Motorola Solutions, Inc. (NYSE: MSI):
- Announces $0.22 per share quarterly
cash dividend
- Board of directors authorizes up to
$2.0 billion share repurchase program through 2012
- Ended quarter with total cash* of $6.7
billion
- Sales of $2.1 billion, up 6 percent
from second-quarter 2010
- Government sales of $1.3 billion, up 4
percent from second-quarter 2010
- Enterprise sales of $747 million, up 11
percent from second-quarter 2010
(In millions,
except earnings per share)
Q2 2011 Q2
2010 Change Total sales
$2,055
$1,936 6% GAAP operating earnings
$170
$161 6% Non-GAAP operating earnings
$315 $267 18% GAAP EPS from continuing
operations**
$0.17 $0.01 1600%
Non-GAAP*** EPS from continuing operations**
$0.57
$0.37 54%
Click here for printable press release and financial tables.
Motorola Solutions, Inc. (NYSE: MSI) announced today its
second-quarter 2011 results highlighted by sales of $2.1 billion,
up 6 percent from the second quarter of 2010 and driven by solid
demand across both its Government and Enterprise segments.
In addition, the company announced today that its board of
directors has authorized the initiation of a regular quarterly
dividend of $0.22 per outstanding share of the company’s common
stock. The first dividend will be payable on Oct. 14, 2011, to
shareholders of record at the close of business on Sept. 15, 2011.
As part of a broader return of capital plan, the company’s board
has authorized a share repurchase program of up to $2.0 billion
through the end of 2012. The company may repurchase shares from
time to time in the open market or in other privately negotiated
transactions, subject to market conditions.
Greg Brown, chairman and CEO of Motorola Solutions, said: “Our
solid revenue growth and improved operating leverage further
demonstrate the strength of our business. Based on this
performance, we have raised our full year outlook. Additionally,
the dividend and share repurchase program reinforce our commitment
to return capital to shareholders while maintaining strategic
flexibility.”
GAAP operating earnings in the second quarter of 2011 were $170
million or 8 percent of sales, compared to $161 million or 8
percent of sales in the second quarter of 2010. GAAP earnings per
share from continuing operations** were $0.17, compared to $0.01 in
the second quarter of 2010.
Non-GAAP*** operating earnings in the second quarter of 2011
were $315 million or 15 percent of sales, compared to $267 million
or 14 percent of sales in the second quarter of 2010. Non-GAAP
earnings per share from continuing operations were $0.57, compared
to $0.37 in the second quarter of 2010. Non-GAAP financial
information excludes after-tax benefits of approximately $0.40 per
diluted share related to stock-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 second quarter of 2011, the company generated $102
million in operating cash flow from continuing operations. The
company also retired $540 million in debt and ended the quarter
with total cash* of $6.7 billion.
Government segment sales were $1.3 billion, up 4 percent
from the year-ago quarter. GAAP operating earnings were $111
million or 8 percent of sales compared to $117 million or 9 percent
of sales in the year-ago quarter. Non-GAAP operating earnings were
$174 million or 13 percent of sales compared to $158 million or 13
percent of sales in the year-ago quarter.
Government highlights:
- Received $56 million award to implement
a 700 MHz LTE Broadband Data System for the Mississippi Wireless
Communication Commission
- Secured multi-million dollar public
safety contracts in Bucks County, Pennsylvania; Fort Worth, Texas;
Lower Saxony, Germany and Shenzhen, China
- Recognized for APX 7000XE P25 portable
radio product design with Gold International Design Excellence
Award (IDEA®), which fosters understanding of the impact of design
excellence on the quality of life and the economy
Enterprise segment sales were $747 million, up 11 percent
from the year-ago quarter. GAAP operating earnings were $59 million
or 8 percent of sales compared to $44 million or 7 percent of sales
in the year-ago quarter. Non-GAAP operating earnings were $141
million or 19 percent of sales compared to $109 million or 16
percent of sales in the year-ago quarter.
