MSI
$83.96
Motorola Solutions
$.37
.44%
Earnings Details
4th Quarter December 2016
Thursday, February 02, 2017 4:10:01 PM
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Summary

Motorola Solutions Guides In-line for the Year

Motorola Solutions (MSI) reported 4th Quarter December 2016 earnings of $1.98 per share on revenue of $1.9 billion. The consensus earnings estimate was $1.80 per share on revenue of $1.8 billion. Revenue grew 12.0% on a year-over-year basis.

The company said it expects first quarter non-GAAP earnings of $0.52 to $0.57 per share on revenue of $1.23 billion to $1.25 billion and 2017 earnings of $5.05 to $5.20 per share on revenue of $6.10 billion to $6.16 billion. The current consensus earnings estimate is $0.67 per share on revenue of $1.27 billion for the quarter ending March 31, 2017 and $5.09 per share on revenue of $6.10 billion for the year ending December 31, 2017.

Motorola Solutions Inc designs, manufactures and sells communications infrastructure, devices, system software and applications, and provide services associated with their use. Its products include bar code scanners, mobile computers, & among others.

Results
Reported Earnings
$1.98
Earnings Whisper
-
Consensus Estimate
$1.80
Reported Revenue
$1.88 Bil
Revenue Estimate
$1.84 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Motorola Solutions Reports Fourth-Quarter and Full-Year 2016 Financial Results

FOURTH-QUARTER HIGHLIGHTS

--Sales of $1.9 billion, up 12 percent from a year ago, including $124 million from Airwave

--Products sales of $1.2 billion, up $101 million or 9 percent

--GAAP earnings per share (EPS) from continuing operations of $1.43

--Non-GAAP EPS from continuing operations(2) of $2.03, up 28 percent

--Generated $513 million in operating cash flow; $1.2 billion for the full year

--Generated $453 million in free cash flow(1); $894 million for the full year

--Acquired Spillman Technologies, expanding command center software capabilities

Motorola Solutions, Inc. (MSI) today reported its earnings results for the fourth quarter and full year of 2016. Click here for a printable news release and financial tables.

SUPPORTING QUOTE

"We ended the year with an outstanding fourth quarter, and I am very encouraged with our strong competitive position and record backlog entering 2017," said Greg Brown, chairman and CEO of Motorola Solutions.

KEY FINANCIAL RESULTS (presented in millions, except per
share data and percentages)
Fourth Quarter
Full Year
2016
2015
% Change
2016
2015
% Change
Sales
$1,883
$1,682
12 %
$6,038
$5,695
6 %
GAAP
Operating earnings
$403
$389
4 %
$1,067
$994
7 %
% of Sales
21.4
%
23.1
%
17.7
%
17.5
%
EPS from continuing operations
$1.43
$1.56
(8 )%
$3.24
$3.17
2 %
Non-GAAP
Operating earnings
$541
$458
18 %
$1,427
$1,166
22 %
% of Sales
28.7
%
27.2
%
23.6
%
20.5
%
EPS from continuing operations
$2.03
$1.58
28 %
$4.92
$3.33
48 %
Products Segment
Sales
$1,226
$1,125
9 %
$3,649
$3,676
(1 )%
GAAP Operating earnings
$330
$291
13 %
$734
$704
4 %
% of Sales
26.9
%
25.9
%
20.1
%
19.2
%
Non-GAAP Operating earnings
$407
$340
20 %
$910
$827
10 %
% of Sales
33.2
%
30.2
%
24.9
%
22.5
%
Services Segment
Sales
$657
$557
18 %
$2,389
$2,019
18 %
GAAP Operating earnings
$73
$98
(26 )%
$333
$290
15 %
% of Sales
11.1
%
17.6
%
13.9
%
14.4
%
Non-GAAP Operating earnings
$134
$118
14 %
$517
$339
53 %
% of Sales
20.4
%
21.2
%
21.6
%
16.8
%

OTHER SELECT FOURTH-QUARTER FINANCIAL RESULTS

Revenue - Sales increased 12 percent, including $124 million in sales from Airwave. Sales grew in every region. The Products segment sales grew 9 percent, with growth in every region. The Services segment grew 18 percent including Airwave, while Managed and Support Services grew 5 percent excluding Airwave.

Operating margin - GAAP operating margin was 21.4 percent of sales, compared to 23.1 percent of sales in the year-ago quarter. Non-GAAP operating margin was 28.7 percent of sales, compared with 27.2 percent in the year-ago quarter. The improvement is primarily the result of higher sales.

