DEFINITIONS
1 Free cash flow represents operating cash flow less capital expenditures.
ABOUT MOTOROLA SOLUTIONS
Motorola Solutions is a global leader in mission-critical communications. Our technology platforms in communications, command center software, video and services make cities safer and help communities and businesses thrive. At Motorola Solutions, we are ushering in a new era in public safety and security. Learn more at www.motorolasolutions.com.
MOTOROLA, 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. ©2019 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 | ||||||||
| March 30, 2019 | March 31, 2018 | |||||||
| Net sales from products | $ | 945 | $ | 801 | ||||
| Net sales from services | 712 | 667 | ||||||
| Net sales | 1,657 | 1,468 | ||||||
| Costs of products sales | 444 | 383 | ||||||
| Costs of services sales | 440 | 416 | ||||||
| Costs of sales | 884 | 799 | ||||||
| Gross margin | 773 | 669 | ||||||
| Selling, general and administrative expenses | 327 | 279 | ||||||
| Research and development expenditures | 162 | 152 | ||||||
| Other charges | 5 | 26 | ||||||
| Intangibles amortization | 50 | 41 | ||||||
| Operating earnings | 229 | 171 | ||||||
| Other income (expense): | ||||||||
| Interest expense, net | (55 | ) | (46 | ) | ||||
| Gains on sales of investments and businesses, net | 1 | 11 | ||||||
| Other | 10 | 4 | ||||||
| Total other expense | (44 | ) | (31 | ) | ||||
| Net earnings before income taxes | 185 | 140 | ||||||
| Income tax expense | 33 | 23 | ||||||
| Net earnings | 152 | 117 | ||||||
| Less: Earnings attributable to noncontrolling interests | 1 | - | ||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 151 | $ | 117 | ||||
|
Earnings per common share: |
||||||||
| Basic | $ | 0.92 | $ | 0.73 | ||||
| Diluted | $ | 0.86 | $ | 0.69 | ||||
|
Weighted average common shares outstanding: |
||||||||
| Basic | 164.0 | 161.4 | ||||||
| Diluted | 174.6 | 170.6 | ||||||
| Percentage of Net Sales* | ||||||||
| Net sales from products | 57.0 | % | 54.6 | % | ||||
| Net sales from services | 43.0 | % | 45.4 | % | ||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Costs of products sales | 47.0 | % | 47.8 | % | ||||
| Costs of services sales | 61.8 | % | 62.4 | % | ||||
| Costs of sales | 53.3 | % | 54.4 | % | ||||
| Gross margin | 46.7 | % | 45.6 | % | ||||
| Selling, general and administrative expenses | 19.7 | % | 19.0 | % | ||||
| Research and development expenditures | 9.8 | % | 10.4 | % | ||||
| Other charges | 0.3 | % | 1.8 | % | ||||
| Intangibles amortization | 3.0 | % | 2.8 | % | ||||
| Operating earnings | 13.8 | % | 11.6 | % | ||||
| Other income (expense): | ||||||||
| Interest expense, net | (3.3 | )% | (3.1 | )% | ||||
| Gains on sales of investments and businesses, net | - | % | 0.7 | % | ||||
| Other | 0.6 | % | 0.3 | % | ||||
| Total other expense | (2.7 | )% | (2.1 | )% | ||||
| Net earnings before income taxes | 11.2 | % | 9.5 | % | ||||
| Income tax expense | 2.0 | % | 1.6 | % | ||||
| Net earnings | 9.2 | % | 8.0 | % | ||||
| Less: Earnings attributable to noncontrolling interests | - | % | - | % | ||||
| Net earnings attributable to Motorola Solutions, Inc. | 9.1 | % | 8.0 | % | ||||
| * Percentages may not add up due to rounding | ||||||||
| GAAP-2 | ||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In millions) | ||||||||
| March 30, 2019 | December 31, 2018 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 886 | $ | 1,246 | ||||
| Restricted cash | 11 | 11 | ||||||
| Total cash and cash equivalents | 897 | 1,257 | ||||||
| Accounts receivable, net | 1,150 | 1,293 | ||||||
| Contract assets | 878 | 1,012 | ||||||
| Inventories, net | 425 | 356 | ||||||
| Other current assets | 364 | 354 | ||||||
| Total current assets | 3,714 | 4,272 | ||||||
| Property, plant and equipment, net | 937 | 895 | ||||||
| Operating lease assets | 593 | - | ||||||
| Investments | 163 | 169 | ||||||
| Deferred income taxes | 953 | 985 | ||||||
| Goodwill | 1,860 | 1,514 | ||||||