Enterprise highlights:
- Continued strong growth in the regions
and vertical markets, especially in retail with major mobile
computing contracts such as Macy's in North America, a leading
Russian retailer, a major supermarket in the Netherlands and two
major retailers in France
- Received “Strong Positive” rating in
Gartner’s Rugged Handheld Computer MarketScope†
- Expanded and scaled WiNG 5 wireless LAN
portfolio by introducing a powerful NOC controller and
high-performance 802.11n access points that help enterprise and
government customers support rapid growth of wireless devices and
multimedia applications in their organizations
Results from Discontinued Operations
Second-quarter net earnings from discontinued operations were
$291 million, which substantially relate to operations of the
Networks business that Motorola Solutions sold to Nokia Siemens
Networks on April 29, 2011 for net cash proceeds in excess of $1
billion.
Third-Quarter and Full Year 2011 Outlook
The company expects to see growth across both government and
enterprise segments. Third-quarter sales are expected to grow
between 7 and 8 percent over the third quarter of 2010 with EPS
from continuing operations of $0.56 to $0.61. This outlook excludes
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. The
company now expects full-year revenue growth of 5.5 to 6 percent
with operating earnings of approximately 16.5 percent of sales.
Consolidated GAAP Results
A comparison of results from operations is as follows:
Second Quarter (In millions,
except per share amounts)
2011 2010 Net
sales $2,055 $1,936 Gross margin 1,039 965 Operating
earnings 170 161 Earnings from continuing operations** 58 3 Net
earnings ** 349 162 Diluted earnings per common share from
continuing operations: ** $0.17 $0.01 Weighted average
diluted common shares outstanding 348.5 337.9
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 second quarter of 2011.
(per diluted common share)
Second Quarter2011
GAAP Earnings per Common Share $0.17
Highlighted Items: Debt extinguishment loss 0.14
Reorganization of business charges 0.04 Legal matters, net 0.08
Pension plan adjustments, net (0.03)
Total Highlighted Items 0.23 Stock-based
compensation expense 0.08 Intangible assets amortization expense
0.09
Stock-Based Compensation Expense and Intangible
Assets Amortization Expense 0.17
Total Non-GAAP Adjustments 0.40
Non-GAAP Earnings per Common Share $0.57
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 Thursday, July 28. 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.
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, the
timing and ability to repurchase shares under the share repurchase
program, our ability to pay future dividends, and Motorola
Solutions’ financial outlook for the third quarter and full year of
2011. Motorola Solutions cautions the reader that the risk factors
below, as well as those on pages 12 through 25 in Item 1A of
Motorola Solutions, Inc.'s 2010 Annual Report on Form 10-K, on page
46 in Item 1A of Motorola Solutions, Inc.’s First Quarter Quarterly
Report on Form 10-Q, 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, and
(iii) 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 and recent events in Japan; (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 the increased percentage of cash and cash equivalents
held outside of the United States; (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; and (20) 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.
Definitions
* Total cash = Cash and cash equivalents + Sigma Fund (current
and non-current) and short-term investments
** Amounts attributable to Motorola Solutions, Inc. common
stockholders
*** Non-GAAP financial information excludes from GAAP results
the effects of stock-based compensation expense, intangible assets
amortization expense and highlighted items
† Gartner, Inc., MarketScope for the Ruggedized
Handheld-Computer Market (Global), Tim Zimmerman, Ken Dulaney,
William Clark, March 25, 2011.
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,
visit www.motorolasolutions.com. For ongoing news, please visit our
media center or subscribe to our news feed.
About Gartner’s MarketScope
The MarketScope is copyrighted 2011 by Gartner, Inc. and is
reused with permission. The MarketScope is an evaluation of a
marketplace at and for a specific time period. It depicts Gartner's
analysis of how certain vendors measure against criteria for that
marketplace, as defined by Gartner. Gartner does not endorse any
vendor, product or service depicted in the MarketScope, and does
not advise technology users to select only those vendors with the
highest rating. Gartner disclaims all warranties, express or
implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose.
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. ©2011 Motorola Solutions, Inc.
All rights reserved.