Taxes - The GAAP effective tax rate was 33 percent, compared with 26 percent in the year-ago quarter. The prior year’s favorable rate was driven primarily by several discrete one-time items. The non-GAAP tax rate was 31 percent, compared with 31 percent in the fourth quarter of 2015.

Cash flow - The company generated $513 million in operating cash from continuing operations, up $98 million from the year-ago quarter primarily driven by earnings from higher revenue. Free cash flow(1) was up $82 million to $453 million.

Capital allocation - The company ended the quarter with cash and cash equivalents of $1.0 billion and a net debt position of approximately $3.4 billion(3). The company repaid the $675 million term loan associated with the Airwave acquisition, repurchased $114 million of common stock, paid $68 million in dividends and invested $246 million in acquisitions.

OTHER SELECT FULL-YEAR FINANCIAL RESULTS

Revenue - Sales increased 6 percent, including $462 million in Airwave sales. These results reflect growth in North America and Asia Pacific in both Products and Services. Growth of 33 percent in the Europe, Middle East and Africa region was driven by Airwave and partially offset by lower revenue in Norway associated with completing the implementation phase of the nationwide project. Latin America was down 20 percent, primarily on iDEN declines and first-half weakness. Products segment sales were down 1 percent compared to the prior year, while the Services segment grew 18 percent on Managed and Support Services strength.

Operating margin - For the full year, GAAP operating margin was 17.7 percent of sales, compared with 17.5 percent for the prior year. Non-GAAP operating margin was 23.6 percent of sales, compared with 20.5 percent for the prior year, driven by higher revenue and lower operating expenses.

Taxes - The 2016 GAAP effective tax rate was 33 percent, compared to 30 percent for the prior year. The non-GAAP tax rate was 31 percent, compared with 33 percent in the prior year.

Cash flow - The company generated $1.2 billion in operating cash from continuing operations, reflecting an increase of $144 million from the prior year. Free cash flow(1) was $894 million, up $48 million from the prior year. The increase was driven by higher sales and lower operating costs, partially offset by higher capital expenditures.

Capital allocation - The company invested $1.3 billion in acquisitions, repurchased approximately $842 million of its common stock and paid $280 million in dividends.

KEY HIGHLIGHTS

Fourth-quarter strategic wins

$140 million P25 system deployment for the Washington, D.C. Metro Area Transit Authority

$60 million P25 system replacement and multiyear services for San Francisco

$40 million P25 system and devices upgrade unifying eight cities in Argentina

$17 million Smart Public Safety Solutions sale of computer-aided dispatch equipment, software and multiyear services to Indianapolis

Fourth-quarter innovation and investments in growth

Acquired Spillman Technologies, a leading provider of comprehensive law enforcement and public safety software solutions, which bolsters the command center portfolio

Released new P25 and TETRA devices that provide unmatched features and functionality. In addition to form factor enhancements, the radios provide Bluetooth 4.0, Wi-Fi and enhanced location services that enable future software and services opportunities

Following more than three years of collaboration, emergency services in Norway and Sweden conducted their first major cross-border emergency response exercise supported by fully inter-operable multi-vendor radio communications. This land mobile radio (LMR) to LMR cross-border collaboration using different vendor equipment is spurring additional interest from neighboring countries and illustrates the power of the LMR communications platform

BUSINESS OUTLOOK

First-quarter 2017 - Motorola Solutions expects revenue growth of 3 to 5 percent compared with the first quarter of 2016. This includes approximately $115 million from Airwave versus $61 million in the year-ago quarter. The company expects non-GAAP earnings per share from continuing operations in the range of $0.52 to $0.57 per share.

Full-year 2017 - The company expects revenue to be up 1 to 2 percent. Airwave revenue is expected to be flat compared with the prior year due to foreign exchange rates. The company expects non-GAAP earnings per share from continuing operations in the range of $5.05 to $5.20 per share.

CONFERENCE CALL AND WEBCAST

Motorola Solutions will host its quarterly conference call beginning at 4 p.m. U.S. Central Standard Time (5 p.m. U.S. Eastern Standard Time) Thursday, Feb. 2. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.

