Exhibit 99.1
Motorola Solutions Announces Fourth-Quarter
and Full-Year 2010 Financial Results
SCHAUMBURG, Ill. – Jan. 27, 2011 – Motorola Solutions, Inc. (NYSE: MSI), formerly Motorola, Inc., today announced its fourth-quarter and full-year 2010 financial results.
The following are pro forma* financial highlights for Motorola Solutions, which primarily represented the continuing operations of the former Enterprise Mobility Solutions segment of Motorola, Inc. These results have been adjusted for the impact of the separation of Motorola Mobility Holdings, Inc. as a discontinued operation.
Fourth-quarter financial highlights:
| • | Pro forma sales of $2.2 billion, up 13% from fourth-quarter 2009 |
| • | Pro forma operating earnings of $279 million compared to pro forma operating earnings of $250 million in fourth-quarter 2009 |
| • | Pro forma non-GAAP operating earnings** of $352 million compared to $351 million in fourth-quarter 2009 |
| • | Government sales of $1.5 billion, an increase of 9% from fourth-quarter 2009 |
| • | Enterprise sales of $772 million, an increase of 23% from fourth-quarter 2009 |
| • | Total cash of $5.7 billion and net cash of $3.0 billion as of the Jan. 4 separation*** |
| Fourth Quarter | Full Year | |||||||||||||||||||||||
In millions | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Pro forma sales | $ | 2,246 | $ | 1,983 | 13 | % | $ | 7,871 | $ | 7,180 | 10 | % | ||||||||||||
Pro forma operating earnings | $ | 279 | $ | 250 | 12 | % | $ | 778 | $ | 570 | 36 | % | ||||||||||||
Pro forma non-GAAP operating earnings** | $ | 352 | $ | 351 | 0 | % | $ | 1,090 | $ | 976 | 12 | % | ||||||||||||
“With our separation completed, Motorola Solutions has embarked on a new and independent future with an even more sharpened strategic and operational focus that is both clear and purpose-driven,” said Greg Brown, president and CEO of Motorola Solutions. “We are committed to driving profitable growth, optimizing our cost structure, improving cash flow and creating greater shareholder value. Our time, talent and resources are fully dedicated to executing on our financial plan and delivering mission- and business-critical solutions to government and enterprise customers throughout the world.”
Operating Results
Government business highlights:
| • | Secured multi-million dollar contracts from the states of Maryland, New Jersey, Louisiana, Mississippi and Minnesota; the counties of Charleston in South Carolina, DuPage in Illinois, Escambia in Florida, Harris in Texas, Lapeer in Michigan, Orange in Florida and York in Virginia; the Los Angeles Unified School District; Queensland Gas in Australia; the Brazilian Army; and SAIC to service U.S. Customs and Border Protection |
| • | Deployed AirDefense Security & Compliance solution for the Federal Aviation Administration to prevent unauthorized wireless access to its critical core network at 66 locations across the United States |
Enterprise business highlights:
| • | Secured multi-million dollar contracts with TNT Express in Holland, Bergendahls in the Nordics, Stockholm City in the Nordics and Hermes in Germany |
| • | Announced the industry’s most comprehensive service device management platform that helps maximize uptime, increase mobile worker productivity and reduce IT expenditures |
Networks Financial Results
Financial results related to the portion of the company’s Networks business expected to be acquired by Nokia Siemens Networks in the first quarter of 2011 are reported as discontinued operations. For the Networks discontinued operations, sales were $939 million in the fourth quarter of 2010 and $3.4 billion for full-year 2010. GAAP earnings from discontinued operations totaled $86 million in the fourth quarter of 2010 and $379 million for full-year 2010.
First-Quarter 2011 Outlook
Motorola Solutions’ outlook for the first quarter of 2011 is for sales growth of 3-4 percent over the first quarter of 2010 and earnings per share from continuing operations of $0.29 to $0.34 per share. Earnings per share is based on approximately 340 million diluted shares outstanding. This outlook excludes the portion of the Networks business expected to be acquired by Nokia Siemens Networks in the first quarter of 2011, the Motorola Mobility business that was separated from Motorola Solutions on Jan. 4, 2011, as well as stock-based compensation expense, intangible assets amortization expense and charges associated with items of the variety typically highlighted by the company in its quarterly earnings releases.
Motorola, Inc. Consolidated GAAP Results
The following results reflect Motorola, Inc.’s consolidated fourth-quarter results prior to its Jan. 4, 2011 distribution of Motorola Mobility Holdings, Inc. and its name change to Motorola Solutions, Inc.
(In millions, except per share amounts) | Fourth Quarter | Full Year | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales | $ | 5,663 | $ | 4,786 | $ | 19,282 | $ | 18,147 | ||||||||
Gross margin | 2,033 | 1,728 | 6,898 | 5,741 | ||||||||||||
Operating earnings (loss) | 378 | 88 | 789 | (492 | ) | |||||||||||
Earnings (loss) from continuing operations† | 207 | 51 | 254 | (367 | ) | |||||||||||
Earnings from discontinued operations | 86 | 91 | 379 | 316 | ||||||||||||
Net earnings (loss) † | 293 | 142 | 633 | (51 | ) | |||||||||||
Diluted earnings (loss) per common share: † | ||||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.15 | $ | 0.75 | $ | (1.12 | ) | |||||||
Discontinued operations | 0.25 | 0.28 | 1.12 | 0.96 | ||||||||||||
| $ | 0.86 | $ | 0.43 | $ | 1.87 | $ | (0.16 | ) | ||||||||
Weighted average diluted common shares outstanding | 341.3 | 332.9 | 338.1 | 327.9 | ||||||||||||
| † | Amounts attributable to Motorola Solutions, Inc. common shareholders |
Motorola, Inc. Highlighted Items, Stock-Based Compensation Expense and Intangible Assets Amortization Expense
The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense for the fourth quarter of 2010.
(Per diluted common share) | Fourth Quarter 2010†† | |||
GAAP Earnings from Continuing Operations | $ | 0.61 | ||
Highlighted Items: | ||||
Separation-related transaction costs | 0.17 | |||
Reorganization of business charges | 0.09 | |||
IP settlement | (0.17 | ) | ||
Total Highlighted Items | 0.09 | |||
Stock-based compensation expense | 0.14 | |||
Intangible assets amortization expense | 0.12 | |||
Stock-Based Compensation Expense and Intangible Assets Amortization Expense | 0.26 | |||
Total Non-GAAP Adjustments | 0.34 | |||
Non-GAAP Earnings from Continuing Operations | $ | 0.95 | ||
| †† | Earnings per share amount does not add up due to rounding |
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call beginning at 8 a.m. (U.S. Eastern Time) on Thursday, Jan. 27. The conference call will be webcast live with audio and slides atwww.motorolasolutions.com/investor.
Use of Non-GAAP Financial Information
In addition to the GAAP results included in this presentation, Motorola Solutions also has included non-GAAP measurements of results. We have provided these non-GAAP measurements to help investors better understand our core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to our competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate performance of the businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes this
measurement enables it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the Company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP.
Highlighted items: The Company has excluded the effects of highlighted items (and any reversals of highlighted items recorded in prior periods) from its non-GAAP operating expenses and net income measurements because the Company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the Company’s current operating performance or comparisons to the Company’s past operating performance.
Stock-based compensation expense: The Company has excluded stock-based compensation expense from its non-GAAP operating expenses and net income measurements. Although stock-based compensation is a key incentive offered to our employees and the Company believes such compensation contributed to the revenue earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its performance excluding stock-based compensation expense primarily because it represents a significant non-cash expense. Stock-based compensation expense will recur in future periods.
Intangible assets amortization expense: The Company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net income measurements, primarily because it represents a significant non-cash expense and because the Company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the Company’s acquisitions. Investors should note that the use of intangible assets contributed to the Company’s revenues earned during the periods presented and will contribute to the Company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.
Details of the above items and reconciliations of the non-GAAP measurements to the corresponding GAAP measurements can be found at the end of this press release.
Definitions
* Pro forma results: Consistent with the Report on Form 8-K furnished with the Securities and Exchange Commission on Jan. 10, 2011, the Motorola
Solutions pro forma information presented in this release reflects the adjustment of Motorola’s GAAP results for: (i) the removal of the results of the Motorola Mobility business (which excludes certain corporate overhead costs that were previously allocated to the business) as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, and (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Because this revised financial data was made on a pro forma basis, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above. A reconciliation of Motorola’s GAAP results to the Motorola Solutions pro forma results can be found at the end of this press release.
** Pro forma non-GAAP operating earnings excludes from pro forma operating earnings the effects of stock-based compensation expense, intangible asset amortization expense and highlighted items
*** Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) and short-term investments – cash contributed to Motorola Mobility at separation. Net cash = total cash - Total debt (Notes payable and current portion of long-term debt + Long-term debt)
Business Risks
This press release contains “forward-looking statements” within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes”, “expects”, “intends”, “anticipates”, “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, statements about the timing and financial impact of the launch of new products,the impact of the separation of Motorola, Inc. into two independent, public companies, and Motorola Solutions’ financial outlook for the first quarter of 2011. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 17 through 29 in Item 1A of Motorola Inc.’s 2009 Annual Report on Form 10-K, pages 58 through 62 in Part II, Item 1A of Motorola, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2010, and in its other SEC filings available for free on the SEC’s website atwww.sec.gov and on Motorola Solutions’ website atwww.motorolasolutions.com,
could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions and factors that may impact forward-looking statements include, but are not limited to: (1) possible negative effects on the Company’s business operations, financial performance or assets as a result of the separation into two independent, publicly traded companies, which may include: (i) diminished purchasing leverage and increased exposure to market fluctuations as a result of being a smaller, more focused company, (ii) ongoing obligations relating to certain debt and pension liabilities and certain corporate litigation matters retained by Motorola Solutions after the separation, (iii) the increased percentage of cash and cash equivalents retained by Motorola Solutions after the separation being held outside of the U.S., and (iv) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (2) the economic outlook for the government and enterprise communications industries; (3) the level of demand for the Company’s products, particularly if businesses and governments defer purchases in response to tighter credit; (4) the Company’s ability to introduce new products and technologies in a timely manner; (5) unexpected negative consequences from the Company’s restructuring and cost reduction activities; (6) negative impact on the Company’s business from global economic conditions, which may include: (i) the inability of customers to obtain financing for purchases of the Company’s products; (ii) the viability of the Company’s suppliers that may no longer have access to necessary financing; (iii) changes in the value of investments held by the Company’s pension plan and other defined benefit plans; (iv) fair and/or actual value of the Company’s debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the Company’s financial position; and (vi) difficulties or increased costs for the Company in obtaining financing; (7) the Company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (8) risks related to dependence on certain key suppliers; (9) the impact on the Company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (10) risks related to the Company’s manufacturing and business operations in foreign countries; (11) the creditworthiness of the Company’s customers and distributors, particularly purchasers of large infrastructure systems; (12) risks related to the fact that certain customers require that the Company build, own and operate their systems, often over a multi-year period; (13) variability in income received from licensing the Company’s intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact of changes in governmental policies, laws or regulations; (17) the outcome of currently ongoing and future tax
matters; and (18) negative consequences from the Company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.
