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Section 1: 8-K (8-K)

Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

_______
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): May 2, 2019
 
Motorola Solutions, Inc.
(Exact Name of Registrant as Specified in Charter)
 
 
DELAWARE
 
 
(State or Other Jurisdiction of Incorporation)
 
 
1-7221
 
36-1115800
(Commission File Number)
 
(IRS Employer Identification No.)
 
500 W. Monroe Street
Chicago, Illinois

 
60661
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
Registrant’s telephone number, including area code: (847) 576-5000
 
 
  _____________________________
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 





Item 2.02.    Results of Operations and Financial Condition

The information in this Form 8-K that is furnished under “Item 2.02. Results of Operations and Financial Condition” and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On May 2, 2019 Motorola Solutions, Inc. (the “Company”) issued a press release announcing, among other things, financial results for the quarter ended March 30, 2019. A copy of this press release is attached hereto as Exhibit 99.1.

Item 9.01.    Financial Statements and Exhibits
 
(d)       Exhibits
 
Exhibit No.
Description
Press Release by Motorola Solutions, Inc. dated May 2, 2019 announcing financial results for the quarter ended March 30, 2019.





SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
MOTOROLA SOLUTIONS, INC.
(Registrant)
 
 
 
 
 
 
 
 Dated: May 2, 2019

By:
/s/ Dan Pekofske
 
 
 
Name:
Dan Pekofske
 
 
 
Title:
Corporate Vice President and Chief Accounting Officer
 

 
 




 
EXHIBIT INDEX
 
Exhibit No.
Description
99.1
Press Release by Motorola Solutions, Inc. dated May 2, 2019 announcing financial results for the quarter ended March 30, 2019.




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1

Motorola Solutions Reports First-Quarter 2019 Financial Results
Record Q1 revenue, operating earnings and ending backlog; raises full-year earnings outlook

Revenue of $1.7 billion, up 13% from a year ago
Operating cash flow of $251 million, up $751 million* from a year ago
GAAP earnings per share (EPS) of $0.86, up 25%
Non-GAAP EPS** of $1.28, up 16%
Backlog of $10.4 billion, up $781 million from a year ago

CHICAGO – May 2, 2019 – Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the first quarter of 2019. Click here for a printable news release and financial tables.

"Q1 was another outstanding quarter, with record first-quarter revenue, operating earnings and ending backlog,” said Greg Brown, chairman and CEO of Motorola Solutions. “We are well positioned for 2019 with continued demand across our platforms.”

KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)
 
Q1 2019

Q1 2018

% Change
Sales
$1,657
$1,468
13
%
GAAP
 
 
 
  Operating Earnings
$229
$171
34
%
  % of Sales
13.8
%
11.6
%
 
  EPS
$0.86
$0.69
25
%
Non-GAAP
 
 
 
  Operating Earnings
$315
$260
21
%
  % of Sales
19.0
%
17.7
%
 
  EPS
$1.28
$1.10
16
%
Products and Systems Integration Segment
 
 
 
  Sales
$1,069
$952
12
%
  GAAP Operating Earnings
$108
$90
20
%
  % of Sales
10.1
%
9.5
%
 
  Non-GAAP Operating Earnings
$147
$125
18
%
  % of Sales
13.8
%
13.1
%
 
Services and Software Segment
 
 
 
  Sales
$588
$516
14
%
  GAAP Operating Earnings
$121
$81
49
%
  % of Sales
20.6
%
15.7
%
 
  Non-GAAP Operating Earnings
$168
$135
24
%
  % of Sales
28.6
%
26.2
%
 

* Includes voluntary $500M debt-funded U.S. pension contribution in Q1 2018
**Non-GAAP financial information excludes the after-tax impact of approximately $0.42 per diluted share related to share-based compensation, 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 news release.