CONSOLIDATED GAAP RESULTS (presented in millions, except per share data)

A comparison of results from operations is as follows:

Fourth Quarter
Full Year
2016
2015
2016
2015
Net sales
$1,883
$1,682
$6,038
$5,695
Gross margin
928
838
2,869
2,719
Operating earnings
403
389
1,067
994
Amounts attributable to Motorola Solutions, Inc. common
stockholders
Earnings from continuing operations, net of tax
243
277
560
640
Net earnings
243
279
560
610
Diluted EPS from continuing operations
$1.43
$1.56
$3.24
$3.17
Weighted average diluted common shares outstanding
170.4
177.5
173.1
201.8

HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION EXPENSE

The table below includes highlighted items, share-based compensation expense and intangible amortization for the fourth quarter of 2016.

(per diluted common share)
Q4 2016
GAAP Earnings from Continuing Operations
$1.43
Highlighted Items:
Share-based compensation expense
$0.06
Reorganization of business charges
$0.31
Intangibles amortization expense
$0.14
Loss on pension plan settlement
$0.15
Release of unrecognized tax benefit from audit settlement
($0.06)
Total Highlighted Items
$0.60
Non-GAAP Diluted EPS from Continuing Operations
$2.03

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. Specifically in regards to its restructuring plans, the company has incurred significant restructuring charges as it reduced approximately $700 million of operating expenses in the past four years.

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.

Constant Currency: The company evaluates its results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The company calculates constant currency percentages by converting its current period local currency results using prior-period exchange rates, and then comparing these adjusted values to prior period reported results.

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 first quarter and full year of 2017 and incremental revenues of Airwave. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 9 through 22 in Item 1A of Motorola Solutions 2015 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) 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; (6) 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; (7) the outcome of ongoing and future tax matters; (8) 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; (9) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (10) the impact on the company’s performance and financial results from strategic acquisitions or divestitures, including the acquisition of Airwave; (11) risks related to the company’s manufacturing and business operations in foreign countries; (12) the creditworthiness of the company’s customers and distributors, particularly purchasers of large infrastructure systems; (13) 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; (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 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; (22) the impact of the sale of the company’s legacy information systems, including components of the enterprise resource planning (ERP) system and the implementation of a new ERP system; and (23) 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

(2)Q4 Non-GAAP financial information excludes the after-tax impact of approximately $0.60 per diluted share related to share-based compensation, intangible assets amortization expense and highlighted items for the fourth-quarter. Details on these non-GAAP adjustments and the use of non-GAAP measures are included later in this news release.

(3) Net debt represents cash and cash equivalents less long-term debt, including current portion

ABOUT MOTOROLA SOLUTIONS

Motorola Solutions (MSI) creates innovative, mission-critical communication solutions and services that help public safety and commercial customers build safer cities and thriving communities. For ongoing news, visit www.motorolasolutions.com/newsroom or subscribe to a 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. (C)2017 Motorola Solutions, Inc. All rights reserved.

GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations
(In millions, except per share amounts)
Three Months Ended
December 31, 2016
December 31, 2015
Net sales from products
$
1,226
$
1,125
Net sales from services
657
557
Net sales
1,883
1,682
Costs of products sales
525
485
Costs of services sales
430
359
Costs of sales
955
844
Gross margin
928
838
Selling, general and administrative expenses
277
252
Research and development expenditures
142
152
Other charges
76
43
Intangibles amortization
30
2
Operating earnings
403
389
Other income (expense):
Interest expense, net
(48 )
(51 )
Gains on sales of investments and businesses, net
7
47
Other
--
(8 )
Total other expense
(41 )
(12 )
Earnings from continuing operations before income taxes
362
377
Income tax expense
118
99
Earnings from continuing operations
244
278
Earnings from discontinued operations, net of tax
--
2
Net earnings
244
280
Less: Earnings attributable to noncontrolling interests
1
1
Net earnings attributable to Motorola Solutions, Inc.
$
243
$
279
Amounts attributable to Motorola Solutions, Inc. common
stockholders:
Earnings from continuing operations, net of tax
$
243
$
277
Earnings from discontinued operations, net of tax
--
2
Net earnings attributable to Motorola Solutions, Inc.
$
243
$
279
Earnings per common share:
Basic:
Continuing operations
$
1.47
$
1.58
Discontinued operations
--
0.02
$
1.47
$
1.60
Diluted:
Continuing operations
$
1.43
$
1.56
Discontinued operations
--
0.01
$
1.43
$
1.57
Weighted average common shares outstanding:
Basic
165.4
174.9
Diluted
170.4
177.5
Percentage of Net Sales*
Net sales from products
65.1 %
66.9 %
Net sales from services
34.9 %
33.1 %
Net sales
100.0 %
100.0 %
Costs of products sales
42.8 %
43.1 %
Costs of services sales
65.4 %
64.5 %
Costs of sales
50.7 %
50.2 %
Gross margin
49.3 %
49.8 %
Selling, general and administrative expenses
14.7 %
15.0 %
Research and development expenditures
7.5 %
9.0 %
Other charges
4.0 %
2.6 %
Intangibles amortization
1.6 %
0.1 %
Operating earnings
21.4 %
23.1 %
Other income (expense):
Interest expense, net
(2.5 )%
(3.0 )%
Gains on sales of investments and businesses, net
0.4 %
2.8 %
Other
-- %
(0.5 )%
Total other expense
(2.2 )%
(0.7 )%
Earnings from continuing operations before income taxes
19.2 %
22.4 %
Income tax expense
6.3 %
5.9 %
Earnings from continuing operations
13.0 %
16.5 %
Earnings from discontinued operations, net of tax
-- %
0.1 %
Net earnings
13.0 %
16.6 %
Less: Earnings attributable to noncontrolling interests
0.1 %
0.1 %
Net earnings attributable to Motorola Solutions, Inc.
12.9 %
16.6 %
* Percentages may not add up due to rounding
GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations
(In millions, except per share amounts)
Years Ended
December 31, 2016
December 31, 2015
December 31, 2014
Net sales from products
$
3,649
$
3,676
$
3,807
Net sales from services
2,389
2,019
2,074
Net sales
6,038
5,695
5,881
Costs of products sales
1,649
1,625
1,678
Costs of services sales
1,520
1,351
1,372
Costs of sales
3,169
2,976
3,050
Gross margin
2,869
2,719
2,831
Selling, general and administrative expenses
1,000
1,021
1,184
Research and development expenditures
553
620
681
Other charges
136
76
1,968
Intangibles amortization
113
8
4
Operating earnings (loss)
1,067
994
(1,006 )
Other income (expense):
Interest expense, net
(205 )
(173 )
(126 )
Gains (losses) on sales of investments and businesses, net
(6 )
107
5
Other
(12 )
(11 )
(34 )
Total other expense
(223 )
(77 )
(155 )
Earnings (loss) from continuing operations before income taxes
844
917
(1,161 )
Income tax expense (benefit)
282
274
(465 )
Earnings (loss) from continuing operations
562
643
(696 )
Earnings (loss) from discontinued operations, net of tax
--
(30 )
1,996
Net earnings
562
613
1,300
Less: Earnings attributable to noncontrolling interests
2
3
1
Net earnings attributable to Motorola Solutions, Inc.
$
560
$
610
$
1,299
Amounts attributable to Motorola Solutions, Inc. common
stockholders:
Earnings (loss) from continuing operations, net of tax
$
560
$
640
$
(697 )
