Motorola Solutions, Inc. (NYSE: MSI):
- Sales of $2.1 billion, up 10 percent
from third-quarter 2010
- Government sales of $1.4 billion, up 9
percent from third-quarter 2010
- Enterprise sales of $726 million, up 13
percent from third-quarter 2010
- Cash flow from continuing operations
during the quarter of $477 million and ended the quarter with total
cash* of $6.3 billion
- Repurchased $744 million of shares in
the quarter
(In millions, except
earnings per share)
Q3 2011
Q3 2010
Change
Total sales
$2,105 $1,908 10% GAAP
operating earnings
$253 $211 20%
Non-GAAP operating earnings
$358 $289
24% GAAP EPS from continuing operations**
$0.45
$(0.04) -- Non-GAAP*** EPS from continuing
operations**
$0.65 $0.54 20%
Click here for printable press release and financial tables.
Motorola Solutions, Inc. (NYSE: MSI) announced today its
third-quarter 2011 results highlighted by sales of $2.1 billion, up
10 percent from the third quarter of 2010 and driven by solid
demand in all regions across both its Government and Enterprise
segments.
“Our customers continue to invest in solutions that increase
revenues and improve operating efficiency,” said Greg Brown,
chairman and CEO of Motorola Solutions. “In addition to our robust
growth this quarter, we returned significant capital to
shareholders. We repurchased $744 million of stock, initiated our
dividend and generated very strong operating cash flow.”
GAAP operating earnings in the third quarter of 2011 were $253
million or 12 percent of sales, compared to $211 million or 11
percent of sales in the third quarter of 2010. GAAP earnings per
share from continuing operations** were $0.45, compared to a GAAP
loss of $0.04 in the third quarter of 2010.
Non-GAAP*** operating earnings in the third quarter of 2011 were
$358 million or 17 percent of sales, compared to $289 million or 15
percent of sales in the third quarter of 2010. Non-GAAP earnings
per share from continuing operations were $0.65, compared to $0.54
in the third quarter of 2010. Non-GAAP financial information
excludes after-tax benefits of approximately $0.20 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 third quarter of 2011, the company generated $477
million in operating cash flow from continuing operations. The
company ended the quarter with total cash* of $6.3 billion while
returning $744 million to shareholders through share repurchases
during the quarter.
Government segment sales were $1.4 billion, up 9 percent
from the year-ago quarter. GAAP operating earnings were $185
million or 13 percent of sales compared to $159 million or 13
percent of sales in the year-ago quarter. Non-GAAP operating
earnings were $223 million or 16 percent of sales compared to $175
million or 14 percent of sales in the year-ago quarter.
Government highlights:
- Secured multi-million dollar public
safety contracts with Jefferson County 911 Dispatch in Missouri;
Morris County in New Jersey; the city of Cleveland; the state of
Hessen, Germany; the National Police of Colombia; the Public Safety
State Council of Jalisco, Mexico; and Shangdong Police in
China
- Renewed a $95 million managed services
and support agreement with Airwave for its UK TETRA network, the
largest TETRA network in the world with 250,000 subscribers and
nationwide coverage
- Shipped one millionth MOTOTRBO™ digital
two-way radio, the first digital radio in the professional market
that Motorola Solutions introduced in 2007
- Continued to demonstrate leadership in
public safety LTE with an agreement to help the Brazilian Army test
4G LTE technologies for mobile broadband applications for public
security operating in the 700MHz frequency range; also released
first devices for LTE, a vehicle modem and a USB modem, which allow
public safety personnel to access a Band Class 14 Public Safety LTE
network
Enterprise segment sales were $726 million, up 13 percent
from the year-ago quarter. GAAP operating earnings were $68 million
or 9 percent of sales compared to $52 million or 8 percent of sales
in the year-ago quarter. Non-GAAP operating earnings were $135
million or 19 percent of sales compared to $114 million or 18
percent of sales in the year-ago quarter.