OTHER SELECTED FINANCIAL RESULTS

Revenue - Sales were $1.7 billion, up $189 million, or 13% from the year-ago quarter, driven by growth in the Americas and EMEA. Revenue from acquisitions was $137 million in the quarter. The Products and Systems Integration segment grew 12%, and the Services and Software segment grew 14%. Both segments were driven by growth in the Americas and EMEA.
Operating margin - GAAP operating margin was 13.8% of sales, compared with 11.6% in the year-ago quarter. The improvement was primarily due to higher sales and gross margin, partially offset by higher operating expenses related to acquisitions. Non-GAAP operating margin was 19.0% of sales, compared with 17.7% in the year-ago quarter due to higher sales and gross margin partially offset by higher operating expenses related to acquisitions.
Taxes - The GAAP effective tax rate was 18%, compared with 16% in the year-ago quarter. The non-GAAP effective tax rate was 20% compared with 19% in the year-ago quarter. Rates were favorably impacted by tax benefits on excess share-based compensation.
Cash flow - Operating cash flow was $251 million, compared with $500 million of operating cash outflow in the year-ago quarter. Free cash flow1 was $185 million, compared with $541 million of free cash outflow in the year-ago quarter. Cash flow for the quarter increased due to a $500 million voluntary pension contribution in the prior year, timing of annual incentive payments, higher earnings and improved working capital.
Capital allocation - The company invested $445 million of cash and equity to acquire VaaS International Holdings and $136 million in cash for Avtec, Inc., repurchased $145 million of common stock, paid $93 million in cash dividends and $66 million of capital expenditures.
Backlog - The company ended the quarter with backlog of $10.4 billion, up $781 million from the year-ago quarter. Services and Software was up 14% or $885 million due to growth in EMEA and the Americas. Products and Systems Integration segment backlog was down 3% or $104 million due to large projects in the Middle East and Africa in the prior year, partially offset by growth in the Americas.

KEY HIGHLIGHTS

Services and Software wins
$17 million managed services contract with a mining customer in Latin America
$7 million computer-aided dispatch (CAD) and records contract for a large government customer in California
$5 million video services renewal with the Chicago Office of Emergency Management

Products and Systems Integration wins
Selected by North Dakota for a new statewide P25 radio system
$25 million P25 win with New South Wales Telco Authority
$8 million TETRA order for a utility customer in Chile


BUSINESS OUTLOOK
Second-quarter 2019 - Motorola Solutions expects revenue growth of approximately 4 to 5% compared with the second quarter of 2018. The company expects non-GAAP earnings in the range of $1.55 to $1.60 per share. This assumes current foreign exchange rates, approximately 176 million fully diluted shares and an effective tax rate of approximately 24%.
Full-year 2019 - The company continues to expect revenue growth of approximately 6 to 7% and now expects non-GAAP earnings per share in the range of $7.60 to $7.72, up from the prior guidance of $7.55 to $7.70. This assumes current foreign exchange rates, approximately 176 million fully diluted shares and an effective tax rate of 24 to 25%.





CONFERENCE CALL AND WEBCAST Motorola Solutions will host its quarterly conference call beginning at 4 p.m. U.S. Central Daylight Time (5 p.m. U.S. Eastern Daylight Time) on Thursday, May 2. The conference call will be webcast live at www.motorolasolutions.com/investor.

CONSOLIDATED GAAP RESULTS (presented in millions, except per share data)
A comparison of results from operations is as follows:
 
Q1 2019

Q1 2018

Net sales
$1,657
$1,468
Gross margin
773

669

Operating earnings
229

171

Amounts attributable to Motorola Solutions, Inc. common stockholders
 
 
Net earnings
151

117

Diluted EPS
$0.86
$0.69
Weighted average diluted common shares outstanding
174.6

170.6


HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION EXPENSE
The table below includes highlighted items, share-based compensation expense and intangible amortization for the first quarter of 2019.

(per diluted common share)
Q1 2019

 
 
GAAP Earnings
$0.86
Highlighted Items:
 
Share-based compensation expense
0.12

Reorganization of business charges
0.04

Intangibles amortization expense
0.23

Legal settlement
(0.01
)
Fair value adjustments to equity investments
0.01

Investment impairments
0.04

Sale of investments
(0.01
)
Acquisition-related transaction fees
0.01

FIN48 release
(0.01
)
 
 
Non-GAAP Diluted EPS
$1.28





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. The company has provided these non-GAAP measurements to help investors better understand its core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to its 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 generally accepted accounting principles.

Highlighted items: The company has excluded the effects of highlighted items including, but not limited to, acquisition-related transaction costs, tangible and intangible asset impairments, restructuring charges, non-cash pension adjustments, significant litigation and other contingencies, significant gains and losses on investments, and the income tax effects of significant tax matters, 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. For the purposes of management's internal analysis over operating performance, the company uses financial statements that exclude highlighted items, as these charges do not contribute to a meaningful evaluation of the company's current operating performance or comparisons to the company's past operating performance.