About Motorola Solutions
Motorola Solutions is a leading provider of business- and mission-critical communication products and services for enterprise and government customers. Through leading-edge innovation and communications technology, it is a global leader that enables its customers to be their best in the moments that matter. Motorola Solutions trades on the New York Stock Exchange under the ticker “MSI.” To learn more, visitwww.motorolasolutions.com. For ongoing news, please visit ourmedia center or subscribe to ournews feed.
Media contacts:
Nicholas Sweers
(847) 576-2462
nicholas.sweers@motorolasolutions.com
Tama McWhinney
(847) 538-1865
tama.mcwhinney@motorolasolutions.com
Investor contacts:
Shep Dunlap
(847) 576-6899
shep.dunlap@motorolasolutions.com
Jason Winkler
(847) 576-2441
jason.winkler@motorolasolutions.com
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
| Three Months Ended | ||||||||||||||||||||
| December 31, 2010 | October 2, 2010 | December 31, 2009 | ||||||||||||||||||
| Net sales | $ | 5,663 | $ | 4,890 | $ | 4,786 | ||||||||||||||
| Costs of sales | 3,630 | 3,110 | 3,058 | |||||||||||||||||
| Gross margin | 2,033 | 1,780 | 1,728 | |||||||||||||||||
| Selling, general and administrative expenses | 944 | 810 | 808 | |||||||||||||||||
| Research and development expenditures | 641 | 637 | 648 | |||||||||||||||||
| Separation-related transaction costs | 68 | 44 | 23 | |||||||||||||||||
| Other charges (income) | (63 | ) | (1 | ) | 93 | |||||||||||||||
| Intangibles amortization | 65 | 65 | 68 | |||||||||||||||||
| Operating earnings | 378 | 225 | 88 | |||||||||||||||||
| Other income (expense): | ||||||||||||||||||||
Interest expense, net | (31 | ) | (29 | ) | (19 | ) | ||||||||||||||
Gain on sales of investments and businesses, net | 4 | 4 | 53 | |||||||||||||||||
Other | (3 | ) | 5 | (2 | ) | |||||||||||||||
| Total other income (expense) | (30 | ) | (20 | ) | 32 | |||||||||||||||
| Earnings from continuing operations before income taxes | 348 | 205 | 120 | |||||||||||||||||
| Income tax expense | 128 | 196 | 70 | |||||||||||||||||
| Earnings from continuing operations | 220 | 9 | 50 | |||||||||||||||||
| Earnings from discontinued operations, net of tax | 86 | 102 | 91 | |||||||||||||||||
| Net earnings | 306 | 111 | 141 | |||||||||||||||||
| Less: Earnings (loss) attributable to noncontrolling interests | 13 | 2 | (1 | ) | ||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 293 | $ | 109 | $ | 142 | ||||||||||||||
| Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||||||||||||||
Earnings from continuing operations, net of tax | $ | 207 | $ | 7 | $ | 51 | ||||||||||||||
Earnings from discontinued operations, net of tax | 86 | 102 | 91 | |||||||||||||||||
Net earnings | $ | 293 | $ | 109 | $ | 142 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Continuing operations | $ | 0.62 | $ | 0.02 | $ | 0.15 | ||||||||||||||
Discontinued operations | 0.25 | 0.31 | 0.28 | |||||||||||||||||
| $ | 0.87 | $ | 0.33 | $ | 0.43 | |||||||||||||||
Diluted: | ||||||||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.02 | $ | 0.15 | ||||||||||||||
Discontinued operations | 0.25 | 0.30 | 0.28 | |||||||||||||||||
| $ | 0.86 | $ | 0.32 | $ | 0.43 | |||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 335.9 | 334.1 | 330.2 | |||||||||||||||||
Diluted | 341.3 | 339.2 | 332.9 | |||||||||||||||||
Dividends paid per share | $ | - | $ | - | $ | - | ||||||||||||||
| Percentage of Net Sales* | ||||||||||||||||||||
| Net sales | 100 | % | 100 | % | 100 | % | ||||||||||||||
| Costs of sales | 64.1 | % | 63.6 | % | 63.9 | % | ||||||||||||||
| Gross margin | 35.9 | % | 36.4 | % | 36.1 | % | ||||||||||||||
| Selling, general and administrative expenses | 16.7 | % | 16.6 | % | 16.9 | % | ||||||||||||||
| Research and development expenditures | 11.3 | % | 13.0 | % | 13.5 | % | ||||||||||||||
| Separation-related transaction costs | 1.2 | % | 0.9 | % | 0.5 | % | ||||||||||||||
| Other charges (income) | -1.1 | % | 0.0 | % | 1.9 | % | ||||||||||||||
| Intangibles amortization | 1.1 | % | 1.3 | % | 1.4 | % | ||||||||||||||
| Operating earnings | 6.7 | % | 4.6 | % | 1.8 | % | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
Interest expense, net | -0.5 | % | -0.6 | % | -0.4 | % | ||||||||||||||
Gain on sales of investments and businesses, net | 0.1 | % | 0.1 | % | 1.1 | % | ||||||||||||||
Other | -0.1 | % | 0.1 | % | 0.0 | % | ||||||||||||||
| Total other income (expense) | -0.5 | % | -0.4 | % | 0.7 | % | ||||||||||||||
| Earnings from continuing operations before income taxes | 6.1 | % | 4.2 | % | 2.5 | % | ||||||||||||||
| Income tax expense | 2.3 | % | 4.0 | % | 1.5 | % | ||||||||||||||
| Earnings from continuing operations | 3.9 | % | 0.2 | % | 1.0 | % | ||||||||||||||
| Earnings from discontinued operations, net of tax | 1.5 | % | 2.1 | % | 1.9 | % | ||||||||||||||
| Net earnings | 5.4 | % | 2.3 | % | 2.9 | % | ||||||||||||||
| Less: Earnings (loss) attributable to noncontrolling interests | 0.2 | % | 0.0 | % | 0.0 | % | ||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | 5.2 | % | 2.2 | % | 3.0 | % | ||||||||||||||
* Percentages may not add up due to rounding
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
| Year Ended | ||||||||||||
| December 31, 2010 | December 31, 2009 | |||||||||||
Net sales | $ | 19,282 | $ | 18,147 | ||||||||
Costs of sales | 12,384 | 12,406 | ||||||||||
Gross margin | 6,898 | 5,741 | ||||||||||
Selling, general and administrative expenses | 3,367 | 3,058 | ||||||||||
Research and development expenditures | 2,530 | 2,598 | ||||||||||
Separation-related transaction costs | 242 | 42 | ||||||||||
Other charges (income) | (288 | ) | 258 | |||||||||
Intangibles amortization | 258 | 277 | ||||||||||
Operating earnings (loss) | 789 | (492 | ) | |||||||||
Other income (expense): | ||||||||||||
Interest expense, net | (131 | ) | (132 | ) | ||||||||
Gain on sales of investments and businesses, net | 48 | 74 | ||||||||||
Other | (29 | ) | 47 | |||||||||
Total other income (expense) | (112 | ) | (11 | ) | ||||||||
Earnings (loss) from continuing operations before income taxes | 677 | (503 | ) | |||||||||
Income tax expense (benefit) | 406 | (159 | ) | |||||||||
Earnings (loss) from continuing operations | 271 | (344 | ) | |||||||||
Earnings from discontinued operations, net of tax | 379 | 316 | ||||||||||
Net earnings (loss) | 650 | (28 | ) | |||||||||
Less: Earnings attributable to noncontrolling interests | 17 | 23 | ||||||||||
Net earnings (loss) attributable to Motorola, Inc. | $ | 633 | $ | (51 | ) | |||||||
| Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 254 | $ | (367 | ) | |||||||
Earnings from discontinued operations, net of tax | 379 | 316 | ||||||||||
Net earnings (loss) | $ | 633 | $ | (51 | ) | |||||||
Earnings (loss) per common share | ||||||||||||
Basic: | ||||||||||||
Continuing operations | $ | 0.76 | $ | (1.12 | ) | |||||||
Discontinued operations | 1.14 | 0.96 | ||||||||||
| $ | 1.90 | $ | (0.16 | ) | ||||||||
Diluted: | ||||||||||||
Continuing operations | $ | 0.75 | $ | (1.12 | ) | |||||||
Discontinued operations | 1.12 | 0.96 | ||||||||||
| $ | 1.87 | $ | (0.16 | ) | ||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 333.3 | 327.9 | ||||||||||
Diluted | 338.1 | 327.9 | ||||||||||
Dividends paid per share | $ | - | $ | 0.35 | ||||||||
| Percentage of Net Sales* | ||||||||||||
Net sales | 100 | % | 100 | % | ||||||||
Costs of sales | 64.2 | % | 68.4 | % | ||||||||
Gross margin | 35.8 | % | 31.6 | % | ||||||||
Selling, general and administrative expenses | 17.5 | % | 16.9 | % | ||||||||
Research and development expenditures | 13.1 | % | 14.3 | % | ||||||||
Separation-related transaction costs | 1.3 | % | 0.2 | % | ||||||||
Other charges (income) | -1.5 | % | 1.4 | % | ||||||||
Intangibles amortization | 1.3 | % | 1.5 | % | ||||||||
Operating earnings (loss) | 4.1 | % | -2.7 | % | ||||||||
Other income (expense): | ||||||||||||
Interest expense, net | -0.7 | % | -0.7 | % | ||||||||
Gain on sales of investments and businesses, net | 0.2 | % | 0.4 | % | ||||||||
Other | -0.2 | % | 0.3 | % | ||||||||
Total other income (expense) | -0.6 | % | -0.1 | % | ||||||||
Earnings (loss) from continuing operations before income taxes | 3.5 | % | -2.8 | % | ||||||||
Income tax expense (benefit) | 2.1 | % | -0.9 | % | ||||||||
Earnings (loss) from continuing operations | 1.4 | % | -1.9 | % | ||||||||
Earnings from discontinued operations, net of tax | 2.0 | % | 1.7 | % | ||||||||
Net earnings (loss) | 3.4 | % | -0.2 | % | ||||||||
Less: Earnings attributable to noncontrolling interests | 0.1 | % | 0.1 | % | ||||||||
Net earnings (loss) attributable to Motorola, Inc. | 3.3 | % | -0.3 | % | ||||||||
* Percentages may not add up due to rounding
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
| December 31, 2010 | October 2, 2010 | December 31, 2009 | ||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 4,208 | $ | 3,848 | $ | 2,869 | ||||||||||||||
Sigma Fund and short-term investments | 4,655 | 5,046 | 5,094 | |||||||||||||||||
