wrote it down to its fair value, less estimated selling costs, resulting in an impairment loss of $39million, which was included in Other charges for the period. Other Income (Expense) Interest expense, net, and Other, both included in Other income (expense), consist of the following: Three Months Ended Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Interest expense, net: Interest expense $ (63) $ (52) $ (174) $ (204) Interest income 14 70 60 210 $ (49) $ 18 $ (114) $ 6 Other: Investment impairments $ (31) $ (9) $ (64) $ (143) Foreign currency expense (21) (48) (49) (34) Gain (loss) on Sigma Fund investments (8) 67 Impairment charges on Sigma Fund investments (141) (145) Gain from the extinguishment of the Companys outstanding long-term debt 67 Gain on interest rate swaps 24 Other (4) 31 8 34 $ (64) $ (167) $ 29 $ (264) During the three months ended December31, 2007, concurrently with the issuance of debt, the Company entered into several interest rate swaps to convert the fixed rate interest cost of the debt to a floating rate. At the time of entering into these interest rate swaps, the swaps were designated as fair value hedges and qualified for hedge accounting treatment. The swaps were originally designated as fair value hedges of the underlying debt, including the Companys credit spread. During the three months ended March29, 2008, the swaps were no longer considered effective hedges because of the volatility in the price of the Companys fixed-rate domestic term debt and the swaps were dedesignated. In the same period, the Company was able to redesignate the same interest rate swaps as fair value hedges of the underlying debt, exclusive of the Companys credit spread. For the period of time that the swaps were deemed ineffective hedges, the Company recognized a gain of $24million, representing the increase in the fair value of the swaps, which was included in Other income for the period.

Debt and Credit Facilities

Debt and Credit Facilities
	9 Months Ended Oct. 03, 2009 USD / shares
Debt and Credit Facilities [Abstract]
Debt and Credit Facilities	4.Debt and Credit Facilities Long-Term Debt During the nine months ended October3, 2009, the Company completed the open market purchase of $199million of its outstanding long-term debt for an aggregate purchase price of $133million, including $4million of accrued interest, all of which occurred during the three months ended April4, 2009. The $199million of long-term debt repurchased included principal amounts of: (i)$11million of the $400million outstanding of the 7.50%Debentures due 2025, (ii)$20million of the $309million outstanding of the 6.50%Debentures due 2025, (iii)$14million of the $299million outstanding of the 6.50%Debentures due 2028, and (iv)$154million of the $600million outstanding of the 6.625%Senior Notes due 2037. The Company recognized a gain of approximately $67million related to these open market purchases in Other within Other income (expense) in the condensed consolidated statements of operations. Credit Facilities In June 2009, the Company elected to amend its domestic syndicated revolving credit facility (as amended from time to time, the Credit Facility) that is scheduled to mature in December 2011. As part of the amendment, the Company reduced the size of the Credit Facility to the lesser of: (1)$1.5billion, or (2)an amount determined based on eligible domestic accounts receivable and inventory. If the Company elects to borrow under the Credit Facility, it would be required to pledge its domestic accounts receivables and, at its option, domestic inventory. As amended, the Credit Facility does not require the Company to meet any financial covenants unless remaining availability under the Credit Facility is less than $225million. In addition, until borrowings are made under the Credit Facility, the Company is able to use its working capital assets in any capacity in conjunction with other capital market funding alternatives that may be available to the Company. As of and during the nine months ended October3, 2009, there were no outstanding borrowings under this Credit Facility.