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (In
millions, except per share amounts)
Three Months Ended July 2, 2011 July 3, 2010
Net sales from products $ 1,524 $ 1,438 Net sales from services
531 498 Net sales 2,055 1,936
Costs of products sales 685 656 Costs of services sales 331
315 Costs of sales 1,016 971
Gross margin 1,039 965 Selling,
general and administrative expenses 492 471 Research and
development expenditures 271 269 Other charges 56 14 Intangibles
amortization 50 50 Operating earnings
170 161 Other income (expense):
Interest expense, net (21 ) (35 ) Gain on sales of investments and
businesses, net 1 33 Other (77 ) (30 ) Total other
income (expense) (97 ) (32 ) Earnings from continuing
operations before income taxes 73 129 Income tax expense 17
122 Earnings from continuing operations 56 7
Earnings from discontinued operations, net of tax 291
159 Net earnings 347 166 Less: Earnings
(loss) attributable to noncontrolling interests (2 )
4 Net earnings attributable to Motorola Solutions, Inc. $
349 $ 162 Amounts attributable to Motorola
Solutions, Inc. common shareholders Earnings from continuing
operations, net of tax $ 58 $ 3 Earnings from discontinued
operations, net of tax 291 159 Net
earnings $ 349 $ 162
Earnings per common
share
Basic: Continuing operations $ 0.17 $ 0.01 Discontinued operations
0.85 0.48 $ 1.02 $ 0.49
Diluted: Continuing operations $ 0.17 $ 0.01 Discontinued
operations 0.83 0.47 $ 1.00 $
0.48
Weighted average
common shares outstanding
Basic 341.2 332.7 Diluted 348.5 337.9
Percentage of Net Sales* Net
sales from products 74.2 % 74.3 % Net sales from services
25.8 % 25.7 % Net sales 100 % 100 %
Costs of products sales 44.9 % 45.6 % Costs of services sales
62.3 % 63.3 % Costs of sales 49.4 %
50.2 % Gross margin 50.6 % 49.8 %
Selling, general and administrative expenses 23.9 % 24.3 %
Research and development expenditures 13.2 % 13.9 % Other charges
2.7 % 0.7 % Intangibles amortization 2.4 % 2.6 %
Operating earnings 8.3 % 8.3 % Other income
(expense): Interest expense, net -1.0 % -1.8 % Gain on sales of
investments and businesses, net 0.0 % 1.7 % Other -3.7 %
-1.5 % Total other income (expense) -4.7 %
-1.7 % Earnings from continuing operations before income taxes 3.6
% 6.7 % Income tax expense 0.8 % 6.3 % Earnings from
continuing operations 2.7 % 0.4 % Earnings from discontinued
operations, net of tax 14.2 % 8.2 % Net earnings 16.9
% 8.6 % Less: Earnings (loss) attributable to noncontrolling
interests -0.1 % 0.2 % Net earnings attributable to
Motorola Solutions, Inc. 17.0 % 8.4 % *
Percentages may not add up due to rounding
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (In millions, except
per share amounts) Six Months Ended
July 2, 2011 July 3, 2010 Net sales from products $
2,948 $ 2,729 Net sales from services 991 947
Net sales 3,939 3,676 Costs of products sales 1,341
1,250 Costs of services sales 617 608
Costs of sales 1,958 1,858 Gross margin 1,981
1,818 Selling, general and
administrative expenses 960 925 Research and development
expenditures 520 527 Other charges (income) 61 (16 ) Intangibles
amortization 100 101 Operating earnings
340 281 Other income (expense):
Interest expense, net (41 ) (68 ) Gain on sales of investments and
businesses, net 19 40 Other (72 ) (15 ) Total other
income (expense) (94 ) (43 ) Earnings from continuing
operations before income taxes 246 238 Income tax expense (benefit)
(169 ) 135 Earnings from continuing operations
415 103 Earnings from discontinued operations, net of tax
423 131 Net earnings 838 234
Less: Earnings (loss) attributable to noncontrolling interests
(8 ) 3 Net earnings attributable to Motorola
Solutions, Inc. $ 846 $ 231 Amounts
attributable to Motorola Solutions, Inc. common shareholders
Earnings from continuing operations, net of tax $ 423 $ 100
Earnings from discontinued operations, net of tax 423
131 Net earnings $ 846 $ 231
Earnings per common
share
Basic: Continuing operations $ 1.24 $ 0.30 Discontinued operations