Share-based compensation expense: The company has excluded share-based compensation expense from its non-GAAP operating expenses and net income measurements. Although share-based compensation is a key incentive offered to the company’s 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 share-based compensation expense primarily because it represents a significant non-cash expense. Share-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 earnings measurements, primarily because it represents a 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 news 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. The company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent the company’s views only as of today and should not be relied upon as representing the company’s 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 the company’s 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 second quarter and full year of 2019. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 9 through 21 in Item 1A of Motorola Solutions’ 2018 Annual Report on Form 10-K 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 communications industry; (2) the impact of foreign currency fluctuations on the company; (3) the level of demand for the company's products; (4) the company's ability to refresh existing and introduce new products and technologies in a timely manner; (5) 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; (6) negative impact on the company's business from global economic and political conditions, which may include: (i) continued 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, which could impact future required or voluntary pension contributions; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (7) the impact of a security breach or other significant disruption in the company’s IT systems, those of its partners or suppliers or those it sells to or operates or maintains for its customers; (8) the outcome of ongoing and future tax matters; (9) the company's ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions and reductions in the company’s purchasing power; (10) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (11) the impact on the company's performance and financial results from strategic acquisitions or divestitures; (12) risks related to the company's manufacturing and business operations in foreign countries; (13) the creditworthiness of the company's customers and distributors, particularly purchasers of large infrastructure systems; (14) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (15) 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; (16) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (17) the impact of the percentage of cash and cash equivalents held outside of the United States; (18) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (19) the ability of the company to complete acquisitions or repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (20) the impact of changes in governmental policies, laws or regulations; (21) negative consequences from the company's use of third party vendors for various activities, including certain manufacturing operations, information technology and administrative functions; and (22) the company’s ability to settle the par value of its Senior Convertible Notes in cash. 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
1 Free cash flow represents operating cash flow less capital expenditures.





ABOUT MOTOROLA SOLUTIONS
Motorola Solutions is a global leader in mission-critical communications. Our technology platforms in communications, command center software, video and services make cities safer and help communities and businesses thrive. At Motorola Solutions, we are ushering in a new era in public safety and security. Learn more at www.motorolasolutions.com





MEDIA CONTACT
Kate Dyer
Motorola Solutions
+1 224-374-3124
[email protected]

INVESTOR CONTACT
Chris Kutsor
Motorola Solutions
+1 847-576-4995
[email protected]

MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2019 Motorola Solutions, Inc. All rights reserved.





GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)

Three Months Ended

March 30, 2019
 
March 31, 2018
Net sales from products
$
945

 
$
801

Net sales from services
712

 
667

Net sales
1,657

 
1,468

Costs of products sales
444

 
383

Costs of services sales
440

 
416

Costs of sales
884

 
799

Gross margin
773

 
669

Selling, general and administrative expenses
327

 
279

Research and development expenditures
162

 
152

Other charges
5

 
26

Intangibles amortization
50

 
41

Operating earnings
229

 
171

Other income (expense):


 


Interest expense, net
(55
)
 
(46
)
Gains on sales of investments and businesses, net
1

 
11

Other
10

 
4

Total other expense
(44
)
 
(31
)
Net earnings before income taxes
185

 
140

Income tax expense
33

 
23

Net earnings
152

 
117

Less: Earnings attributable to noncontrolling interests
1

 

Net earnings attributable to Motorola Solutions, Inc.
$
151

 
$
117

 
 
 
 
Earnings per common share:
 
 
 
Basic
$
0.92

 
$
0.73

Diluted
$
0.86

 
$
0.69

 
 
 
 
Weighted average common shares outstanding:


 


Basic
164.0

 
161.4

Diluted
174.6

 
170.6

 
Percentage of Net Sales*
Net sales from products
57.0
 %
 
54.6
 %
Net sales from services
43.0
 %
 
45.4
 %
Net sales
100.0
 %
 
100.0
 %
Costs of products sales
47.0
 %
 
47.8
 %
Costs of services sales
61.8
 %
 
62.4
 %
Costs of sales
53.3
 %
 
54.4
 %
Gross margin
46.7
 %
 
45.6
 %
Selling, general and administrative expenses
19.7
 %
 
19.0
 %
Research and development expenditures
9.8
 %
 
10.4
 %
Other charges
0.3
 %
 
1.8
 %
Intangibles amortization
3.0
 %
 
2.8
 %
Operating earnings
13.8
 %
 
11.6
 %
Other income (expense):
 