Accounts receivable, net | 3,268 | 3,236 | 2,845 | |||||||||||||||||
Inventories, net | 1,364 | 1,354 | 1,097 | |||||||||||||||||
Deferred income taxes | 1,338 | 1,230 | 1,082 | |||||||||||||||||
Other current assets | 1,342 | 1,442 | 1,389 | |||||||||||||||||
Current assets held-for-sale | 979 | 1,217 | 1,656 | |||||||||||||||||
Total current assets | 17,154 | 17,373 | 16,032 | |||||||||||||||||
Property, plant and equipment, net | 1,729 | 1,768 | 1,819 | |||||||||||||||||
Sigma Fund | 70 | 105 | 66 | |||||||||||||||||
Investments | 310 | 304 | 456 | |||||||||||||||||
Deferred income taxes | 1,619 | 1,762 | 2,283 | |||||||||||||||||
Goodwill | 2,825 | 2,752 | 2,714 | |||||||||||||||||
Other assets | 1,428 | 1,447 | 1,680 | |||||||||||||||||
Non-current assets held-for-sale | 442 | 414 | 553 | |||||||||||||||||
Total assets | $ | 25,577 | $ | 25,925 | $ | 25,603 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Notes payable and current portion of long-term debt | $ | 605 | $ | 532 | $ | 536 | ||||||||||||||
Accounts payable | 2,462 | 2,379 | 1,998 | |||||||||||||||||
Accrued liabilities | 4,704 | 4,517 | 4,141 | |||||||||||||||||
Current liabilities held-for-sale | 939 | 1,281 | 1,586 | |||||||||||||||||
Total current liabilities | 8,710 | 8,709 | 8,261 | |||||||||||||||||
Long-term debt | 2,194 | 2,864 | 3,365 | |||||||||||||||||
Other liabilities | 3,542 | 3,639 | 3,987 | |||||||||||||||||
Non-current liabilities held-for-sale | 144 | 167 | 107 | |||||||||||||||||
Total Motorola Solutions, Inc. stockholders’ equity | 10,885 | 10,441 | 9,775 | |||||||||||||||||
Noncontrolling interests | 102 | 105 | 108 | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | 25,577 | $ | 25,925 | $ | 25,603 | ||||||||||||||
Financial Ratios: | ||||||||||||||||||||
Total cash* | $ | 8,933 | $ | 8,999 | $ | 8,029 | ||||||||||||||
Total debt** | $ | 2,799 | $ | 3,396 | $ | 3,901 | ||||||||||||||
Net cash*** | $ | 6,134 | $ | 5,603 | $ | 4,128 | ||||||||||||||
*Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) and short-term investments
**Total debt = Notes payable and current portion of long-term debt + Long-term debt
***Net cash = Total cash - Total debt
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
| Three Months Ended | ||||||||||||||||
| December 31, 2010 | October 2, 2010 | December 31, 2009 | ||||||||||||||
Operating | ||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 293 | $ | 109 | $ | 142 | ||||||||||
| Earnings (loss) attributable to the noncontrolling interests | 13 | 2 | (1 | ) | ||||||||||||
Net earnings | 306 | 111 | 141 | |||||||||||||
Earnings from discontinued operations, net of tax | 86 | 102 | 91 | |||||||||||||
Earnings from continuing operations | 220 | 9 | 50 | |||||||||||||
| Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 146 | 142 | 155 | |||||||||||||
Non-cash other income | (38 | ) | (17 | ) | (74 | ) | ||||||||||
Share-based compensation expense | 71 | 69 | 63 | |||||||||||||
Gains on sales of investments and businesses, net | (4 | ) | (5 | ) | (55 | ) | ||||||||||
Loss from the extinguishment of long-term debt | - | - | 67 | |||||||||||||
Deferred income taxes, including change in valuation allowance | 23 | 62 | 164 | |||||||||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||||||||||
Accounts receivable | (6 | ) | (334 | ) | (33 | ) | ||||||||||
Inventories | (10 | ) | (280 | ) | 211 | |||||||||||
Other current assets | 100 | (152 | ) | (46 | ) | |||||||||||
Accounts payable and accrued liabilities | 180 | 934 | 93 | |||||||||||||
Other assets and liabilities | (63 | ) | 74 | 87 | ||||||||||||
Net cash provided by operating activities | 619 | 502 | 682 | |||||||||||||
Investing | ||||||||||||||||
Acquisitions and investments, net | (98 | ) | (46 | ) | (8 | ) | ||||||||||
Proceeds from sales of investments and businesses, net | 27 | 6 | 37 | |||||||||||||
Capital expenditures | (155 | ) | (64 | ) | (60 | ) | ||||||||||
Proceeds from sales of property, plant and equipment | - | - | 15 | |||||||||||||
Proceeds from sales (purchases) of Sigma Fund investments, net | 422 | 278 | (1,020 | ) | ||||||||||||
Proceeds from sales of short-term investments, net | - | 17 | 13 | |||||||||||||
Net cash provided by (used for) investing activities | 196 | 191 | (1,023 | ) | ||||||||||||
Financing | ||||||||||||||||
Repayment of short-term borrowings, net | (1 | ) | - | (15 | ) | |||||||||||
Repayment of debt | (527 | ) | (3 | ) | (2 | ) | ||||||||||
Issuance of common stock | 27 | 83 | 6 | |||||||||||||
Payment of dividends | - | - | - | |||||||||||||
Distribution from (to) discontinued operations | (15 | ) | 108 | 160 | ||||||||||||
Other, net | (14 | ) | - | - | ||||||||||||
Net cash provided by (used for) financing activities | (530 | ) | 188 | 149 | ||||||||||||
Discontinued Operations | ||||||||||||||||
Net cash provided by operating activities from discontinued operations | 34 | 84 | 195 | |||||||||||||
Net cash used for investing activities from discontinued operations | (21 | ) | (6 | ) | (40 | ) | ||||||||||
Net cash provided by (used for) financing activities from discontinued operations | 15 | (108 | ) | (160 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents from discontinued operations | (28 | ) | 30 | 5 | ||||||||||||
Net cash provided by (used for) discontinued operations | - | - | - | |||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 75 | 74 | 11 | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | 360 | 955 | (181 | ) | ||||||||||||
| Cash and cash equivalents, beginning of period | 3,848 | 2,893 | 3,050 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 4,208 | $ | 3,848 | $ | 2,869 | ||||||||||
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
| Year Ended | ||||||||||||
| December 31, 2010 | December 31, 2009 | |||||||||||
Operating | ||||||||||||
| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 633 | $ | (51 | ) | |||||||
| Less: Earnings attributable to the noncontrolling interests | 17 | 23 | ||||||||||
Net earnings (loss) | 650 | (28 | ) | |||||||||
Earnings from discontinued operations, net of tax | 379 | 316 | ||||||||||
Earnings (loss) from continuing operations | 271 | (344 | ) | |||||||||
| Adjustments to reconcile loss from continuing operations to net cash provided by (used for) operating activities: | ||||||||||||
Depreciation and amortization | 572 | 642 | ||||||||||
Non-cash other income | (76 | ) | (76 | ) | ||||||||
Share-based compensation expense | 273 | 262 | ||||||||||
Gains on sales of investments and businesses, net | (48 | ) | (76 | ) | ||||||||
Loss from the extinguishment of long-term debt | 12 | - | ||||||||||
Deferred income taxes, including change in valuation allowance | 346 | 50 | ||||||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||||||
Accounts receivable | (311 | ) | 91 | |||||||||
Inventories | (267 | ) | 1,266 | |||||||||
Other current assets | 41 | 510 | ||||||||||
Accounts payable and accrued liabilities | 920 | (2,412 | ) | |||||||||
Other assets and liabilities | (199 | ) | (8 | ) | ||||||||
Net cash provided by (used for) operating activities | 1,534 | (95 | ) | |||||||||
Investing | ||||||||||||
Acquisitions and investments, net | (170 | ) | (38 | ) | ||||||||
Proceeds from sales of investments and businesses, net | 276 | 343 | ||||||||||
Capital expenditures | (335 | ) | (204 | ) | ||||||||
Proceeds from sales of property, plant and equipment | 29 | 23 | ||||||||||
Proceeds from sales (purchases) of Sigma Fund investments, net | 452 | (922 | ) | |||||||||
Proceeds from sales (purchases) of short-term investments, net | (6 | ) | 201 | |||||||||
Net cash provided by (used for) investing activities | 246 | (597 | ) | |||||||||
Financing | ||||||||||||
Repayment of short-term borrowings, net | (5 | ) | (86 | ) | ||||||||
Repayment of debt | (1,011 | ) | (132 | ) | ||||||||
Issuance of common stock | 179 | 116 | ||||||||||
Payment of dividends | - | (114 | ) | |||||||||
Distribution from discontinued operations | 383 | 703 | ||||||||||
Other, net | (14 | ) | 6 | |||||||||
Net cash provided by (used for) financing activities | (468 | ) | 493 | |||||||||
Discontinued Operations | ||||||||||||
Net cash provided by operating activities from discontinued operations | 433 | 724 | ||||||||||
Net cash used for investing activities from discontinued operations | (58 | ) | (71 | ) | ||||||||
Net cash used for financing activities from discontinued operations | (383 | ) | (703 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents from discontinued operations | 8 | 50 | ||||||||||
Net cash provided by (used for) discontinued operations | - | - | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 27 | 4 | ||||||||||
Net increase (decrease) in cash and cash equivalents | 1,339 | (195 | ) | |||||||||
Cash and cash equivalents, beginning of period | 2,869 | 3,064 | ||||||||||
Cash and cash equivalents, end of period | $ | 4,208 | $ | 2,869 | ||||||||
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Summarized below are the Company’s Net sales by reportable segment for the three months and year ended December 31, 2010 and December 31, 2009.