Risk Management

Risk Management
	9 Months Ended Oct. 03, 2009 USD / shares
Risk Management [Abstract]
Risk Management	5.Risk Management Derivative Financial Instruments Foreign Currency Risk The Company uses financial instruments to reduce its overall exposure to the effects of currency fluctuations on cash flows. Company policy prohibits speculation in financial instruments for profit on the exchange rate price fluctuation, trading in currencies for which there are no underlying exposures, or entering into transactions for any currency to intentionally increase the underlying exposure. Instruments that are designated as part of a hedging relationship must be effective at reducing the risk associated with the exposure being hedged and designated as part of a hedging relationship at the inception of the contract. Accordingly, changes in market values of hedge instruments must be highly correlated with changes in market values of underlying hedged items both at the inception of the hedge and over the life of the hedge contract. The Companys strategy related to foreign exchange exposure management is to offset the gains or losses on the financial instruments against losses or gains on the underlying operational cash flows or investments based on the operating business units assessment of risk. The Company enters into derivative contracts for some of the Companys non-functional currency receivables and payables, which are primarily denominated in major currencies that can be traded on open markets. The Company typically uses forward contracts and options to hedge these currency exposures. In addition, the Company enters into derivative contracts for some firm commitments and some forecasted transactions, which are designated as part of a hedging relationship if it is determined that the transaction qualifies for hedge accounting under the FASBs guidance on derivatives and hedging activities. A portion of the Companys exposure is from currencies that are not traded in liquid markets and these are addressed, to the extent reasonably possible, by managing net asset positions, product pricing and component sourcing. At October3, 2009 and December31, 2008, the Company had outstanding foreign exchange contracts totaling $1.8billion and $2.2billion, respectively. Management believes that these financial instruments should not subject the Company to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset losses and gains on the underlying assets, liabilities and transactions, except for the ineffective portion of the instruments, which are charged to Other within Other income (expense) in the Companys condensed consolidated statements of operations. The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of October3, 2009 and the corresponding positions as of December31, 2008: Notional Amount Net Buy (Sell) by Currency October3, 2009 December31, 2008 Chinese Renminbi $ (546) $ (481) Brazilian Real (380) (356) Euro (365) (445) Japanese Yen (80) 111 British Pound 165 122 Interest Rate Risk At October3, 2009, the Companys short-term

Income Taxes

Income Taxes
	9 Months Ended Oct. 03, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	6.Income Taxes The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required by considering available evidence, including historical and projected taxable income and tax planning strategies that are both prudent and feasible. As of December31, 2008, the Companys U.S.operations had generated two consecutive years of pre-tax losses, which are attributable to the Mobile Devices segment. During 2007 and 2008, the Home and Networks Mobility and Enterprise Mobility Solution businesses (collectively referred to as the Broadband Mobility Solutions businesses) were profitable in the U.S.and worldwide. Because of the 2007 and 2008 losses at Mobile Devices and the near-term forecasts for the Mobile Devices business, the Company believes that the weight of negative historic evidence precludes it from considering any forecasted income from the Mobile Devices business in its analysis of the recoverability of deferred tax assets. However, based on the sustained profits of the Broadband Mobility Solutions businesses, the Company believes that the weight of positive historic evidence allows it to include forecasted income from the Broadband Mobility Solutions businesses in its analysis of the recoverability of its deferred tax assets. In its analysis, the Company also considered tax planning strategies that are prudent and can be reasonably implemented. Based on all available positive and negative evidence, we concluded that a partial valuation allowance should be recorded against the net deferred tax assets of our U.S.operations. During the year ended December31, 2008, the Company recorded a valuation allowance of $2.1billion for foreign tax credits, general business credits, capital losses and state tax carry forwards that are more likely than not to expire. The Company also recorded valuation allowances of $126million in 2008 relating to tax carryforwards and deferred tax assets of non-U.S.subsidiaries, including Brazil, China and Spain, that the Company believes are more likely than not to expire or go unused. During the nine months ended October3, 2009, the Company recorded additional U.S.valuation allowances of approximately $108million, consisting of a $150million increase during the first quarter of 2009, primarily relating to deferred tax assets generated on the disposition of a subsidiary, offset by a reduction of approximately $42million, of which $40million was recorded in the second quarter of 2009 and $2million in the third quarter of 2009, to reflect expected cash refunds of certain general business credits that the Company claimed on its 2008 tax return and expects to claim on its 2009 tax return. As a result of the 2008 claim, the Company received a $22million tax refund during the third quarter of 2009. Additionally, the Company increased the valuation allowance on non-U.S.subsidiaries by $53million during the nine months ended October3, 2009, all of which was recorded during the three months ended July4, 2009. The Company had unrecognized tax benefits of $506million and $914million, at October3, 2009 and December31, 2008, respectively, of which approximately $180million and