Enterprise highlights:
- Continued strong mobile computing
growth in Europe with awards from customers such as Posten Logistik
Group in Sweden, DHL Express in France, GDF Suez in France and
Jumbo Supermarkets in the Netherlands
- Completed the acquisition of Rhomobile,
a mobile application development platform company, which reinforces
Motorola Solutions’ commitment to enable its partner communities to
deliver rich, highly tailored applications across multiple
operating system environments that will help customers mobilize and
connect across devices today and in the future
- Secured a significant managed services
win with Sears, and a WLAN contract that includes deployment and
maintenance services with Raley’s grocery stores in western United
States
- Announced the sale of point-to-point
(Orthogon) and point-to-multipoint (Canopy) businesses to Vector
Capital
Results from Discontinued Operations
The third-quarter net loss from discontinued operations was $24
million, which substantially relates to an after-tax charge for an
expected purchase price adjustment associated with the sale of the
company’s Networks business in the second quarter of 2011.
Fourth-Quarter and Full-Year 2011 Outlook
The company has raised its expected full-year revenue outlook to
approximately 7 percent growth with operating earnings of
approximately 16.5 percent of sales. Fourth-quarter sales are
expected to grow between 2 and 3 percent compared with the fourth
quarter of 2010 and approximately 7 percent compared with the third
quarter of 2011. Earnings per share from continuing operations are
expected to be $0.78 to $0.83. 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.
Consolidated GAAP Results
A comparison of results from operations is as follows:
Third Quarter (In millions,
except per share amounts)
2011
2010
Net sales $2,105 $1,908 Gross margin 1,060 964 Operating
earnings 253 211 Earnings from continuing operations** 152 (13) Net
earnings ** 128 110 Diluted earnings per common share from
continuing operations: ** $0.45 $(0.04) Weighted average
diluted common shares outstanding 339.5 334.1
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 third quarter of 2011.
Third
Quarter
(per diluted common share)
2011
GAAP Earnings per Common Share from
Continuing Operations $0.45
Highlighted
Items: Reorganization of business charges 0.02
Total Highlighted Items 0.02
Stock-based compensation expense 0.09 Intangible assets
amortization expense 0.09
Stock-Based Compensation
Expense and Intangible Assets Amortization Expense 0.18
Total Non-GAAP Adjustments 0.20
Non-GAAP Earnings per Common Share
$0.65
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, Oct. 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.
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 fourth 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 the flooding that is currently occurring in
Thailand; (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
About Motorola Solutions
Motorola Solutions is a leading provider of mission-critical
communication solutions 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, 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.
GAAP-1 Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Statements of
Operations (In millions, except per share amounts)
Three Months Ended October 1,
2011 October 2, 2010 Net sales from products $ 1,572 $
1,413 Net sales from services 533 495
Net sales 2,105 1,908 Costs of products sales 695 624 Costs
of services sales 350 320 Costs of
sales 1,045 944 Gross margin 1,060
964 Selling, general and administrative
expenses 475 457 Research and development expenditures 272 262
Other charges (income) 10 (17 ) Intangibles amortization 50
51 Operating earnings 253
211 Other income (expense): Interest expense, net (18
) (29 ) Gain on sales of investments and businesses, net 2 4 Other