| Net Sales | ||||||||||||||
Three Months Ended December 31, 2010 | Three Months Ended December 31, 2009 | % Change from 2009 | ||||||||||||
Mobile Devices | $ | 2,420 | $ | 1,824 | 33% | |||||||||
Home | 1,005 | 1,000 | 1% | |||||||||||
Enterprise Mobility Solutions | 2,244 | 1,981 | 13% | |||||||||||
Segment Totals | 5,669 | 4,805 | 18% | |||||||||||
Other and Eliminations | (6) | (19) | -68% | |||||||||||
Company Totals | $ | 5,663 | $ | 4,786 | 18% | |||||||||
| Net Sales | ||||||||||||||
Year Ended December 31, 2010 | Year Ended December 31, 2009 | % Change from 2009 | ||||||||||||
Mobile Devices | $ | 7,819 | $ | 7,146 | 9% | |||||||||
Home | 3,641 | 3,904 | -7% | |||||||||||
Enterprise Mobility Solutions | 7,857 | 7,169 | 10% | |||||||||||
Segment Totals | 19,317 | 18,219 | 6% | |||||||||||
Other and Eliminations | (35 | ) | (72 | ) | -51% | |||||||||
Company Totals | $ | 19,282 | $ | 18,147 | 6% | |||||||||
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Summarized below are the Company’s Operating earnings (loss) by reportable segment for the three months and year ended December 31, 2010 and December 31, 2009.
| Operating Earnings (Loss) | ||||||||||||||
| Three Months Ended December 31, 2010 | Three Months Ended December 31, 2009 | % Change from 2009 | ||||||||||||
Mobile Devices | $ | 72 | $ | (167 | ) | -143% | ||||||||
Home | 54 | (25 | ) | -316% | ||||||||||
Enterprise Mobility Solutions | 337 | 282 | 20% | |||||||||||
Segment Totals | 463 | 90 | 414% | |||||||||||
Other and Eliminations | (85 | ) | (2 | ) | 4150% | |||||||||
Company Totals | $ | 378 | $ | 88 | 330% | |||||||||
| Operating Earnings (Loss) | ||||||||||||||
Year Ended December 31, 2010 | Year Ended December 31, 2009 | % Change from 2009 | ||||||||||||
Mobile Devices | $ | (76 | ) | $ | (1,215 | ) | -94% | |||||||
Home | 152 | 16 | 850% | |||||||||||
Enterprise Mobility Solutions | 949 | 736 | 29% | |||||||||||
Segment Totals | 1,025 | (463 | ) | -321% | ||||||||||
Other and Eliminations | (236 | ) | (29 | ) | 714% | |||||||||
Company Totals | $ | 789 | $ | (492 | ) | -260% | ||||||||
* Percentage change is not meaningful.
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments Bridge
(In millions, except per share amounts)
Three Months Ended December 31, 2010 | ||||||||||||||||||
| GAAP Results | Non-GAAP Adjustments and Discontinued Operations | Non-GAAP Results | ||||||||||||||||
| Net sales | $ | 5,663 | $ | - | $ | 5,663 | ||||||||||||
| Costs of sales | 3,630 | 21 | 3,609 | |||||||||||||||
| Gross margin | 2,033 | (21 | ) | 2,054 | ||||||||||||||
| Selling, general and administrative expenses | 944 | 41 | 903 | |||||||||||||||
| Research and development expenditures | 641 | 22 | 619 | |||||||||||||||
| Separation-related transaction costs | 68 | 68 | - | |||||||||||||||
| Other charges (income) | (63 | ) | (63 | ) | - | |||||||||||||
| Intangibles amortization | 65 | 65 | - | |||||||||||||||
| Operating earnings | 378 | (154 | ) | 532 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
Interest expense, net | (31 | ) | - | (31 | ) | |||||||||||||
Gain on sales of investments and businesses, net | 4 | - | 4 | |||||||||||||||
Other | (3 | ) | - | (3 | ) | |||||||||||||
| Total other income (expense) | (30 | ) | - | (30 | ) | |||||||||||||
| Earnings from continuing operations before income taxes | 348 | (154 | ) | 502 | ||||||||||||||
| Income tax expense | 128 | (37 | ) | 165 | ||||||||||||||
| Earnings from continuing operations | 220 | (117 | ) | 337 | ||||||||||||||
| Earnings from discontinued operations, net of tax | 86 | 86 | - | |||||||||||||||
| Net earnings | 306 | (31 | ) | 337 | ||||||||||||||
| Less: Earnings attributable to noncontrolling interests | 13 | - | 13 | |||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 293 | $ | (31 | ) | $ | 324 | |||||||||||
| Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||||||||||||
Earnings from continuing operations, net of tax | $ | 207 | $ | (117 | ) | $ | 324 | |||||||||||
Earnings from discontinued operations, net of tax | 86 | 86 | - | |||||||||||||||
Net earnings | $ | 293 | $ | (31 | ) | $ | 324 | |||||||||||
| Earnings per common share | ||||||||||||||||||
Basic: | ||||||||||||||||||
Continuing operations | $ | 0.62 | $ | (0.34 | ) | $ | 0.96 | |||||||||||
Discontinued operations | 0.25 | 0.25 | - | |||||||||||||||
| $ | 0.87 | $ | (0.09 | ) | $ | 0.96 | ||||||||||||
Diluted: | ||||||||||||||||||
Continuing operations | $ | 0.61 | $ | (0.34 | ) | $ | 0.95 | |||||||||||
Discontinued operations | 0.25 | 0.25 | - | |||||||||||||||
| $ | 0.86 | $ | (0.09 | ) | $ | 0.95 | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||
Basic | 335.9 | 335.9 | 335.9 | |||||||||||||||
Diluted | 341.3 | 341.3 | 341.3 | |||||||||||||||
| Dividends paid per share | $ | - | $ | - | ||||||||||||||
| Percentage of Net Sales* | ||||||||||||||||||
| Net sales | 100 | % | 100 | % | ||||||||||||||
| Costs of sales | 64.1 | % | 63.7 | % | ||||||||||||||
| Gross margin | 35.9 | % | 36.3 | % | ||||||||||||||
| Selling, general and administrative expenses | 16.7 | % | 15.9 | % | ||||||||||||||
| Research and development expenditures | 11.3 | % | 10.9 | % | ||||||||||||||
| Separation-related transaction costs | 1.2 | % | 0.0 | % | ||||||||||||||
| Other charges (income) | -1.1 | % | 0.0 | % | ||||||||||||||
| Intangibles amortization | 1.1 | % | 0.0 | % | ||||||||||||||
| Operating earnings | 6.7 | % | 9.4 | % | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
Interest expense, net | -0.5 | % | -0.5 | % | ||||||||||||||
Gain on sales of investments and businesses, net | 0.1 | % | 0.1 | % | ||||||||||||||
Other | -0.1 | % | -0.1 | % | ||||||||||||||
| Total other income (expense) | -0.5 | % | -0.5 | % | ||||||||||||||
| Earnings from continuing operations before income taxes | 6.1 | % | 8.9 | % | ||||||||||||||
| Income tax expense | 2.3 | % | 2.9 | % | ||||||||||||||
| Earnings from continuing operations | 3.9 | % | 6.0 | % | ||||||||||||||
| Earnings from discontinued operations, net of tax | 1.5 | % | 0.0 | % | ||||||||||||||
| Net earnings | 5.4 | % | 6.0 | % | ||||||||||||||
| Less: Earnings attributable to noncontrolling interests | 0.2 | % | 0.2 | % | ||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | 5.2 | % | 5.7 | % | ||||||||||||||
* Percentages may not add up due to rounding
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings (Loss) after Non-GAAP Adjustments
| Q1 2010 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | MDB | Home | EMS | Other/Elims | ||||||||||||||||||||||||||||||||||
Net sales | $ | 4,195 | $ | 1,641 | $ | 838 | $ | 1,736 | $ | (20 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) | $ | (33 | ) | $ | (192 | ) | $ | 20 | $ | 145 | $ | (6 | ) | |||||||||||||||||||||||||
Above-OE non-GAAP adjustments by P&L statement line: | Statement Line | |||||||||||||||||||||||||||||||||||||
Reorganization of business charges | Cost of sales | 5 | 3 | 1 | 1 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | Cost of sales | 7 | 2 | 1 | 4 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | SG&A and R&D | 56 | 27 | 8 | 21 | - | ||||||||||||||||||||||||||||||||
Reorganization of business charges | Other charges (income) | 15 | 12 | 4 | 1 | (2 | ) | |||||||||||||||||||||||||||||||
Legal settlement | Other charges (income) | (29 | ) | - | - | - | (29 | ) | ||||||||||||||||||||||||||||||
Separation-related transaction costs | Separation-related transaction costs | 25 | - | - | - | 25 | ||||||||||||||||||||||||||||||||
Intangibles amortization expense | Intangibles amortization | 64 | - | 13 | 51 | - | ||||||||||||||||||||||||||||||||
Less: Total above-OE non-GAAP adjustments
| 143 | 44 | 27 | 78 | (6 | ) | ||||||||||||||||||||||||||||||||
Operating earnings (loss) after non-GAAP adjustments | $ | 110 | $ | (148 | ) | $ | 47 | $ | 223 | $ | (12 | ) | ||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - GAAP | -0.8% | -11.7% | 2.4% | 8.4% | 30.0% | |||||||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - after non-GAAP adjustments | 2.6% | -9.0% | 5.6% | 12.8% | 60.0% | |||||||||||||||||||||||||||||||||
| Q2 2010 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | MDB | Home | EMS | Other/Elims | ||||||||||||||||||||||||||||||||||
Net sales | $ | 4,534 | $ | 1,724 | $ | 886 | $ | 1,931 | $ | (7 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) | $ | 219 | $ | 87 | $ | 29 | $ | 214 | $ | (111 | ) | |||||||||||||||||||||||||||
Above-OE non-GAAP adjustments by P&L statement line: | Statement Line | |||||||||||||||||||||||||||||||||||||
Reorganization of business charges | Cost of sales | 7 | (2 | ) | 4 | 5 | - | |||||||||||||||||||||||||||||||
Stock-based compensation expense | Cost of sales | 7 | 3 | 1 | 3 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | SG&A and R&D | 61 | 27 | 9 | 25 | - | ||||||||||||||||||||||||||||||||
Reorganization of business charges | Other charges (income) | 18 | 4 | 1 | 9 | 4 | ||||||||||||||||||||||||||||||||
