Motorola Solutions, Inc. (NYSE: MSI):
- Fourth-quarter sales of $2.3 billion,
up 5 percent from a year ago
- Fourth-quarter Government sales of $1.5
billion, up 6 percent from a year ago
- Fourth-quarter Enterprise sales of $753
million, up 3 percent from a year ago
- Repurchased $366 million of shares in
the quarter; $1.1 billion for the full year
- Contributed an incremental $250 million
to the U.S. pension plan in the quarter, with U.S. contributions
for the full year totaling $480 million
- Ended the quarter with total cash* of
$5.1 billion
Fourth Quarter Full
Year
(In millions, except
earnings per share)
2011
2010
Change
2011
2010
Change
Total sales
$2,300 $2,185 5%
$8,203 $7,617 8% GAAP operating earnings
$276 $272 1%
$858
$751 14% Non-GAAP operating earnings
$444
$346 28%
$1,373 $1,064
29% GAAP EPS from continuing operations**
$0.54
$0.49 10%
$2.20 $0.72
206% Non-GAAP*** EPS from continuing operations**
$0.87 $0.64 36%
$2.61
$1.84 42%
Click here for printable press release and financial tables.
Motorola Solutions, Inc. (NYSE: MSI) announced today its
fourth-quarter and full-year 2011 results highlighted by
fourth-quarter sales of $2.3 billion, up 5 percent from the fourth
quarter of 2010 and full-year sales of $8.2 billion, up 8 percent
from 2010. The revenue growth reflects solid demand in all regions
across both the Government and Enterprise segments.
“Our record fourth quarter capped a very strong and exciting
year for our company,” said Greg Brown, chairman and CEO of
Motorola Solutions. “We streamlined and strengthened our portfolio,
grew operating earnings more than five times revenue growth,
expanded operating margins, generated strong cash flow and
prioritized return of capital to our shareholders.”
GAAP operating earnings in the fourth quarter of 2011 were $276
million or 12 percent of sales, compared to $272 million or 12
percent of sales in the fourth quarter of 2010. GAAP earnings per
share from continuing operations** were $0.54, compared to a GAAP
earnings of $0.49 in the fourth quarter of 2010. For the full year
2011, GAAP operating earnings were $858 million or 10 percent of
sales, compared to $751 million or 10 percent of sales in 2010.
GAAP earnings per share from continuing operations** were $2.20,
compared to GAAP earnings of $0.72 in 2010.
Non-GAAP*** operating earnings in the fourth quarter of 2011
were $444 million or 19 percent of sales, compared to $346 million
or 16 percent of sales in the fourth quarter of 2010. Non-GAAP
earnings per share from continuing operations were $0.87, compared
to $0.64 in the fourth quarter of 2010. Non-GAAP financial
information excludes after-tax net charges of approximately $0.33
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. For the full
year 2011, Non-GAAP operating earnings were $1.4 billion or 17
percent of sales, compared to $1.1 billion or 14 percent of sales
in 2010. Non-GAAP earnings per share from continuing operations
were $2.61, compared to $1.84 in 2010.
During the fourth quarter of 2011, the company generated $44
million in operating cashflow from continuing operations, which
included a $250 million incremental contribution to the U.S.
pension plan. The company ended the quarter with total cash of $5.1
billion while returning $366 million to shareholders through share
repurchases during the quarter.
Government segment sales were $1.5 billion, up 6 percent
from the year-ago quarter. GAAP operating earnings were $226
million or 15 percent of sales compared to $181 million or 12
percent of sales in the year-ago quarter. Non-GAAP operating
earnings were $307 million or 20 percent of sales compared to $221
million or 15 percent of sales in the year-ago quarter.
For the full year 2011, Government segment sales were $5.4
billion, up 6 percent from 2010. GAAP operating earnings were $616
million or 11 percent of sales compared to $534 million or 11
percent of sales in 2010. Non-GAAP operating earnings were $833
million or 16 percent of sales compared to $637 million or 13
percent of sales in 2010.
Government highlights:
- Secured multi-million dollar contracts
with City of Atlanta; St. Louis County in Missouri; St. Johns,
Seminole and Osceola counties in Florida; the state of Tennessee;
the Washington State Patrol; the Western Australia Police Service;
the Ecuador National Police; and the Mexico Federal Electric
Commission
- Expanded award-winning APX™
mission-critical radio series to include the APX 4000 portable
radio for public works, utilities and rural public safety users,
making APX the first complete portfolio of Project 25 Phase 2 TDMA
two-way portable radios in the industry
- Continued to demonstrate leadership by
completing first commercial release of standards-based LTE
technology for public safety and secured an additional LTE contract
win in Irving, Texas
Enterprise segment sales were $753 million, up 3 percent
from the year-ago quarter, which included a $37 million decline in
iDEN sales. GAAP operating earnings were $50 million or 7 percent
of sales compared to $91 million or 12 percent of sales in the
year-ago quarter. Non-GAAP operating earnings were $137 million or
18 percent of sales compared to $125 million or 17 percent of sales
in the year-ago quarter.