- 6 Total other income (expense)
(16 ) (19 ) Earnings from continuing operations before
income taxes 237 192 Income tax expense 84 203
Earnings (loss) from continuing operations 153 (11 )
Earnings (loss) from discontinued operations, net of tax (24
) 123 Net earnings 129 112 Less: Earnings
attributable to noncontrolling interests 1 2
Net earnings attributable to Motorola Solutions, Inc. $ 128
$ 110 Amounts attributable to Motorola
Solutions, Inc. common shareholders Earnings (loss) from continuing
operations, net of tax $ 152 $ (13 ) Earnings (loss) from
discontinued operations, net of tax (24 ) 123
Net earnings $ 128 $ 110
Earnings (loss) per
common share
Basic: Continuing operations $ 0.45 $ (0.04 ) Discontinued
operations (0.07 ) 0.37 $ 0.38 $ 0.33
Diluted: Continuing operations $ 0.45 $ (0.04 )
Discontinued operations (0.07 ) 0.37 $ 0.38
$ 0.33
Weighted average
common shares outstanding
Basic 335.4 334.1 Diluted 339.5 334.1
Percentage of Net Sales* Net
sales from products 74.7 % 74.1 % Net sales from services
25.3 % 25.9 % Net sales 100 % 100 %
Costs of products sales 44.2 % 44.2 % Costs of services sales
65.7 % 64.6 % Costs of sales 49.6 %
49.5 % Gross margin 50.4 % 50.5 %
Selling, general and administrative expenses 22.6 % 24.0 %
Research and development expenditures 12.9 % 13.7 % Other charges
(income) 0.5 % -0.9 % Intangibles amortization 2.4 %
2.7 % Operating earnings 12.0 % 11.1 % Other
income (expense): Interest expense, net -0.9 % -1.5 % Gain on sales
of investments and businesses, net 0.1 % 0.2 % Other 0.0 %
0.3 % Total other income (expense) -0.8 % -1.0
% Earnings from continuing operations before income taxes 11.3 %
10.1 % Income tax expense 4.0 % 10.6 % Earnings
(loss) from continuing operations 7.3 % -0.6 % Earnings
(loss) from discontinued operations, net of tax -1.1 %
6.4 % Net earnings 6.1 % 5.9 % Less: Earnings
attributable to noncontrolling interests 0.0 % 0.1 %
Net earnings attributable to Motorola Solutions, Inc. 6.1 %
5.8 % * Percentages may not add up due to rounding
GAAP-2 Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Statements of
Operations (In millions, except per share amounts)
Nine Months Ended October 1,
2011 October 2, 2010 Net sales from products $ 4,445 $
4,056 Net sales from services 1,524 1,442
Net sales 5,969 5,498 Costs of products sales 2,001
1,833 Costs of services sales 967 928
Costs of sales 2,968 2,761 Gross margin 3,001
2,737 Selling, general and
administrative expenses 1,425 1,369 Research and development
expenditures 775 772 Other charges (income) 71 (33 ) Intangibles
amortization 150 152 Operating earnings
580 477 Other income (expense):
Interest expense, net (59 ) (97 ) Gain on sales of investments and
businesses, net 21 44 Other (72 ) (9 ) Total other
income (expense) (110 ) (62 ) Earnings from
continuing operations before income taxes 470 415 Income tax
expense (benefit) (91 ) 332 Earnings from
continuing operations 561 83 Earnings from discontinued
operations, net of tax 407 263 Net
earnings 968 346 Less: Earnings (loss) attributable to
noncontrolling interests (6 ) 5 Net earnings
attributable to Motorola Solutions, Inc. $ 974 $ 341
Amounts attributable to Motorola Solutions, Inc. common
shareholders Earnings from continuing operations, net of tax $ 567
$ 78 Earnings from discontinued operations, net of tax 407
263 Net earnings $ 974 $ 341
Earnings per common
share
Basic: Continuing operations $ 1.68 $ 0.23 Discontinued operations
1.21 0.80 $ 2.89 $ 1.03
Diluted: Continuing operations $ 1.65 $ 0.23 Discontinued
operations 1.19 0.78 $ 2.84 $
1.01
Weighted average
common shares outstanding
Basic 337.3 332.5 Diluted 343.4 337.1
Percentage of Net Sales* Net
sales from products 74.5 % 73.8 % Net sales from services
25.5 % 26.2 % Net sales 100 % 100 %
Costs of products sales 45.0 % 45.2 % Costs of services sales
63.5 % 64.4 % Costs of sales 49.7 %
50.2 % Gross margin 50.3 % 49.8 %