1.25 0.40 $ 2.49 $ 0.70
Diluted: Continuing operations $ 1.22 $ 0.30 Discontinued
operations 1.22 0.39 $ 2.44 $
0.69
Weighted average
common shares outstanding
Basic 339.3 331.7 Diluted 346.3 336.1
Percentage of Net Sales* Net
sales from products 74.8 % 74.2 % Net sales from services
25.2 % 25.8 % Net sales 100 % 100 %
Costs of products sales 45.5 % 45.8 % Costs of services sales
62.3 % 64.2 % Costs of sales 49.7 %
50.5 % Gross margin 50.3 % 49.5 %
Selling, general and administrative expenses 24.4 % 25.2 %
Research and development expenditures 13.2 % 14.3 % Other charges
(income) 1.5 % -0.4 % Intangibles amortization 2.5 %
2.7 % Operating earnings 8.6 % 7.6 % Other
income (expense): Interest expense, net -1.0 % -1.8 % Gain on sales
of investments and businesses, net 0.5 % 1.1 % Other -1.8 %
-0.4 % Total other income (expense) -2.4 %
-1.2 % Earnings from continuing operations before income taxes 6.2
% 6.5 % Income tax expense (benefit) -4.3 % 3.7 %
Earnings from continuing operations 10.5 % 2.8 % Earnings
from discontinued operations, net of tax 10.7 % 3.6 %
Net earnings 21.3 % 6.4 % Less: Earnings (loss) attributable
to noncontrolling interests -0.2 % 0.1 % Net earnings
attributable to Motorola Solutions, Inc. 21.5 % 6.3 %
* Percentages may not add up due to rounding
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions)
July 2, December 31, 2011 2010 Assets
Cash and cash equivalents $ 2,203 $ 4,208 Sigma Fund and short-term
investments 4,424 4,655 Accounts receivable, net 1,546 1,547
Inventories, net 522 521 Deferred income taxes 729 871 Other
current assets 729 748 Current assets held for disposition
116 4,604 Total current assets 10,269 17,154
Property, plant and equipment, net 899 922 Sigma Fund 28 70
Investments 175 172 Deferred income taxes 2,063 1,920 Goodwill
1,429 1,429 Other assets 641 734 Non-current assets held for
disposition 93 3,176
Total assets $
15,597 $ 25,577 Liabilities and
Stockholders' Equity Notes payable and current portion of long-term
debt $ 606 $ 605 Accounts payable 625 731 Accrued liabilities 2,790
2,574 Current liabilities held for disposition 110
4,800 Total current liabilities 4,131 8,710
Long-term debt 1,548 2,098 Other liabilities 3,015 3,045
Non-current liabilities held for disposition 79 737 Total
Motorola Solutions, Inc. stockholders' equity 6,739
10,885 Noncontrolling interests 85 102
Total liabilities and stockholders' equity $
15,597 $ 25,577 Financial
Ratios: Total cash* $ 6,655 $ 8,933 Net cash** 4,501 6,230
*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
Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (In millions) Three Months
Ended July 2, 2011 July 3, 2010 Operating
Net earnings attributable to Motorola Solutions, Inc. $ 349 $ 162
Earnings (loss) attributable to the noncontrolling interests
(2 ) 4 Net earnings 347 166 Earnings from
discontinued operations, net of tax 291 159
Earnings from continuing operations 56 7 Adjustments to
reconcile earnings from continuing operations to net cash provided
by operating activities: Depreciation and amortization 90 85
Non-cash other charges (income) 53 (5 ) Share-based compensation
expense 39 36 Gain on sales of investments and businesses, net (1 )
(33 ) Loss from the extinguishment of long-term debt 81 12 Deferred
income taxes 104 237 Changes in assets and liabilities, net of
effects of acquisitions and dispositions: Accounts receivable (87 )
(227 ) Inventories (2 ) (21 ) Other current assets 22 80 Accounts
payable and accrued liabilities (117 ) 53 Other assets and
liabilities (136 ) (121 ) Net cash provided by
operating activities from continuing operations 102
103
Investing Acquisitions and investments,
net (2 ) (3 ) Proceeds from sales of investments and businesses,
net 1,026 221 Capital expenditures (33 ) (37 ) Proceeds from sales
of property, plant and equipment 3 - Purchases of Sigma Fund
investments, net (975 ) (132 ) Proceed from sales (purchases) of
short-term investments, net 6 (19 ) Net cash
