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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): August 1, 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
 
  _____________________________
 
 
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common Stock;
$0.01
Par Value
 
MSI
 
New York Stock Exchange

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 August 1, 2019 Motorola Solutions, Inc. (the “Company”) issued a press release announcing, among other things, financial results for the quarter ended June 29, 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 August 1, 2019 announcing financial results for the quarter ended June 29, 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: August 1, 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 August 1, 2019 announcing financial results for the quarter ended June 29, 2019.




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1

Motorola Solutions Reports Second-Quarter 2019 Financial Results
Company raises full-year revenue and earnings outlook

Revenue of $1.9 billion, up 6% from a year ago
GAAP earnings per share (EPS) of $1.18, up 12%
Non-GAAP EPS* of $1.69, up 16%
Backlog of $10.9 billion, up $1.5 billion or 16% from a year ago
Generated $251 million of operating cash flow

CHICAGO – Aug. 1, 2019 – Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the second quarter of 2019. Click here for a printable news release and financial tables.

"Our outstanding Q2 results highlight the strength of our business and the value of our unique public safety ecosystem," said Greg Brown, chairman and CEO of Motorola Solutions. “Our strong revenue and earnings growth in the quarter, combined with our record ending backlog, position us well for continued growth in the second half of 2019 and beyond.”

KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)
 
Q2 2019

Q2 2018

% Change
Sales
$1,860
$1,760
6
%
GAAP
 
 
 
  Operating Earnings
$349
$273
28
%
  % of Sales
18.8
%
15.5
%
 
  EPS
$1.18
$1.05
12
%
Non-GAAP
 
 
 
  Operating Earnings
$444
$378
17
%
  % of Sales
23.9
%
21.5
%
 
  EPS
$1.69
$1.46
16
%
Products and Systems Integration Segment
 
 
 
  Sales
$1,238
$1,189
4
%
  GAAP Operating Earnings
$201
$175
15
%
  % of Sales
16.2
%
14.7
%
 
  Non-GAAP Operating Earnings
$242
$226
7
%
  % of Sales
19.5
%
19.0
%
 
Services and Software Segment
 
 
 
  Sales
$622
$571
9
%
  GAAP Operating Earnings
$148
$98
51
%
  % of Sales
23.8
%
17.2
%
 
  Non-GAAP Operating Earnings
$202
$152
33
%
  % of Sales
32.5
%
26.6
%
 

*Non-GAAP financial information excludes the after-tax impact of approximately $0.51 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 $1.9 billion, up $100 million, or 6% from the year-ago quarter, driven by growth in the Americas. Revenue from acquisitions was $33 million, and currency headwinds were $37 million in the quarter. The Products and Systems Integration segment grew 4%, and the Services and Software segment grew 9%. Both segments were driven by growth in the Americas, partially offset by unfavorable currency rates.
Operating margin - GAAP operating margin was 18.8% of sales, up from 15.5% 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 23.9% of sales, up from 21.5% in the year-ago quarter due to higher sales and gross margin, partially offset by higher operating expenses related to acquisitions.
Cash flow - Operating cash flow was $251 million, compared with $425 million in the year-ago quarter. Free cash flow was $188 million, compared with $384 million in the year-ago quarter. Cash flow for the quarter decreased year over year primarily due to the timing of incentive payments made in 2019 versus 2018. For the first half of 2019, operating cash flow and free cash flow were higher versus the first half of 2018 primarily driven by a $500 million voluntary pension contribution in the prior year and higher earnings.
Capital allocation - The company paid $94 million in cash dividends, incurred $63 million of capital expenditures and repurchased $25 million of common stock. From a debt perspective, the company issued $650 million of new 10 year senior unsecured notes and used the proceeds to repurchase existing notes, resulting in an extended weighted average debt maturity profile.
Backlog - The company ended the quarter with backlog of $10.9 billion, up $1.5 billion from the year-ago quarter. Services and Software backlog was up 24% or $1.5 billion due to growth in EMEA and the Americas, partially offset by unfavorable changes in currency rates. Products and Systems Integration segment backlog was down 2% or $48 million primarily due to two large system deployments in the Middle East and Africa in the prior year and unfavorable changes in currency rates, partially offset by growth in the Americas.