For the full year 2011, Enterprise segment sales were $2.8
billion, up 11 percent from 2010. GAAP operating earnings were $242
million or 9 percent of sales compared to $217 million or 8 percent
of sales in 2010. Non-GAAP operating earnings were $540 million or
19 percent of sales compared to $427 million or 17 percent of sales
in 2010.
Enterprise highlights:
- Continued growth with demand in retail
and transportation & logistics from key customers such as Lord
& Taylor, UPS and Poste Italiane
- Launched the ET1 tablet, the first in
an emerging category of enterprise-class tablet computers that
brings the familiarity and popularity of a consumer-class user
experience to a true enterprise-class device
- Introduced RhoElements, a
state-of-the-art web-based application framework that allows
businesses to quickly and cost-effectively develop and deploy
web-based applications on mobile computers
Results from Discontinued Operations
The fourth-quarter GAAP profit from discontinued operations was
$7 million, which substantially relates to the divestiture of the
company’s Point-to-Point (Orthogon) and Point-to-Multipoint
(Canopy) wireless broadband networks businesses.
First-Quarter and Full-Year Outlook
Motorola Solutions’ outlook for the first quarter of 2012 is for
revenue growth of approximately 4 percent compared with the first
quarter of 2011 and earnings per share from continuing operations
of $0.50 to $0.55 per share. For the full-year 2012, the company
expects revenue growth of approximately 5 percent compared with
2011 and operating earnings of approximately 17 percent of sales.
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:
Fourth
Quarter
Full
Year
(In millions, except per share amounts)
2011
2010
2011
2010
Net
sales 2,300 2,185 8,203 7,617 Gross margin 1,160 1,089 4,146 3,812
Operating earnings 276 272 858 751 Earnings from continuing
operations** 177 167 747 244 Net earnings ** 184 292 1,158 633
Diluted earnings per common share from continuing
operations: ** $0.54 $0.49 $2.20 $0.72 Weighted average
diluted common shares outstanding 328.4 341.3
339.7 338.1
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 fourth quarter of 2011.
Fourth
Quarter
(per diluted common share)
2011
GAAP Earnings per Common Share from
Continuing Operations $0.54
Highlighted
Items: Legal matter 0.08 Reorganization of business charges
0.05 Long-term financing receivable reserve 0.02 Tax expense
related to undistributed foreign earnings 0.05 Tax benefit from
audit settlements and agreements (0.05)
Total Highlighted Items 0.15 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 0.33
Non-GAAP Earnings per Common Share $0.87
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call
beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern
Daylight Time) on Wednesday, Jan. 25. 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,
Motorola Solutions’ financial outlook for the first quarter and
full year of 2012. 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
2011 Quarterly Report on Form 10-Q, on page 50 in Item 1A of
Motorola Solutions, Inc.’s Third Quarter 2011 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) the economic outlook for the government and
enterprise communications industries; (2) the level of demand for
the company's products, particularly if businesses and governments
defer or cancel purchases in response to tighter credit; (3) the
company's ability to introduce new products and technologies in a
timely manner; (4) negative impact on the company's business from
global economic conditions, which may include: (i) potential
deferment or cancellation of purchase orders by customers; (ii) the
inability of customers to obtain financing for purchases of the
company's products; (iii) increased demand to provide vendor
financing to customers; (iv) increased financial pressures on
third-party dealers, distributors and retailers; (v) the viability
of the company's suppliers that may no longer have access to
necessary financing; (vi) counterparty failures negatively
impacting the company’s financial position; (vii) changes in the
value of investments held by the company's pension plan and other
defined benefit plans; and (viii) the company’s ability to access
the capital markets on acceptable terms and conditions; (5) the
company's ability to purchase sufficient materials, parts and
components to meet customer demand, particularly in light of global
economic conditions; (6) risks related to dependence on certain key
suppliers, subcontractors, third-party distributors and other
representatives; (7) the impact on the company's performance and
financial results from strategic acquisitions or divestitures,
including those that may occur in the future; (8) risks related to
the company's manufacturing and business operations in foreign
countries; (9) the creditworthiness of the company's customers and
distributors, particularly purchasers of large infrastructure
systems; (10) exposure under large systems and managed services
contracts, including risks related to the fact that certain
customers require that the company build, own and operate their
systems, often over a multi-year period; (11) the ownership of
certain logos, trademarks, trade names and service marks including
“MOTOROLA” by Motorola Mobility Holdings, Inc.; (12) variability in
income received from licensing the company's intellectual property
to others, as well as expenses incurred when the company licenses
intellectual property from others; (13) unexpected liabilities or
expenses, including unfavorable outcomes to any pending or future
litigation or regulatory or similar proceedings; (14) the impact of
foreign currency fluctuations, including the negative impact of a
strengthening U.S. dollar on the company when competing for
business in foreign markets; (15) the impact of the percentage of
cash and cash equivalents held outside of the United States; (16)
the ability of the company to pay future dividends due to possible
adverse market conditions or adverse impacts on the company’s cash
flow; (17) the ability of the company to repurchase shares under
its repurchase program due to possible adverse market conditions or
adverse impacts on the company’s cash flow; (18) the impact of
changes in governmental policies, laws or regulations; (19) the
outcome of currently ongoing and future tax matters; 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. ©2012 Motorola Solutions, Inc.
