Exhibit 99.1
Motorola Solutions Reports
Third-Quarter 2012 Financial Results
| • | Sales of $2.2 billion, up 3 percent from a year ago |
| • | Record Government sales of $1.5 billion, up 12 percent from a year ago |
| • | GAAP earnings per share (EPS) from continuing operations* up 60 percent from a year ago |
| • | Non-GAAP** EPS from continuing operations up 27 percent from a year ago |
| • | Repurchased $308 million of shares in the quarter |
(In millions, except EPS) | Q3 2012 | Q3 2011 | Change | |||||||||
Total sales | $ | 2,153 | $ | 2,085 | 3 | % | ||||||
GAAP operating earnings | $ | 324 | $ | 254 | 28 | % | ||||||
Non-GAAP operating earnings | $ | 387 | $ | 359 | 8 | % | ||||||
GAAP EPS from continuing operations | $ | 0.72 | $ | 0.45 | 60 | % | ||||||
Non-GAAP EPS from continuing operations | $ | 0.84 | $ | 0.66 | 27 | % | ||||||
Click here for printable press release and financial tables.
SCHAUMBURG, Ill.– Oct. 24, 2012 – Motorola Solutions, Inc. (NYSE: MSI) announced today its third-quarter 2012 results highlighted by sales of $2.2 billion, up 3 percent from the third quarter of 2011 and driven by strong demand in its Government segment. These results include an unfavorable currency exchange rate impact to revenues of $42 million, or approximately 2 percent.
“We had strong revenue and earnings growth, including record performance in our Government segment,” said Greg Brown, chairman and CEO of Motorola Solutions. “We expanded operating margins, managed our costs and grew earnings per share 27 percent driven by our operating performance and continued return of capital to shareholders.”
GAAP operating earnings in the third quarter of 2012 were $324 million or 15 percent of sales, compared to $254 million or 12.2 percent of sales in the third quarter of 2011. GAAP EPS from continuing operations was $0.72, compared to $0.45 in the third quarter of 2011.
Non-GAAP operating earnings in the third quarter of 2012 were $387 million or 18 percent of sales, compared to $359 million or 17.2 percent of sales in the third quarter of 2011. Non-GAAP EPS from continuing operations was $0.84, compared to $0.66 in the third quarter of 2011. Non-GAAP financial information excludes after-tax expense of approximately $0.12 per diluted share related to share-based compensation expense, intangible assets amortization expense and highlighted items. Details on these Non-GAAP adjustments and the use of Non-GAAP measures are included later in this press release.
During the third quarter of 2012, the company generated $182 million in operating cash flow from continuing operations, including the impact of an early pension payment of $72 million. Additionally, the company repurchased $308 million in shares, paid $63 million in dividends and ended the quarter with total cash*** of $3.5 billion.
Government segment sales were $1.5 billion, up 12 percent from the year-ago quarter, driven by double-digit growth in North America and solid performance in EMEA and Latin
America. GAAP operating earnings were $273 million or 17.9 percent of sales compared to $186 million or 13.7 percent in the year-ago quarter. Non-GAAP operating earnings were $310 million or 20.4 percent of sales compared to $224 million or 16.5 percent in the year-ago quarter.
Government highlights:
| • | Secured multimillion dollar contracts with the state of Alaska; the state of Ohio; Maui County in Hawaii; Prince George’s County in Maryland; York County in South Carolina; the City of Phoenix; the City of Glendale, Calif.; the City of Fort Wayne, Ind.; Rheinbahn public transit in Germany; Wuxi Metro in China; and Codelco Chuquicamata Mining in Chile |
| • | Continued to expand family of APX™ Project 25 (P25) two-way radios including a new accountability solution for the Motorola Tactical Incident Command Solution, which helps incident commanders accurately and quickly keep track of on-scene operations; the APX 4500 mobile radio, which gives P25 interoperable communications for all first responders; and the APX 3000, which enables undercover officers to use a high-powered concealed portable radio |
| • | At APCO (Association of Public-Safety Communications Officials) International, Motorola Solutions demonstrated how the company’s technology and expertise enhance a safer and thriving Connected City by delivering a comprehensive product portfolio and solutions that better serve – and protect – the Connected Officer, the Connected Patrol Vehicle and the Connected Fire Fighter. All integrated solutions enable our public-safety customers to stay connected and leverage technology with their very challenging jobs |
Enterprise segment sales were $632 million, down 13 percent from the year-ago quarter, which included the anticipated decline in iDEN sales. GAAP operating earnings were $51 million or 8.1 percent of sales compared to $68 million or 9.4 percent in the year-ago quarter. Non-GAAP operating earnings were $77 million or 12.2 percent of sales compared to $135 million or 18.6 percent in the year-ago quarter.
