Motorola Solutions, Inc. (NYSE: MSI):
- Sales of $2.1 billion, down 2 percent
from a year ago
- GAAP earnings per share (EPS) from
continuing operations* of $0.94
- Non-GAAP** EPS from continuing
operations of $1.12
- GAAP, Non-GAAP results impacted by $118
million of net tax benefits
- Increases quarterly cash dividend by 19
percent to $0.31 per share
- Expands share repurchase program by
$2.0 billion
Second Quarter
2013
2012
Change
Total sales ($M)
$2,107 $2,148
-2% GAAP operating earnings ($M)
$266 $278 -4% Non-GAAP operating
earnings ($M)
$334 $350
-5% GAAP EPS from continuing operations
$0.94 $0.60 57% Non-GAAP EPS
from continuing operations
$1.12
$0.70 60%
Click here for printable press release and financial tables.
Motorola Solutions, Inc. (NYSE: MSI) announced today
second-quarter 2013 sales of $2.1 billion, down 2 percent from the
second quarter of 2012. Government sales were down 1 percent, while
Enterprise sales declined 5 percent.
In addition, the company announced today that its board of
directors has increased its regular quarterly cash dividend by 19
percent to $0.31 per share. The next quarterly dividend will be
payable on Oct. 15, 2013, to stockholders of record at the close of
business on Sept. 13, 2013. As part of its continuing plan to
return capital to shareholders, the company’s board also has
authorized an additional $2.0 billion in share repurchases, with no
expiration date. This increase is in addition to the $5.0 billion
currently authorized, $4.5 billion of which has been utilized in
the last 24 months. The company may continue to repurchase shares
from time to time in the open market or in other privately
negotiated transactions, subject to market conditions.
Greg Brown, chairman and CEO of Motorola Solutions, said: “Our
Government business performed well in the second quarter though our
Enterprise business continues to be challenged primarily due to
market conditions. We remain confident in the fundamental drivers
of the business. We will maintain our focus on growing our
revenues, managing our cost structure and expanding our operating
margin.”
GAAP operating earnings in the second quarter of 2013 were $266
million or 12.6 percent of sales, compared to $278 million or 12.9
percent of sales in the second quarter of 2012. GAAP earnings per
share from continuing operations were $0.94, compared to $0.60 in
the second quarter of 2012.
Non-GAAP operating earnings in the second quarter of 2013 were
$334 million or 15.9 percent of sales, compared to $350 million or
16.3 percent of sales in the second quarter of 2012. Non-GAAP
earnings per share from continuing operations were $1.12, compared
to $0.70 in the second quarter of 2012. These GAAP and Non-GAAP
earnings results include the favorable impact of $118 million of
net tax benefits largely associated with the recognition of certain
foreign tax credits as a result of our implementation of a holding
company structure for certain non-U.S. subsidiaries. Non-GAAP
financial information excludes after-tax net charges of
approximately $0.18 per diluted share related to stock-based
compensation, intangible amortization and highlighted items.
Details on these Non-GAAP adjustments and the use of Non-GAAP
measures are included later in this press release.
During the quarter, the company generated $82 million in
operating cash flow from continuing operations. The company ended
the quarter with total cash*** of $3.2 billion while returning $621
million to shareholders through share repurchases and cash
dividends.
Government segment sales were $1.5 billion, down 1
percent from the year-ago quarter. GAAP operating earnings were
$215 million or 14.8 percent of sales compared to $197 million or
13.5 percent of sales in the year-ago quarter. Non-GAAP operating
earnings were $256 million or 17.6 percent of sales compared to
$240 million or 16.4 percent of sales in the year-ago quarter.