Selling, general and administrative expenses 23.9 % 24.9 %
Research and development expenditures 13.0 % 14.0 % Other charges
(income) 1.2 % -0.6 % Intangibles amortization 2.5 %
2.8 % Operating earnings 9.7 % 8.7 % Other
income (expense): Interest expense, net -1.0 % -1.8 % Gain on sales
of investments and businesses, net 0.4 % 0.8 % Other -1.2 %
-0.2 % Total other income (expense) -1.8 %
-1.1 % Earnings from continuing operations before income taxes 7.9
% 7.5 % Income tax expense (benefit) -1.5 % 6.0 %
Earnings from continuing operations 9.4 % 1.5 % Earnings
from discontinued operations, net of tax 6.8 % 4.8 %
Net earnings 16.2 % 6.3 % Less: Earnings (loss) attributable
to noncontrolling interests -0.1 % 0.1 % Net earnings
attributable to Motorola Solutions, Inc. 16.3 % 6.2 %
* Percentages may not add up due to rounding
GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets
(In millions) October 1, December
31, 2011 2010 Assets Cash and cash equivalents $
1,785 $ 4,208 Sigma Fund and short-term investments 4,465 4,655
Accounts receivable, net 1,535 1,547 Inventories, net 548 521
Deferred income taxes 629 871 Other current assets 743 748 Current
assets held for disposition 10 4,604 Total current
assets 9,715 17,154 Property, plant and
equipment, net 889 922 Sigma Fund 26 70 Investments 167 172
Deferred income taxes 2,074 1,920 Goodwill 1,449 1,429 Other assets
449 734 Non-current assets held for disposition 2
3,176
Total assets $ 14,771 $
25,577 Liabilities and Stockholders' Equity Notes
payable and current portion of long-term debt $ 605 $ 605 Accounts
payable 641 731 Accrued liabilities 2,911 2,574 Current liabilities
held for disposition 12 4,800 Total current
liabilities 4,169 8,710 Long-term debt 1,538
2,098 Other liabilities 2,906 3,045 Non-current liabilities held
for disposition - 737 Total Motorola Solutions, Inc.
stockholders' equity 6,098 10,885
Noncontrolling interests 60 102
Total
liabilities and stockholders' equity $ 14,771
$ 25,577 Total cash* $ 6,276 $ 8,933
Net cash** 4,133 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
GAAP-4 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Three Months Ended
October 1, 2011 October 2, 2010 Operating Net
earnings attributable to Motorola Solutions, Inc. $ 128 $ 110
Earnings attributable to the noncontrolling interests 1
2 Net earnings 129 112 Earnings (loss) from
discontinued operations, net of tax (24 ) 123
Earnings (loss) from continuing operations 153 (11 ) Adjustments to
reconcile earnings from continuing operations to net cash provided
by operating activities: Depreciation and amortization 92 85
Non-cash other income (6 ) (22 ) Share-based compensation expense
45 39 Gain on sales of investments and businesses, net (2 ) (4 )
Loss from the extinguishment of long-term debt - - Deferred income
taxes 40 143 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable (6 ) (48 )
Inventories (26 ) (54 ) Other current assets (15 ) (63 ) Accounts
payable and accrued liabilities 107 326 Other assets and
liabilities 95 (73 ) Net cash provided by
operating activities from continuing operations 477
318
Investing Acquisitions and investments,
net (24 ) (1 ) Proceeds from sales of investments and businesses,
net (14 ) (1 ) Capital expenditures (43 ) (37 ) Proceeds from sales
of property, plant and equipment 2 - Purchases of Sigma Fund
investments, net (41 ) 278 Proceeds from sales of short-term
investments, net - 17 Net cash provided
by (used for) investing activities from continuing operations
(120 ) 256
Financing Repayment of
short-term borrowings, net - - Repayment of debt (1 ) (3 )
Contribution to Motorola Mobility (75 ) - Issuance of common stock
20 84 Purchase of common stock (744 ) - Excess tax benefits from
share-based compensation 39 - Distribution from discontinued
operations 20 104 Net cash provided by
