[May 04, 2017] |
|
Motorola Solutions Reports First-Quarter 2017 Financial Results
Motorola
Solutions, Inc. (NYSE: MSI) today reported its earnings results for
the first quarter of 2017. Click
here for a printable news release and financial tables.
SUPPORTING QUOTE
"Q1 was a strong quarter and an excellent start to the year," said Greg
Brown, chairman and CEO of Motorola Solutions. "I'm very pleased with
our momentum going forward."
KEY FINANCIAL RESULTS (presented in millions, except per share
data and percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2017
|
|
|
Q1 2016
|
|
|
% Change
|
|
Sales
|
|
$1,281
|
|
|
$1,193
|
|
|
7
|
%
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
Operating Earnings
|
|
$176
|
|
|
$100
|
|
|
76
|
%
|
|
% of Sales
|
|
13.7%
|
|
|
8.4%
|
|
|
|
|
EPS
|
|
$0.45
|
|
|
$0.10
|
|
|
350
|
%
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
Operating Earnings
|
|
$224
|
|
|
$166
|
|
|
35
|
%
|
|
% of Sales
|
|
17.5%
|
|
|
13.9%
|
|
|
|
|
EPS
|
|
$0.71
|
|
|
$0.52
|
|
|
37
|
%
|
|
Product Segment
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$703
|
|
|
$702
|
|
|
-
|
%
|
|
GAAP Operating Earnings
|
|
$89
|
|
|
$51
|
|
|
75
|
%
|
|
% of Sales
|
|
12.7%
|
|
|
7.3%
|
|
|
|
|
Non-GAAP Operating Earnings
|
|
$101
|
|
|
$84
|
|
|
20
|
%
|
|
% of Sales
|
|
14.4%
|
|
|
12.0%
|
|
|
|
|
Services Segment
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$578
|
|
|
$491
|
|
|
18
|
%
|
|
GAAP Operating Earnings
|
|
$87
|
|
|
$49
|
|
|
78
|
%
|
|
% of Sales
|
|
15.1%
|
|
|
10.0%
|
|
|
|
|
Non-GAAP Operating Earnings
|
|
$123
|
|
|
$82
|
|
|
50
|
%
|
|
% of Sales
|
|
21.3%
|
|
|
16.7%
|
|
|
|
*Non-GAAP financial information excludes the after-tax impact of
approximately $0.26 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.
-
Revenue - Sales increased 7 percent in total, and 3
percent excluding Airwave. The increase reflects growth in EMEA and
the Americas. Product segment sales were up $1 million. The Services
segment grew 18 percent, including $58 million of incremental Airwave
revenue. Excluding Airwave, Services grew 7 percent.
-
Operating margin - GAAP operating margin was 13.7
percent of sales, compared with 8.4 percent in the year-ago quarter.
The improvement reflects higher sales and gross margin. Non-GAAP
operating margin was 17.5 percent of sales, compared with 13.9 percent
in the year-ago quarter, driven by higher sales and gross margin as
well as lower operating expenses.
-
Cash flow - The company generated $142 million in
operating cash, an increase of $129 million from the year-ago quarter
on higher revenue and earnings. Q1 also included a $52 million legal
settlement. Free cash flow2 was up $112 million to $74
million, driven by higher revenue and earnings.
-
Capital Allocation - The company ended the quarter with
cash and cash equivalents of $829 million and a net debt position of
approximately $3.6 billion3. The company repurchased
approximately $178 million of its common stock, paid approximately $77
million in cash dividends, and invested $55 million in acquisitions.
-
Backlog - The company ended the quarter with $8.5
billion of backlog, up $129 million from the year-ago quarter.
Products backlog is up $285 million, while Services backlog is down
$156 million, driven by a reduction of approximately $650 million in
Airwave backlog over the prior 12 months.
KEY HIGHLIGHTS
Strategic wins
-
$80 million to upgrade and manage a nationwide TETRA network in Europe
-
$38 million for Managed Services with Victoria Police in Australia
-
$34 million P25 network with multi-year services in California
-
$10 million P25 system with Central Louisiana Electric Company (CLECO)
-
Double-digit growth for Command Center software driven by Spillman,
Emergency CallWorks, and PremierOne solutions
Innovation and investments in growth
-
Announced the planned acquisition of Kodiak Networks, a leading
provider of broadband push-to-talk for commercial customers, which
adds a carrier-integrated, cellular push-to-talk solution for mobile
operators around the world
-
Acquired Interexport, a provider of managed services for
communications systems to public safety and commercial customers in
Chile
-
Announced new head of software, Andrew Sinclair, to lead a new
integrated Software Enterprise team focused on the development, sales
and delivery of software
-
Launched WAVE OnCloud, which provides instant communications between
various devices and networks with a new subscription-based
Software-as-a-Service (SaaS) model that reduces adoption barriers
BUSINESS OUTLOOK
-
Second-quarter 2017 - Motorola Solutions expects revenue
growth of 2 to 3 percent compared with the second quarter of 2016. The
company expects non-GAAP earnings in the range of $0.98 to $1.03 per
share.