Earnings (loss) from discontinued operations, net of tax
--
(30 )
1,996
Net earnings attributable to Motorola Solutions, Inc.
$
560
$
610
$
1,299
Earnings (loss) per common share:
Basic:
Continuing operations
$
3.30
$
3.21
$
(2.84 )
Discontinued operations
--
(0.15 )
8.13
$
3.30
$
3.06
$
5.29
Diluted:
Continuing operations
$
3.24
$
3.17
$
(2.84 )
Discontinued operations
--
(0.15 )
8.13
$
3.24
$
3.02
$
5.29
Weighted average common shares outstanding:
Basic
169.6
199.6
245.6
Diluted
173.1
201.8
245.6
Percentage of Net Sales*
Net sales from products
60.4 %
64.5 %
64.7 %
Net sales from services
39.6 %
35.5 %
35.3 %
Net sales
100.0 %
100.0 %
100.0 %
Costs of products sales
45.2 %
44.2 %
44.1 %
Costs of services sales
63.6 %
66.9 %
66.2 %
Costs of sales
52.5 %
52.3 %
51.9 %
Gross margin
47.5 %
47.7 %
48.1 %
Selling, general and administrative expenses
16.6 %
17.9 %
20.1 %
Research and development expenditures
9.2 %
10.9 %
11.6 %
Other charges
2.3 %
1.3 %
33.5 %
Intangibles amortization
1.9 %
0.1 %
0.1 %
Operating earnings (loss)
17.7 %
17.5 %
(17.1 )%
Other income (expense):
Interest expense, net
(3.4 )%
(3.0 )%
(2.1 )%
Gains (losses) on sales of investments and businesses, net
(0.1 )%
1.9 %
0.1 %
Other
(0.2 )%
(0.2 )%
(0.6 )%
Total other expense
(3.7 )%
(1.4 )%
(2.6 )%
Earnings (loss) from continuing operations before income taxes
14.0 %
16.1 %
(19.7 )%
Income tax expense (benefit)
4.7 %
4.8 %
(7.9 )%
Earnings (loss) from continuing operations
9.3 %
11.3 %
(11.8 )%
Earnings (loss) from discontinued operations, net of tax
-- %
(0.5 )%
33.9 %
Net earnings
9.3 %
10.8 %
22.1 %
Less: Earnings attributable to noncontrolling interests
-- %
0.1 %
-- %
Net earnings attributable to Motorola Solutions, Inc.
9.3 %
10.7 %
22.1 %
* Percentages may not add up due to rounding
GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
(In millions)
December 31, 2016
December 31, 2015
Assets
Cash and cash equivalents
$
1,030
$
1,980
Accounts receivable, net
1,372
1,362
Inventories, net
273
296
Other current assets
755
954
Current assets held for disposition
--
27
Total current assets
3,430
4,619
Property, plant and equipment, net
789
487
Investments
238
231
Deferred income taxes
2,219
2,278
Goodwill
728
420
Other assets
1,021
271
Non-current assets held for disposition
--
40
Total assets
$
8,425
$
8,346
Liabilities and Stockholders’ Equity
Current portion of long-term debt
$
4
$
4
Accounts payable
553
518
Accrued liabilities
2,073
1,671
Total current liabilities
2,630
2,193
Long-term debt
4,392
4,345
Other liabilities
2,355
1,904
Total Motorola Solutions, Inc. stockholders’ equity (deficit)
(964 )
(106 )
Noncontrolling interests
12
10
Total liabilities and stockholders’ equity
$
8,425
$
8,346
Financial Ratios:
Net cash (debt)*
$
(3,366 )
$
(2,369 )
*Net cash (debt) = Total cash - Current portion of long-term debt
- Long-term debt
GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In millions)
Three Months Ended
December 31, 2016
December 31, 2015
Operating
Net earnings attributable to Motorola Solutions, Inc.
$
243
$
279
Earnings attributable to noncontrolling interests
1
1
Net earnings
244
280
Earnings from discontinued operations, net of tax
--
2
Earnings from continuing operations, net of tax
244
278
Adjustments to reconcile earnings (loss) from continuing operations
to net cash provided by operating activities:
Depreciation and amortization
75
37
Non-cash other charges
11
9
Loss on pension plan settlement
26
--
Share-based compensation expense
16
20
Gains on sales of investments and businesses, net
(7 )
(47 )
Loss from the extinguishment of long-term debt
2
--
Deferred income taxes
71
33
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
(213 )
(146 )
Inventories
6
37
Other current assets
(81 )
54
Accounts payable and accrued liabilities
427
179
Other assets and liabilities
(64 )
(39 )
Net cash provided by operating activities from continuing operations
513
415
Investing
Acquisitions and investments, net
(259 )
(436 )
Proceeds from sales of investments and businesses, net
33
80
Capital expenditures
(60 )
(44 )