 
 
Interest expense, net
(3.3
)%
 
(3.1
)%
Gains on sales of investments and businesses, net
 %
 
0.7
 %
Other
0.6
 %
 
0.3
 %
Total other expense
(2.7
)%
 
(2.1
)%
Net earnings before income taxes
11.2
 %
 
9.5
 %
Income tax expense
2.0
 %
 
1.6
 %
Net earnings
9.2
 %
 
8.0
 %
Less: Earnings attributable to noncontrolling interests
 %
 
 %
Net earnings attributable to Motorola Solutions, Inc.
9.1
 %
 
8.0
 %
 * Percentages may not add up due to rounding
 
 
 




GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)

 
 
March 30, 2019
 
December 31, 2018
Assets
 
 
 
 
   Cash and cash equivalents
 
$
886

 
$
1,246

   Restricted cash
 
11

 
11

         Total cash and cash equivalents
 
897

 
1,257

Accounts receivable, net
 
1,150

 
1,293

Contract assets
 
878

 
1,012

Inventories, net
 
425

 
356

Other current assets
 
364

 
354

         Total current assets
 
3,714

 
4,272

 
 
 
 
 
Property, plant and equipment, net
 
937

 
895

Operating lease assets
 
593

 

Investments
 
163

 
169

Deferred income taxes
 
953

 
985

Goodwill
 
1,860

 
1,514

Intangible assets, net
 
1,416

 
1,230

Other assets
 
357

 
344

Total assets
 
$
9,993

 
$
9,409

 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
Current portion of long-term debt
 
$
28

 
$
31

Accounts payable
 
558

 
592

Contract liabilities
 
1,158

 
1,263

Accrued liabilities
 
1,235

 
1,210

         Total current liabilities
 
2,979

 
3,096

 
 
 
 
 
Long-term debt
 
5,287

 
5,289

Operating lease liabilities
 
553

 

Other liabilities
 
2,264

 
2,300

 
 
 
 
 
Total Motorola Solutions, Inc. stockholders’ equity (deficit)
 
(1,108
)
 
(1,293
)
 
 
 
 
 
Noncontrolling interests
 
18

 
17

 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
9,993

 
$
9,409

 
 
 
 
 





GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)

 
Three Months Ended
 
March 30, 2019
 
March 31, 2018
Operating
 
 
 
Net earnings attributable to Motorola Solutions, Inc.
$
151

 
$
117

Earnings attributable to noncontrolling interests
1

 

Net earnings
152

 
117

Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities:
 
 
 
Depreciation and amortization
95

 
82

Non-cash other charges
10

 
3

Share-based compensation expense
27

 
17

Gains on sales of investments and businesses, net
(1
)
 
(11
)
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
 
 
 
Accounts receivable
168

 
195

Inventories
(63
)
 
(9
)
Other current assets and contract assets
136

 
2

Accounts payable, accrued liabilities, and contract liabilities
(261
)
 
(350
)
Other assets and liabilities
(6
)
 
(553
)
Deferred income taxes
(6
)
 
7

Net cash provided by (used for) operating activities
251

 
(500
)
Investing
 
 
 
Acquisitions and investments, net
(368
)
 
(1,125
)
Proceeds from sales of investments and businesses, net
2

 
77

Capital expenditures
(66
)
 
(41
)
Net cash used for investing activities
(432
)
 
(1,089
)
Financing
 
 
 
Repayment of debt
(8
)
 
(50
)
Net proceeds from issuance of debt


1,296

Issuance of common stock
45

 
53

Purchases of common stock
(145
)
 
(66
)
Payments of dividends
(93
)
 
(84
)
Net cash provided by (used for) financing activities
(201
)
 
1,149

Effect of exchange rate changes on cash and cash equivalents
22

 
30

Net decrease in cash and cash equivalents
(360
)
 
(410
)
Cash and cash equivalents, beginning of period
1,257

 
1,268

Cash and cash equivalents, end of period
$
897

 
$
858

 
 
 
 
Financial Ratios:
 
 
 
Free cash flow*
$
185

 
$
(541
)
 
 
 
 
*Free cash flow = Net cash provided by (used for) operating activities - Capital expenditures
 
 
 





GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Net Sales
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
% Change
Products and Systems Integration
$
1,069

 
$
952

 
12
%
Services and Software
588

 
516

 
14
%
   Total Motorola Solutions
$
1,657

 
$
1,468

 
13
%
 
 
 