-
Full-year 2017 - The company now expects revenue growth
of approximately 2 percent versus the prior outlook of 1 to 2 percent,
and raises non-GAAP earnings per share to $5.08 to $5.23 versus the
prior outlook of $5.05 to $5.20.
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 4. 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:
|
|
|
|
|
|
|
|
|
|
Q1 2017
|
|
Q1 2016
|
|
Net sales
|
|
$1,281
|
|
$1,193
|
|
Gross margin
|
|
570
|
|
502
|
|
Operating earnings
|
|
176
|
|
100
|
|
Amounts attributable to Motorola Solutions, Inc. common
stockholders
|
|
|
|
|
|
Earnings, net of tax
|
|
77
|
|
17
|
|
Net earnings
|
|
77
|
|
17
|
|
Diluted EPS
|
|
$0.45
|
|
$0.10
|
|
Weighted average diluted common shares outstanding
|
|
169.9
|
|
177.0
|
|
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 2017.
|
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(per diluted common share)
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Q1 2017
|
|
|
|
|
|
|
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|
GAAP Earnings
|
|
|
$0.45
|
|
|
Highlighted Items:
|
|
|
|
|
|
Share-based compensation expense
|
|
|
0.06
|
|
|
Reorganization of business charges
|
|
|
0.09
|
|
|
Intangibles amortization expense
|
|
|
0.16
|
|
|
Gain on legal settlement
|
|
|
(0.15
|
)
|
|
Building impairment
|
|
|
0.05
|
|
|
Non-US pension settlement loss
|
|
|
0.05
|
|
|
Sale of investments
|
|
|
(0.01
|
)
|
|
Acquisition-related transaction fees
|
|
|
0.01
|
|
|
Total Highlighted Items
|
|
|
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$0.26
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted EPS
|
|
|
$0.71
|
|
|
|
|
|
|
|
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 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 second quarter and full year of
2017 and the enhancement of the company's offerings through
acquisitions. 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 2016 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
|
|
Q1 Non-GAAP financial information excludes the after-tax impact of
approximately $0.26 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 in this news release.
|
2
|
|
Free cash flow represents operating cash flow less capital
expenditures
|
3
|
|
Net debt represents cash and cash equivalents less long-term debt,
including current portion
|
|
|
|
ABOUT MOTOROLA SOLUTIONS
Motorola Solutions (NYSE: 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. ©2017 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
|
|
|
April 1, 2017
|
|
April 2, 2016
|
Net sales from products
|
|
$
|
703
|
|
|
$
|
702
|
|
Net sales from services
|
|
|
578
|
|
|
|
491
|
|
Net sales
|
|
|
1,281
|
|
|
|
1,193
|
|
|
|
|
|
|
Costs of products sales
|
|
|
347
|
|
|
|
366
|
|
Costs of services sales
|
|
|
364
|
|
|
|
325
|
|
Costs of sales
|
|
|
711
|
|
|
|
691
|
|
|
|
|
|
|
Gross margin
|
|
|
570
|
|
|
|
502
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
232
|
|
|
|
234
|
|
Research and development expenditures
|
|
|
135
|
|
|
|
135
|
|
Other charges
|
|
|
(9
|
)
|
|
|
20
|
|
Intangibles amortization
|
|
|
36
|
|
|
|
13
|
|
Operating earnings
|
|
|
176
|
|
|
|
100
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
Interest expense, net
|
|
|
(51
|
)
|
|
|
(49
|
)
|
Gains (losses) on sales of investments and businesses, net
|
|
|
3
|
|
|
|
(21
|
)
|
Other
|
|
|
(8
|
)
|
|
|
(8
|
)
|
Total other expense
|
|
|
(56
|
)
|
|
|
(78
|
)
|
Net earnings before income taxes
|
|
|
120
|
|
|
|
22
|
|
Income tax expense
|
|
|
42
|
|
|
|
5
|
|
Net earnings
|
|
|
78
|
|
|
|
17
|
|
|
|
|
|
|
Less: Earnings attributable to noncontrolling interests
|
|
|
1
|
|
|
|
-
|
|
Net earnings attributable to Motorola Solutions, Inc.