Proceeds from sales of property, plant and equipment
4
1
Net cash used for investing activities from continuing operations
(282 )
(399 )
Financing
Repayment of debt
(683 )
(1 )
Net proceeds from issuance of debt
--
(5 )
Issuance of common stock
14
14
Purchase of common stock
(114 )
(179 )
Excess tax benefit from share-based compensation
--
4
Payment of dividends
(68 )
(60 )
Net cash used for financing activities from continuing operations
(851 )
(227 )
Effect of exchange rate changes on cash and cash equivalents from
(37 )
(9 )
continuing operations
Net decrease in cash and cash equivalents
(657 )
(220 )
Cash and cash equivalents, beginning of period
1,687
2,200
Cash and cash equivalents, end of period
$
1,030
$
1,980
Financial Ratios:
Free cash flow*
$
453
$
371
*Free cash flow = Net cash provided by operating activities -
Capital Expenditures
GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In millions)
Years Ended
December 31, 2016
December 31, 2015
December 31, 2014
Operating
Net earnings attributable to Motorola Solutions, Inc.
$
560
$
610
$
1,299
Earnings attributable to noncontrolling interests
2
3
1
Net earnings
562
613
1,300
Earnings (loss) from discontinued operations, net of tax
--
(30 )
1,996
Earnings (loss) from continuing operations, net of tax
562
643
(696 )
Adjustments to reconcile earnings (loss) from continuing operations
to net cash provided by operating activities:
Depreciation and amortization
295
150
173
Non-cash other charges
54
52
--
Non-U.S. pension curtailment gain
--
(32 )
--
Gain on sale of building and land
--
--
(21 )
Loss on pension plan settlement
26
--
1,883
Share-based compensation expense
68
78
94
Loss (gains) on sales of investments and businesses, net
6
(107 )
(5 )
Loss from the extinguishment of long-term debt
2
--
37
Deferred income taxes
213
160
(557 )
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
32
21
(62 )
Inventories
6
16
(5 )
Other current assets
(185 )
92
(47 )
Accounts payable and accrued liabilities
203
26
(72 )
Other assets and liabilities
(117 )
(78 )
(1,359 )
Net cash provided by (used for) operating activities from continuing
1,165
1,021
(637 )
operations
Investing
Acquisitions and investments, net
(1,474 )
(586 )
(47 )
Proceeds from sales of investments and businesses, net
670
230
3,403
Capital expenditures
(271 )
(175 )
(181 )
Proceeds from sales of property, plant and equipment
73
3
33
Net cash provided by (used for) investing activities from continuing
(1,002 )
(528 )
3,208
operations
Financing
Repayment of debt
(686 )
(4 )
(465 )
Net proceeds from issuance of debt
673
971
1,375
Issuance of common stock
93
84
87
Purchase of common stock
(842 )
(3,177 )
(2,546 )
Excess tax benefit from share-based compensation
--
5
11
Payment of dividends
(280 )
(277 )
(318 )
Distributions from discontinued operations
--
--
93
Net cash used for financing activities from continuing operations
(1,042 )
(2,398 )
(1,763 )
Discontinued Operations
Net cash provided by operating activities from discontinued
--
--
95
operations
Net cash provided by investing activities from discontinued
--
--
4
operations
Net cash used for financing activities from discontinued operations
--
--
(93 )
Effect of exchange rate changes on cash and cash equivalents from
--
--
(6 )
discontinued operations
Net cash provided by discontinued operations
--
--
--
Effect of exchange rate changes on cash and cash equivalents from
(71 )
(69 )
(79 )
continuing operations
Net decrease in cash and cash equivalents
(950 )
(1,974 )
729
Cash and cash equivalents, beginning of period
1,980
3,954
3,225
Cash and cash equivalents, end of period
$
1,030
$
1,980
$
3,954
Financial Ratios:
Free cash flow*
$
894
$
846
$
(818 )
*Free cash flow = Net cash provided by operating activities -
Capital Expenditures
GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
Net Sales
Three Months Ended
December 31, 2016
December 31, 2015
% Change
Products
$
1,226
$
1,125
9 %
Services
657
557
18 %
Total Motorola Solutions
$
1,883
$
1,682
12 %
Years Ended
December 31, 2016
December 31, 2015
% Change
Products
$
3,649
$
3,676
(1 )%