NOTABLE WINS

Services and Software
Signed $200 million ESN service extension through the end of 2024
$60 million P25 multi-year service contract with the state of Tennessee, extending service through 2028
$59 million five-year contract extension to provide license plate data and analytical software
$5 million records management contract with Baltimore County

Products and Systems Integration
$60 million P25 additional orders for statewide system in North Dakota
$46 million P25 order from Oakland County, Michigan
$34 million P25 order from Washington Metropolitan Area Transit Authority
$5 million of public safety video security contracts in Broward County, FL and the Cleveland metro area
Several multi-million dollar video security wins in education






BUSINESS OUTLOOK
Third-quarter 2019 - Motorola Solutions expects revenue growth of approximately 6.5% compared with the third quarter of 2018. The company expects non-GAAP earnings per share in the range of $1.91 to $1.96. This assumes current foreign exchange rates, approximately 177 million fully diluted shares and an effective tax rate of approximately 25%.
Full-year 2019 - The company now expects revenue growth of 7 to 7.5%, up from the prior guidance of 6 to 7%. The company now expects non-GAAP earnings per share in the range of $7.67 to $7.77, up from the prior guidance of $7.60 to $7.72. 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, Aug. 1. 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:
 
Q2 2019

Q2 2018

Net sales
$1,860
$1,760
Gross margin
931

822

Operating earnings
349

273

Amounts attributable to Motorola Solutions, Inc. common stockholders
 
 
Net earnings
207

180

Diluted EPS
$1.18
$1.05
Weighted average diluted common shares outstanding
176.1

171.7


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

(per diluted common share)
Q2 2019

 
 
GAAP Earnings
$1.18
Highlighted Items:
 
Intangibles amortization expense
0.23

Loss from the extinguishment of long-term debt
0.18

Share-based compensation expense
0.13

Reorganization of business charges
0.05

Legal settlements
0.01

Investment impairments
0.01

Sale of a business
(0.01
)
FIN48 releases
(0.02
)
Fair value adjustments to equity investments
(0.07
)
 
 
Non-GAAP Diluted EPS
$1.69





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, litigation and other contingencies, gains and losses on investments and businesses, 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.

Adjusted operating cash flow: Adjusted operating cash flow information reflects operating cash flow under GAAP excluding a $500 million voluntary, debt-funded U.S. pension contribution in the first quarter 2018. The company has excluded the impact of this contribution because the company believes that this item does not reflect expected future operating cash flows and does not contribute to a meaningful evaluation of the company's current operating cash flow performance or comparisons to the company's past operating cash flow performance.   





Free cash flow: Free cash flow represents operating cash flow less capital expenditures. We believe that free cash flow is also useful to investors as the basis for comparing our performance and coverage ratios with other companies in our industries, although our measure of free cash flow may not be directly comparable to similar measures used by other companies

Organic Revenue: Organic revenue reflects net sales calculated under GAAP excluding net sales from acquired business owned for less than four full quarters.  The company believes non-GAAP organic revenue growth provides useful information for evaluating the periodic growth of the business on a consistent basis and provides for a meaningful period-to-period comparison and analysis of trends in the business.

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.

The company has not quantitatively reconciled its guidance for non-GAAP metrics to their most comparable GAAP measure because the company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the company’s control, or cannot be reasonably predicted. Accordingly, a reconciliation to the nearest GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the company’s results.