Legal settlement | Other charges (income) | (228 | ) | (228 | ) | - | - | - | ||||||||||||||||||||||||||||||
Separation-related transaction costs | Separation-related transaction costs | 105 | - | - | - | 105 | ||||||||||||||||||||||||||||||||
Intangibles amortization expense | Intangibles amortization | 64 | - | 14 | 50 | - | ||||||||||||||||||||||||||||||||
Less: Total above-OE non-GAAP adjustments
| 34 | (196 | ) | 29 | 92 | 109 | ||||||||||||||||||||||||||||||||
Operating earnings (loss) after non-GAAP adjustments | $ | 253 | $ | (109 | ) | $ | 58 | $ | 306 | $ | (2 | ) | ||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - GAAP | 4.8% | 5.0% | 3.3% | 11.1% | 1585.7% | |||||||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - after non-GAAP adjustments | 5.6% | -6.3% | 6.5% | 15.8% | 28.6% | |||||||||||||||||||||||||||||||||
| Q3 2010 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | MDB | Home | EMS | Other/Elims | ||||||||||||||||||||||||||||||||||
Net sales | $ | 4,890 | $ | 2,034 | $ | 912 | $ | 1,946 | $ | (2 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) | $ | 225 | $ | (43 | ) | $ | 49 | $ | 253 | $ | (34 | ) | ||||||||||||||||||||||||||
Above-OE non-GAAP adjustments by P&L statement line: | Statement Line | |||||||||||||||||||||||||||||||||||||
Reorganization of business charges | Cost of sales | 10 | 4 | 1 | 5 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | Cost of sales | 9 | 3 | 1 | 5 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | SG&A and R&D | 60 | 29 | 9 | 22 | - | ||||||||||||||||||||||||||||||||
Reorganization of business charges | Other charges (income) | 36 | 9 | 4 | 22 | 1 | ||||||||||||||||||||||||||||||||
IP reserve adjustments | Other charges (income) | (37 | ) | - | - | (37 | ) | - | ||||||||||||||||||||||||||||||
Separation-related transaction costs | Separation-related transaction costs | 44 | - | - | - | 44 | ||||||||||||||||||||||||||||||||
Intangibles amortization expense | Intangibles amortization | 65 | 1 | 13 | 51 | - | ||||||||||||||||||||||||||||||||
Less: Total above-OE non-GAAP adjustments
| 187 | 46 | 28 | 68 | 45 | |||||||||||||||||||||||||||||||||
Operating earnings (loss) after non-GAAP adjustments | $ | 412 | $ | 3 | $ | 77 | $ | 321 | $ | 11 | ||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - GAAP | 4.6% | -2.1% | 5.4% | 13.0% | 1700.0% | |||||||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - after non-GAAP adjustments | 8.4% | 0.1% | 8.4% | 16.5% | -550.0% | |||||||||||||||||||||||||||||||||
| Q4 2010 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | MDB | Home | EMS | Other/Elims | ||||||||||||||||||||||||||||||||||
Net sales | $ | 5,663 | $ | 2,420 | $ | 1,005 | $ | 2,244 | $ | (6 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) | $ | 378 | $ | 72 | $ | 54 | $ | 337 | $ | (85 | ) | |||||||||||||||||||||||||||
Above-OE non-GAAP adjustments by P&L statement line: | Statement Line | |||||||||||||||||||||||||||||||||||||
Reorganization of business charges | Cost of sales | 13 | 2 | 4 | 7 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | Cost of sales | 8 | 3 | 1 | 4 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | SG&A and R&D | 63 | 30 | 9 | 24 | - | ||||||||||||||||||||||||||||||||
Reorganization of business charges | Other charges (income) | 31 | 2 | 10 | 16 | 3 | ||||||||||||||||||||||||||||||||
IP settlement | Other charges (income) | (94 | ) | (55 | ) | - | (39 | ) | - | |||||||||||||||||||||||||||||
Separation-related transaction costs | Separation-related transaction costs | 68 | - | - | - | 68 | ||||||||||||||||||||||||||||||||
Intangibles amortization expense | Intangibles amortization | 65 | 2 | 12 | 51 | - | ||||||||||||||||||||||||||||||||
Less: Total above-OE non-GAAP adjustments
| 154 | (16 | ) | 36 | 63 | 71 | ||||||||||||||||||||||||||||||||
Operating earnings (loss) after non-GAAP adjustments | $ | 532 | $ | 56 | $ | 90 | $ | 400 | $ | (14 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - GAAP | 6.7% | 3.0% | 5.4% | 15.0% | 1416.7% | |||||||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - after non-GAAP adjustments | 9.4% | 2.3% | 9.0% | 17.8% | 233.3% | |||||||||||||||||||||||||||||||||
| 2010 | ||||||||||||||||||||||||||||||||||||||
| TOTAL | MDB | Home | EMS | Other/Elims | ||||||||||||||||||||||||||||||||||
Net sales | $ | 19,282 | $ | 7,819 | $ | 3,641 | $ | 7,857 | $ | (35 | ) | |||||||||||||||||||||||||||
Operating earnings (loss) | $ | 789 | $ | (76 | ) | $ | 152 | $ | 949 | $ | (236 | ) | ||||||||||||||||||||||||||
Above-OE non-GAAP adjustments by P&L statement line: | Statement Line | |||||||||||||||||||||||||||||||||||||
Reorganization of business charges | Cost of sales | 35 | 7 | 10 | 18 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | Cost of sales | 31 | 11 | 4 | 16 | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | SG&A and R&D | 240 | 113 | 35 | 92 | - | ||||||||||||||||||||||||||||||||
Reorganization of business charges | Other charges (income) | 100 | 27 | 19 | 48 | 6 | ||||||||||||||||||||||||||||||||
IP settlement and reserve adjustments | Other charges (income) | (131 | ) | (55 | ) | - | (76 | ) | - | |||||||||||||||||||||||||||||
Legal settlement | Other charges (income) | (257 | ) | (228 | ) | - | - | (29 | ) | |||||||||||||||||||||||||||||
Separation-related transaction costs | Separation-related transaction costs | 242 | - | - | - | 242 | ||||||||||||||||||||||||||||||||
Intangibles amortization expense | Intangibles amortization | 258 | 3 | 52 | 203 | - | ||||||||||||||||||||||||||||||||
Less: Total above-OE non-GAAP adjustments
| 518 | (122 | ) | 120 | 301 | 219 | ||||||||||||||||||||||||||||||||
Operating earnings (loss) after non-GAAP adjustments | $ | 1,307 | $ | (198 | ) | $ | 272 | $ | 1,250 | $ | (17 | ) | ||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - GAAP | 4.1% | -1.0% | 4.2% | 12.1% | 674.3% | |||||||||||||||||||||||||||||||||
Operating earnings (loss) as a percentage of net sales - after non-GAAP adjustments | 6.8% | -2.5% | 7.5% | 15.9% | 48.6% | |||||||||||||||||||||||||||||||||
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Highlighted Items, Stock-Based Compensation Expense and Intangibles Amortization Expense)
| Q1 2010 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact* | |||||||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | $ | 63 | $ | 19 | $ | 44 | $ | 0.13 | |||||||||
| Intangibles amortization expense | Intangibles amortization | 64 | 24 | 40 | 0.12 | |||||||||||||
| Separation-related transaction costs | Separation-related transaction costs | 25 | 5 | 20 | 0.06 | |||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | 20 | 6 | 14 | 0.04 | |||||||||||||
| Legal settlement | Other charges (income) | (29 | ) | (12 | ) | (17 | ) | (0.05 | ) | |||||||||
| Impact of Medicare Part D Subsidy tax law change | Income tax (expense) benefit | - | (18 | ) | 18 | 0.05 | ||||||||||||
| Tax-related benefit | Income tax (expense) benefit | - | 50 | (50 | ) | (0.15 | ) | |||||||||||
Total Continuing Operations Impact | $ | 143 | $ | 74 | $ | 69 | $ | 0.21 | ||||||||||
| Q2 2010 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact* | |||||||||||||
| Separation-related transaction costs | Separation-related transaction costs | $ | 105 | $ | 15 | $ | 90 | $ | 0.27 | |||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | 68 | 21 | 47 | 0.14 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 64 | 24 | 40 | 0.12 | |||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | 25 | 7 | 18 | 0.05 | |||||||||||||
| Gain on sale of investment | Other income (expense) | (31 | ) | (11 | ) | (20 | ) | (0.06 | ) | |||||||||
| Legal settlement | Other charges (income) | (228 | ) | (84 | ) | (144 | ) | (0.43 | ) | |||||||||
| Tax-related expense | Income tax (expense) benefit | - | (82 | ) | 82 | 0.24 | ||||||||||||
| Tax-related benefit | Income tax (expense) benefit | - | 64 | (64 | ) | (0.19 | ) | |||||||||||
Total Continuing Operations Impact | $ | 3 | $ | (46 | ) | $ | 49 | $ | 0.15 | |||||||||
| Q3 2010 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact* | |||||||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | $ | 69 | $ | 23 | $ | 46 | $ | 0.14 | |||||||||
| Intangibles amortization expense | Intangibles amortization | 65 | 24 | 41 | 0.12 | |||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | 46 | 11 | 35 | 0.10 | |||||||||||||
| Separation-related transaction costs | Separation-related transaction costs | 44 | 8 | 36 | 0.11 | |||||||||||||
| IP reserve adjustments | Other charges (income) | (37 | ) | (14 | ) | (23 | ) | (0.07 | ) | |||||||||
| Tax-related benefit | Income tax (expense) benefit | - | (136 | ) | 136 | 0.41 | ||||||||||||
Total Continuing Operations Impact | $ | 187 | $ | (84 | ) | $ | 271 | $ | 0.81 | |||||||||
| Q4 2010 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact* | |||||||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | $ | 71 | $ | 24 | $ | 47 | $ | 0.14 | |||||||||