All rights reserved.
GAAP-1 Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Statements of
Operations (In millions, except per share amounts)
Three Months Ended December 31,
2011 December 31, 2010 Net sales from products $ 1,689 $
1,626 Net sales from services 611 559
Net sales 2,300 2,185 Costs of products sales 774 743 Costs
of services sales 366 353 Costs of
sales 1,140 1,096 Gross margin 1,160
1,089 Selling, general and administrative
expenses 498 515 Research and development expenditures 266 271
Other charges (income) 70 (20 ) Intangibles amortization 50
51 Operating earnings 276
272 Other income (expense): Interest expense, net (15
) (32 ) Gain on sales of investments and businesses, net 2 5 Other
4 3 Total other income (expense)
(9 ) (24 ) Earnings from continuing operations before
income taxes 267 248 Income tax expense 90
69 Earnings from continuing operations 177 179
Earnings from discontinued operations, net of tax 7
125 Net earnings 184 304 Less: Earnings
attributable to noncontrolling interests - 12
Net earnings attributable to Motorola Solutions, Inc. $ 184
$ 292 Amounts attributable to Motorola
Solutions, Inc. common shareholders Earnings from continuing
operations, net of tax $ 177 $ 167 Earnings from discontinued
operations, net of tax 7 125 Net
earnings $ 184 $ 292
Earnings per common
share
Basic: Continuing operations $ 0.55 $ 0.50 Discontinued operations
0.02 0.37 $ 0.57 $ 0.87
Diluted: Continuing operations $ 0.54 $ 0.49 Discontinued
operations 0.02 0.37 $ 0.56 $
0.86
Weighted average
common shares outstanding
Basic 323.1 335.9 Diluted 328.4 341.3
Percentage of Net Sales* Net
sales from products 73.4 % 74.4 % Net sales from services
26.6 % 25.6 % Net sales 100 % 100 %
Costs of products sales 45.8 % 45.7 % Costs of services sales
59.9 % 63.1 % Costs of sales 49.6 %
50.2 % Gross margin 50.4 % 49.8 %
Selling, general and administrative expenses 21.7 % 23.6 %
Research and development expenditures 11.6 % 12.4 % Other charges
3.0 % -0.9 % Intangibles amortization 2.2 % 2.3 %
Operating earnings 12.0 % 12.4 % Other income
(expense): Interest expense, net -0.7 % -1.5 % Gain on sales of
investments and businesses, net 0.1 % 0.2 % Other 0.2 %
0.1 % Total other income (expense) -0.4 % -1.1
% Earnings from continuing operations before income taxes 11.6 %
11.4 % Income tax expense 3.9 % 3.2 % Earnings from
continuing operations 7.7 % 8.2 % Earnings from discontinued
operations, net of tax 0.3 % 5.7 % Net earnings 8.0 %
13.9 % Less: Earnings attributable to noncontrolling
interests 0.0 % 0.5 % Net earnings attributable to
Motorola Solutions, Inc. 8.0 % 13.4 % *
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)
Year Ended December
31, 2011 December 31, 2010 December 31, 2009 Net
sales from products $ 6,068 $ 5,616 $ 5,026 Net sales from services
2,135 2,001 1,921 Net
sales 8,203 7,617 6,947 Costs of products sales 2,723 2,523
2,221 Costs of services sales 1,334 1,282
1,249 Costs of sales 4,057 3,805 3,470
Gross margin 4,146 3,812
3,477 Selling, general and administrative
expenses 1,912 1,874 1,662 Research and development expenditures
1,035 1,037 993 Other charges (income) 141 (53 ) 37 Intangibles
amortization 200 203 218
Operating earnings 858 751 567
Other income (expense): Interest expense, net (74 )
(129 ) (133 ) Gain on sales of investments and businesses, net 23