Retirement Benefits

Retirement Benefits
	9 Months Ended Oct. 03, 2009 USD / shares
Retirement Benefits [Abstract]
Retirement Benefits	7.Retirement Benefits Pension Benefit Plans The net periodic pension costs for the Regular Pension Plan, Officers Plan, the Motorola Supplemental Pension Plan (MSPP) and Non-U.S.plans were as follows: October3, 2009 September27, 2008 Three Months Ended Regular Pension Officers and MSPP Non U.S. Regular Pension Officers and MSPP Non U.S. Service cost $ 4 $ $ 9 $ 25 $ 1 $ 9 Interest cost 84 2 27 81 2 25 Expected return on plan assets (95) (1) (25) (98) (1) (23) Amortization of: Unrecognized net loss 19 1 2 13 Unrecognized prior service cost (8) Settlement/curtailment loss 1 1 Net periodic pension cost $ 12 $ 3 $ 13 $ 13 $ 3 $ 11 October3, 2009 September27, 2008 Nine Months Ended Regular Pension Officers and MSPP Non U.S. Regular Pension Officers and MSPP Non U.S. Service cost $ 11 $ 20 $ 74 $ 2 $ 24 Interest cost 251 5 59 242 6 57 Expected return on plan assets (285) (1) (52) (294) (2) (49) Amortization of: Unrecognized net loss 59 2 5 39 1 Unrecognized prior service cost (23) (1) Settlement/curtailment loss 2 4 Net periodic pension cost $ 36 $ 8 $ 32 $ 38 $ 10 $ 32 During the three months ended October3, 2009, contributions of $7million were made to the Companys Non-U.S.plans. The Company made no contributions to the Regular plan during the three months ended October3, 2009. During the nine months ended October3, 2009, contributions of $80million and $29million were made to the Companys Regular Pension and Non-U.S.plans, respectively. The Company has amended its Regular Pension Plan, the Officers Plan and MSPP such that: (i)no participant shall accrue any benefits or additional benefits on or after March1, 2009, and (ii)no compensation increases earned by a participant on or after March1, 2009 shall be used to compute any accrued benefit. During the three months ended October3, 2009, the Company altered the target asset mix for the Regular pension plan reducing the target investments in equity securities from 75% to 65% and increasing the target proportion of fixed income securities from 24% to 34%. Postretirement Health Care Benefit Plans Net postretirement health care expenses consist of the following: Three Months Ended Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Service cost $ 1 $ 2 $ 5 $ 5 Interest cost 7 7 21 19 Expected return on plan assets (4) (5) (14) (15) Amortization of: Unrecognized net loss 2 1 5 4 Unrecognized prior service cost (1) (1) (2) (2) Net postretirement health care

Share-Based Compensation Plans

Share-Based Compensation Plans
	9 Months Ended Oct. 03, 2009 USD / shares
Share-Based Compensation Plans [Abstract]
Share-Based Compensation Plans	8.Share-Based Compensation Plans Compensation expense for the Companys employee stock options, stock appreciation rights, employee stock purchase plans, restricted stock and restricted stock units (RSUs) was as follows: Three Months Ended Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Share-based compensation expense included in: Costs of sales $ 8 $ 6 $ 25 $ 24 Selling, general and administrative expenses 43 30 128 125 Research and development expenditures 24 18 72 71 Share-based compensation expense included in Operating earnings (loss) 75 54 225 220 Tax benefit (23) (16) (70) (68) Share-based compensation expense, net of tax $ 52 $ 38 $ 155 $ 152 For the nine months ended October3, 2009 the Company has granted 36.4million RSUs, net of forfeitures, and 17.5million stock options (excluding the second quarter option exchange described below). The total compensation expense related to the RSUs is $176million, net of forfeitures. The total compensation expense related to the stock options is $45million, net of estimated forfeitures. The expense for RSUs will be recognized over a weighted average vesting period of four years and the expense for stock options will be recognized over a weighted average vesting period of three years. Stock Option Exchange On May14, 2009, the Company initiated a tender offer for certain eligible employees (excluding executive officers and directors) to exchange certain out-of-the-money options for new options with an exercise price equal to the fair market value of the Companys stock as of the grant date. In order to be eligible for the exchange, the options had to have been granted prior to June1, 2007, expire after December31, 2009 and have an exercise price equal to or greater than $12.00. The offering period closed on June12, 2009. On that date, 97million options were tendered and exchanged for 43million new options with an exercise price of $6.73 and a ratable annual vesting period over two years. The exchange program was designed so that the fair market value of the new options would approximate the fair market value of the options exchanged. The resulting incremental compensation expense was not material to the Companys consolidated financial statements.