Enterprise highlights:
| • | Secured contracts with key customers such as Best Buy, Pharmedium and Flowers Bakery in the United States; Aeon Technology in Shanghai and Grupo Polar Companies in Venezuela |
| • | Introduced the MC67 mobile computer, an ultra-rugged device that offers HSPA+ WAN, which is targeted at task worker applications in the field such as parcel collection and delivery scanning, inventory management, sales order entry, direct store delivery (DSD) and route accounting |
| • | Introduced the Wide-Area Network (WAN) version of the ET1 tablet that brings the ‘go-anywhere’ familiarity and popularity of a consumer-class user experience to a true enterprise-class device that offers enhanced durability, an optional modular barcode scanner and magnetic stripe reader, hot-swappable battery packs and secure system software |
Fourth-Quarter and Full-Year 2012 Outlook
The company expects fourth-quarter sales to grow approximately 6 to 7 percent compared with the fourth quarter of 2011, with EPS from continuing operations of $0.98 to $1.03. The company is increasing its full-year 2012 outlook for sales growth to 6 to 6.5 percent to reflect revenues for Psion, which Motorola Solutions acquired on Oct. 1, 2012. Our EPS outlook excludes share-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.
Consolidated GAAP Results
A comparison of results from operations is as follows:
| Third Quarter | ||||||||
(In millions, except per share amounts) | 2012 | 2011 | ||||||
Net sales | $ | 2,153 | $ | 2,085 | ||||
Gross margin | 1,087 | 1,055 | ||||||
Operating earnings | 324 | 254 | ||||||
Earnings from continuing operations before income taxes | 324 | 238 | ||||||
Income tax expense | 118 | 83 | ||||||
Earnings from continuing operations** | 206 | 153 | ||||||
Loss from discontinued operations, net of tax | — | (25 | ) | |||||
Net earnings | $ | 206 | $ | 128 | ||||
Diluted EPS from continuing operations: | $ | 0.72 | $ | 0.45 | ||||
Weighted average diluted common shares outstanding | 287.4 | 339.5 | ||||||
Highlighted Items, Share-Based Compensation Expense and Intangible Assets Amortization Expense
The table below includes highlighted items, share-based compensation expense and intangible assets amortization expense for the third quarter of 2012.
(per diluted common share) | Third Quarter 2012 | |||
GAAP Earnings Per Common Share from Continuing Operations** | $ | 0.72 | ||
Highlighted Items: | ||||
Reorganization of business charges | $ | 0.03 | ||
Gain on sale of equity investment | $ | (0.03 | ) | |
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Total Highlighted Items | $ | 0.00 | ||
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Share-based compensation expense | $ | 0.11 | ||
Intangible assets amortization expense | $ | 0.01 | ||
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Total Share-Based Compensation Expense and Intangible Assets Amortization Expense | $ | 0.12 | ||
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Total Non-GAAP Adjustments | $ | 0.12 | ||
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Non-GAAP Earnings Per Common Share from Continuing Operations | $ | 0.84 | ||
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Conference Call and Webcast
Motorola Solutions will host its quarterly conference call beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time) on Wednesday, Oct. 24. 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.
Share-based compensation expense: The company has excluded share-based compensation expense from its Non-GAAP operating expenses and net income measurements. Although share-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 share-based compensation expense primarily because it represents a significant non-cash expense. Share-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.
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, Motorola Solutions’ financial outlook for the fourth quarter and full year of 2012, payment of a regular quarterly dividend and purchases of shares under the company’s share repurchase program. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 9 through 22 in Item 1A of Motorola Solutions, Inc.’s 2011 Annual Report on Form 10-K 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) the economic outlook for the government and enterprise communications industries; (2) the level of demand for the company’s products, particularly if businesses and governments defer or cancel purchases in response to tighter credit; (3) the company’s ability to introduce new products and technologies in a timely manner; (4) negative impact on the company’s business from global economic conditions, which may include: (i) potential deferment or cancellation of purchase orders by customers; (ii) the inability of customers to obtain financing for purchases of the company’s products; (iii) increased demand to provide vendor financing to customers; (iv) increased financial pressures on third-party dealers, distributors and retailers; (v) the viability of the company’s suppliers that may no longer have access to necessary financing; (vi) counterparty failures negatively impacting the company’s financial position; (vii) changes in the value of investments held by the company’s pension plan and other defined benefit plans; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (5) the company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (6) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (7) the impact on the
company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (8) risks related to the company’s manufacturing and business operations in foreign countries; (9) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (10) exposure under large systems and managed services contracts, including risks related to the fact that certain customers require that the company build, own and operate their systems, often over a multi-year period; (11) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (12) 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; (13) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (14) 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; (15) the impact of the percentage of cash and cash equivalents held outside of the United States; (16) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (17) the ability of the company to repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; (20) negative consequences from the company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions; and (21) the impact of our multi-year phased upgrade and consolidation of our enterprise resource planning systems into a single global platform. 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.