| Intangible Assets, net | 1,416 | 1,230 | ||||||
| Other assets | 357 | 344 | ||||||
| Total assets | $ | 9,993 | $ | 9,409 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current portion of long-term debt | $ | 28 | $ | 31 | ||||
| Accounts payable | 558 | 592 | ||||||
| Contract liabilities | 1,158 | 1,263 | ||||||
| Accrued liabilities | 1,235 | 1,210 | ||||||
| Total current liabilities | 2,979 | 3,096 | ||||||
| Long-term debt | 5,287 | 5,289 | ||||||
| Operating lease liabilities | 553 | - | ||||||
| Other liabilities | 2,264 | 2,300 | ||||||
| Total Motorola Solutions, Inc. stockholders' equity (deficit) | (1,108 | ) | (1,293 | ) | ||||
| Noncontrolling interests | 18 | 17 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,993 | $ | 9,409 | ||||
| GAAP-3 | ||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In millions) | ||||||||
| Three Months Ended | ||||||||
| March 30, 2019 | March 31, 2018 | |||||||
| Operating | ||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 151 | $ | 117 | ||||
| Earnings attributable to noncontrolling interests | 1 | - | ||||||
| Net earnings | 152 | 117 | ||||||
| Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities: | ||||||||
| Depreciation and amortization | 95 | 82 | ||||||
| Non-cash other charges | 10 | 3 | ||||||
| Share-based compensation expense | 27 | 17 | ||||||
| Gains on sales of investments and businesses, net | (1 | ) | (11 | ) | ||||
| Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | . | |||||||
| Accounts receivable | 168 | 195 | ||||||
| Inventories | (63 | ) | (9 | ) | ||||
| Other current assets and contract assets | 136 | 2 | ||||||
| Accounts payable, accrued liabilities, and contract liabilities | (261 | ) | (350 | ) | ||||
| Other assets and liabilities | (6 | ) | (553 | ) | ||||
| Deferred income taxes | (6 | ) | 7 | |||||
| Net cash provided by (used for) operating activities | 251 | (500 | ) | |||||
| Investing | ||||||||
| Acquisitions and investments, net | (368 | ) | (1,125 | ) | ||||
| Proceeds from sales of investments and businesses, net | 2 | 77 | ||||||
| Capital expenditures | (66 | ) | (41 | ) | ||||
| Net cash used for investing activities | (432 | ) | (1,089 | ) | ||||
| Financing | ||||||||
| Repayment of debt | (8 | ) | (50 | ) | ||||
| Net proceeds from issuance of debt | - | 1,296 | ||||||
| Issuance of common stock | 45 | 53 | ||||||
| Purchases of common stock | (145 | ) | (66 | ) | ||||
| Payments of dividends | (93 | ) | (84 | ) | ||||
| Net cash provided by (used for) financing activities | (201 | ) | 1,149 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 22 | 30 | ||||||
| Net decrease in cash and cash equivalents | (360 | ) | (410 | ) | ||||
| Cash and cash equivalents, beginning of period | 1,257 | 1,268 | ||||||
| Cash and cash equivalents, end of period | $ | 897 | $ | 858 | ||||
| Financial Ratios: | ||||||||
| Free cash flow* | $ | 185 | $ | (541 | ) | |||
| *Free cash flow = Net cash provided by (used for) operating activities - Capital expenditures | ||||||||
| GAAP-4 | |||||||||||
| Motorola Solutions, Inc. and Subsidiaries | |||||||||||
| Segment Information | |||||||||||
| (In millions) | |||||||||||
| Net Sales | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | % Change | |||||||||
| Products and Systems Integration | $ | 1,069 | $ | 952 | 12 | % | |||||
| Services and Software | 588 | 516 | 14 | % | |||||||
| Total Motorola Solutions | $ | 1,657 | $ | 1,468 | 13 | % | |||||
| Operating Earnings | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | % Change | |||||||||
| Products and Systems Integration | $ | 108 | $ | 90 | 20 | % | |||||
| Services and Software | 121 | 81 | 49 | % | |||||||
| Total Motorola Solutions | $ | 229 | $ | 171 | 34 | % | |||||
| Operating Earnings % | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | ||||||||||
| Products and Systems Integration | 10.1 | % | 9.5 | % | |||||||
| Services and Software | 20.6 | % | 15.7 | % | |||||||