Services
2,389
2,019
18 %
Total Motorola Solutions
$
6,038
$
5,695
6 %
Operating Earnings
Three Months Ended
December 31, 2016
December 31, 2015
% Change
Products
$
330
$
291
13 %
Services
73
98
(26 )%
Total Motorola Solutions
$
403
$
389
4 %
Years Ended
December 31, 2016
December 31, 2015
% Change
Products
$
734
$
704
4 %
Services
333
290
15 %
Total Motorola Solutions
$
1,067
$
994
7 %
Operating Earnings %
Three Months Ended
December 31, 2016
December 31, 2015
Products
26.9 %
25.9 %
Services
11.1 %
17.6 %
Total Motorola Solutions
21.4 %
23.1 %
Years Ended
December 31, 2016
December 31, 2015
Products
20.1 %
19.2 %
Services
13.9 %
14.4 %
Total Motorola Solutions
17.7 %
17.5 %
Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense,
Share-Based Compensation Expense, and Highlighted Items)
Q1 2016
PBT
Tax
PAT
Non-GAAP Adjustments
Statement Line
(Inc)/Exp
Inc/(Exp)
(Inc)/Exp
EPS impact
Share-based compensation expense
Cost of sales, SG&A and R&D
$
17
$
6
$
11
$
0.06
Reorganization of business charges
Cost of sales and Other charges
23
8
15
0.08
Intangibles amortization expense
Intangibles amortization
13
3
10
0.06
Acquisition related transaction fees
Other charges
13
--
13
0.07
Loss on investment in United Kingdom treasuries
Other expense (income)
19
7
12
0.07
Realized foreign currency loss on acquisition
Other expense (income)
10
3
7
0.04
Loss on sale of Malaysia facility and operations
Other expense (income)
7
--
7
0.04
Total impact on Net earnings
$
102
$
27
$
75
$
0.42
Q2 2016
PBT
Tax
PAT
Non-GAAP Adjustments
Statement Line
(Inc)/Exp
Inc/(Exp)
(Inc)/Exp
EPS impact
Share-based compensation expense
Cost of sales, SG&A and R&D
$
18
$
6
$
12
$
0.07
Reorganization of business charges
Cost of sales and Other charges
27
7
20
0.12
Intangibles amortization expense
Intangibles amortization
38
8
30
0.17
Building impairment
Other charges
17
6
11
0.06
Total impact on Net earnings
$
100
$
27
$
73
$
0.42
Q3 2016
PBT
Tax
PAT
Non-GAAP Adjustments
Statement Line
(Inc)/Exp
Inc/(Exp)
(Inc)/Exp
EPS impact
Share-based compensation expense
Cost of sales, SG&A and R&D
$
17
$
5
$
12
$
0.07
Reorganization of business charges
Cost of sales and Other charges
7
2
5
0.03
Intangibles amortization expense
Intangibles amortization
31
7
24
0.14
Total impact on Net earnings
$
55
$
14
$
41
$
0.24
Q4 2016
PBT
Tax
PAT
Non-GAAP Adjustments
Statement Line
(Inc)/Exp
Inc/(Exp)
(Inc)/Exp
EPS impact
Share-based compensation expense
Cost of sales, SG&A and R&D
$
16
$
5
$
11
$
0.06
Reorganization of business charges
Cost of sales and Other charges
66
14
52
0.31
Intangibles amortization expense
Intangibles amortization
30
6
24
0.14
Loss on Non-U.S. pension plan settlement
Other charges
26
--
26
0.15
Release of unrecognized tax benefit from audit settlement
Income Tax Expense (Benefit)
--
10
(10 )
(0.06 )
Total impact on Net earnings
$
138
$
35
$
103
0.60
FY 2016
PBT
Tax
PAT
Non-GAAP Adjustments
Statement Line
(Inc)/Exp
Inc/(Exp)
(Inc)/Exp
EPS impact
Share-based compensation expense
Cost of sales, SG&A and R&D
$
68
$
22
$
46
$
0.27
Reorganization of business charges
Cost of sales and Other charges
123
31
92
0.53
Intangibles amortization expense
Intangibles amortization
113
26
87
0.50
Acquisition related transaction fees
Other charges
13
--
13
0.08
Loss on investment in United Kingdom treasuries
Other expense (income)
19
7
12
0.07
Realized foreign currency loss on acquisition
Other expense (income)
10
3
7
0.04
Loss on sale of Malaysia facility and operations
Other expense (income)
7
--
7
0.04
Building impairment
Other charges
17
6
11
0.06
Loss on Non-U.S. pension plan settlement
Other charges
26
--
26
0.15
Release of unrecognized tax benefit from audit settlement
Income Tax Expense (Benefit)
--
10
(10 )
(0.06 )
Total impact on Net earnings
$
396
$
105
$
291
$
1.68
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
Net Sales
Three Months Ended
December 31, 2016
December 31, 2015
% Change
Products
$
1,226
$
1,125
9 %
Services
657
557
18 %
Total Motorola Solutions
$
1,883
$
1,682
12 %
Years Ended
December 31, 2016
December 31, 2015
% Change