Government highlights:
- Secured multi-million dollar contracts
with U.S. customers such as cities of Baltimore and Phoenix,
Caroline County in Virginia, Carroll County in Maryland, Chautauqua
County in New York, Clinton County in Ohio, Maricopa County in
Arizona, Northumberland County in Pennsylvania, Somerset County in
New Jersey, State of Mississippi, East Bay Communications, Entergy,
Imperial Irrigation District and Port of Seattle
- Secured multi-million dollar contracts
with international customers such as York Region and Quebec
Government in Canada; MTRC Shatin Central Line in Hong Kong;
Sea-Aeroporti in Italy; Kuwait Ministry of Defense; Singapore
Ministry of Home Affairs; Taiwan Coast Guard and Taiwan High Speed
Rail; as well as Chongqing Metro, Hangzhou Metro and Ningbo Metro
in China
- Expanded the company’s command and
control portfolio by introducing PremierOne™ Next Generation 9-1-1
Call Control solution for incident management operations
- Introduced the next generation of
Terrestrial Trunked Radio (TETRA) base stations, which allow public
safety agencies to deploy TETRA today and be future-ready to
facilitate a cost-effective and staged migration to a unified TETRA
and Long-Term Evolution (LTE) network
Enterprise segment sales were $656 million, down 5
percent from the year-ago quarter. Excluding Psion, sales were down
12 percent. GAAP operating earnings were $51 million or 7.8 percent
of sales compared to $81 million or 11.8 percent of sales in the
year-ago quarter. Non-GAAP operating earnings were $78 million or
11.9 percent of sales compared to $110 million or 16.0 percent of
sales in the year-ago quarter.
Enterprise highlights:
- Secured contracts with key customers
such as L.L.Bean, United States Cold Storage, Canadian Tire,
Australia Post, Kmart Australia, Coles Supermarkets in Australia,
Tesco in the U.K., FamilyMart in Japan, Colombia Movil, China Post,
China Deppon Logistics and Correos in Spain
- Introduced Mobility Lifecycle
Management service aimed at enterprises that want to use mobile
devices to transform their business operations, leaving the complex
task of lifecycle management to a trusted adviser who can deliver
predictable performance and cost
- Introduced the MC9200 mobile computer,
which is capable of supporting the latest mobile enterprise
applications in demanding environments such as warehouses, loading
docks and manufacturing shop floors
- Announced three new products that
provide enhanced productivity in the most challenging customer
environments, including the busiest warehouses and coldest supply
chains: the Psion Omnii XT15f rugged handheld, and the VH10 and
VH10f vehicle-mounted mobile computers
Third-Quarter and Full-Year Outlook
Motorola Solutions’ outlook for the third quarter of 2013 is for
revenues that are flat to down 3 percent compared with the third
quarter of 2012 and Non-GAAP earnings per share from continuing
operations of $0.97 to $1.02 per share. The third quarter of 2013
Non-GAAP per share outlook assumes an ongoing tax rate of 10 to 13
percent. For the full-year 2013, the company now expects revenues
that are flat to up 1 percent compared with 2012. The company still
expects to achieve Non-GAAP operating margins of approximately 18
percent of sales. This outlook excludes stock-based compensation,
intangible amortization and charges associated with items typically
highlighted by the company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
Second
Quarter
2013
2012
Net sales ($M) $2,107 $2,148 Gross
margin ($M) 1,029 1,060 Operating
earnings ($M) 266 278 Earnings from
continuing operations ($M) 258 177 Net
earnings ($M) 258 182
Diluted EPS from continuing
operations $0.94 $0.60
Weighted average diluted common shares
outstanding (in millions)
274.7 296.1
Highlighted Items, Stock-Based Compensation Expense and
Intangible Assets Amortization Expense
The table below includes highlighted items, stock-based
compensation expense and intangible assets amortization
expense.
Second
Quarter
(per diluted common share)
2013
2012
GAAP Earnings
per Common Share from Continuing Operations*
$0.94
$0.60
Highlighted
Items: Reorganization
of business charges $0.08 $0.03 Tax
expense from audit settlements and agreements $0.00
$(0.04)
Total Highlighted Items
$0.08 $(0.01)
Stock-based compensation expense $0.09
$0.10 Intangible assets amortization expense
$0.01 $0.01
Total Stock-Based Compensation
Expense and Intangible Assets Amortization Expense
$0.10
$0.11
Total Non-GAAP
Adjustments $0.18 $0.10
Non-GAAP Earnings per
Common Share $1.12 $0.70
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call
beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern
Daylight Time) on Wednesday, July 24. The conference call will be
webcast live with audio and slides at
www.motorolasolutions.com/investor.