| Total Motorola Solutions | 13.8 | % | 11.6 | % | |||||||
| Non-GAAP-1 | |||||||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | |||||||||||||||||
| Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expense and Highlighted Items) | |||||||||||||||||
| (In millions) | |||||||||||||||||
| Q1 2019 | |||||||||||||||||
| Non-GAAP Adjustments | Statement Line |
PBT
(Inc)/Exp |
Tax
Inc/(Exp) |
PAT
(Inc)/Exp |
EPS impact | ||||||||||||
| Share-based compensation expense | Cost of sales, SG&A and R&D | $ | 27 | $ | 6 | 21 | $ | 0.12 | |||||||||
| Reorganization of business charges | Cost of sales and Other charges | 8 | 2 | 6 | 0.04 | ||||||||||||
| Intangibles amortization expense | Intangibles amortization | 50 | 11 | 39 | 0.23 | ||||||||||||
| Legal settlement | Other charges | (1 | ) | - | (1 | ) | (0.01 | ) | |||||||||
| Fair value adjustments to equity investments | Other expense | 1 | - | 1 | 0.01 | ||||||||||||
| Investment impairments | Investment impairments | 8 | 2 | 6 | 0.04 | ||||||||||||
| Sale of investments | (Gain) or loss on sales of investments and businesses, net | (1 | ) | - | (1 | ) | (0.01 | ) | |||||||||
| Acquisition-related transaction fees | Other charges | 2 | - | 2 | 0.01 | ||||||||||||
| FIN48 release | Income tax expense | - | 1 | (1 | ) | (0.01 | ) | ||||||||||
| Total impact on Net earnings | $ | 94 | $ | 22 | $ | 72 | $ | 0.42 | |||||||||
| Non-GAAP-2 | |||||||||||
| Motorola Solutions, Inc. and Subsidiaries | |||||||||||
| Non-GAAP Segment Information | |||||||||||
| (In millions) | |||||||||||
| Net Sales | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | % Change | |||||||||
| Products and Systems Integration | $ | 1,069 | $ | 952 | 12 | % | |||||
| Services and Software | 588 | 516 | 14 | % | |||||||
| Total Motorola Solutions | $ | 1,657 | $ | 1,468 | 13 | % | |||||
| Non-GAAP Operating Earnings | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | % Change | |||||||||
| Products and Systems Integration | $ | 147 | $ | 125 | 18 | % | |||||
| Services and Software | 168 | 135 | 24 | % | |||||||
| Total Motorola Solutions | $ | 315 | $ | 260 | 21 | % | |||||
| Non-GAAP Operating Earnings % | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | ||||||||||
| Products and Systems Integration | 13.8 | % | 13.1 | % | |||||||
| Services and Software | 28.6 | % | 26.2 | % | |||||||
| Total Motorola Solutions | 19.0 | % | 17.7 | % | |||||||
| Non-GAAP-3 | ||||||||||||
| Motorola Solutions, Inc. and Subsidiaries | ||||||||||||
| Operating Earnings after Non-GAAP Adjustments | ||||||||||||
| (In millions) | ||||||||||||
| Q1 2019 | ||||||||||||
| TOTAL |
Products and
|
Services and
|
||||||||||
| Net sales | $ | 1,657 | $ | 1,069 | $ | 588 | ||||||
| Operating earnings ("OE") | $ | 229 | $ | 108 | $ | 121 | ||||||
| Above-OE non-GAAP adjustments: | ||||||||||||
| Share-based compensation expense | 27 | 21 | 6 | |||||||||
| Reorganization of business charges | 8 | 7 | 1 | |||||||||
| Intangibles amortization expense | 50 | 11 | 39 | |||||||||
| Acquisition-related transaction fees | 2 | 1 | 1 | |||||||||
| Legal settlement | (1 | ) | (1 | ) | - | |||||||
| Total above-OE non-GAAP adjustments | 86 | 39 | 47 | |||||||||
| Operating earnings after non-GAAP adjustments | $ | 315 | $ | 147 | $ | 168 | ||||||
| Operating earnings as a percentage of net sales - GAAP | 13.8 | % | 10.1 | % | 20.6 | % | ||||||
| Operating earnings as a percentage of net sales - after non-GAAP adjustments | 19.0 | % | 13.8 | % | 28.6 | % | ||||||
| Non-GAAP-4 | |||||||||||
| Motorola Solutions, Inc. and Subsidiaries | |||||||||||
| Non-GAAP Organic Revenue | |||||||||||
| (In millions) | |||||||||||
| Total Motorola Solutions | |||||||||||
| Three Months Ended | |||||||||||
| March 30, 2019 | March 31, 2018 | % Change | |||||||||
| Net sales | $ | 1,657 | $ | 1,468 | 13 | % | |||||
| Non-GAAP adjustments: | |||||||||||
| Acquisitions | (159 | ) | (22 | ) | |||||||
| Organic revenue | $ | 1,498 | $ | 1,446 | 4 | % | |||||
