MSI Motorola Solutions Inc

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 %

Click here for printable press release and financial tables. For consolidated Motorola, Inc. fourth-quarter financial results, click here.

"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 Quarter2010††

  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 at www.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 at www.sec.gov and on Motorola Solutions’ website at www.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, visit www.motorolasolutions.com. For ongoing news, please visit our media center or subscribe to our news feed.

      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, October 2, December 31, 2010 2010 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 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 EndedDecember 31, 2010

Three Months EndedDecember 31, 2009

% Change from2009

  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 EndedDecember 31, 2010

Year EndedDecember 31, 2009

% Change from2009

  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 EndedDecember 31, 2010

Three Months EndedDecember 31, 2009

% Change from2009

  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 EndedDecember 31, 2010

Year EndedDecember 31, 2009

% Change from2009

  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-GAAPAdjustments andDiscontinuedOperations

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

TaxInc/(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

TaxInc/(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

TaxInc/(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

TaxInc/(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

TaxInc/(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)        

HistoricalMotorola

Motorola MobilitySeparation

Other

Pro FormaMotorolaSolutions

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)        

HistoricalMotorola

Motorola MobilitySeparation

Other

Pro FormaMotorolaSolutions

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 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 Balance Sheets December 31, 2010 (Unaudited) (In millions)        

HistoricalMotorola

Motorola MobilitySeparation

Other

Pro FormaMotorolaSolutions

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 FormaGAAP Results

Pro FormaNon-GAAPAdjustments

Pro FormaNon-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 FormaGAAP Results

Pro FormaNon-GAAPAdjustments

Pro FormaNon-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.