provided by investing activities from continuing operations
25 30
Financing Repayment of short-term
borrowings, net - (1 ) Repayment of debt (616 ) (480 ) Issuance of
common stock 58 5 Distribution from (to) discontinued operations
(136 ) 133 Net cash used for financing
activities from continuing operations (694 ) (343 )
Discontinued Operations Net cash provided by (used for)
operating activities from discontinued operations (153 ) 143 Net
cash used for investing activities from discontinued operations (2
) (39 ) Net cash provided by (used for) financing activities from
discontinued operations 136 (133 ) Effect of exchange rate
changes on cash and cash equivalents from discontinued operations
19 29 Net cash provided by (used for)
financing activities from discontinued operations -
- Effect of exchange rate changes on cash and
cash equivalents from continuing operations 6
(85 ) Net decrease in cash and cash equivalents (561 ) (295 ) Cash
and cash equivalents, beginning of period 2,764
3,188 Cash and cash equivalents, end of period $
2,203 $ 2,893
Financial Ratios: Free
cash flow* $ 69 $ 66 *Free cash flow = Net cash provided by
operating activities - Capital expenditures
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (In millions)
Six Months Ended July 2, 2011
July 3, 2010 Operating Net earnings attributable to
Motorola Solutions, Inc. $ 846 $ 231 Earnings (loss) attributable
to the noncontrolling interests (8 ) 3 Net
earnings 838 234 Earnings from discontinued operations, net of tax
423 131
Earnings from continuing operations
415 103 Adjustments to reconcile earnings from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 181 172 Non-cash other charges
(income) 45 (37 ) Share-based compensation expense 78 69 Gain on
sales of investments and businesses, net (19 ) (40 ) Loss from the
extinguishment of long-term debt 81 12 Deferred income taxes (10 )
255 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable 88 (32 )
Inventories (12 ) (36 ) Other current assets 9 10 Accounts payable
and accrued liabilities (338 ) (144 ) Other assets and liabilities
(185 ) (170 ) Net cash provided by operating
activities from continuing operations 333 162
Investing Acquisitions and investments, net (2 ) (6 )
Proceeds from sales of investments and businesses, net 1,078 239
Capital expenditures (60 ) (74 ) Proceeds from sales of property,
plant and equipment 4 27 Proceeds from sales (purchases) of Sigma
Fund investments, net 266 (248 ) Proceeds from sales (purchases) of
short-term investments, net 6 (23 ) Net cash
provided by (used for) investing activities from continuing
operations 1,292 (85 )
Financing
Repayment of short-term borrowings, net - (5 ) Repayment of debt
(616 ) (481 ) Distribution of Motorola Mobility (3,200 ) - Issuance
of common stock 128 68 Distribution from discontinued operations
75 531 Net cash provided by (used for)
financing activities from continuing operations (3,613 )
113
Discontinued Operations Net cash provided
by operating activities from discontinued operations 38 567 Net
cash used for investing activities from discontinued operations (8
) (88 ) Net cash used for financing activities from discontinued
operations (75 ) (531 ) Effect of exchange rate changes on
cash and cash equivalents from discontinued operations 45
52 Net cash provided by (used for) financing
activities from discontinued operations - -
Effect of exchange rate changes on cash and cash
equivalents from continuing operations (17 ) (166 )
Net increase (decrease) in cash and cash equivalents (2,005 ) 24
Cash and cash equivalents, beginning of period 4,208
2,869 Cash and cash equivalents, end of period $
2,203 $ 2,893
Financial Ratios: Free
cash flow* $ 273 $ 88 *Free cash flow = Net cash provided by
operating activities - Capital expenditures
Motorola Solutions, Inc. and Subsidiaries Segment
Information (In millions) Summarized below are
the Company's Net sales and Operating earnings by reportable
segment for the three and six months ended July 2, 2011 and July 3,
2010.