49 108 Other (69 ) (7 ) 91 Total other
income (expense) (120 ) (87 ) 66
Earnings from continuing operations before income taxes 738 664 633
Income tax expense (benefit) (3 ) 403
188 Earnings from continuing operations 741 261 445
Earnings (loss) from discontinued operations, net of tax
411 389 (473 ) Net earnings
1,152 650 (28 ) Less: Earnings (loss) attributable to
noncontrolling interests (6 ) 17 23
Net earnings attributable to Motorola Solutions, Inc. $
1,158 $ 633 $ (51 ) Amounts attributable to
Motorola Solutions, Inc. common shareholders Earnings from
continuing operations, net of tax $ 747 $ 244 $ 422 Earnings (loss)
from discontinued operations, net of tax 411
389 (473 ) Net earnings (loss) $ 1,158 $ 633
$ (51 )
Earnings per common
share
Basic: Continuing operations $ 2.24 $ 0.73 $ 1.29 Discontinued
operations 1.23 1.17 (1.45 ) $
3.47 $ 1.90 $ (0.16 ) Diluted: Continuing
operations $ 2.20 $ 0.72 $ 1.28 Discontinued operations 1.21
1.15 (1.43 ) $ 3.41 $ 1.87
$ (0.15 )
Weighted average
common shares outstanding
Basic 333.8 333.3 327.9 Diluted 339.7 338.1
329.9
Percentage of Net Sales* Net sales from products 74.0
% 73.7 % 72.3 % Net sales from services 26.0 % 26.3 %
27.7 % Net sales 100 % 100 % 100 %
Costs of products sales 44.9 % 44.9 % 44.2 % Costs of
services sales 62.5 % 64.1 % 65.0 % Costs of
sales 49.5 % 50.0 % 49.9 %
Gross margin 50.5 % 50.0 % 50.1 %
Selling, general and administrative expenses 23.3 % 24.6 %
23.9 % Research and development expenditures 12.6 % 13.6 % 14.3 %
Other charges (income) 1.7 % -0.7 % 0.5 % Intangibles amortization
2.4 % 2.7 % 3.1 % Operating earnings
10.5 % 9.9 % 8.2 % Other income (expense):
Interest expense, net -0.9 % -1.7 % -1.9 % Gain on sales of
investments and businesses, net 0.3 % 0.6 % 1.6 % Other -0.8
% -0.1 % 1.3 % Total other income (expense)
-1.5 % -1.1 % 1.0 % Earnings from continuing
operations before income taxes 9.0 % 8.7 % 9.1 % Income tax expense
(benefit) 0.0 % 5.3 % 2.7 % Earnings from
continuing operations 9.0 % 3.4 % 6.4 % Earnings (loss) from
discontinued operations, net of tax 5.0 % 5.1 %
-6.8 % Net earnings 14.0 % 8.5 % -0.4 % Less:
Earnings (loss) attributable to noncontrolling interests
-0.1 % 0.2 % 0.3 % Net earnings attributable to
Motorola Solutions, Inc. 14.1 % 8.3 % -0.7 %
* Percentages may not add up due to rounding
GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets
(In millions) December 31, December
31, 2011 2010 Assets Cash and cash equivalents $
1,881 $ 4,208 Sigma Fund and short-term investments 3,210 4,655
Accounts receivable, net 1,866 1,547 Inventories, net 512 521
Deferred income taxes 613 871 Other current assets 676 748 Current
assets held for disposition 10 4,604 Total current
assets 8,768 17,154 Property, plant and
equipment, net 896 922 Sigma Fund - 70 Investments 166 172 Deferred
income taxes 2,375 1,920 Goodwill 1,428 1,429 Other assets 294 734
Non-current assets held for disposition 2 3,176
Total assets $ 13,929 $ 25,577
Liabilities and Stockholders' Equity Notes payable and
current portion of long-term debt $ 405 $ 605 Accounts payable 677
731 Accrued liabilities 2,721 2,574 Current liabilities held for
disposition 12 4,800 Total current liabilities
3,815 8,710 Long-term debt 1,130 2,098 Other
liabilities 3,710 3,045 Non-current liabilities held for
disposition - 737 Total Motorola Solutions, Inc.