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Oct. 03, 2009 USD / shares
Fair Value Measurements
Fair Value Measurements	9.Fair Value Measurements The Company records certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The Company has no non-financial assets and liabilities that are required to be measured at fair value on a recurring basis as of October3, 2009. The Company holds certain fixed income securities, equity securities and derivatives, which must be measured using the FASBs guidance for fair value hierarchy and related valuation methodologies. The 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 Companys assumptions about current market conditions. The prescribed fair value hierarchy and related valuation methodologies are as follows: Level1Quoted prices for identical instruments in active markets. Level2Quoted 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. Level3Valuations derived from valuation techniques, in which one or more significant inputs are unobservable. The levels of the Companys financial assets and liabilities that are carried at fair value were as follows: October3, 2009 Level 1 Level 2 Level 3 Total Assets: Sigma Fund securities: U.S. government and agency obligations $ $ 3,324 $ $ 3,324 Corporate bonds 629 28 657 Asset-backed securities 67 67 Mortgage-backed securities 77 77 Available-for-sale securities: U.S. government and agency obligations 24 24 Corporate bonds 14 14 Asset-backed securities 1 1 Mortgage-backed securities 3 3 Common stock and equivalents 169 169 Derivative assets 16 16 Liabilities: Derivative liabilities 71 71 The following table summarizes the changes in fair value of our Level3 assets: Three Months Ended Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Beginning balance $ 80 $ 43 $ 134 $ 35 Transfers to Level3 50 11 60 Transfers from Level3 (27) (27) Purchases, sales, issuances, settlements and payments received (25) (78) Mark-to-market on Sigma Fund investments included in Other income (expense) (12) Unrealized losses in Sigma Fund investments included in Accumulated other comprehensive income (loss) (15) (17) Ending balance $ 28 $ 78

Long-term Customer Financing

Long-term Customer Financing
	9 Months Ended Oct. 03, 2009 USD / shares
Long-term Customer Financing
Long-term Customer Financing and sales of receivables	10.Long-term Customer Financing and Sales of Receivables Long-term Customer Financing Long-term receivables consist of trade 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: October3, 2009 December31, 2008 Long-term receivables $ 99 $ 169 Less allowance for losses (2) (7) 97 162 Less current portion (27) (110) Non-current long-term receivables, net $ 70 $ 52 The current portion of long-term receivables is included in Accounts receivable and the non-current portion of long-term receivables is included in Other assets in the Companys condensed consolidated balance sheets. Certain purchasers of the Companys infrastructure equipment may request that the Company provide long-term financing (defined as financing with terms greater than one year) in connection with the sale of equipment. These requests may include all or a portion of the purchase price of the equipment. However, the Companys obligation to provide long-term financing is often conditioned on the issuance of a letter of credit in favor of the Company by a reputable bank to support the purchasers credit or a pre-existing commitment from a reputable bank to purchase the long-term receivables from the Company. The Company had outstanding commitments to provide long-term financing to third parties totaling $463million and $370million at October3, 2009 and December31, 2008, respectively. Of these amounts, $14million and $266million were supported by letters of credit or by bank commitments to purchase long-term receivables at October3, 2009 and December31, 2008, respectively. In addition to providing direct financing to certain equipment customers, the Company also assists customers in obtaining financing directly from banks and other sources to fund equipment purchases. The Company had committed to provide financial guarantees relating to customer financing totaling $29million and $43million at October3, 2009 and December31, 2008, respectively (including $25million and $23million at October3, 2009 and December31, 2008, respectively, relating to the sale of short-term receivables). Customer financing guarantees outstanding were $3million and $6million at October3, 2009 and December31, 2008, respectively (including $1 million and $4million at October3, 2009 and December31, 2008, respectively, relating to the sale of short-term receivables). Sales of Receivables From time to time, the Company sells accounts receivable and long-term receivables in transactions that qualify as true-sales. Certain of these accounts receivable and long-term receivables are sold to third parties on a one-time, non-recourse basis, while others are sold to third parties under committed facilities that involve contractual commitments from these parties to purchase qualifying receivables up to an outstanding monetary limit. Committed facilities may be revolving in nature and, typically, must be renewed annually. The Company may or may not retain the obligation to service the sold acco