Net Sales Three Months Ended
July 2, 2011 July 3, 2010 %
Change Government $ 1,308 $ 1,262 4 % Enterprise
747 674 11 % Company Total $ 2,055 $ 1,936 6 %
Six Months Ended July 2,
2011 July 3, 2010 % Change Government $
2,497 $ 2,394 4 % Enterprise 1,442 1,282 12 % Company
Total $ 3,939 $ 3,676 7 %
Operating Earnings
Three Months Ended July 2, 2011
July 3, 2010 % Change Government $ 111 $ 117
-5 % Enterprise 59 44 34 % Company Total $ 170 $ 161
6 %
Six Months Ended
July 2, 2011 July 3, 2010 % Change
Government $ 215 $ 209 3 % Enterprise 125 72
74 % Company Total $ 340 $ 281 21 %
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments Bridge (In millions, except per
share amounts)
Three Months Ended Three Months
Ended July 2, 2011 July 3, 2010 GAAP
Results
Non-GAAPAdjustments
andDiscontinuedOperations
Non-GAAP Results GAAP Results
Non-GAAPAdjustments
andDiscontinuedOperations
Non-GAAP Results
Net sales $ 2,055 $ - $ 2,055 $ 1,936 $ - $ 1,936 Costs of sales
1,016 5 1,011 971
10 961 Gross margin 1,039
(5 ) 1,044 965 (10
) 975 Selling, general and administrative
expenses 492 25 467 471 21 450 Research and development
expenditures 271 9 262 269 11 258 Other charges 56 56 - 14 14 -
Intangibles amortization 50 50 -
50 50 - Operating
earnings 170 (145 ) 315
161 (106 ) 267 Other income
(expense): Interest expense, net (21 ) - (21 ) (35 ) - (35 ) Gain
on sales of investments and businesses, net 1 - 1 33 31 2 Other
(77 ) (81 ) 4 (30 ) -
(30 ) Total other income (expense) (97 )
(81 ) (16 ) (32 ) 31 (63
) Earnings from continuing operations before income taxes 73 (226 )
299 129 (75 ) 204 Income tax expense 17 (84 )
101 122 46 76
Earnings from continuing operations 56 (142 ) 198 7 (121 )
128 Earnings from discontinued operations, net of tax
291 291 - 159
159 - Net earnings 347 149 198 166 38
128 Less: Earnings (loss) attributable to noncontrolling
interests (2 ) - (2 ) 4
- 4 Net earnings attributable to
Motorola Solutions, Inc. $ 349 $ 149 $ 200 $
162 $ 38 $ 124 Amounts attributable to
Motorola Solutions, Inc. common shareholders Earnings from
continuing operations, net of tax $ 58 $ (142 ) $ 200 $ 3 $ (121 )
$ 124 Earnings from discontinued operations, net of tax 291
291 - 159
159 - Net earnings $ 349 $ 149 $
200 $ 162 $ 38 $ 124
Earnings per common
share
Basic: Continuing operations $ 0.17 $ (0.42 ) $ 0.59 $ 0.01 $ (0.36
) $ 0.37 Discontinued operations 0.85 0.85
- 0.48 0.48
- $ 1.02 $ 0.43 $ 0.59 $ 0.49 $
0.12 $ 0.37 Diluted: Continuing operations $
0.17 $ (0.40 ) $ 0.57 $ 0.01 $ (0.36 ) $ 0.37 Discontinued
operations 0.83 0.83 -
0.47 0.47 - $ 1.00
$ 0.43 $ 0.57 $ 0.48 $ 0.11 $ 0.37
Weighted average
common shares outstanding
Basic 341.2 341.2 341.2 332.7 332.7 332.7 Diluted 348.5
348.5 348.5 337.9
337.9 337.9
Percentage
of Net Sales* Net sales 100
% 100 % 100 % 100 % Costs of sales 49.4 % 49.2 %
50.2 % 49.6 % Gross margin 50.6 % 50.8
% 49.8 % 50.4 % Selling, general and
administrative expenses 23.9 % 22.7 % 24.3 % 23.2 % Research and
development expenditures 13.2 % 12.7 % 13.9 % 13.3 % Other charges
2.7 % 0.0 % 0.7 % 0.0 % Intangibles amortization 2.4 %
0.0 % 2.6 % 0.0 % Operating earnings
8.3 % 15.3 % 8.3 % 13.8 % Other income
(expense): Interest expense, net -1.0 % -1.0 % -1.8 % -1.8 % Gain
on sales of investments and businesses, net 0.0 % 0.0 % 1.7 % 0.1 %
Other -3.7 % 0.2 % -1.5 % -1.5 % Total
other income (expense) -4.7 % -0.8 % -1.7 %