Definitions
| * | Amounts attributable to Motorola Solutions, Inc. common shareholders |
| ** | Non-GAAP financial information excludes from GAAP results the effects of share-based compensation expense, intangible assets amortization expense and highlighted items |
| *** | Total cash = Cash and cash equivalents + Sigma Fund (current) and short-term investments |
About Motorola Solutions
Motorola Solutions is a leading provider of 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
Nick Sweers
Motorola Solutions
+1 847-576-2462
nicholas.sweers@motorolasolutions.com
Tama McWhinney
Motorola Solutions
+1 847-538-1865
tama.mcwhinney@motorolasolutions.com
Investor Contacts
Shep Dunlap
Motorola Solutions
+1 847-576-6899
shep.dunlap@motorolasolutions.com
Jason Winkler
Motorola Solutions
+1 847-576-4995
jason.winkler@motorolasolutions.com
MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2012 Motorola Solutions, Inc. All rights reserved.
GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
| Three Months Ended | ||||||||
| September 29, 2012 | October 1, 2011 | |||||||
Net sales from products | $ | 1,567 | $ | 1,552 | ||||
Net sales from services | 586 | 533 | ||||||
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Net sales | 2,153 | 2,085 | ||||||
Costs of product sales | 682 | 679 | ||||||
Costs of service sales | 384 | 351 | ||||||
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Costs of sales | 1,066 | 1,030 | ||||||
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Gross margin | 1,087 | 1,055 | ||||||
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Selling, general and administrative expenses | 485 | 471 | ||||||
Research and development expenditures | 262 | 270 | ||||||
Other charges | 10 | 10 | ||||||
Intangibles amortization | 6 | 50 | ||||||
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Operating earnings | 324 | 254 | ||||||
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Other income (expense): | ||||||||
Interest expense, net | (16 | ) | (18 | ) | ||||
Gain on sales of investments and businesses, net | 19 | 2 | ||||||
Other | (3 | ) | — | |||||
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Total other expense | — | (16 | ) | |||||
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Earnings from continuing operations before income taxes | 324 | 238 | ||||||
Income tax expense | 118 | 83 | ||||||
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Earnings from continuing operations | 206 | 155 | ||||||
Loss from discontinued operations, net of tax | — | (25 | ) | |||||
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Net earnings | 206 | 130 | ||||||
Less: Earnings attributable to noncontrolling interests | — | 2 | ||||||
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Net earnings attributable to Motorola Solutions, Inc. | $ | 206 | $ | 128 | ||||
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Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||
Earnings from continuing operations, net of tax | $ | 206 | $ | 153 | ||||
Loss from discontinued operations, net of tax | — | (25 | ) | |||||
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Net earnings | $ | 206 | $ | 128 | ||||
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Earnings (loss) per common share | ||||||||
Basic: | ||||||||
Continuing operations | $ | 0.73 | $ | 0.46 | ||||
Discontinued operations | — | (0.08 | ) | |||||
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| $ | 0.73 | $ | 0.38 | |||||
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Diluted: | ||||||||
Continuing operations | $ | 0.72 | $ | 0.45 | ||||
Discontinued operations | — | (0.07 | ) | |||||
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| $ | 0.72 | $ | 0.38 | |||||
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Weighted average common shares outstanding | ||||||||
Basic | 283.1 | 335.4 | ||||||
Diluted | 287.4 | 339.5 | ||||||
| Percentage of Net Sales* | ||||||||
Net sales from products | 72.8 | % | 74.4 | % | ||||
Net sales from services | 27.2 | % | 25.6 | % | ||||
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Net sales | 100 | % | 100 | % | ||||
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Costs of product sales | 43.5 | % | 43.8 | % | ||||
Costs of service sales | 65.5 | % | 65.9 | % | ||||
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Costs of sales | 49.5 | % | 49.4 | % | ||||
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Gross margin | 50.5 | % | 50.6 | % | ||||
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Selling, general and administrative expenses | 22.5 | % | 22.6 | % | ||||
Research and development expenditures | 12.2 | % | 12.9 | % | ||||
Other charges | 0.5 | % | 0.5 | % | ||||
Intangibles amortization | 0.3 | % | 2.4 | % | ||||
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Operating earnings | 15.0 | % | 12.2 | % | ||||
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Other income (expense): | ||||||||