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 third 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


ABOUT MOTOROLA SOLUTIONS
Motorola Solutions is a global leader in mission-critical communications. Our technology platforms in communications, command center software, video security solutions and managed and support 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
Michael Shore
Motorola Solutions
+1 847-867-4221
[email protected]

INVESTOR CONTACT
Tim Yocum
Motorola Solutions
+1 847-576-6899
[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
 
June 29, 2019
 
June 30, 2018
Net sales from products
$
1,118

 
$
1,042

Net sales from services
742

 
718

Net sales
1,860

 
1,760

Costs of products sales
490

 
485

Costs of services sales
439

 
453

Costs of sales
929

 
938

Gross margin
931

 
822

Selling, general and administrative expenses
351

 
316

Research and development expenditures
170

 
162

Other charges
9

 
18

Intangibles amortization
52

 
53

Operating earnings
349

 
273

Other income (expense):
 
 
 
Interest expense, net
(56
)
 
(58
)
Gains (losses) on sales of investments and businesses, net
3

 
(1
)
Other, net
(21
)
 
13

Total other expense
(74
)
 
(46
)
Net earnings before income taxes
275

 
227

Income tax expense
67

 
46

Net earnings
208

 
181

Less: Earnings attributable to non-controlling interests
1

 
1

Net earnings attributable to Motorola Solutions, Inc.
$
207

 
$
180

 
 
 
 
Earnings per common share:
 
 
 
Basic
$
1.25

 
$
1.11

Diluted
$
1.18

 
$
1.05

 
 
 
 
Weighted average common shares outstanding:
 
 
 
Basic
164.9

 
162.2

Diluted
176.1

 
171.7

 
Percentage of Net Sales*
Net sales from products
60.1
 %
 
59.2
 %
Net sales from services
39.9
 %
 
40.8
 %
Net sales
100.0
 %
 
100.0
 %
Costs of products sales
43.8
 %
 
46.5
 %
Costs of services sales
59.2
 %
 
63.1
 %
Costs of sales
49.9
 %
 
53.3
 %
Gross margin
50.1
 %
 
46.7
 %
Selling, general and administrative expenses
18.9
 %
 
18.0
 %
Research and development expenditures
9.1
 %
 
9.2
 %
Other charges
0.5
 %
 
1.0
 %
Intangibles amortization
2.8
 %
 
3.0
 %
Operating earnings
18.8
 %
 
15.5
 %
Other income (expense):
 
 
 
Interest expense, net
(3.0
)%
 
(3.3
)%
Gains (losses) on sales of investments and businesses, net
0.2
 %
 
(0.1
)%
Other, net
(1.1
)%
 
0.7
 %
Total other expense
(4.0
)%
 
(2.6
)%
Net earnings before income taxes
14.8
 %
 
12.9
 %
Income tax expense
3.6
 %
 
2.6
 %
Net earnings
11.2
 %
 
10.3
 %
Less: Earnings attributable to non-controlling interests
0.1
 %
 
0.1
 %
Net earnings attributable to Motorola Solutions, Inc.
11.1
 %
 
10.2
 %
 * 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)
 
Six Months Ended
 
June 29, 2019
 
June 30, 2018
Net sales from products
$
2,063

 
$
1,842

Net sales from services
1,454

 
1,385

Net sales
3,517

 
3,227

Costs of products sales
934

 
867

Costs of services sales
879

 
869

Costs of sales
1,813

 
1,736

Gross margin
1,704

 
1,491

Selling, general and administrative expenses
676

 
594

Research and development expenditures
333

 
314

Other charges
14

 
44

Intangibles amortization
102

 
94

Operating earnings
579

 
445

Other income (expense):
 
 
 
Interest expense, net
(111
)
 
(104
)
Gains on sales of investments and businesses, net
4

 
10

Other, net
(12
)
 
16

Total other expense
(119
)
 
(78
)
Net earnings before income taxes
460

 
367

Income tax expense
100

 
69

Net earnings
360

 
298

Less: Earnings attributable to non-controlling interests
2

 
1

Net earnings attributable to Motorola Solutions, Inc.
$
358

 
$
297

Earnings per common share:
 
 
 
Basic
$
2.18

 
$
1.83

Diluted
$
2.04

 
$
1.73

Weighted average common shares outstanding:
 
 
 