-3.3 % Earnings from continuing operations before income
taxes 3.6 % 14.5 % 6.7 % 10.5 % Income tax expense 0.8 %
4.9 % 6.3 % 3.9 % Earnings from continuing
operations 2.7 % 9.6 % 0.4 % 6.6 % Earnings from
discontinued operations, net of tax 14.2 % 0.0 %
8.2 % 0.0 % Net earnings 16.9 % 9.6 % 8.6 % 6.6 %
Less: Earnings (loss) attributable to noncontrolling
interests -0.1 % -0.1 % 0.2 % 0.2 % Net
earnings attributable to Motorola Solutions, Inc. 17.0 %
9.7 % 8.4 % 6.4 % * Percentages may not
add up due to rounding
Motorola Solutions,
Inc. and Subsidiaries Operating Earnings after Non-GAAP
Adjustments
Q1 2011
TOTAL Government Enterprise Net sales $ 1,884
$ 1,189 $ 695 Operating earnings $ 170 $ 104
$ 66 Above-OE non-GAAP adjustments by P&L
statement line:
Statement
Line
Reorganization of business charges Cost of sales 3 3 - Stock-based
compensation expense Cost of sales 3 2 1 Stock-based compensation
expense SG&A and R&D 36 24 12 Reorganization of business
charges Other charges (income) 5 5 - Intangibles amortization
expense Intangibles amortization 50 1
49 Less: Total above-OE non-GAAP adjustments 97 35 62
Operating earnings after
non-GAAP adjustments $ 267 $ 139 $ 128
Operating earnings as a percentage of
net sales - GAAP 9.0 % 8.7 % 9.5 % Operating earnings as a
percentage of net sales - after non-GAAP adjustments 14.2 %
11.7 % 18.4 %
Q2 2011
TOTAL Government Enterprise Net
sales $ 2,055 $ 1,308 $ 747 Operating earnings $ 170
$ 111 $ 59 Above-OE non-GAAP
adjustments by P&L statement line:
Statement
Line
Stock-based compensation expense Cost of sales 5 3 2 Stock-based
compensation expense SG&A and R&D 34 23 11 Legal matters,
net Other charges 48 32 16 Reorganization of business charges Other
charges 17 10 7 Pension plan adjustments, net Other charges (9 ) (6
) (3 ) Intangibles amortization expense Intangibles amortization
50 1 49 Less: Total
above-OE non-GAAP adjustments 145 63 82
Operating earnings after non-GAAP adjustments
$ 315 $ 174 $ 141
Operating earnings as a percentage of net sales - GAAP 8.3 % 8.5 %
7.9 % Operating earnings as a percentage of net sales - after
non-GAAP adjustments 15.3 % 13.3 % 18.9 %
Motorola Solutions,
Inc. and Subsidiaries Non-GAAP Adjustments (Intangibles
Amortization Expense, Stock-Based Compensation Expense and
Highlighted Items)
Q1 2011
Highlighted Items Statement Line
PBT(Inc)/Exp
TaxInc/(Exp)
PAT(Inc)/Exp
EPS impact Intangibles amortization expense
Intangibles amortization $ 50 $ 18 $ 32 0.09 Stock-based
compensation expense Cost of sales, SG&A and R&D 39 11 28
0.08 Reorganization of business charges Cost of sales and Other
charges (income) 8 4 4 0.02 Reduction in deferred tax valuation
allowance Income tax benefit - 244 (244 ) (0.71 )
- Total continuing operations impact $ 97 $
277 $ (180 ) $ (0.52 )
Q2 2011
Highlighted Items Statement Line
PBT(Inc)/Exp
TaxInc/(Exp)
PAT(Inc)/Exp
EPS impact Debt extinguishment loss Other income
(expense) $ 81 $ 30 $ 51 0.14 Intangibles amortization expense
Intangibles amortization 50 18 32 0.09 Legal matters, net Other
charges 48 18 30 0.08 Stock-based compensation expense Cost of
sales, SG&A and R&D 39 12 27 0.08 Reorganization of
business charges Other charges 17 4 13 0.04 Pension plan
adjustments, net Other charges (9 ) 2 (11 ) (0.03 )
- Total continuing operations impact $ 226 $
84 $ 142 $ 0.40
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