stockholders' equity 5,214 10,885
Noncontrolling interests 60 102
Total
liabilities and stockholders' equity $ 13,929
$ 25,577 Total cash* $ 5,091 $ 8,933
Net cash** 3,556 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
December 31, 2011 December 31, 2010 Operating
Net earnings attributable to Motorola Solutions, Inc. $ 184 $ 292
Earnings attributable to noncontrolling interests -
12
Net earnings
184 304 Earnings from discontinued operations, net of tax 7
125 Earnings from continuing operations 177
179 Adjustments to reconcile earnings from continuing operations to
net cash provided by operating activities: Depreciation and
amortization 93 85 Non-cash other income (6 ) (13 ) Share-based
compensation expense 45 36 Gain on sales of investments and
businesses, net (1 ) (6 ) Deferred income taxes 32 (14 ) Changes in
assets and liabilities, net of effects of acquisitions and
dispositions: Accounts receivable (332 ) (3 ) Inventories 23 (21 )
Other current assets 68 5 Accounts payable and accrued liabilities
40 151 Other assets and liabilities (95 ) (66 ) Net
cash provided by operating activities from continuing operations
44 333
Investing Acquisitions
and investments, net (5 ) (16 ) Proceeds from sales of investments
and businesses, net 59 26 Capital expenditures (83 ) (81 ) Sales of
Sigma Fund investments, net 1,283 423
Net cash provided by investing activities from continuing
operations 1,254 352
Financing
Repayment of debt (601 ) (527 ) Contributions to Motorola Mobility
(150 ) - Issuance of common stock 44 27 Purchase of common stock
(366 ) - Excess tax benefits from share-based compensation 3 -
Payment of dividends (72 ) - Distributions from (to) discontinued
operations (37 ) 152 Net cash used for
financing activities from continuing operations (1,179 )
(348 )
Discontinued Operations Net cash provided by
(used for) operating activities from discontinued operations (38 )
321 Net cash used for investing activities from discontinued
operations - (183 ) Net cash provided by (used for) financing
activities from discontinued operations 37 (152 ) Effect of
exchange rate changes on cash and cash equivalents from
discontinued operations 1 14 Net cash
provided by (used for) financing activities from discontinued
operations - - Effect of
exchange rate changes on cash and cash equivalents from continuing
operations (23 ) 23 Net increase in cash and
cash equivalents 96 360 Cash and cash equivalents, beginning of
period 1,785 3,848 Cash and cash
equivalents, end of period $ 1,881 $ 4,208
Financial Ratios: Free cash flow* $ (39 ) $ 252 *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)
Year Ended December 31, 2011
December 31, 2010 December 31, 2009 Operating
Net earnings (loss) attributable to Motorola Solutions, Inc. $
1,158 $ 633 $ (51 ) Earnings (loss) attributable to noncontrolling
interests (6 ) 17 23 Net
earnings (loss) 1,152 650 (28 ) Earnings (loss) from discontinued
operations, net of tax 411 389
(473 ) Earnings from continuing operations 741 261 445 Adjustments
to reconcile earnings from continuing operations to net cash
provided by operating activities: Depreciation and amortization 366
342 388 Non-cash other charges (income) 34 (74 ) (72 ) Share-based
compensation expense 168 144 137 Gain on sales of investments and
businesses, net (21 ) (49 ) (108 ) Gain (Loss) from the
extinguishment of long-term debt 81 12 (67 ) Deferred income taxes
63 384 47 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable (250 ) (83 ) 102
Inventories (14 ) (111 ) 111 Other current assets 61 (48 ) 276
Accounts payable and accrued liabilities (191 ) 333 (621 ) Other
assets and liabilities (190 ) (308 ) (11 ) Net
cash provided by operating activities from continuing operations
848 803 627
Investing Acquisitions and investments, net (32 ) (23 ) (17
) Proceeds from sales of investments and businesses, net 1,123 264
357 Capital expenditures (186 ) (192 ) (136 ) Proceeds from sales
of property, plant and equipment 6 27 1 Sales from (purchases of)
Sigma Fund investments, net 1,509 453 (922 ) Proceeds from sales
(purchases of) short-term investments, net 6
(6 ) 186 Net cash provided by (used for) investing
activities from continuing operations 2,426
523 (531 )
Financing Repayment of short-term
borrowings, net - (5 ) (86 ) Repayment of debt (1,219 ) (1,011 )
(132 ) Contributions to Motorola Mobility (3,425 ) - - Issuance of
common stock 192 179 116 Purchase of common stock (1,110 ) - -
Excess tax benefits from share-based compensation 42 - - Payment of
dividends (72 ) - (114 ) Distributions from (to) discontinued
operations 64 797 (67 ) Other, net - -
6 Net cash used for financing activities from
continuing operations (5,528 ) (40 ) (277 )
Discontinued Operations Net cash provided by operating
activities from discontinued operations 26 1,169 2 Net cash used
for investing activities from discontinued operations (8 ) (343 )
(137 ) Net cash provided by (used for) financing activities from
discontinued operations (64 ) (797 ) 67 Effect of exchange
rate changes on cash and cash equivalents from discontinued
operations 46 (29 ) 68 Net cash
provided by (used for) financing activities from discontinued
operations - - -
Effect of exchange rate changes on cash and cash equivalents from
continuing operations (73 ) 53 (14 )
Net increase (decrease) in cash and cash equivalents (2,327 ) 1,339
(195 ) Cash and cash equivalents, beginning of period 4,208
2,869 3,064 Cash and cash
equivalents, end of period $ 1,881 $ 4,208 $ 2,869
Financial Ratios: Free cash flow* $ 662 $ 611
$ 491 *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 months and year ended December 31,
2011 and December 31, 2010.