| Separation-related transaction costs | Separation-related transaction costs | 68 | 11 | 57 | 0.17 | |||||||||||||
| Intangibles amortization expense | Intangibles amortization | 65 | 24 | 41 | 0.12 | |||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | 44 | 13 | 31 | 0.09 | |||||||||||||
| IP settlement | Other charges (income) | (94 | ) | (35 | ) | (59 | ) | (0.17 | ) | |||||||||
Total Continuing Operations Impact | $ | 154 | $ | 37 | $ | 117 | $ | 0.34 | ||||||||||
| 2010 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact* | |||||||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | $ | 271 | $ | 87 | $ | 184 | $ | 0.54 | |||||||||
| Intangibles amortization expense | Intangibles amortization | 258 | 96 | 162 | 0.48 | |||||||||||||
| Separation-related transaction costs | Separation-related transaction costs | 242 | 39 | 203 | 0.60 | |||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | 135 | 37 | 98 | 0.29 | |||||||||||||
| Legal settlement | Other charges (income) | (257 | ) | (96 | ) | (161 | ) | (0.48 | ) | |||||||||
| IP settlement and reserve adjustments | Other charges (income) | (131 | ) | (49 | ) | (82 | ) | (0.24 | ) | |||||||||
| Gain on sale of investment | Other income (expense) | (31 | ) | (11 | ) | (20 | ) | (0.06 | ) | |||||||||
| Impact of Medicare Part D Subsidy tax law change | Income tax (expense) benefit | - | (18 | ) | 18 | 0.05 | ||||||||||||
| Tax-related expense | Income tax (expense) benefit | - | (82 | ) | 82 | 0.24 | ||||||||||||
| Tax-related benefit | Income tax (expense) benefit | - | (22 | ) | 22 | 0.07 | ||||||||||||
Total Continuing Operations Impact | $ | 487 | $ | (19 | ) | $ | 506 | $ | 1.50 | |||||||||
| * | EPS impact may not add up due to rounding |
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statements of Operations
For the Three Months December 31, 2010
(Unaudited)
(In millions, except per share amounts)
| Historical Motorola | Motorola Mobility Separation | Other | Pro Forma Motorola Solutions | |||||||||||||||||||||
Net sales | $ | 5,663 | $ | 3,425 | $ | 8 | (a) | $ | 2,246 | |||||||||||||||
Costs of sales | 3,630 | 2,506 | 8 | (a) | 1,132 | |||||||||||||||||||
Gross margin | 2,033 | 919 | - | 1,114 | ||||||||||||||||||||
Selling, general and administrative expenses | 944 | 421 | - | 523 | ||||||||||||||||||||
Research and development expenditures | 641 | 360 | - | 281 | ||||||||||||||||||||
Other charges | 70 | (29 | ) | (68 | ) | (b) | 31 | |||||||||||||||||
Operating earnings | 378 | 167 | 68 | 279 | ||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest expense, net | (31 | ) | 1 | - | (32 | ) | ||||||||||||||||||
Gain on sales of investments and businesses, net | 4 | (1 | ) | - | 5 | |||||||||||||||||||
Other | (3 | ) | (5 | ) | - | 2 | ||||||||||||||||||
Total other income (expense) | (30 | ) | (5 | ) | - | (25 | ) | |||||||||||||||||
Earnings from continuing operations before income taxes | 348 | 162 | 68 | 254 | ||||||||||||||||||||
Income tax expense | 128 | 92 | (c) | 11 | (b) | 47 | ||||||||||||||||||
Earnings from continuing operations | 220 | 70 | 57 | 207 | ||||||||||||||||||||
Earnings from discontinued operations, net of tax | 86 | - | (86 | ) | (d) | - | ||||||||||||||||||
Net earnings | 306 | 70 | (29 | ) | 207 | |||||||||||||||||||
Less: Earnings attributable to noncontrolling interests | 13 | - | - | 13 | ||||||||||||||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 293 | $ | 70 | $ | (29 | ) | $ | 194 | |||||||||||||||
Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||||||||||||||||||
Earnings from continuing operations, net of tax | $ | 207 | $ | 70 | $ | 57 | $ | 194 | ||||||||||||||||
Earnings from discontinued operations, net of tax | 86 | - | (86 | ) | - | |||||||||||||||||||
Net earnings | $ | 293 | $ | 70 | $ | (29 | ) | $ | 194 | |||||||||||||||
Earnings per common share | ||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||
Continuing operations | $ | 0.62 | $ | 0.58 | ||||||||||||||||||||
Discontinued operations | 0.25 | - | ||||||||||||||||||||||
| $ | 0.87 | $ | 0.58 | |||||||||||||||||||||
Diluted | ||||||||||||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.57 | ||||||||||||||||||||
Discontinued operations | 0.25 | - | ||||||||||||||||||||||
| $ | 0.86 | $ | 0.57 | |||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||
Basic | 335.9 | 335.9 | ||||||||||||||||||||||
Diluted | 341.3 | 341.3 | ||||||||||||||||||||||
Dividends paid per common share | $ | - | $ | - | ||||||||||||||||||||
Notes to the pro forma condensed consolidated statements of operations
(a) Adjusted for the inter-segment sales between Motorola Solutions and Motorola Mobility that were eliminated in consolidation in the preparation of the historical Motorola condensed consolidated statements of operations.
(b) Adjusted to reflect the removal of the Company's costs of separating into two separate, publicly traded companies, along with the corresponding tax impact.
(c) Adjusted to reflect a pro formas Motorola Solutions effective tax rate equal to the historical Motorola, Inc. effective tax rates. As a results, the historical effective tax rate as calculated in the pro forma condensed consolidated statement of operations will differ from the effective tax rate used in the calculation of discontinued operations.
(d) Adjusted to reflect the removal of the historical Earnings from discontinued operations.
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2010
(Unaudited)
(In millions, except per share amounts)
| Historical Motorola | Motorola Mobility Separation | Other | Pro Forma Motorola Solutions | |||||||||||||||||||
Net sales | $ | 19,282 | $ | 11,460 | $ | 49 | (a) | $ | 7,871 | |||||||||||||
Costs of sales | 12,384 | 8,479 | 49 | (a) | 3,954 | |||||||||||||||||
Gross margin | 6,898 | 2,981 | - | 3,917 | ||||||||||||||||||
Selling, general and administrative expenses | 3,367 | 1,458 | - | 1,909 | ||||||||||||||||||
Research and development expenditures | 2,530 | 1,451 | - | 1,079 | ||||||||||||||||||
Other charges | 212 | (181) | (242) | (b) | 151 | |||||||||||||||||
Operating earnings | 789 | 253 | 242 | 778 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||
Interest expense, net | (131) | (2) | - | (129) | ||||||||||||||||||
Gain on sales of investments and businesses, net | 48 | (1) | - | 49 | ||||||||||||||||||
Other | (29) | (22) | - | (7) | ||||||||||||||||||
Total other income (expense) | (112) | (25) | - | (87) | ||||||||||||||||||
Earnings from continuing operations before income taxes | 677 | 228 | 242 | 691 | ||||||||||||||||||
Income tax expense | 406 | 30 | (c) | 39 | (b) | 415 | ||||||||||||||||
Earnings from continuing operations | 271 | 198 | 203 | 276 | ||||||||||||||||||
Earnings from discontinued operations, net of tax | 379 | - | (379) | (d) | - | |||||||||||||||||
Net earnings | 650 | 198 | (176) | 276 | ||||||||||||||||||
Less: Earnings attributable to noncontrolling interests | 17 | - | - | 17 | ||||||||||||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 633 | $ | 198 | $ | (176) | $ | 259 | ||||||||||||||
Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||||||||||||||||
Earnings from continuing operations, net of tax | $ | 254 | $ | 198 | $ | 203 | $ | 259 | ||||||||||||||
Earnings from discontinued operations, net of tax | 379 | - | (379) | - | ||||||||||||||||||
Net earnings | $ | 633 | $ | 198 | $ | (176) | $ | 259 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||||
Basic: | ||||||||||||||||||||||
Continuing operations | $ | 0.76 | $ | 0.78 | ||||||||||||||||||
Discontinued operations | 1.14 | - | ||||||||||||||||||||
| $ | 1.90 | $ | 0.78 | |||||||||||||||||||
Diluted | ||||||||||||||||||||||
Continuing operations | $ | 0.75 | $ | 0.77 | ||||||||||||||||||
Discontinued operations | 1.12 | - | ||||||||||||||||||||
| $ | 1.87 | $ | 0.77 | |||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||||
Basic | 333.3 | 333.3 | ||||||||||||||||||||
Diluted | 338.1 | 338.1 | ||||||||||||||||||||
Dividends paid per common share | $ | - | $ | - | ||||||||||||||||||
Notes to the pro forma condensed consolidated statements of operations
(a) Adjusted for the inter-segment sales between Motorola Solutions and Motorola Mobility that were eliminated in consolidation in the preparation of the historical Motorola condensed consolidated statements of operations.
(b) Adjusted to reflect the removal of the Company's costs of separating into two separate, publicly traded companies, along with the corresponding tax impact.
(c) Adjusted to reflect a pro formas Motorola Solutions effective tax rate equal to the historical Motorola, Inc. effective tax rates. As a results, the historical effective tax rate as calculated in the pro forma condensed consolidated statement of operations will differ from the effective tax rate used in the calculations of discontinued operations.
(d) Adjusted to reflect the removal of the historical Earnings from discontinued operations.