Basic
164.4

 
161.7

Diluted
175.3

 
171.1

 
Percentage of Net Sales*
Net sales from products
58.7
 %
 
57.1
 %
Net sales from services
41.3
 %
 
42.9
 %
Net sales
100.0
 %
 
100.0
 %
Costs of products sales
45.3
 %
 
47.1
 %
Costs of services sales
60.5
 %
 
62.7
 %
Costs of sales
51.5
 %
 
53.8
 %
Gross margin
48.5
 %
 
46.2
 %
Selling, general and administrative expenses
19.2
 %
 
18.4
 %
Research and development expenditures
9.5
 %
 
9.7
 %
Other charges
0.4
 %
 
1.4
 %
Intangibles amortization
2.9
 %
 
2.9
 %
Operating earnings
16.5
 %
 
13.8
 %
Other income (expense):
 
 
 
Interest expense, net
(3.2
)%
 
(3.2
)%
Gains on sales of investments and businesses, net
0.1
 %
 
0.3
 %
Other, net
(0.3
)%
 
0.5
 %
Total other expense
(3.4
)%
 
(2.4
)%
Net earnings before income taxes
13.1
 %
 
11.4
 %
Income tax expense
2.8
 %
 
2.1
 %
Net earnings
10.2
 %
 
9.2
 %
 
 
 
 
Less: Earnings attributable to non-controlling interests
0.1
 %
 
 %
Net earnings attributable to Motorola Solutions, Inc.
10.2
 %
 
9.2
 %
 * Percentages may not add up due to rounding
 
 
 






GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)

 
 
June 29, 2019
 
December 31, 2018
Assets
 
 
 
 
   Cash and cash equivalents
 
$
953

 
$
1,246

   Restricted cash
 
11

 
11

         Total cash and cash equivalents
 
964

 
1,257

Accounts receivable, net
 
1,206

 
1,293

Contract assets
 
913

 
1,012

Inventories, net
 
424

 
356

Other current assets
 
324

 
354

         Total current assets
 
3,831

 
4,272

 
 
 
 
 
Property, plant and equipment, net
 
940

 
895

Operating lease assets
 
567

 

Investments
 
175

 
169

Deferred income taxes
 
913

 
985

Goodwill
 
1,852

 
1,514

Intangible assets, net
 
1,332

 
1,230

Other assets
 
364

 
344

Total assets
 
$
9,974

 
$
9,409

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

 
$
31

Accounts payable
 
544

 
592

Contract liabilities
 
1,187

 
1,263

Accrued liabilities
 
1,117

 
1,210

         Total current liabilities
 
2,876

 
3,096

 
 
 
 
 
Long-term debt
 
5,315

 
5,289

Operating lease liabilities
 
504

 

Other liabilities
 
2,233

 
2,300

 
 
 
 
 
Total Motorola Solutions, Inc. stockholders’ equity (deficit)
 
(970
)
 
(1,293
)
 
 
 
 
 
Non-controlling interests
 
16

 
17

 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
9,974

 
$
9,409

 
 
 
 
 





GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)

 
Three Months Ended
 
June 29, 2019
 
June 30, 2018
Operating
 
 
 
Net earnings attributable to Motorola Solutions, Inc.
$
207

 
$
180

Earnings attributable to non-controlling interests
1

 
1

Net earnings
208

 
181

Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities:
 
 
 
Depreciation and amortization
96

 
96

Non-cash other (income) charges
(6
)
 
3

Share-based compensation expense
30

 
17

Losses (gains) on sales of investments and businesses, net
(3
)
 
1

Loss from the extinguishment of long term debt
43

 

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
 
 
 
Accounts receivable
(58
)
 
11

Inventories
2

 
46

Other current assets and contract assets
(8
)
 
41

Accounts payable, accrued liabilities, and contract liabilities
(84
)
 
10

Other assets and liabilities
8

 
(5
)
Deferred income taxes
23

 
24

Net cash provided by operating activities
251

 
425

Investing
 
 
 
Acquisitions and investments, net
(3
)
 
(28
)
Proceeds from sales of investments and businesses, net
8

 
2

Capital expenditures
(63
)
 
(41
)
Net cash used for investing activities
(58
)
 
(67
)
Financing
 
 
 
Repayment of debt
(658
)
 
(147
)
Net proceeds from issuance of debt
645

 
(1
)
Issuance of common stock
25

 
6

Purchases of common stock
(25
)
 