Products
$
3,649
$
3,676
(1 )%
Services
2,389
2,019
18 %
Total Motorola Solutions
$
6,038
$
5,695
6 %
Non-GAAP Operating Earnings
Three Months Ended
December 31, 2016
December 31, 2015
% Change
Products
$
407
$
340
20 %
Services
134
118
14 %
Total Motorola Solutions
$
541
$
458
18 %
Years Ended
December 31, 2016
December 31, 2015
% Change
Products
$
910
$
827
10 %
Services
517
339
53 %
Total Motorola Solutions
$
1,427
$
1,166
22 %
Non-GAAP Operating Earnings %
Three Months Ended
December 31, 2016
December 31, 2015
Products
33.2 %
30.2 %
Services
20.4 %
21.2 %
Total Motorola Solutions
28.7 %
27.2 %
Years Ended
December 31, 2016
December 31, 2015
Products
24.9 %
22.5 %
Services
21.6 %
16.8 %
Total Motorola Solutions
23.6 %
20.5 %
Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
Q1 2016
TOTAL
Products
Services
Net sales
$
1,193
$
702
$
491
Operating earnings ("OE")
$
100
$
51
$
49
Above-OE non-GAAP adjustments:
Share-based compensation expense
17
11
6
Reorganization of business charges
23
21
2
Intangibles amortization expense
13
1
12
Acquisition related transaction fees
13
--
13
Total above-OE non-GAAP adjustments
66
33
33
Operating earnings after non-GAAP adjustments
$
166
$
84
$
82
Operating earnings as a percentage of net sales - GAAP
8.4 %
7.3 %
10.0 %
Operating earnings as a percentage of net sales - after non-GAAP
13.9 %
12.0 %
16.7 %
adjustments
Q2 2016
TOTAL
Products
Services
Net sales
$
1,430
$
801
$
629
Operating earnings ("OE")
$
224
$
129
$
95
Above-OE non-GAAP adjustments:
Share-based compensation expense
18
12
6
Reorganization of business charges
27
21
6
Intangibles amortization expense
38
2
36
Building impairment
17
12
5
Total above-OE non-GAAP adjustments
100
47
53
Operating earnings after non-GAAP adjustments
$
324
$
176
$
148
Operating earnings as a percentage of net sales - GAAP
15.7 %
16.1 %
15.1 %
Operating earnings as a percentage of net sales - after non-GAAP
22.7 %
22.0 %
23.5 %
adjustments
Q3 2016
TOTAL
Products
Services
Net sales
$
1,532
$
920
$
612
Operating earnings ("OE")
$
341
$
225
$
116
Above-OE non-GAAP adjustments:
Share-based compensation expense
17
11
6
Reorganization of business charges
7
5
2
Intangibles amortization expense
31
2
29
Total above-OE non-GAAP adjustments
55
18
37
Operating earnings after non-GAAP adjustments
$
396
$
243
$
153
Operating earnings as a percentage of net sales - GAAP
22.3 %
24.5 %
19.0 %
Operating earnings as a percentage of net sales - after non-GAAP
25.8 %
26.4 %
25.0 %
adjustments
Q4 2016
TOTAL
Products
Services
Net sales
$
1,883
$
1,226
$
657
Operating earnings ("OE")
$
403
$
330
$
73
Above-OE non-GAAP adjustments:
Share-based compensation expense
16
10
6
Reorganization of business charges
66
47
19
Loss on Non-U.S. pension plan settlement
26
18
8
Intangibles amortization expense
30
2
28
Total above-OE non-GAAP adjustments
138
77
61
Operating earnings after non-GAAP adjustments
$
541
$
407
$
134
Operating earnings as a percentage of net sales - GAAP
21.4 %
26.9 %
11.1 %
Operating earnings as a percentage of net sales - after non-GAAP
28.7 %
33.2 %
20.4 %
adjustments
FY 2016
TOTAL
Products
Services
Net sales
$
6,038
$
3,649
$
2,389
Operating earnings ("OE")
$
1,067
$
734
$
333
Above-OE non-GAAP adjustments:
Share-based compensation expense
68
44
24
Reorganization of business charges
123
94
29
Loss on Non-U.S. pension plan settlement
26
18
8
Intangibles amortization expense
113
8
105
Acquisition related transaction fees
13
--
13
Building impairment
17
12
5
Total above-OE non-GAAP adjustments
360
176
184
Operating earnings after non-GAAP adjustments
$
1,427
$
910
$
517
Operating earnings as a percentage of net sales - GAAP
17.7 %
20.1 %
13.9 %
Operating earnings as a percentage of net sales - after non-GAAP
23.6 %
24.9 %
21.6 %
adjustments

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SOURCE: Motorola Solutions, Inc.

MEDIA CONTACT
Tama McWhinney
Motorola Solutions
+1 847-538-1865
tama.mcwhinney@motorolasolutions.com
or
INVESTOR CONTACT
Chris Kutsor
Motorola Solutions
+1 847-576-4995
chris.kutsor@motorolasolutions.com