Net Sales Three Months
Ended December 31, 2011 December
31, 2010 % Change Government $ 1,547 $ 1,454 6 %
Enterprise 753 731 3 % Company Total $ 2,300 $ 2,185
5 %
Year Ended
December 31, 2011 December 31, 2010 % Change
Government $ 5,358 $ 5,049 6 % Enterprise 2,845
2,568 11 % Company Total $ 8,203 $ 7,617 8 %
Operating Earnings
Three Months Ended
December 31, 2011 December 31, 2010 % Change
Government $ 226 $ 181 25 % Enterprise 50 91
-45 % Company Total $ 276 $ 272 1 %
Year
Ended December 31, 2011 December
31, 2010 % Change Government $ 616 $ 534 15 %
Enterprise 242 217 12 % Company Total $ 858 $ 751 14
%
Non-GAAP-1 Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments Bridge (In millions, except per
share amounts)
Three Months Ended Three Months
Ended December 31, 2011 December 31, 2010
Non-GAAP
Non-GAAP
GAAP Results
Adjustments and
Non-GAAP Results
GAAP Results
Adjustments and
Non-GAAP Results
Discontinued Discontinued Operations
Operations Net
sales $ 2,300 $ - $ 2,300 $ 2,185 $ - $ 2,185 Costs of sales
1,140 9 1,131 1,096
11 1,085 Gross margin
1,160 (9 ) 1,169 1,089
(11 ) 1,100 Selling, general and
administrative expenses 498 29 469 515 20 495 Research and
development expenditures 266 10 256 271 12 259 Other charges 70 70
- (20 ) (20 ) - Intangibles amortization 50 50
- 51 51 -
Operating earnings 276 (168 )
444 272 (74 ) 346
Other income (expense): Interest expense, net (15 ) - (15 ) (32 ) -
(32 ) Gain on sales of investments and businesses, net 2 - 2 5 - 5
Other 4 - 4 3
- 3 Total other income (expense)
(9 ) - (9 ) (24 ) -
(24 ) Earnings from continuing operations before
income taxes 267 (168 ) 435 248 (74 ) 322 Income tax expense
90 (59 ) 149 69
(23 ) 92 Earnings from continuing operations 177 (109
) 286 179 (51 ) 230 Earnings from discontinued operations,
net of tax 7 7 -
125 125 - Net earnings 184 (102
) 286 304 74 230 Less: Earnings attributable to
noncontrolling interests - - -
12 - 12 Net
earnings attributable to Motorola Solutions, Inc. $ 184 $
(102 ) $ 286 $ 292 $ 74 $ 218
Earnings from continuing operations, net of tax $ 177 $ (109
) $ 286 $ 167 $ (51 ) $ 218 Earnings from discontinued operations,
net of tax 7 7 -
125 125 - Net earnings $ 184
$ (102 ) $ 286 $ 292 $ 74 $ 218
Earnings per common
share
Basic: Continuing operations $ 0.55 $ (0.34 ) $ 0.89 $ 0.50 $ (0.15
) $ 0.65 Discontinued operations 0.02 0.02
- 0.37 0.37
- $ 0.57 $ (0.32 ) $ 0.89 $ 0.87 $ 0.22
$ 0.65 Diluted: Continuing operations $ 0.54 $
(0.33 ) $ 0.87 $ 0.49 $ (0.15 ) $ 0.64 Discontinued operations
0.02 0.02 - 0.37
0.37 - $ 0.56 $ (0.31 ) $
0.87 $ 0.86 $ 0.22 $ 0.64
Weighted average
common shares outstanding
Basic 323.1 323.1 323.1 335.9 335.9 335.9 Diluted 328.4
328.4 328.4 341.3
341.3 341.3
Percentage
of Net Sales* Net sales 100 % 100 %
100 % 100 % Costs of sales 49.6 % 49.2 % 50.2
% 49.7 % Gross margin 50.4 % 50.8 %
49.8 % 50.3 % Selling, general and administrative
expenses 21.7 % 20.4 % 23.6 % 22.7 % Research and development
expenditures 11.6 % 11.1 % 12.4 % 11.9 % Other charges 3.0 % 0.0 %
-0.9 % 0.0 % Intangibles amortization 2.2 % 0.0 %
2.3 % 0.0 % Operating earnings 12.0 %
19.3 % 12.4 % 15.8 % Other income (expense):
Interest expense, net -0.7 % -0.7 % -1.5 % -1.5 % Gain on sales of
investments and businesses, net 0.1 % 0.1 % 0.2 % 0.2 % Other
0.2 % 0.2 % 0.1 % 0.1 % Total other
income (expense) -0.4 % -0.4 % -1.1 %
-1.1 % Earnings from continuing operations before income taxes 11.6
% 18.9 % 11.4 % 14.7 % Income tax expense 3.9 % 6.5 %
3.2 % 4.2 % Earnings from continuing operations 7.7 %
12.4 % 8.2 % 10.5 % Earnings from discontinued operations,
net of tax 0.3 % 0.0 % 5.7 % 0.0 % Net
earnings 8.0 % 12.4 % 13.9 % 10.5 % Less: Earnings
attributable to noncontrolling interests 0.0 % 0.0 %
0.5 % 0.5 % Net earnings attributable to Motorola
Solutions, Inc. 8.0 % 12.4 % 13.4 %
10.0 % * Percentages may not add up due to rounding
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries Non-GAAP