Payments of dividends
(94
)
 
(84
)
Payments of dividends to non-controlling interests
(3
)
 
(1
)
Net cash used for financing activities
(110
)
 
(227
)
Effect of exchange rate changes on total cash and cash equivalents
(16
)
 
(48
)
Net increase in total cash and cash equivalents
67

 
83

Total cash and cash equivalents, beginning of period
897

 
858

Total cash and cash equivalents, end of period
$
964

 
$
941

 
 
 
 
Financial Ratios:
 
 
 
Free cash flow*
$
188

 
$
384

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





GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)

 
Six Months Ended
 
June 29, 2019
 
June 30, 2018
Operating
 
 
 
Net earnings attributable to Motorola Solutions, Inc.
$
358

 
$
297

Earnings attributable to non-controlling interests
2

 
1

Net earnings
360

 
298

Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities:
 
 
 
Depreciation and amortization
191

 
178

Non-cash other charges
4

 
6

Share-based compensation expense
57

 
34

Gains on sales of investments and businesses, net
(4
)
 
(10
)
Loss from the extinguishment of long term debt
43

 

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
 
 
 
Accounts receivable
110

 
206

Inventories
(61
)
 
37

Other current assets and contract assets
128

 
43

Accounts payable, accrued liabilities, and contract liabilities
(345
)
 
(340
)
Other assets and liabilities
2

 
(558
)
Deferred income taxes
17

 
31

Net cash provided by (used for) operating activities
502

 
(75
)
Investing
 
 
 
Acquisitions and investments, net
(371
)
 
(1,153
)
Proceeds from sales of investments and businesses, net
10

 
79

Capital expenditures
(129
)
 
(82
)
Net cash used for investing activities
(490
)
 
(1,156
)
Financing
 
 
 
Repayment of debt
(666
)
 
(197
)
Net proceeds from issuance of debt
645

 
1,295

Issuance of common stock
70

 
59

Purchases of common stock
(170
)
 
(66
)
Payments of dividends
(187
)
 
(168
)
Payments of dividends to non-controlling interests
(3
)
 
(1
)
Net cash provided by (used for) financing activities
(311
)
 
922

Effect of exchange rate changes on total cash and cash equivalents
6

 
(18
)
Net decrease in total cash and cash equivalents
(293
)
 
(327
)
Total cash and cash equivalents, beginning of period
1,257

 
1,268

Total cash and cash equivalents, end of period
$
964

 
$
941

 
 
 
 
Financial Ratios:
 
 
 
Free cash flow*
$
373

 
$
(157
)
 
 
 
 
*Free cash flow = Net cash provided by (used for) operating activities - Capital expenditures
 
 
 





GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Net Sales
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
1,238

 
$
1,189

 
4
%
Services and Software
622

 
571

 
9
%
   Total Motorola Solutions
$
1,860

 
$
1,760

 
6
%
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
2,307

 
$
2,141

 
8
%
Services and Software
1,210

 
1,086

 
11
%
   Total Motorola Solutions
$
3,517

 
$
3,227

 
9
%
 
 
 
 
 
 
Operating Earnings
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
201

 
$
175

 
15
%
Services and Software
148

 
98

 
51
%
   Total Motorola Solutions
$
349

 
$
273

 
28
%
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
310

 
$
265

 
17
%
Services and Software
269

 
180

 
49
%
   Total Motorola Solutions
$
579

 
$
445

 
30
%
 
 
 
 
 
 
Operating Earnings %
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
 
Products and Systems Integration
16.2
%
 
14.7
%
 
 
Services and Software
23.8
%
 
17.2
%
 
 
   Total Motorola Solutions
18.8
%
 
15.5
%
 
 
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
 
Products and Systems Integration
13.4
%
 
12.4
%
 
 
Services and Software
22.2
%
 
16.6
%
 
 
   Total Motorola Solutions
16.5
%
 
13.8
%
 
 
 
 
 
 
 
 





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

 
 
 
 
 
 
 
 
 
 