(used for) financing activities from continuing operations
(741 ) 185
Discontinued Operations Net cash
provided by operating activities from discontinued operations 19
271 Net cash used for investing activities from discontinued
operations - (72 ) Net cash used for financing activities from
discontinued operations (20 ) (104 ) Effect of exchange rate
changes on cash and cash equivalents from discontinued operations
1 (95 ) Net cash provided by (used for)
financing activities from discontinued operations -
- Effect of exchange rate changes on cash and
cash equivalents from continuing operations (34 ) 196
Net decrease in cash and cash equivalents (418 ) 955 Cash
and cash equivalents, beginning of period 2,203
2,893 Cash and cash equivalents, end of period $
1,785 $ 3,848
Financial Ratios: Free
cash flow* $ 434 $ 281 *Free cash flow = Net cash provided
by operating activities - Capital expenditures
GAAP-5 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Nine Months Ended
October 1, 2011 October 2, 2010 Operating Net
earnings attributable to Motorola Solutions, Inc. $ 974 $ 341
Earnings (loss) attributable to the noncontrolling interests
(6 ) 5 Net earnings 968 346 Earnings from
discontinued operations, net of tax 407 263
Earnings from continuing operations 561 83 Adjustments to
reconcile earnings from continuing operations to net cash provided
by operating activities: Depreciation and amortization 273 257
Non-cash other charges (income) 40 (60 ) Share-based compensation
expense 123 108 Gain on sales of investments and businesses, net
(21 ) (44 ) Loss from the extinguishment of long-term debt 81 12
Deferred income taxes 30 398 Changes in assets and liabilities, net
of effects of acquisitions and dispositions: Accounts receivable 82
(80 ) Inventories (37 ) (90 ) Other current assets (6 ) (53 )
Accounts payable and accrued liabilities (230 ) 182 Other assets
and liabilities (93 ) (242 ) Net cash provided by
operating activities from continuing operations 803
471
Investing Acquisitions and investments,
net (26 ) (7 ) Proceeds from sales of investments and businesses,
net 1,064 238 Capital expenditures (103 ) (111 ) Proceeds from
sales of property, plant and equipment 6 27 Purchases of Sigma Fund
investments, net 225 30 Proceeds from sales (purchases) of
short-term investments, net 6 (6 ) Net cash
provided by investing activities from continuing operations
1,172 171
Financing Repayment of
short-term borrowings, net - (5 ) Repayment of debt (617 ) (484 )
Contribution to Motorola Mobility (3,275 ) - Issuance of common
stock 148 152 Purchase of common stock (744 ) - Excess tax benefits
from share-based compensation 39 - Distribution from discontinued
operations 102 644 Net cash provided by
(used for) financing activities from continuing operations
(4,347 ) 307
Discontinued Operations Net cash
provided by operating activities from discontinued operations 65
847 Net cash used for investing activities from discontinued
operations (8 ) (160 ) Net cash used for financing activities from
discontinued operations (102 ) (644 ) Effect of exchange
rate changes on cash and cash equivalents from discontinued
operations 45 (43 ) Net cash provided by (used
for) financing activities from discontinued operations -
- Effect of exchange rate changes on
cash and cash equivalents from continuing operations (51 )
30 Net increase (decrease) in cash and cash
equivalents (2,423 ) 979 Cash and cash equivalents, beginning of
period 4,208 2,869 Cash and cash
equivalents, end of period $ 1,785 $ 3,848
Financial Ratios: Free cash flow* $ 700 $ 360 *Free
cash flow = Net cash provided by operating activities - Capital
expenditures
GAAP-6 Motorola
Solutions, Inc. and Subsidiaries Segment Information
(In millions)
Summarized below are the Company's Net
sales and Operating earnings by reportable segment for the three
and nine months ended October 1, 2011 and October 2, 2010.