Adjustments Bridge (In millions, except per share
amounts)
Year Ended Year Ended
December 31, 2011 December 31, 2010
Non-GAAP
Non-GAAP
GAAP Results
Adjustments and
Non-GAAP Results
GAAP Results
Adjustments and
Non-GAAP Results
Discontinued Discontinued Operations
Operations Net
sales $ 8,203 $ - $ 8,203 $ 7,617 $ - $ 7,617 Costs of sales
4,057 26 4,031 3,805
37 3,768 Gross margin
4,146 (26 ) 4,172 3,812
(37 ) 3,849 Selling, general and
administrative expenses 1,912 83 1,829 1,874 82 1,792 Research and
development expenditures 1,035 65 970 1,037 44 993 Other charges
141 141 - (53 ) (53 ) - Intangibles amortization 200
200 - 203 203
- Operating earnings 858
(515 ) 1,373 751 (313 )
1,064 Other income (expense): Interest expense, net
(74 ) - (74 ) (129 ) - (129 ) Gain on sales of investments and
businesses, net 23 - 23 49 31 18 Other (69 ) (81 )
12 (7 ) - (7 ) Total
other income (expense) (120 ) (81 ) (39 )
(87 ) 31 (118 ) Earnings from
continuing operations before income taxes 738 (596 ) 1,334 664 (282
) 946 Income tax expense (3 ) (455 )
452 403 97 306
Earnings from continuing operations 741 (141 ) 882 261 (379 ) 640
Earnings from discontinued operations, net of tax 411
411 - 389
389 - Net earnings 1,152 270 882 650 10 640
Less: Earnings (loss) attributable to noncontrolling
interests (6 ) - (6 ) 17
- 17 Net earnings attributable to
Motorola Solutions, Inc. $ 1,158 $ 270 $ 888 $
633 $ 10 $ 623 Earnings from
continuing operations, net of tax $ 747 $ (141 ) $ 888 $ 244 $ (379
) $ 623 Earnings from discontinued operations, net of tax
411 411 - 389
389 - Net earnings $ 1,158 $ 270
$ 888 $ 633 $ 10 $ 623
Earnings per common
share
Basic: Continuing operations $ 2.24 $ (0.42 ) $ 2.66 $ 0.73 $ (1.14
) $ 1.87 Discontinued operations 1.23 1.23
- 1.17 1.17
- $ 3.47 $ 0.81 $ 2.66 $ 1.90 $
0.03 $ 1.87 Diluted: Continuing operations $
2.20 $ (0.41 ) $ 2.61 $ 0.72 $ (1.12 ) $ 1.84 Discontinued
operations 1.21 1.21 -
1.15 1.15 - $ 3.41
$ 0.80 $ 2.61 $ 1.87 $ 0.03 $ 1.84
Weighted average
common shares outstanding
Basic 333.8 333.8 333.8 333.3 333.3 333.3 Diluted 339.7
339.7 339.7 338.1
338.1 338.1
Percentage
of Net Sales* Net sales 100 % 100 %
100 % 100 % Costs of sales 49.5 % 49.1 % 50.0
% 49.5 % Gross margin 50.5 % 50.9 %
50.0 % 50.5 % Selling, general and administrative
expenses 23.3 % 22.3 % 24.6 % 23.5 % Research and development
expenditures 12.6 % 11.8 % 13.6 % 13.0 % Other charges 1.7 % 0.0 %
-0.7 % 0.0 % Intangibles amortization 2.4 % 0.0 %
2.7 % 0.0 % Operating earnings 10.5 %
16.7 % 9.9 % 14.0 % Other income (expense):
Interest expense, net -0.9 % -0.9 % -1.7 % -1.7 % Gain on sales of
investments and businesses, net 0.3 % 0.3 % 0.6 % 0.2 % Other
-0.8 % 0.1 % -0.1 % -0.1 % Total other
income (expense) -1.5 % -0.5 % -1.1 %
-1.5 % Earnings from continuing operations before income taxes 9.0
% 16.3 % 8.7 % 12.4 % Income tax expense 0.0 % 5.5 %
5.3 % 4.0 % Earnings from continuing operations 9.0 %
10.8 % 3.4 % 8.4 % Earnings from discontinued operations,
net of tax 5.0 % 0.0 % 5.1 % 0.0 % Net
earnings 14.0 % 10.8 % 8.5 % 8.4 % Less: Earnings
attributable to noncontrolling interests -0.1 % -0.1
% 0.2 % 0.2 % Net earnings attributable to Motorola
Solutions, Inc. 14.1 % 10.8 % 8.3 % 8.2
% * Percentages may not add up due to rounding
Non-GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Operating Earnings after Non-GAAP
Adjustments
Q1 2011
TOTAL Government
Enterprise Net sales $ 1,834 $ 1,167 $ 667 Operating
earnings $ 169 $ 99 $ 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 $ 266 $ 134
$ 132 Operating earnings as a
percentage of net sales - GAAP 9.2 % 8.5 % 10.5 % Operating
earnings as a percentage of net sales - after non-GAAP adjustments
14.5 % 11.5 % 19.8 %
Q2 2011
TOTAL
Government Enterprise Net sales $ 1,984 $ 1,284 $ 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
Earnings (loss) from discontinued operations, net of
tax 8.0 % 8.2 % 7.7 % Operating earnings as a percentage of net
sales - after non-GAAP adjustments 15.3 % 13.1 %