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheets
December 31, 2010
(Unaudited)
(In millions)
| Historical Motorola | Motorola Mobility Separation | Other | Pro Forma Motorola Solutions | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 4,208 | $ | - | $ | (3,200 | ) | (a) | $ | 1,008 | ||||||||||||||||
Sigma Fund and short-term investments | 4,655 | - | - | 4,655 | ||||||||||||||||||||||
Accounts receivable, net | 3,268 | 1,571 | - | 1,697 | ||||||||||||||||||||||
Inventories, net | 1,364 | 843 | - | 521 | ||||||||||||||||||||||
Deferred income taxes | 1,338 | 119 | - | 1,219 | ||||||||||||||||||||||
Other current assets | 1,342 | 594 | - | 748 | ||||||||||||||||||||||
Current assets held for sale | 979 | - | - | 979 | ||||||||||||||||||||||
Total current assets | 17,154 | 3,127 | (3,200 | ) | 10,827 | |||||||||||||||||||||
Property, plant and equipment, net | 1,729 | 806 | - | 923 | ||||||||||||||||||||||
Sigma Fund | 70 | - | - | 70 | ||||||||||||||||||||||
Investments | 310 | 137 | - | 173 | ||||||||||||||||||||||
Deferred income taxes | 1,619 | 49 | - | 1,570 | ||||||||||||||||||||||
Goodwill | 2,825 | 1,396 | - | 1,429 | ||||||||||||||||||||||
Other assets | 1,428 | 697 | - | 731 | ||||||||||||||||||||||
Non-current assets held for sale | 442 | - | - | 442 | ||||||||||||||||||||||
Total assets | $ | 25,577 | $ | 6,212 | $ | (3,200 | ) | $ | 16,165 | |||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||
Notes payable and current portion of long-term debt | $ | 605 | $ | - | $ | - | $ | 605 | ||||||||||||||||||
Accounts payable | 2,462 | 1,731 | - | 731 | ||||||||||||||||||||||
Accrued liabilities | 4,704 | 2,101 | 300 | (a) | 2,903 | |||||||||||||||||||||
Current liabilities held for sale | 939 | - | - | 939 | ||||||||||||||||||||||
Total current liabilities | 8,710 | 3,832 | 300 | 5,178 | ||||||||||||||||||||||
Long-term debt | 2,194 | 97 | - | 2,097 | ||||||||||||||||||||||
Other liabilities | 3,542 | 496 | - | 3,046 | ||||||||||||||||||||||
Non-current liabilities held for sale | 144 | - | - | 144 | ||||||||||||||||||||||
Stockholder’s Equity | ||||||||||||||||||||||||||
Preferred Stock | - | - | - | - | ||||||||||||||||||||||
Common stock | 3 | - | - | 3 | ||||||||||||||||||||||
Additional paid-in capital | 8,644 | - | (1,022 | ) | (a) | 7,471 | ||||||||||||||||||||
Retained earnings | 4,460 | 2,133 | (2,478 | ) | (a) | - | ||||||||||||||||||||
Accumulated other comprehensive earnings (loss) | (2,222 | ) | (346 | ) | - | (1,876 | ) | |||||||||||||||||||
Total Motorola Solutions, Inc. stockholders’ equity | 10,885 | 1,787 | (3,500 | ) | 5,598 | |||||||||||||||||||||
Noncontrolling interests | 102 | - | - | 102 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 25,577 | $ | 6,212 | $ | (3,200 | ) | $ | 16,165 | |||||||||||||||||
Financial Ratios: | ||||||||||||||||||||||||||
Total cash* | $ | 8,933 | $ | 5,733 | ||||||||||||||||||||||
Total debt** | $ | 2,799 | $ | 2,702 | ||||||||||||||||||||||
Net cash*** | $ | 6,134 | $ | 3,031 | ||||||||||||||||||||||
*Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) and short-term investments
**Total debt = Notes payable and current portion of long-term debt + Long-term debt
***Net cash = Total cash - Total debt
Notes to the pro forma condensed consolidated statements of operations
(a) Adjusted to reflect: (i) an initial contribution of $3.2 billion of cash and cash equivalents, and (ii) a deferred contribution of up to $300 million of cash and cash equivalents.
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Selected Financial Information
(In millions)
| 2010 | ||||||||||||||||||||||||||||||||||||
Q1 2010
| Q2 2010 | Q3 2010 | Q4 2010 | 2010 | ||||||||||||||||||||||||||||||||
Depreciation expense | $ | 36 | $ | 35 | $ | 34 | $ | 34 | $ | 139 | ||||||||||||||||||||||||||
Capital expenditures |
| 37
|
|
| 37
|
|
| 37
|
|
| 81
|
|
| 192
|
| |||||||||||||||||||||
| 2009 | ||||||||||||||||||||||||||||||||||||
Q1 2009
| Q2 2009 | Q3 2009 | Q4 2009 | 2009 | ||||||||||||||||||||||||||||||||
Depreciation expense | $ | 39 | $ | 42 | $ | 46 | $ | 42 | $ | 169 | ||||||||||||||||||||||||||
Capital expenditures |
| 38
|
|
| 34
|
|
| 27
|
|
| 37
|
|
| 136
|
| |||||||||||||||||||||
| 2008 | ||||||||||||||||||||||||||||||||||||
2008
| ||||||||||||||||||||||||||||||||||||
Depreciation expense | $ | 174 | ||||||||||||||||||||||||||||||||||
Capital expenditures |
| 257
|
| |||||||||||||||||||||||||||||||||
As discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on January 10, 2011, the financial data presented above reflects the removal of the pro forma results of the Motorola Mobility business as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. This revised financial data was made on a pro forma basis and accordingly, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above.
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Non-GAAP Adjustments Bridge
(In millions, except per share amounts)
Three Months Ended December 31, 2010 | ||||||||||||||||||||
| Pro Forma GAAP Results | Pro Forma Non-GAAP Adjustments | Pro Forma Non-GAAP Results | ||||||||||||||||||
Net sales | $ | 2,246 | $ | - | $ | 2,246 | ||||||||||||||
Costs of sales | 1,132 | 11 | 1,121 | |||||||||||||||||
Gross margin | 1,114 | (11 | ) | 1,125 | ||||||||||||||||
Selling, general and administrative expenses | 523 | 20 | 503 | |||||||||||||||||
Research and development expenditures | 281 | 11 | 270 | |||||||||||||||||
Other income | (20 | ) | (20 | ) | - | |||||||||||||||
Intangibles amortization | 51 | 51 | - | |||||||||||||||||
Operating earnings | 279 | (73 | ) | 352 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (32 | ) | - | (32 | ) | |||||||||||||||
Gain on sales of investments and businesses, net | 5 | - | 5 | |||||||||||||||||
Other | 2 | - | 2 | |||||||||||||||||
Total other income (expense) | (25 | ) | - | (25 | ) | |||||||||||||||
| Earnings from continuing operations before income taxes | 254 | (73 | ) | 327 | ||||||||||||||||
Income tax expense | 47 | (62 | ) | 109 | ||||||||||||||||
Earnings from continuing operations | 207 | (11 | ) | 218 | ||||||||||||||||
Less: Earnings attributable to noncontrolling interests | 13 | - | 13 | |||||||||||||||||
| Net earnings from continuing operations attributable to Motorola Solutions, Inc. | $ | 194 | $ | (11 | ) | $ | 205 | |||||||||||||
| Earnings per common share | ||||||||||||||||||||
Basic | $ | 0.58 | $ | (0.03 | ) | $ | 0.61 | |||||||||||||
Diluted | $ | 0.57 | $ | (0.03 | ) | $ | 0.60 | |||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 335.9 | 335.9 | 335.9 | |||||||||||||||||
Diluted | 341.3 | 341.3 | 341.3 | |||||||||||||||||
Dividends paid per share | $ | - | $ | - | ||||||||||||||||
Percentage of Net Sales* | ||||||||||||||||||||
Net sales | 100 | % | 100 | % | ||||||||||||||||
Costs of sales | 50.4 | % | 49.9 | % | ||||||||||||||||
Gross margin | 49.6 | % | 50.1 | % | ||||||||||||||||
Selling, general and administrative expenses | 23.3 | % | 22.4 | % | ||||||||||||||||
Research and development expenditures | 12.5 | % | 12.0 | % | ||||||||||||||||
Other income | -0.9 | % | 0.0 | % | ||||||||||||||||
Intangibles amortization | 2.3 | % | 0.0 | % | ||||||||||||||||
Operating earnings | 12.4 | % | 15.7 | % | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | -1.4 | % | -1.4 | % | ||||||||||||||||
Gain on sales of investments and businesses, net | 0.2 | % | 0.2 | % | ||||||||||||||||
Other | 0.1 | % | 0.1 | % | ||||||||||||||||
Total other income (expense) | -1.1 | % | -1.1 | % | ||||||||||||||||
| Earnings from continuing operations before income taxes | 11.3 | % | 14.6 | % | ||||||||||||||||
Income tax expense | 2.1 | % | 4.9 | % | ||||||||||||||||
Earnings from continuing operations | 9.2 | % | 9.7 | % | ||||||||||||||||
Less: Earnings attributable to noncontrolling interests | 0.6 | % | 0.6 | % | ||||||||||||||||
| Net earnings from continuing operations attributable to Motorola Solutions, Inc. | 8.6 | % | 9.1 | % | ||||||||||||||||
* Percentages may not add up due to rounding
As discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on January 10, 2011, the financial data presented above reflects: (i) the removal of the pro forma results of the Motorola Mobility business as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate, and (v) the reduction in the number of issued and outstanding shares of Motorola, Inc. Common Stock based on a reverse stock split ratio of 1-for-7. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Motorola Solutions expects its ongoing effective tax rate to be approximately 35% to 37%. This revised financial data was made on a pro forma basis and accordingly, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above.