Net Sales Three Months
Ended October 1, 2011 October 2,
2010 % Change Government $ 1,379 $ 1,267 9 %
Enterprise 726 641 13 % Company Total $ 2,105 $ 1,908
10 %
Nine Months Ended
October 1, 2011 October 2, 2010 %
Change Government $ 3,876 $ 3,661 6 % Enterprise
2,093 1,837 14 % Company Total $ 5,969 $ 5,498 9 %
Operating Earnings Three
Months Ended October 1, 2011
October 2, 2010 % Change Government $ 185 $
159 16 % Enterprise 68 52 31 % Company Total $ 253 $
211 20 %
Nine Months Ended
October 1, 2011 October 2, 2010 %
Change Government $ 388 $ 352 10 % Enterprise 192
125 54 % Company Total $ 580 $ 477 22 %
Non-GAAP-1 Motorola
Solutions, Inc. and Subsidiaries Non-GAAP Adjustments
Bridge (In millions, except per share amounts)
Three Months Ended Three Months Ended October 1,
2011 October 2, 2010 GAAP Results
Non-GAAPAdjustments
andDiscontinuedOperations
Non-GAAP Results GAAP Results
Non-GAAPAdjustments
andDiscontinuedOperations
Non-GAAP Results
Net sales $ 2,105 $ - $ 2,105 $ 1,908 $ - $ 1,908 Costs of sales
1,045 6 1,039 944
11 933 Gross margin 1,060
(6 ) 1,066 964 (11
) 975 Selling, general and administrative
expenses 475 29 446 457 22 435 Research and development
expenditures 272 10 262 262 11 251 Other charges 10 10 - (17 ) (17
) - Intangibles amortization 50 50
- 51 51 -
Operating earnings 253 (105 ) 358
211 (78 ) 289
Other income (expense): Interest expense, net (18 ) - (18 ) (29 ) -
(29 ) Gain on sales of investments and businesses, net 2 - 2 4 - 4
Other - - - 6
- 6 Total other income (expense)
(16 ) - (16 ) (19 ) -
(19 ) Earnings from continuing operations before
income taxes 237 (105 ) 342 192 (78 ) 270 Income tax expense
(benefit) 84 (35 ) 119
203 115 88 Earnings (loss) from
continuing operations 153 (70 ) 223 (11 ) (193 ) 182
Earnings (loss) from discontinued operations, net of tax (24
) (24 ) - 123 123
- Net earnings 129 (94 ) 223 112 (70 ) 182
Less: Earnings attributable to noncontrolling interests 1
- 1 2 -
2 Net earnings attributable to Motorola
Solutions, Inc. $ 128 $ (94 ) $ 222 $ 110 $
(70 ) $ 180 Earnings (loss) from continuing
operations, net of tax $ 152 $ (70 ) $ 222 $ (13 ) $ (193 ) $ 180
Earnings (loss) from discontinued operations, net of tax (24
) (24 ) - 123 123
- Net earnings $ 128 $ (94 ) $ 222 $
110 $ (70 ) $ 180
Earnings per common
share
Basic: Continuing operations $ 0.45 $ (0.21 ) $ 0.66 $ (0.04 ) $
(0.58 ) $ 0.54 Discontinued operations (0.07 ) (0.07
) - 0.37 0.37 -
$ 0.38 $ (0.28 ) $ 0.66 $ 0.33 $ (0.21
) $ 0.54 Diluted: Continuing operations $ 0.45 $
(0.20 ) $ 0.65 $ (0.04 ) $ (0.58 ) $ 0.54 Discontinued operations
(0.07 ) (0.07 ) - 0.37
0.37 - $ 0.38 $ (0.27 ) $ 0.65
$ 0.33 $ (0.21 ) $ 0.54
Weighted average
common shares outstanding
Basic 335.4 335.4 335.4 334.1 334.1 334.1 Diluted 339.5
339.5 339.5 334.1
334.1 334.1
Percentage
of Net Sales* Net sales 100
% 100 % 100 % 100 % Costs of sales 49.6 % 49.4 %
49.5 % 48.9 % Gross margin 50.4 % 50.6
% 50.5 % 51.1 % Selling, general and
administrative expenses 22.6 % 21.2 % 24.0 % 22.8 % Research and
development expenditures 12.9 % 12.4 % 13.7 % 13.2 % Other charges