Interest expense, net | -0.7 | % | -0.9 | % | ||||
Gain on sales of investments and businesses, net | 0.9 | % | 0.1 | % | ||||
Other | -0.1 | % | 0.0 | % | ||||
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Total other expense | 0.0 | % | -0.8 | % | ||||
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Earnings from continuing operations before income taxes | 15.0 | % | 11.4 | % | ||||
Income tax expense | 5.5 | % | 4.0 | % | ||||
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Earnings from continuing operations | 9.6 | % | 7.4 | % | ||||
Earnings from discontinued operations, net of tax | 0.0 | % | -1.2 | % | ||||
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Net earnings | 9.6 | % | 6.2 | % | ||||
Less: Loss attributable to noncontrolling interests | 0.0 | % | 0.1 | % | ||||
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Net earnings attributable to Motorola Solutions, Inc. | 9.6 | % | 6.1 | % | ||||
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| * | Percentages may not add up due to rounding |
GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
| Nine Months Ended | ||||||||
| September 29, 2012 | October 1, 2011 | |||||||
Net sales from products | $ | 4,574 | $ | 4,379 | ||||
Net sales from services | 1,683 | 1,524 | ||||||
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Net sales | 6,257 | 5,903 | ||||||
Costs of product sales | 2,052 | 1,949 | ||||||
Costs of service sales | 1,085 | 968 | ||||||
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Costs of sales | 3,137 | 2,917 | ||||||
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Gross margin | 3,120 | 2,986 | ||||||
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Selling, general and administrative expenses | 1,454 | 1,414 | ||||||
Research and development expenditures | 785 | 769 | ||||||
Other charges | 30 | 71 | ||||||
Intangibles amortization | 18 | 150 | ||||||
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Operating earnings | 833 | 582 | ||||||
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Other income (expense): | ||||||||
Interest expense, net | (46 | ) | (59 | ) | ||||
Gain on sales of investments and businesses, net | 39 | 21 | ||||||
Other | (18 | ) | (73 | ) | ||||
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Total other expense | (25 | ) | (111 | ) | ||||
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Earnings from continuing operations before income taxes | 808 | 471 | ||||||
Income tax expense (benefit) | 266 | (93 | ) | |||||
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Earnings from continuing operations | 542 | 564 | ||||||
Earnings from discontinued operations, net of tax | 3 | 404 | ||||||
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Net earnings | 545 | 968 | ||||||
Less: Loss attributable to noncontrolling interests | — | (6 | ) | |||||
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Net earnings attributable to Motorola Solutions, Inc. | $ | 545 | $ | 974 | ||||
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Amounts attributable to Motorola Solutions, Inc. common shareholders | ||||||||
Earnings from continuing operations, net of tax | $ | 542 | $ | 570 | ||||
Earnings from discontinued operations, net of tax | 3 | 404 | ||||||
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Net earnings | $ | 545 | $ | 974 | ||||
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Earnings per common share | ||||||||
Basic: | ||||||||
Continuing operations | $ | 1.83 | $ | 1.69 | ||||
Discontinued operations | 0.01 | 1.20 | ||||||
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| $ | 1.84 | $ | 2.89 | |||||
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Diluted: | ||||||||
Continuing operations | $ | 1.80 | $ | 1.66 | ||||
Discontinued operations | 0.01 | 1.18 | ||||||
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| $ | 1.81 | $ | 2.84 | |||||
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Weighted average common shares outstanding | ||||||||
Basic | 296.1 | 337.3 | ||||||
Diluted | 301.5 | 343.4 | ||||||
| Percentage of Net Sales* | ||||||||
Net sales from products | 73.1 | % | 74.2 | % | ||||
Net sales from services | 26.9 | % | 25.8 | % | ||||
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Net sales | 100 | % | 100 | % | ||||
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Costs of product sales | 44.9 | % | 44.5 | % | ||||
Costs of service sales | 64.5 | % | 63.5 | % | ||||
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Costs of sales | 50.1 | % | 49.4 | % | ||||
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Gross margin | 49.9 | % | 50.6 | % | ||||
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Selling, general and administrative expenses | 23.2 | % | 24.0 | % | ||||
Research and development expenditures | 12.5 | % | 13.0 | % | ||||
Other charges | 0.5 | % | 1.2 | % | ||||