|
|
$
|
77
|
|
|
$
|
17
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
Basic
|
|
$
|
0.47
|
|
|
$
|
0.10
|
|
Diluted
|
|
$
|
0.45
|
|
|
$
|
0.10
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
Basic
|
|
|
164.2
|
|
|
|
174.5
|
|
Diluted
|
|
|
169.9
|
|
|
|
177.0
|
|
|
|
|
|
|
|
|
Percentage of Net Sales*
|
Net sales from products
|
|
|
54.9
|
%
|
|
|
58.8
|
%
|
Net sales from services
|
|
|
45.1
|
%
|
|
|
41.2
|
%
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Costs of products sales
|
|
|
49.4
|
%
|
|
|
52.1
|
%
|
Costs of services sales
|
|
|
63.0
|
%
|
|
|
66.2
|
%
|
Costs of sales
|
|
|
55.5
|
%
|
|
|
57.9
|
%
|
|
|
|
|
|
Gross margin
|
|
|
44.5
|
%
|
|
|
42.1
|
%
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
18.1
|
%
|
|
|
19.6
|
%
|
Research and development expenditures
|
|
|
10.5
|
%
|
|
|
11.3
|
%
|
Other charges
|
|
|
(0.7
|
)%
|
|
|
1.7
|
%
|
Intangibles amortization
|
|
|
2.8
|
%
|
|
|
1.1
|
%
|
Operating earnings
|
|
|
13.7
|
%
|
|
|
8.4
|
%
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
Interest expense, net
|
|
|
(4.0
|
)%
|
|
|
(4.1
|
)%
|
Gains (losses) on sales of investments and businesses, net
|
|
|
0.2
|
%
|
|
|
(1.8
|
)%
|
Other
|
|
|
(0.6
|
)%
|
|
|
(0.7
|
)%
|
Total other expense
|
|
|
(4.4
|
)%
|
|
|
(6.5
|
)%
|
Net earnings before income taxes
|
|
|
9.4
|
%
|
|
|
1.8
|
%
|
Income tax expense
|
|
|
3.3
|
%
|
|
|
0.4
|
%
|
Net earnings
|
|
|
6.1
|
%
|
|
|
1.4
|
%
|
|
|
|
|
|
Less: Earnings attributable to noncontrolling interests
|
|
|
0.1
|
%
|
|
|
-
|
%
|
Net earnings attributable to Motorola Solutions, Inc.
|
|
|
6.0
|
%
|
|
|
1.4
|
%
|
* Percentages may not add up due to rounding
|
|
GAAP-2
|
Motorola Solutions, Inc. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
(In millions)
|
|
|
|
|
|
|
|
April 1, 2017
|
|
December 31, 2016
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
766
|
|
|
$
|
967
|
|
Restricted cash
|
|
|
63
|
|
|
|
63
|
|
Total cash and cash equivalents
|
|
|
829
|
|
|
|
1,030
|
|
Accounts receivable, net
|
|
|
1,070
|
|
|
|
1,410
|
|
Inventories, net
|
|
|
345
|
|
|
|
273
|
|
Other current assets
|
|
|
829
|
|
|
|
755
|
|
Total current assets
|
|
|
3,073
|
|
|
|
3,468
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
820
|
|
|
|
789
|
|
Investments
|
|
|
237
|
|
|
|
238
|
|
Deferred income taxes
|
|
|
2,198
|
|
|
|
2,219
|
|
Goodwill
|
|
|
737
|
|
|
|
728
|
|
Intangible Assets
|
|
|
878
|
|
|
|
821
|
|
Other assets
|
|
|
197
|
|
|
|
200
|
|
Total assets
|
|
$
|
8,140
|
|
|
$
|
8,463
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
44
|
|
|
$
|
4
|
|
Accounts payable
|
|
|
433
|
|
|
|
553
|
|
Accrued liabilities
|
|
|
1,908
|
|
|
|
2,111
|
|
Total current liabilities
|
|
|
2,385
|
|
|
|
2,668
|
|
|
|
|
|
|
Long-term debt
|
|
|
4,414
|
|
|
|
4,392
|
|
Other liabilities
|
|
|
2,378
|
|
|
|
2,355
|
|
|
|
|
|
|
Total Motorola Solutions, Inc. stockholders' equity (deficit)
|
|
|
(1,050
|
)
|
|
|
(964
|
)
|
|
|
|
|
|
Noncontrolling interests
|
|
|
13
|
|
|
|
12
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
8,140
|
|
|
$
|
8,463
|
|
|
|
|
|
|
Financial Ratios:
|
|
|
|
|
Net cash (debt)*
|
|
$
|
(3,629
|
)
|
|
$
|
(3,366
|
)
|
|
|
|
|
|
*Net cash (debt) = Total cash - Current portion of long-term debt
- Long-term debt
|
|
GAAP-3
|
Motorola Solutions, Inc. and Subsidiaries
|
Condensed Consolidated Statements of Cash Flows
|
(In millions)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
April 1, 2017
|
|
April 2, 2016
|
Operating
|
|
|
|
|
Net earnings attributable to Motorola Solutions, Inc.