Use of Non-GAAP Financial Information
In addition to the GAAP results included in this presentation,
Motorola Solutions also has included Non-GAAP measurements of
results. We have provided these Non-GAAP measurements to help
investors better understand our core operating performance, enhance
comparisons of core operating performance from period to period and
allow better comparisons of operating performance to our
competitors. Among other things, management uses these operating
results, excluding the identified items, to evaluate performance of
the businesses and to evaluate results relative to certain
incentive compensation targets. Management uses operating results
excluding these items because it believes this measurement enables
it to make better period-to-period evaluations of the financial
performance of core business operations. The Non-GAAP measurements
are intended only as a supplement to the comparable GAAP
measurements and the company compensates for the limitations
inherent in the use of Non-GAAP measurements by using GAAP measures
in conjunction with the Non-GAAP measurements. As a result,
investors should consider these Non-GAAP measurements in addition
to, and not in substitution for or as superior to, measurements of
financial performance prepared in accordance with GAAP.
Highlighted items: The company has excluded the effects of
highlighted items (and any reversals of highlighted items recorded
in prior periods) from its Non-GAAP operating expenses and net
income measurements because the company believes that these
historical items do not reflect expected future operating earnings
or expenses and do not contribute to a meaningful evaluation of the
company’s current operating performance or comparisons to the
company’s past operating performance.
Stock-based compensation expense: The company has excluded
stock-based compensation expense from its Non-GAAP operating
expenses and net income measurements. Although stock-based
compensation is a key incentive offered to our employees and the
company believes such compensation contributed to the revenue
earned during the periods presented and also believes it will
contribute to the generation of future period revenues, the company
continues to evaluate its performance excluding stock-based
compensation expense primarily because it represents a significant
non-cash expense. Stock-based compensation expense will recur in
future periods.
Intangible assets amortization expense: The company has excluded
intangible assets amortization expense from its Non-GAAP operating
expenses and net income measurements, primarily because it
represents a significant non-cash expense and because the company
evaluates its performance excluding intangible assets amortization
expense. Amortization of intangible assets is consistent in amount
and frequency but is significantly affected by the timing and size
of the company’s acquisitions. Investors should note that the use
of intangible assets contributed to the company’s revenues earned
during the periods presented and will contribute to the company’s
future period revenues as well. Intangible assets amortization
expense will recur in future periods.
Details of the above items and reconciliations of the Non-GAAP
measurements to the corresponding GAAP measurements can be found at
the end of this press release.
Business Risks
This press release contains "forward-looking statements" within
the meaning of applicable federal securities law. These statements
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and generally include
words such as “believes,” “expects,” “intends,” “anticipates,”
“estimates” and similar expressions. We can give no assurance that
any future results or events discussed in these statements will be
achieved. Any forward-looking statements represent our views only
as of today and should not be relied upon as representing our views
as of any subsequent date. Readers are cautioned that such
forward-looking statements are subject to a variety of risks and
uncertainties that could cause our actual results to differ
materially from the statements contained in this release. Such
forward-looking statements include, but are not limited to,
Motorola Solutions’ financial outlook for the third quarter and the
full year of 2013, payment of a regular quarterly dividend and
purchases of shares under the company’s share repurchase program.