Intangibles amortization | 0.3 | % | 2.5 | % | ||||
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Operating earnings | 13.3 | % | 9.9 | % | ||||
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Other income (expense): | ||||||||
Interest expense, net | -0.7 | % | -1.0 | % | ||||
Gain on sales of investments and businesses, net | 0.6 | % | 0.4 | % | ||||
Other | -0.3 | % | -1.2 | % | ||||
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Total other expense | -0.4 | % | -1.9 | % | ||||
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Earnings from continuing operations before income taxes | 12.9 | % | 8.0 | % | ||||
Income tax expense (benefit) | 4.3 | % | -1.6 | % | ||||
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Earnings from continuing operations | 8.7 | % | 9.6 | % | ||||
Earnings from discontinued operations, net of tax | 0.0 | % | 6.8 | % | ||||
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Net earnings | 8.7 | % | 16.4 | % | ||||
Less: Loss attributable to noncontrolling interests | 0.0 | % | -0.1 | % | ||||
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Net earnings attributable to Motorola Solutions, Inc. | 8.7 | % | 16.5 | % | ||||
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| * | Percentages may not add up due to rounding |
GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
| September 29, 2012 | December 31, 2011 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,779 | $ | 1,881 | ||||
Sigma Fund and short-term investments | 1,760 | 3,210 | ||||||
Accounts receivable, net | 1,704 | 1,866 | ||||||
Inventories, net | 538 | 512 | ||||||
Deferred income taxes | 662 | 613 | ||||||
Other current assets | 828 | 686 | ||||||
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Total current assets | 7,271 | 8,768 | ||||||
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Property, plant and equipment, net | 860 | 896 | ||||||
Investments | 162 | 166 | ||||||
Deferred income taxes | 2,017 | 2,375 | ||||||
Goodwill | 1,430 | 1,428 | ||||||
Other assets | 280 | 296 | ||||||
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Total assets | $ | 12,020 | $ | 13,929 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current portion of long-term debt | $ | 4 | $ | 405 | ||||
Accounts payable | 646 | 677 | ||||||
Accrued liabilities | 2,475 | 2,733 | ||||||
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Total current liabilities | 3,125 | 3,815 | ||||||
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| |||||
Long-term debt | 1,860 | 1,130 | ||||||
Other liabilities | 3,138 | 3,710 | ||||||
Total Motorola Solutions, Inc. stockholders’ equity | 3,872 | 5,214 | ||||||
|
|
|
| |||||
Noncontrolling interests | 25 | 60 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 12,020 | $ | 13,929 | ||||
|
|
|
| |||||
Total cash* | $ | 3,539 | $ | 5,091 | ||||
Net cash** | 1,675 | 3,556 | ||||||
| * | Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments |
| ** | Net cash = Total cash - Notes payable and current portion of long-term debt - Long-term debt |
GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
| Three Months Ended | ||||||||
| September 29, 2012 | October 1, 2011 | |||||||
Operating | ||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 206 | $ | 128 | ||||
Earnings attributable to noncontrolling interests | — | 2 | ||||||
|
|
|
| |||||
Net earnings | 206 | 130 | ||||||
Loss from discontinued operations, net of tax | — | (25 | ) | |||||
|
|
|
| |||||
Earnings from continuing operations | 206 | 155 | ||||||
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 45 | 92 | ||||||
Non-cash other expense (income) | 13 | (6 | ) | |||||
Share-based compensation expense | 44 | 45 | ||||||
Gain on sales of investments and businesses, net | (19 | ) | (1 | ) | ||||
Deferred income taxes | 110 | 40 | ||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Accounts receivable | (73 | ) | (6 | ) | ||||
Inventories | (43 | ) | (26 | ) | ||||
Other current assets | (70 | ) | (15 | ) | ||||
Accounts payable and accrued liabilities | 100 | 107 | ||||||
Other assets and liabilities | (131 | ) | 92 | |||||
|
|
|
| |||||
Net cash provided by operating activities from continuing operations | 182 | 477 | ||||||
|
|
|
| |||||
Investing | ||||||||
Acquisitions and investments, net | (7 | ) | (24 | ) | ||||
Proceeds from (used for) sales of investments and businesses, net | 29 | (14 | ) | |||||
Capital expenditures | (39 | ) | (43 | ) | ||||
Proceeds from sales of property, plant and equipment | — | 2 | ||||||
Proceeds from (purchases of) sales of Sigma Fund investments, net | 173 | (41 | ) | |||||
|
|
|
| |||||
Net cash provided by (used for) investing activities from continuing operations | 156 | (120 | ) | |||||
|
|
|
| |||||
Financing | ||||||||
Repayment of debt | (1 | ) | (1 | ) | ||||
Issuance of common stock | 16 | 20 | ||||||
Purchase of common stock | (308 | ) | (744 | ) | ||||