|
|
$
|
77
|
|
|
$
|
17
|
|
Earnings attributable to noncontrolling interests
|
|
|
1
|
|
|
|
-
|
|
Net earnings
|
|
|
78
|
|
|
|
17
|
|
Adjustments to reconcile Net earnings to Net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
80
|
|
|
|
62
|
|
Non-cash other charges
|
|
|
15
|
|
|
|
11
|
|
Non-U.S. pension settlement loss
|
|
|
9
|
|
|
|
-
|
|
Share-based compensation expense
|
|
|
17
|
|
|
|
17
|
|
Losses (gains) on sales of investments and businesses, net
|
|
|
(3
|
)
|
|
|
21
|
|
Deferred income taxes
|
|
|
23
|
|
|
|
35
|
|
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
|
|
|
|
|
Accounts receivable
|
|
|
368
|
|
|
|
277
|
|
Inventories
|
|
|
(69
|
)
|
|
|
(4
|
)
|
Other current assets
|
|
|
(59
|
)
|
|
|
(43
|
)
|
Accounts payable and accrued liabilities
|
|
|
(307
|
)
|
|
|
(363
|
)
|
Other assets and liabilities
|
|
|
(10
|
)
|
|
|
(17
|
)
|
Net cash provided by operating activities
|
|
|
142
|
|
|
|
13
|
|
Investing
|
|
|
|
|
Acquisitions and investments, net
|
|
|
(106
|
)
|
|
|
(1,053
|
)
|
Proceeds from sales of investments and businesses, net
|
|
|
53
|
|
|
|
481
|
|
Capital expenditures
|
|
|
(68
|
)
|
|
|
(51
|
)
|
Net cash used for investing activities
|
|
|
(121
|
)
|
|
|
(623
|
)
|
Financing
|
|
|
|
|
Repayment of debt
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Net proceeds from issuance of debt
|
|
|
-
|
|
|
|
673
|
|
Issuance of common stock
|
|
|
22
|
|
|
|
40
|
|
Purchase of common stock
|
|
|
(178
|
)
|
|
|
(64
|
)
|
Payment of dividends
|
|
|
(77
|
)
|
|
|
(71
|
)
|
Net cash provided by (used for) financing activities
|
|
|
(234
|
)
|
|
|
577
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
12
|
|
|
|
(7
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(201
|
)
|
|
|
(40
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
1,030
|
|
|
|
1,980
|
|
Cash and cash equivalents, end of period
|
|
$
|
829
|
|
|
$
|
1,940
|
|
|
|
|
|
|
Financial Ratios:
|
|
|
|
|
Free cash flow*
|
|
$
|
74
|
|
|
$
|
(38
|
)
|
|
|
|
|
|
*Free cash flow = Net cash provided by operating activities -
Capital Expenditures
|
|
GAAP-4
|
Motorola Solutions, Inc. and Subsidiaries
|
Segment Information
|
(In millions)
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
% Change
|
|
Products
|
|
$
|
703
|
|
$
|
702
|
|
-%
|
|
Services
|
|
|
578
|
|
|
491
|
|
18 %
|
|
Total Motorola Solutions
|
|
$
|
1,281
|
|
$
|
1,193
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
% Change
|
|
Products
|
|
$
|
89
|
|
$
|
51
|
|
75 %
|
|
Services
|
|
|
87
|
|
|
49
|
|
78 %
|
|
Total Motorola Solutions
|
|
$
|
176
|
|
$
|
100
|
|
76 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings %
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
|
|
Products
|
|
|
12.7 %
|
|
|
7.3 %
|
|
|
|
Services
|
|
|
15.1 %
|
|
|
10.0 %
|
|
|
|
Total Motorola Solutions
|
|
|
13.7 %
|
|
|
8.4 %
|
|
|
|
|
Non-GAAP-1
|
Motorola Solutions, Inc. and Subsidiaries
|
Non-GAAP Adjustments (Intangibles Amortization Expense,
Share-Based Compensation Expense and Highlighted Items)
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2017
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