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Oct. 03, 2009 USD / shares
Commitments and Contingencies
Commitments and Contingencies	11.Commitments and Contingencies Legal The Company is a defendant in various suits, claims and investigations that 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 Companys consolidated financial position, liquidity or results of operations. Other The Company is also a party to a variety of agreements pursuant to which it is obligated to indemnify the other party with respect to certain matters. Some of these obligations arise as a result of divestitures of the Companys assets or businesses and require the Company to hold the other party harmless against losses arising from the settlement of these pending obligations. The total amount of indemnification under these types of provisions is $156million, of which the Company accrued $55million at October3, 2009 for potential claims under these provisions. In addition, the Company may provide indemnifications for losses that result from the breach of general warranties contained in certain commercial and intellectual property. Historically, the Company has not made significant payments under these agreements. However, there is an increasing risk in relation to patent indemnities given the current legal climate. 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 partys claims. Further, the Companys obligations under these agreements for indemnification based on breach of representations and warranties are generally limited in terms of duration, and for amounts not in excess of the contract value, and, in some instances, the Company may have recourse against third parties for certain payments made by the Company.

Segment Information

Segment Information
	9 Months Ended Oct. 03, 2009 USD / shares
Segment Information
Segment Information	12.Segment Information The Company reports financial results for the following operating business segments: The Mobile Devices segment designs, manufactures, sells and services wireless handsets with integrated software and accessory products, and licenses intellectual property. The Home and Networks Mobility segment designs, manufactures, sells, installs and services: (i)digital video, Internet Protocol video and broadcast network interactive set-tops (digital entertainment devices), end-to-end video delivery systems, broadband access infrastructure platforms, and associated data and voice customer premise equipment to cable television and telecom service providers (collectively, referred to as the home business), and (ii)wireless access systems, including cellular infrastructure systems and wireless broadband systems, to wireless service providers (collectively, referred to as the network business). The Enterprise Mobility Solutions segment designs, manufactures, sells, installs and services analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets, including government and public safety agencies (which, together with all sales to distributors of two-way communication products, are referred to as the government and public safety market), as well as retail, energy and utilities, transportation, manufacturing, healthcare and other commercial customers (which, collectively, are referred to as the commercial enterprise market). The following table summarizes the Net sales and Operating earnings (loss) by operating business segment: Net Sales Operating Earnings (Loss) Three Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Mobile Devices $ 1,692 $ 3,116 $ (183) $ (840) Home and Networks Mobility 2,007 2,369 199 263 Enterprise Mobility Solutions 1,770 2,030 306 403 5,469 7,515 322 (174) Other and Eliminations (16) (35) (194) (278) Net sales $ 5,453 $ 7,480 Operating earnings (loss) 128 (452) Total other income (expense) (92) (142) Earnings (loss) from continuing operations before income taxes $ 36 $ (594) Net Sales Operating Earnings (Loss) Nine Months Ended October3, 2009 September27, 2008 October3, 2009 September27, 2008 Mobile Devices $ 5,322 $ 9,749 $ (945) $ (1,604) Home and Networks Mobility 5,999 7,490 467 661 Enterprise Mobility Solutions 5,054 5,878 689 1,030 16,375 23,117 211 87 Other and Eliminations (54) (107) (522) (803) Net sales $ 16,321 $ 23,010 Operating earnings (loss) (311) (716) Total other income (expense) (54) (193) Loss from continuing operations bef