Excess tax benefits from share-based compensation | — | 39 | ||||||
Payment of dividends | (63 | ) | — | |||||
Contribution to Motorola Mobility | — | (75 | ) | |||||
Distribution to discontinued operations | — | 19 | ||||||
|
|
|
| |||||
Net cash used for financing activities from continuing operations | (356 | ) | (742 | ) | ||||
|
|
|
| |||||
Discontinued Operations | ||||||||
Net cash provided by operating activities from discontinued operations | — | 19 | ||||||
Net cash used for financing activities from discontinued operations | — | (19 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents from discontinued operations | — | — | ||||||
|
|
|
| |||||
Net cash provided by (used for) financing activities from discontinued operations | — | — | ||||||
|
|
|
| |||||
Effect of exchange rate changes on cash and cash equivalents from continuing operations | 25 | (33 | ) | |||||
|
|
|
| |||||
Net decrease in cash and cash equivalents | 7 | (418 | ) | |||||
Cash and cash equivalents, beginning of period | 1,772 | 2,203 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 1,779 | $ | 1,785 | ||||
|
|
|
| |||||
Financial Ratios: | ||||||||
Free cash flow* | $ | 143 | $ | 434 | ||||
| * | Free cash flow = Net cash provided by operating activities - Capital expenditures |
GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
| Nine Months Ended | ||||||||
| September 29, 2012 | October 1, 2011 | |||||||
Operating | ||||||||
Net earnings attributable to Motorola Solutions, Inc. | $ | 545 | $ | 974 | ||||
Loss attributable to noncontrolling interests | — | (6 | ) | |||||
|
|
|
| |||||
Net earnings | 545 | 968 | ||||||
Earnings from discontinued operations, net of tax | 3 | 404 | ||||||
|
|
|
| |||||
Earnings from continuing operations | 542 | 564 | ||||||
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 151 | 273 | ||||||
Non-cash other income | 12 | 39 | ||||||
Share-based compensation expense | 139 | 123 | ||||||
Gain on sales of investments and businesses, net | (39 | ) | (21 | ) | ||||
Loss from the extinguishment of long-term debt | 6 | 81 | ||||||
Deferred income taxes | 203 | 30 | ||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Accounts receivable | 189 | 82 | ||||||
Inventories | (51 | ) | (38 | ) | ||||
Other current assets | (147 | ) | (6 | ) | ||||
Accounts payable and accrued liabilities | (283 | ) | (230 | ) | ||||
Other assets and liabilities | (218 | ) | (93 | ) | ||||
|
|
|
| |||||
Net cash provided by operating activities from continuing operations | 504 | 804 | ||||||
|
|
|
| |||||
Investing | ||||||||
Acquisitions and investments, net | 61 | (26 | ) | |||||
Proceeds from (used for) sales of investments and businesses, net | (38 | ) | 1,064 | |||||
Capital expenditures | (140 | ) | (103 | ) | ||||
Proceeds from sales of property, plant and equipment | 9 | 6 | ||||||
Proceeds from sales of Sigma Fund investments, net | 1,450 | 225 | ||||||
Proceeds from sales of short-term investments, net | — | 6 | ||||||
|
|
|
| |||||
Net cash provided by investing activities from continuing operations | 1,342 | 1,172 | ||||||
|
|
|
| |||||
Financing | ||||||||
Repayment of debt | (412 | ) | (617 | ) | ||||
Proceeds from issuance of debt | 747 | — | ||||||
Issuance of common stock | 79 | 148 | ||||||
Purchase of common stock | (2,112 | ) | (744 | ) | ||||
Excess tax benefits from share-based compensation | 17 | 39 | ||||||
Payments of dividends | (197 | ) | — | |||||
Contributions to Motorola Mobility | (73 | ) | (3,275 | ) | ||||
Distribution from (to) discontinued operations | (11 | ) | 102 | |||||
|
|
|
| |||||
Net cash used for financing activities from continuing operations | (1,962 | ) | (4,347 | ) | ||||
|
|
|
| |||||
Discontinued Operations | ||||||||
Net cash provided by operating activities from discontinued operations | 2 | 65 | ||||||
Net cash used for investing activities from discontinued operations | — | (8 | ) | |||||
Net cash provided by (used for) financing activities from discontinued operations | 11 | (102 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents from discontinued operations | (13 | ) | 45 | |||||
|
|
|
| |||||
Net cash provided by (used for) financing activities from discontinued operations | — | — | ||||||
|
|
|
| |||||
Effect of exchange rate changes on cash and cash equivalents from continuing operations | 14 | (52 | ) | |||||
|
|
|
| |||||
Net decrease in cash and cash equivalents | (102 | ) | (2,423 | ) | ||||
Cash and cash equivalents, beginning of period | 1,881 | 4,208 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 1,779 | $ | 1,785 | ||||
|
|
|
| |||||
Financial Ratios: | ||||||||
Free cash flow* | $ | 364 | $ | 701 | ||||
| * | Free cash flow = Net cash provided by operating activities - Capital expenditures |
GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Summarized below are the Company’s Net sales and Operating earnings by segment for the three and nine months ended September 29, 2012 and October 1, 2011.