17
|
|
|
$
|
6
|
|
|
$
|
11
|
|
|
$
|
0.06
|
|
Reorganization of business charges
|
|
Cost of sales and Other charges
|
|
|
19
|
|
|
|
4
|
|
|
|
15
|
|
|
|
0.09
|
|
Intangibles amortization expense
|
|
Intangibles amortization
|
|
|
36
|
|
|
|
9
|
|
|
|
27
|
|
|
|
0.16
|
|
Gain on legal settlement
|
|
Other charges
|
|
|
(42
|
)
|
|
|
(16
|
)
|
|
|
(26
|
)
|
|
|
(0.15
|
)
|
Building impairment
|
|
Other charges
|
|
|
8
|
|
|
|
-
|
|
|
|
8
|
|
|
|
0.05
|
|
Non-US pension settlement loss
|
|
Other charges
|
|
|
9
|
|
|
|
-
|
|
|
|
9
|
|
|
|
0.05
|
|
Sale of investments
|
|
Sale of Investment or Business (Gain) or Loss
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(0.01
|
)
|
Acquisition-related transaction fees
|
|
Other charges
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impact on Net earnings
|
|
|
|
$
|
45
|
|
|
$
|
2
|
|
|
$
|
43
|
|
|
$
|
0.26
|
|
|
Non-GAAP-2
|
Motorola Solutions, Inc. and Subsidiaries
|
Non-GAAP Segment Information
|
(In millions)
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
% Change
|
|
Products
|
|
$
|
703
|
|
$
|
702
|
|
-%
|
|
Services
|
|
|
578
|
|
|
491
|
|
18 %
|
|
Total Motorola Solutions
|
|
$
|
1,281
|
|
$
|
1,193
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Earnings
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
% Change
|
|
Products
|
|
$
|
101
|
|
$
|
84
|
|
20 %
|
|
Services
|
|
|
123
|
|
|
82
|
|
50 %
|
|
Total Motorola Solutions
|
|
$
|
224
|
|
$
|
166
|
|
35 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Earnings %
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
|
|
Products
|
|
|
14.4 %
|
|
|
12.0 %
|
|
|
|
Services
|
|
|
21.3 %
|
|
|
16.7 %
|
|
|
|
Total Motorola Solutions
|
|
|
17.5 %
|
|
|
13.9 %
|
|
|
|
|
Non-GAAP-3
|
Motorola Solutions, Inc. and Subsidiaries
|
Operating Earnings after Non-GAAP Adjustments
|
|
|
|
|
|
|
|
Q1 2017
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
Products
|
|
Services
|
Net sales
|
|
$
|
1,281
|
|
|
$
|
703
|
|
|
$
|
578
|
|
Operating earnings ("OE")
|
|
$
|
176
|
|
|
$
|
89
|
|
|
$
|
87
|
|
|
|
|
|
|
|
|
Above-OE non-GAAP adjustments:
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
17
|
|
|
|
11
|
|
|
|
6
|
|
Reorganization of business charges
|
|
|
19
|
|
|
|
13
|
|
|
|
6
|
|
Intangibles amortization expense
|
|
|
36
|
|
|
|
6
|
|
|
|
30
|
|
Acquisition-related transaction fees
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Gain on legal settlement
|
|
|
(42
|
)
|
|
|
(30
|
)
|
|
|
(12
|
)
|
Building impairment
|
|
|
8
|
|
|
|
6
|
|
|
|
2
|
|
Non-US pension settlement loss
|
|
|
9
|
|
|
|
6
|
|
|
|
3
|
|
Total above-OE non-GAAP adjustments
|
|
|
48
|
|
|
|
12
|
|
|
|
36
|
|
|
|
|
|
|
|
|
Operating earnings after non-GAAP adjustments
|
|
$
|
224
|
|
|
$
|
101
|
|
|
$
|
123
|
|
|
|
|
|
|
|
|
Operating earnings as a percentage of net sales - GAAP
|
|
|
13.7
|
%
|
|
|
12.7
|
%
|
|
|
15.1
|
%
|
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
|
|
|
17.5
|
%
|
|
|
14.4
|
%
|
|
|
21.3
|
%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504006639/en/
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