 
Q2 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
 
$
30

 
$
7

 
$
23

 
$
0.13

Reorganization of business charges
 
Cost of sales and Other charges
 
12

 
3

 
9

 
0.05

Intangibles amortization expense
 
Intangibles amortization
 
52

 
11

 
41

 
0.23

Loss from the extinguishment of long-term debt
 
Other expense
 
43

 
11

 
32

 
0.18

Sale of a business
 
(Gain) or loss on sales of investments and businesses, net
 
(3
)
 
(1
)
 
(2
)
 
(0.01
)
Legal settlements
 
Other charges
 
1

 

 
1

 
0.01

Investment impairments
 
Investment impairments
 
3

 
1

 
2

 
0.01

Fair value adjustments to equity investments
 
Other income
 
(16
)
 
(4
)
 
(12
)
 
(0.07
)
FIN48 releases
 
Other income, Income tax expense
 
(4
)
 
(1
)
 
(3
)
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
Total impact on Net earnings
 
 
 
$
118

 
$
27

 
$
91

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 




Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
Net Sales
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
1,238

 
$
1,189

 
4
%
Services and Software
622

 
571

 
9
%
   Total Motorola Solutions
$
1,860

 
$
1,760

 
6
%
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
2,307

 
$
2,141

 
8
%
Services and Software
1,210

 
1,086

 
11
%
   Total Motorola Solutions
$
3,517

 
$
3,227

 
9
%
 
 
 
 
 
 
Non-GAAP Operating Earnings
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
242

 
$
226

 
7
%
Services and Software
202

 
152

 
33
%
   Total Motorola Solutions
$
444

 
$
378

 
17
%
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Products and Systems Integration
$
389

 
$
350

 
11
%
Services and Software
370

 
287

 
29
%
   Total Motorola Solutions
$
759

 
$
637

 
19
%
 
 
 
 
 
 
Non-GAAP Operating Earnings %
 
Three Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
 
Products and Systems Integration
19.5
%
 
19.0
%
 
 
Services and Software
32.5
%
 
26.6
%
 
 
   Total Motorola Solutions
23.9
%
 
21.5
%
 
 
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 29, 2019
 
June 30, 2018
 
 
Products and Systems Integration
16.9
%
 
16.3
%
 
 
Services and Software
30.6
%
 
26.4
%
 
 
   Total Motorola Solutions
21.6
%
 
19.7
%
 
 





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
%
Q2 2019
 
 
TOTAL
 
Products and Systems Integration
 
Services and Software
Net sales
 
$
1,860

 
$
1,238

 
$
622

Operating earnings ("OE")
 
$
349

 
$
201

 
$
148

 
 
 
 
 
 
 
Above-OE non-GAAP adjustments:
 
 
 
 
 
 
  Share-based compensation expense
 
30

 
19

 
11

  Reorganization of business charges
 
12

 
9

 
3

  Intangibles amortization expense
 
52

 
12

 
40

Legal settlements
 
1

 
1

 

Total above-OE non-GAAP adjustments
 
95

 
41

 
54

Operating earnings after non-GAAP adjustments
 
$
444

 
$
242

 
$
202


  Operating earnings as a percentage of net sales - GAAP
 
18.8
%
 
16.2
%
 
23.8
%
  Operating earnings as a percentage of net sales - after non-GAAP adjustments
 
23.9
%
 
19.5
%
 
32.5
%





Non-GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Organic Revenue
(In millions)
Total Motorola Solutions
 
 
Three Months Ended
 
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Net sales
 
$
1,860

 
$
1,760

 
6
%
Non-GAAP adjustments:
 
 
 
 
 
 
  Acquisitions
 
(37
)
 
(4
)
 
 
Organic revenue
 
$
1,823

 
$
1,756

 
4
%

Total Motorola Solutions
 
 
Six Months Ended
 
 
 
 
June 29, 2019
 
June 30, 2018
 
% Change
Net sales
 
$
3,517

 
$
3,227

 
9
%
Non-GAAP adjustments:
 
 
 
 
 
 
  Acquisitions
 
(196
)
 
(26
)
 
 
Organic revenue
 
$
3,321

 
$
3,201

 
4
%




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