19.4 %
Q3 2011
TOTAL Government Enterprise Net
sales $ 2,085 $ 1,360 $ 725 Operating earnings
$ 254 $ 186 $ 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 $ 359
$ 224 $ 135 Operating
earnings as a percentage of net sales - GAAP 12.2 % 13.7 % 9.4 %
Operating earnings as a percentage of net sales - after non-GAAP
adjustments 17.2 % 16.5 % 18.6 %
Q4 2011
TOTAL
Government Enterprise Net sales $ 2,300 $ 1,547 $ 753
Operating earnings $ 276 $ 226 $
50 Above-OE non-GAAP adjustments by P&L statement
line:
Statement
Line
Reorganization of business charges Cost of sales $ 3 $ 2 $ 1
Stock-based compensation expense Cost of sales 6 4 2 Stock-based
compensation expense SG&A and R&D 39 25 14 Legal matters,
net Other charges 40 26 14 Reorganization of business charges Other
charges 20 13 7 Long-term financing receivable reserve Other
charges 10 10 - Intangibles amortization expense Intangibles
amortization 50 1 49
Less: Total above-OE non-GAAP adjustments 168 81 87
Operating earnings after
non-GAAP adjustments $ 444 $ 307
$ 137 Operating earnings as a
percentage of net sales - GAAP 12.0 % 14.6 % 6.6 % Operating
earnings as a percentage of net sales - after non-GAAP adjustments
19.3 % 19.8 % 18.2 %
FY 2011
TOTAL
Government Enterprise Net sales $ 8,203 $ 5,358 $
2,845 Operating earnings $ 858 $ 616
$ 242 Above-OE non-GAAP adjustments by P&L
statement line:
Statement
Line
Reorganization of business charges Cost of sales $ 6 $ 5 $ 1
Stock-based compensation expense Cost of sales 20 13 7 Stock-based
compensation expense SG&A and R&D 148 98 50 Legal matters,
net Other charges 88 58 30 Reorganization of business charges Other
charges 52 35 17 Pension plan adjustments, net Other charges (9 )
(6 ) (3 ) Long-term financing receivable reserve Other charges 10
10 0 Intangibles amortization expense Intangibles amortization
200 4 196 Less: Total
above-OE non-GAAP adjustments 515 217 298
Operating earnings after non-GAAP
adjustments $ 1,373 $ 833 $ 540
Operating earnings as a percentage of
net sales - GAAP 10.5 % 11.5 % 8.5 % Operating earnings as a
percentage of net sales - after non-GAAP adjustments 16.7 %
15.5 % 19.0 %
Non-GAAP-4 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 0.01 Reduction in
deferred tax valuation allowance Income tax benefit - 244 (244 )
(0.71 ) - Total continuing
operations impact $ 97 $ 277 $ (180 ) $ (0.53 )
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 0.10 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 $ 0.21
Q4 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 Legal matters, net Other charges 40 15 25
0.08 Reorganization of business charges Cost of sales and Other
charges 23 7 16 0.05 Long-term financing receivable reserve Other
charges 10 4 6 0.02 Tax expense related to undistributed foreign
earnings Income tax (expense) benefit - (17 ) 17 0.05 Tax benefit
from audit settlements and agreements Income tax (expense) benefit
- 18 (18 ) (0.05 ) Total
continuing operations impact $ 168 $ 59 $ 109 $ 0.33
FY 2011 PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp
Inc/(Exp) (Inc)/Exp EPS impact
Intangibles amortization expense Intangibles amortization 200 72
128 0.37 Stock-based compensation expense Cost of sales, SG&A
and R&D 168 51 117 0.34 Legal matters, net Other charges 88 33
55 0.16 Debt extinguishment loss Other income (expense) 81 30 51
0.15 Reorganization of business charges Cost of sales and 'Other
charges 58 18 40 0.12 Long-term financing receivable reserve Other
charges 10 4 6 0.02 Pension plan adjustments, net Other charges (9
) 2 (11 ) (0.03 ) Reduction in deferred tax valuation allowance
Income tax benefit - 244 (244 ) (0.72 ) Tax expense related to
undistributed foreign earnings Income tax (expense) benefit - (17 )
17 0.05 Tax benefit from audit settlements and agreements Income
tax (expense) benefit - 18 (18 )
(0.05 ) Total continuing operations impact $ 596 $ 455 $ 141
$ 0.41
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