Reorganization of Businesses

Reorganization of Businesses
	9 Months Ended Oct. 03, 2009 USD / shares
Reorganization of Businesses
Reorganization of Business	13.Reorganization of Businesses The Company maintains a formal Involuntary Severance Plan (the Severance Plan), which permits the Company to offer eligible employees severance benefits based on years of service and employment grade level in the event that employment is involuntarily terminated as a result of a reduction-in-force or restructuring. The Company recognizes termination benefits based on formulas per the Severance Plan at the point in time that future settlement is probable and can be reasonably estimated based on estimates prepared at the time a restructuring plan is approved by management. Exit costs consist of future minimum lease payments on vacated facilities and other contractual terminations. At each reporting date, the Company evaluates its accruals for employee separation and exit costs to ensure the accruals are still appropriate. In certain circumstances, accruals are no longer needed because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance or were redeployed due to circumstances not foreseen when the original plans were initiated. In these cases, the Company reverses accruals through the condensed consolidated statements of operations where the original charges were recorded when it is determined they are no longer needed. 2009 Charges During the nine months ended October3, 2009, the Company committed to implement various productivity improvement plans aimed at achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. All three of the Companys business segments, as well as corporate functions, are impacted by these plans, with the majority of the impact in the Mobile Devices segment. The employees affected are located in all geographic regions. During the three months ended October3, 2009, the Company recorded net reorganization of business charges of $4million in Costs of sales in the Companys condensed consolidated statements of operations. Included in the aggregate $4million are charges of $22million for employee separation costs and $10million for exit costs, partially offset by $28million of reversals for accruals no longer needed. During the nine months ended October3, 2009, the Company recorded net reorganization of business charges of $266million, including $59million of charges in Costs of sales and $207million of charges under Other charges in the Companys condensed consolidated statements of operations. Included in the aggregate $266million are charges of $286million for employee separation costs, $32million for exit costs and $18million for fixed asset impairment charges, partially offset by $70million of reversals for accruals no longer needed. The following table displays the net charges incurred by business segment: Three Months Ended October3, 2009 Nine Months Ended October3, 2009 Mobile Devices $ $ 161 Home and Networks Mobility 4 37 Enterprise Mobility Solutions 5 42 9 240 Corporate (5) 26 $ 4 $ 266 The following table displays a

Acquisitions related Intangible

Acquisitions related Intangibles
	9 Months Ended Oct. 03, 2009 USD / shares
Intangible Assets and Goodwill
Intangible Assets and Goodwill	14.Intangible Assets and Goodwill Intangible Assets Amortized intangible assets were comprised of the following: October3, 2009 December31, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Completed technology $ 1,121 $ 751 $ 1,127 $ 633 Patents 288 165 292 125 Customer-related 276 135 277 104 Licensed technology 130 121 129 118 Other intangibles 150 135 150 126 $ 1,965 $ 1,307 $ 1,975 $ 1,106 Amortization expense on intangible assets, which is included within Other and Eliminations, was $69million and $80million for the three months ended October3, 2009 and September27, 2008, respectively, and $210million and $244million for the nine months ended October3, 2009 and September27, 2008, respectively. As of October3, 2009, annual amortization expense is estimated to be $278million for 2009, $255million in 2010, $242million in 2011, $49million in 2012 and $29million in 2013. Amortized intangible assets, excluding goodwill, by business segment: October3, 2009 December31, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Mobile Devices $ 45 $ 45 $ 45 $ 45 Home and Networks Mobility 713 558 722 522 Enterprise Mobility Solutions 1,207 704 1,208 539 $ 1,965 $ 1,307 $ 1,975 $ 1,106 Goodwill The following tables display a rollforward of the carrying amount of goodwill from January1, 2009 to October3, 2009, by business segment: January1, 2009 Adjustments(1) Dispositions October3, 2009 Home and Networks Mobility $ 1,409 $ (3) $ $ 1,406 Enterprise Mobility Solutions 1,428 (11) 1,417 $ 2,837 $ (3) $ (11) $ 2,823 (1) Includes translation adjustments.

Document Information

Document Information
	9 Months Ended Oct. 03, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-10-03

Entity Information

Entity Information (USD $)
	9 Months Ended Oct. 03, 2009
Entity Information [Line Items]
Entity Registrant Name	MOTOROLA INC
Entity Central Index Key	0000068505
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Listings [Line Items]
Entity Common Stock, Shares Outstanding	2,310,943,519