0.5 % 0.0 % -0.9 % 0.0 % Intangibles amortization 2.4 %
0.0 % 2.7 % 0.0 % Operating earnings
12.0 % 17.0 % 11.1 % 15.1 % Other
income (expense): Interest expense, net -0.9 % -0.9 % -1.5 % -1.5 %
Gain on sales of investments and businesses, net 0.1 % 0.1 % 0.2 %
0.2 % Other 0.0 % 0.0 % 0.3 % 0.3 %
Total other income (expense) -0.8 % -0.8 %
-1.0 % -1.0 % Earnings from continuing operations before
income taxes 11.3 % 16.2 % 10.1 % 14.2 % Income tax expense
(benefit) 4.0 % 5.7 % 10.6 % 4.6 %
Earnings (loss) from continuing operations 7.3 % 10.6 % -0.6 % 9.5
% Earnings (loss) from discontinued operations, net of tax
-1.1 % 0.0 % 6.4 % 0.0 % Net earnings
6.1 % 10.6 % 5.9 % 9.5 % Less: Earnings attributable to
noncontrolling interests 0.0 % 0.0 % 0.1 %
0.1 % Net earnings attributable to Motorola Solutions, Inc.
6.1 % 10.5 % 5.8 % 9.4 % *
Percentages may not add up due to rounding
Non-GAAP-2 Motorola Solutions, Inc. and
Subsidiaries Operating Earnings after Non-GAAP
Adjustments Q1 2011
TOTAL Government
Enterprise Net sales $ 1,856 $ 1,189 $ 667 Operating
earnings $ 168 $ 98 $ 70
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 $
265 $ 133 $ 132 Operating
earnings as a percentage of net sales - GAAP 9.1 % 8.2 % 10.5 %
Operating earnings as a percentage of net sales - after non-GAAP
adjustments 14.3 % 11.2 % 19.8 %
Q2
2011
TOTAL Government Enterprise Net sales $ 2,008
$ 1,308 $ 700 Operating earnings $ 159
$ 105 $ 54 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 $ 304 $ 168 $
136 Operating earnings as a percentage
of net sales - GAAP 7.9 % 8.0 % 7.7 % Operating earnings as a
percentage of net sales - after non-GAAP adjustments 15.1 %
12.8 % 19.4 %
Q3 2011
TOTAL
Government Enterprise Net sales $ 2,105 $ 1,379 $ 726
Operating earnings $ 253 $ 185
$ 68 Above-OE non-GAAP adjustments by P&L
statement line:
Statement
Line
Stock-based compensation expense Cost of sales 6 4 2 Stock-based
compensation expense SG&A and R&D 39 26 13 Reorganization
of business charges Other charges 10 7 3 Intangibles amortization
expense Intangibles amortization 50 1
49 Less: Total above-OE non-GAAP adjustments 105 38
67
Operating earnings after non-GAAP adjustments
$ 358 $ 223 $ 135
Operating earnings as a percentage of net sales - GAAP 12.0 % 13.4
% 9.4 % Operating earnings as a percentage of net sales - after
non-GAAP adjustments 17.0 % 16.2 % 18.6 %
Non-GAAP-3 Motorola
Solutions, Inc. and Subsidiaries Non-GAAP Adjustments
(Intangibles Amortization Expense, Stock-Based Compensation Expense
and Highlighted Items)
Q1 2011
PBT Tax PAT Highlighted Items
Statement Line (Inc)/Exp Inc/(Exp)
(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 PBT
Tax PAT Highlighted Items Statement
Line (Inc)/Exp Inc/(Exp) (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
Q3 2011 PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp
Inc/(Exp) (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 45 14 31 0.09 Reorganization of business charges Other
charges 10 3 7 0.02
Total continuing operations impact $ 105 $ 35 $ 70 $ 0.20
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