Net Sales
| Three Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 1,521 | $ | 1,360 | 12 | % | ||||||
Enterprise | 632 | 725 | -13 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 2,153 | $ | 2,085 | 3 | % | ||||||
|
|
|
| �� |
|
| ||||||
| Nine Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 4,281 | $ | 3,811 | 12 | % | ||||||
Enterprise | 1,976 | 2,092 | -6 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 6,257 | $ | 5,903 | 6 | % | ||||||
|
|
|
|
|
| |||||||
Operating Earnings
| Three Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 273 | $ | 186 | 47 | % | ||||||
Enterprise | 51 | 68 | -25 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 324 | $ | 254 | 28 | % | ||||||
|
|
|
|
|
| |||||||
| Nine Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 620 | $ | 390 | 59 | % | ||||||
Enterprise | 213 | 192 | 11 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 833 | $ | 582 | 43 | % | ||||||
|
|
|
|
|
| |||||||
Operating Earnings %
| Three Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | 17.9 | % | 13.7 | % | 31 | % | ||||||
Enterprise | 8.1 | % | 9.4 | % | -14 | % | ||||||
|
|
|
|
|
| |||||||
Company Total | 15.0 | % | 12.2 | % | 24 | % | ||||||
|
|
|
|
|
| |||||||
| Nine Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | 14.5 | % | 10.2 | % | 42 | % | ||||||
Enterprise | 10.8 | % | 9.2 | % | 17 | % | ||||||
|
|
|
|
|
| |||||||
Company Total | 13.3 | % | 9.9 | % | 35 | % | ||||||
|
|
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|
|
| |||||||
Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense, Stock-Based Compensation Expense and Highlighted Items)
Q1 2012
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact | |||||||||||||
Intangibles amortization expense | Intangibles amortization | $ | 6 | $ | 2 | $ | 4 | 0.01 | ||||||||||
Stock-based compensation expense | Cost of sales, SG&A and R&D | 43 | 13 | 30 | 0.09 | |||||||||||||
Reorganization of business charges | Cost of sales and Other charges | 9 | 3 | 6 | 0.02 | |||||||||||||
Gain on sale of equity investment | Gain on sales of investments and businesses, net | (16 | ) | (6 | ) | (10 | ) | (0.03 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||||
Total continuing operations impact | $ | 42 | $ | 12 | $ | 30 | $ | 0.09 | ||||||||||
| Q2 2012 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact | |||||||||||||
Intangibles amortization expense | Intangibles amortization | $ | 6 | $ | 2 | $ | 4 | 0.01 | ||||||||||
Stock-based compensation expense | Cost of sales, SG&A and R&D | 52 | 21 | 31 | 0.10 | |||||||||||||
Reorganization of business charges | Cost of sales and Other charges | 14 | 5 | 9 | 0.03 | |||||||||||||
Tax expense from audit settlements and agreements | Income tax (expense) benefit | — | 13 | (13 | ) | (0.04 | ) | |||||||||||
| — | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total continuing operations impact | $ | 72 | $ | 41 | $ | 31 | $ | 0.10 | ||||||||||
| Q3 2012 | ||||||||||||||||||
Highlighted Items | Statement Line | PBT (Inc)/Exp | Tax Inc/(Exp) | PAT (Inc)/Exp | EPS impact | |||||||||||||
Intangibles amortization expense | Intangibles amortization | $ | 6 | $ | 2 | $ | 4 | 0.01 | ||||||||||
Stock-based compensation expense | Cost of sales, SG&A and R&D | 44 | 14 | 30 | 0.11 | |||||||||||||
Reorganization of business charges | Cost of sales and Other charges | 13 | 4 | 9 | 0.03 | |||||||||||||
Gain on sale of equity investment | Gain on sales of investments and businesses, net | (13 | ) | (5 | ) | (8 | ) | (0.03 | ) | |||||||||
| — | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total continuing operations impact | $ | 50 | $ | 15 | $ | 35 | $ | 0.12 | ||||||||||