Motorola Solutions, Inc. and Subsidiaries
Pro Forma Non-GAAP Adjustments Bridge
(In millions, except per share amounts)
Year Ended December 31, 2010 | ||||||||||||||||||||
Pro Forma GAAP Results | Pro Forma Non-GAAP Adjustments | Pro Forma Non-GAAP Results | ||||||||||||||||||
Net sales | $ | 7,871 | $ | - | $ | 7,871 | ||||||||||||||
Costs of sales | 3,954 | 37 | 3,917 | |||||||||||||||||
Gross margin | 3,917 | (37 | ) | 3,954 | ||||||||||||||||
Selling, general and administrative expenses | 1,909 | 82 | 1,827 | |||||||||||||||||
Research and development expenditures | 1,079 | 42 | 1,037 | |||||||||||||||||
Other income | (51 | ) | (51 | ) | - | |||||||||||||||
Intangibles amortization | 202 | 202 | - | |||||||||||||||||
Operating earnings | 778 | (312 | ) | 1,090 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (129 | ) | - | (129 | ) | |||||||||||||||
Gain on sales of investments and businesses, net | 49 | 31 | 18 | |||||||||||||||||
Other | (7 | ) | - | (7 | ) | |||||||||||||||
Total other income (expense) | (87 | ) | 31 | (118 | ) | |||||||||||||||
| Earnings from continuing operations before income taxes | 691 | (281 | ) | 972 | ||||||||||||||||
Income tax expense | 415 | 91 | 324 | |||||||||||||||||
Earnings from continuing operations | 276 | (372 | ) | 648 | ||||||||||||||||
| Less: Earnings attributable to noncontrolling interests | 17 | - | 17 | |||||||||||||||||
| Net earnings from continuing operations attributable to Motorola Solutions, Inc. | $ | 259 | $ | (372 | ) | $ | 631 | |||||||||||||
| Earnings per common share | ||||||||||||||||||||
Basic | $ | 0.78 | $ | (1.11 | ) | $ | 1.89 | |||||||||||||
Diluted | $ | 0.77 | $ | (1.10 | ) | $ | 1.87 | |||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 333.3 | 333.3 | 333.3 | |||||||||||||||||
Diluted | 338.1 | 338.1 | 338.1 | |||||||||||||||||
Dividends paid per share | $ | - | $ | - | ||||||||||||||||
Percentage of Net Sales* | ||||||||||||||||||||
Net sales | 100 | % | 100 | % | ||||||||||||||||
Costs of sales | 50.2 | % | 49.8 | % | ||||||||||||||||
Gross margin | 49.8 | % | 50.2 | % | ||||||||||||||||
Selling, general and administrative expenses | 24.3 | % | 23.2 | % | ||||||||||||||||
Research and development expenditures | 13.7 | % | 13.2 | % | ||||||||||||||||
Other income | -0.6 | % | 0.0 | % | ||||||||||||||||
Intangibles amortization | 2.6 | % | 0.0 | % | ||||||||||||||||
Operating earnings | 9.9 | % | 13.8 | % | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | -1.6 | % | -1.6 | % | ||||||||||||||||
Gain on sales of investments and businesses, net | 0.6 | % | 0.2 | % | ||||||||||||||||
Other | -0.1 | % | -0.1 | % | ||||||||||||||||
Total other income (expense) | -1.1 | % | -1.5 | % | ||||||||||||||||
| Earnings from continuing operations before income taxes | 8.8 | % | 12.3 | % | ||||||||||||||||
Income tax expense | 5.3 | % | 4.1 | % | ||||||||||||||||
Earnings from continuing operations | 3.5 | % | 8.2 | % | ||||||||||||||||
| Less: Earnings attributable to noncontrolling interests | 0.2 | % | 0.2 | % | ||||||||||||||||
| Net earnings from continuing operations attributable to Motorola Solutions, Inc. | 3.3 | % | 8.0 | % | ||||||||||||||||
* Percentages may not add up due to rounding
As discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on January 10, 2011, the financial data presented above reflects: (i) the removal of the pro forma results of the Motorola Mobility business as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate, and (v) the reduction in the number of issued and outstanding shares of Motorola, Inc. Common Stock based on a reverse stock split ratio of 1-for-7. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Motorola Solutions expects its ongoing effective tax rate to be approximately 35% to 37%. This revised financial data was made on a pro forma basis and accordingly, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above.
Motorola Solutions, Inc.
Operating Earnings after Pro Forma Non-GAAP Adjustments
| Q1 2010 | ||||||
| MSI | ||||||
Net sales | $ | 1,740 | ||||
Operating earnings | $ | 120 | ||||
| Above-OE pro forma non-GAAP adjustments by P&L statement line: | Statement Line | |||||
Reorganization of business charges | Cost of sales | 1 | ||||
Stock-based compensation expense | Cost of sales | 5 | ||||
Stock-based compensation expense | SG&A and R&D | 29 | ||||
Reorganization of business charges | Other charges (income) | (1 | ) | |||
Legal settlement | Other charges (income) | (29 | ) | |||
Intangibles amortization expense | Intangibles amortization | 52 | ||||
Less: Total above-OE pro forma non-GAAP adjustments | 57 | |||||
Operating earnings after pro forma non-GAAP adjustments | $ | 177 | ||||
Operating earnings as a percentage of net sales-pro forma GAAP | 6.9 | % | ||||
Operating earnings as a percentage of net sales-after pro forma non-GAAP adjustments | 10.2 | % | ||||
| Q2 2010 | ||||||
| MSI | ||||||
Net sales | $ | 1,936 | ||||
Operating earnings | $ | 161 | ||||
| Above-OE pro forma non-GAAP adjustments by P&L statement line: | Statement Line | |||||
Reorganization of business charges | Cost of sales | 5 | ||||
Stock-based compensation expense | Cost of sales | 4 | ||||
Stock-based compensation expense | SG&A and R&D | 32 | ||||
Reorganization of business charges | Other charges (income) | 13 | ||||
Intangibles amortization expense | Intangibles amortization | 50 | ||||
Less: Total above-OE pro forma non-GAAP adjustments | 104 | |||||
Operating earnings after pro forma non-GAAP adjustments | $ | 265 | ||||
Operating earnings as a percentage of net sales - pro forma GAAP | 8.3 | % | ||||
Operating earnings as a percentage of net sales - after pro forma non-GAAP adjustments | 13.7 | % | ||||
| Q3 2010 | ||||||
| MSI | ||||||
Net sales | $ | 1,949 | ||||
Operating earnings | $ | 218 | ||||
| Above-OE pro forma non-GAAP adjustments by P&L statement line: | Statement Line | |||||
Reorganization of business charges | Cost of sales | 5 | ||||
Stock-based compensation expense | Cost of sales | 6 | ||||
Stock-based compensation expense | SG&A and R&D | 32 | ||||
Reorganization of business charges | Other charges (income) | 23 | ||||
IP reserve adjustments | Other charges (income) | (37 | ) | |||
Intangibles amortization expense | Intangibles amortization | 49 | ||||
Less: Total above-OE pro forma non-GAAP adjustments | 78 | |||||
Operating earnings after pro forma non-GAAP adjustments | $ | 296 | ||||
Operating earnings as a percentage of net sales - pro forma GAAP | 11.2 | % | ||||
Operating earnings as a percentage of net sales - after pro forma non-GAAP adjustments | 15.2 | % | ||||
| Q4 2010 | ||||||
| MSI | ||||||
Net sales | $ | 2,246 | ||||
Operating earnings | $ | 279 | ||||
| Above-OE pro forma non-GAAP adjustments by P&L statement line: | Statement Line | |||||
Reorganization of business charges | Cost of sales | 6 | ||||
Stock-based compensation expense | Cost of sales | 5 | ||||
Stock-based compensation expense | SG&A and R&D | 31 | ||||
Reorganization of business charges | Other charges (income) | 19 | ||||
IP settlement | Other charges (income) | (39 | ) | |||
Intangibles amortization expense | Intangibles amortization | 51 | ||||
Less: Total above-OE pro forma non-GAAP adjustments | 73 | |||||
Operating earnings after pro forma non-GAAP adjustments | $ | 352 | ||||
Operating earnings as a percentage of net sales - pro forma GAAP | 12.4 | % | ||||
Operating earnings as a percentage of net sales - after pro forma non-GAAP adjustments | 15.7 | % | ||||
| 2010 | ||||||
| MSI | ||||||
Net sales | $ | 7,871 | ||||
Operating earnings | $ | 778 | ||||
| Above-OE pro forma non-GAAP adjustments by P&L statement line: | Statement Line | |||||
Reorganization of business charges | Cost of sales | 17 | ||||
Stock-based compensation expense | Cost of sales | 20 | ||||
Stock-based compensation expense | SG&A and R&D | 124 | ||||
Reorganization of business charges | Other charges (income) | 54 | ||||
Legal settlement | Other charges (income) | (29 | ) | |||
IP settlement and reserve adjustments | Other charges (income) | (76 | ) | |||
Intangibles amortization expense | Intangibles amortization | 202 | ||||
Less: Total above-OE pro forma non-GAAP adjustments | 312 | |||||
Operating earnings after pro forma non-GAAP adjustments | $ | 1,090 | ||||
Operating earnings as a percentage of net sales - pro forma GAAP | 9.9 | % | ||||
Operating earnings as a percentage of net sales - after pro forma non-GAAP adjustments | 13.8 | % | ||||
As discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on January 10, 2011, the financial data presented above reflects: (i) the removal of the pro forma results of the Motorola Mobility business as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate, and (v) the reduction in the number of issued and outstanding shares of Motorola, Inc. Common Stock based on a reverse stock split ratio of 1-for-7. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Motorola Solutions expects its ongoing effective tax rate to be approximately 35% to 37%. This revised financial data was made on a pro forma basis and accordingly, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above.
Motorola Solutions, Inc.
Pro Forma Non-GAAP Adjustments
| 2010 | ||||||||||||||||||||||||||||||||||||||
| Highlighted Items | Statement Line | Q1 2010 | Q2 2010 | Q3 2010 | Q4 2010 | 2010 | ||||||||||||||||||||||||||||||||
| Intangibles amortization expense | Intangibles amortization | $ | 52 | $ | 50 | $ | 49 | $ | 51 | $ | 202 | |||||||||||||||||||||||||||
| Stock-based compensation expense | Cost of sales, SG&A and R&D | 34 | 36 | 38 | 36 | 144 | ||||||||||||||||||||||||||||||||
| Reorganization of business charges | Cost of sales and Other charges (income) | - | 18 | 28 | 25 | 71 | ||||||||||||||||||||||||||||||||
| Legal settlement | Other charges (income) | (29 | ) | - | - | - | (29 | ) | ||||||||||||||||||||||||||||||
| IP settlement and reserve adjustments | Other charges (income) | - | - | (37 | ) | (39 | ) | (76 | ) | |||||||||||||||||||||||||||||
| Gain on sale of investment | Other income (expense) | - | (31 | ) | - | - | (31 | ) | ||||||||||||||||||||||||||||||
Loss (earnings) from continuing operations before income taxes | 57 | 73 | 78 | 73 | 281 | |||||||||||||||||||||||||||||||||
Tax-related expense, net | Income tax | (8 | ) | (18 | ) | (127 | ) | 62 | (91 | ) | ||||||||||||||||||||||||||||
| Loss (earnings) from continuing operations | $ | 65 | $ | 91 | $ | 205 | $ | 11 | $ | 372 | ||||||||||||||||||||||||||||
| Loss (earnings) per diluted common share | $ | 0.20 | $ | 0.27 | $ | 0.61 | $ | 0.03 | $ | 1.10 | ||||||||||||||||||||||||||||
As discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on January 10, 2011, the financial data presented above reflects: (i) the removal of the pro forma results of the Motorola Mobility business as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate, and (v) the reduction in the number of issued and outstanding shares of Motorola, Inc. Common Stock based on a reverse stock split ratio of 1-for-7. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Motorola Solutions expects its ongoing effective tax rate to be approximately 35% to 37%. This revised financial data was made on a pro forma basis and accordingly, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above.