 
 
 
Operating Earnings
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
% Change
Products and Systems Integration
$
108

 
$
90

 
20
%
Services and Software
121

 
81

 
49
%
   Total Motorola Solutions
$
229

 
$
171

 
34
%
 
 
 
 
 
 
Operating Earnings %
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
 
Products and Systems Integration
10.1
%
 
9.5
%
 
 
Services and Software
20.6
%
 
15.7
%
 
 
   Total Motorola Solutions
13.8
%
 
11.6
%
 
 
 
 
 
 
 
 





Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expenses, Share-Based Compensation Expense, and Highlighted Items)
(In millions)
Q1 2019
Non-GAAP Adjustments
 
Statement Line
 
PBT
(Inc)/Exp
 
Tax
Inc/(Exp)
 
PAT
(Inc)/Exp
 
EPS impact
Share-based compensation expense
 
Cost of sales, SG&A and R&D
 
$
27

 
$
6

 
$
21

 
$
0.12

Reorganization of business charges
 
Cost of sales and Other charges
 
8

 
2

 
6

 
0.04

Intangibles amortization expense
 
Intangibles amortization
 
50

 
11

 
39

 
0.23

Legal settlement
 
Other charges
 
(1
)
 

 
(1
)
 
(0.01
)
Fair value adjustments to equity investments
 
Other expense
 
1

 

 
1

 
0.01

Investment impairments
 
Investment impairments
 
8

 
2

 
6

 
0.04

Sale of investments
 
(Gain) or loss on sales of investments and businesses, net
 
(1
)
 

 
(1
)
 
(0.01
)
Acquisition-related transaction fees
 
Other charges
 
2

 

 
2

 
0.01

FIN48 release
 
Income tax expense
 

 
1

 
(1
)
 
(0.01
)
Total impact on Net earnings
 
 
 
$
94

 
$
22

 
$
72

 
$
0.42

 
 
 
 
 
 
 
 
 
 
 




Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
Net Sales
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
% Change
Products and Systems Integration
$
1,069

 
$
952

 
12
%
Services and Software
588

 
516

 
14
%
   Total Motorola Solutions
$
1,657

 
$
1,468

 
13
%
 
 
 
 
 
 
Non-GAAP Operating Earnings
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
% Change
Products and Systems Integration
$
147

 
$
125

 
18
%
Services and Software
168

 
135

 
24
%
   Total Motorola Solutions
$
315

 
$
260

 
21
%
 
 
 
 
 
 
Non-GAAP Operating Earnings %
 
Three Months Ended
 
 
 
March 30, 2019
 
March 31, 2018
 
 
Products and Systems Integration
13.8
%
 
13.1
%
 
 
Services and Software
28.6
%
 
26.2
%
 
 
   Total Motorola Solutions
19.0
%
 
17.7
%
 
 
 
 
 
 
 
 





Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
(In millions)
Q1 2019
 
 
TOTAL
 
Products and Systems Integration
 
Services and Software
Net sales
 
$
1,657

 
$
1,069

 
$
588

Operating earnings ("OE")
 
$
229

 
$
108

 
$
121

 
 
 
 
 
 
 
Above-OE non-GAAP adjustments:
 
 
 
 
 
 
  Share-based compensation expense
 
27

 
21

 
6

  Reorganization of business charges
 
8

 
7

 
1

  Intangibles amortization expense
 
50

 
11

 
39

  Acquisition-related transaction fees
 
2

 
1

 
1

  Legal settlement
 
(1
)
 
(1
)
 

Total above-OE non-GAAP adjustments
 
86

 
39

 
47

Operating earnings after non-GAAP adjustments
 
$
315

 
$
147

 
$
168

  Operating earnings as a percentage of net sales - GAAP
 
13.8
%
 
10.1
%
 
20.6
%
  Operating earnings as a percentage of net sales - after non-GAAP adjustments
 
19.0
%
 
13.8
%
 
28.6
%




Non-GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Organic Revenue
(In millions)
Total Motorola Solutions
 
 
Three Months Ended
 
 
 
 
March 30, 2019
 
March 31, 2018
 
% Change
Net sales
 
$
1,657

 
$
1,468

 
13
%
Non-GAAP adjustments:
 
 
 
 
 
 
  Acquisitions
 
(159
)
 
(22
)
 
 
Organic revenue
 
$
1,498

 
$
1,446

 
4
%





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