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
| Non-GAAP Operating Earnings | ||||||||||||
| Three Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 310 | $ | 224 | 38 | % | ||||||
Enterprise | 77 | 135 | -43 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 387 | $ | 359 | 8 | % | ||||||
|
|
|
|
|
| |||||||
| Nine Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | $ | 735 | $ | 525 | 40 | % | ||||||
Enterprise | 292 | 404 | -28 | % | ||||||||
|
|
|
|
|
| |||||||
Company Total | $ | 1,027 | $ | 929 | 11 | % | ||||||
|
|
|
|
|
| |||||||
| Non-GAAP Operating Earnings % | ||||||||||||
| Three Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | 20.4 | % | 16.5 | % | 24 | % | ||||||
Enterprise | 12.2 | % | 18.6 | % | -35 | % | ||||||
|
|
|
|
|
| |||||||
Company Total | 18.0 | % | 17.2 | % | 4 | % | ||||||
|
|
|
|
|
| |||||||
| Nine Months Ended | ||||||||||||
| September 29, 2012 | October 1, 2011 | % Change | ||||||||||
Government | 17.2 | % | 13.8 | % | 25 | % | ||||||
Enterprise | 14.8 | % | 19.3 | % | -23 | % | ||||||
|
|
|
|
|
| |||||||
Company Total | 16.4 | % | 15.7 | % | 4 | % | ||||||
|
|
|
|
|
| |||||||
Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
Q1 2012
| TOTAL | Government | Enterprise | ||||||||||
Net sales | $ | 1,956 | $ | 1,301 | $ | 655 | ||||||
Operating earnings | $ | 232 | $ | 150 | $ | 82 | ||||||
|
|
|
|
|
| |||||||
Above-OE non-GAAP adjustments: | ||||||||||||
Stock-based compensation expense | 43 | 27 | 16 | |||||||||
Reorganization of business charges | 9 | 7 | 2 | |||||||||
Intangibles amortization expense | 6 | — | 6 | |||||||||
|
|
|
|
|
| |||||||
Total above-OE non-GAAP adjustments | 58 | 34 | 24 | |||||||||
|
|
|
|
|
| |||||||
Operating earnings after non-GAAP adjustments | $ | 290 | $ | 184 | $ | 106 | ||||||
|
|
|
|
|
| |||||||
Operating earnings as a percentage of net sales - GAAP | 11.9 | % | 11.5 | % | 12.5 | % | ||||||
Operating earnings as a percentage of net sales - after non-GAAP adjustments | 14.8 | % | 14.1 | % | 16.2 | % | ||||||
| Q2 2012 | ||||||||||||
| TOTAL | Government | Enterprise | ||||||||||
Net sales | $ | 2,148 | $ | 1,459 | $ | 689 | ||||||
Operating earnings | $ | 278 | $ | 197 | $ | 81 | ||||||
|
|
|
|
|
| |||||||
Above-OE non-GAAP adjustments: | ||||||||||||
Stock-based compensation expense | 52 | 34 | 18 | |||||||||
Reorganization of business charges | 14 | 9 | 5 | |||||||||
Intangibles amortization expense | 6 | — | 6 | |||||||||
|
|
|
|
|
| |||||||
Total above-OE non-GAAP adjustments | 72 | 43 | 29 | |||||||||
|
|
|
|
|
| |||||||
Operating earnings after non-GAAP adjustments | $ | 350 | $ | 240 | $ | 110 | ||||||
|
|
|
|
|
| |||||||
Operating earnings as a percentage of net sales - GAAP | 12.9 | % | 13.5 | % | 11.8 | % | ||||||
Operating earnings as a percentage of net sales - after non-GAAP adjustments | 16.3 | % | 16.4 | % | 16.0 | % | ||||||
| Q3 2012 | ||||||||||||
| TOTAL | Government | Enterprise | ||||||||||
Net sales | $ | 2,153 | $ | 1,521 | $ | 632 | ||||||
Operating earnings | $ | 324 | $ | 273 | $ | 51 | ||||||
|
|
|
|
|
| |||||||
Above-OE non-GAAP adjustments: | ||||||||||||
Stock-based compensation expense | 44 | 29 | 15 | |||||||||
Reorganization of business charges | 13 | 8 | 5 | |||||||||
Intangibles amortization expense | 6 | — | 6 | |||||||||
|
|
|
|
|
| |||||||
Total above-OE non-GAAP adjustments | 63 | 37 | 26 | |||||||||
|
|
|
|
|
| |||||||
Operating earnings after non-GAAP adjustments | $ | 387 | $ | 310 | $ | 77 | ||||||
|
|
|
|
|
| |||||||
Operating earnings as a percentage of net sales - GAAP | 15.0 | % | 17.9 | % | 8.1 | % | ||||||
Operating earnings as a percentage of net sales - after non-GAAP adjustments | 18.0 | % | 20.4 | % | 12.2 | % | ||||||