Motorola Solutions cautions the reader that the risk factors below,
as well as those on pages 8 through 19 in Item 1A of Motorola
Solutions, Inc.'s 2012 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 and enterprise communications
industries; (2) the level of demand for the company's products,
particularly if businesses and governments defer or cancel
purchases in response to tighter credit; (3) the company's ability
to introduce new products and technologies in a timely manner; (4)
negative impact on the company's business from global economic
conditions, including sequestration in the United States, 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; (5) the impact of foreign currency fluctuations on
the company when competing for business in foreign markets; (6) the
outcome of currently ongoing and future tax matters; (7) the
company's ability to purchase sufficient materials, parts and
components to meet customer demand, particularly in light of global
economic conditions; (8) risks related to dependence on certain key
suppliers, subcontractors, third-party distributors and other
representatives; (9) the impact on the company's performance and
financial results from strategic acquisitions or divestitures,
including Psion and those that may occur in the future; (10) risks
related to the company's manufacturing and business operations in
foreign countries; (11) the creditworthiness of the company's
customers and distributors, particularly purchasers of large
infrastructure systems; (12) 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; (13) the
ownership of certain logos, trademarks, trade names and service
marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.;
(14) 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; (15)
unexpected liabilities or expenses, including unfavorable outcomes
to any pending or future litigation or regulatory or similar
proceedings; (16) the impact of the percentage of cash and cash
equivalents held outside of the United States; (17) the ability of
the company to pay future dividends due to possible adverse market
conditions or adverse impacts on the company’s cash flow; (18) 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; (19) the impact of changes in
governmental policies, laws or regulations; (20) negative
consequences from the company's outsourcing of various activities,
including certain business operations, information technology and
administrative functions; and (21) the impact of our multi-year
phased upgrade and consolidation of our enterprise resource
planning systems into a single global platform. 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
* Amounts attributable to Motorola Solutions, Inc. common
shareholders
** Non-GAAP financial information excludes from GAAP results the
effects of stock-based compensation expense, intangible assets
amortization expense and highlighted items
*** Total cash = Cash and cash equivalents + Sigma Fund
(current) and short-term investments
About Motorola Solutions
Motorola Solutions is a leading provider of mission-critical
communication solutions and services for enterprise and government
customers. Through leading-edge innovation and communications
technology, it is a global leader that enables its customers to be
their best in the moments that matter. Motorola Solutions trades on
the New York Stock Exchange under the ticker “MSI.” To learn more,
visit www.motorolasolutions.com. For ongoing news, please visit our
media center or subscribe to our news feed.
MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are
trademarks or registered trademarks of Motorola Trademark Holdings,
LLC and are used under license. All other trademarks are the
property of their respective owners. ©2013 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, 2013
June 30, 2012 Net sales from products $ 1,479 $ 1,563 Net
sales from services 628 585 Net sales
2,107 2,148 Costs of products sales 695 712 Costs of
services sales 383 376 Costs of sales
1,078 1,088 Gross margin 1,029
1,060 Selling, general and administrative expenses
470 496 Research and development expenditures 268 269 Other charges
19 11 Intangibles amortization 6 6
Operating earnings 266 278 Other
income (expense): Interest expense, net (32 ) (16 ) Gain on sales
of investments and businesses, net - 3 Other (10 )
(25 ) Total other expense (42 ) (38 ) Earnings from
continuing operations before income taxes 224 240 Income tax
expense (benefit) (38 ) 63 Earnings from
continuing operations 262 177 Earnings from discontinued
operations, net of tax - 5 Net earnings
262 182 Less: Earnings attributable to noncontrolling
interests 4 - Net earnings attributable
to Motorola Solutions, Inc. $ 258 $ 182
Amounts attributable to Motorola Solutions, Inc. common
shareholders Earnings from continuing operations, net of tax $ 258
$ 177 Earnings from discontinued operations, net of tax -
5 Net earnings attributable to Motorola
Solutions, Inc. $ 258 $ 182
Earnings per common
share
Basic: Continuing operations $ 0.96 $ 0.61 Discontinued operations
- 0.02 $ 0.96 $ 0.63
Diluted: Continuing operations $ 0.94 $ 0.60 Discontinued
operations - 0.01 $ 0.94 $ 0.61
Weighted average
common shares outstanding
Basic 269.5 290.6 Diluted 274.7 296.1
Percentage of Net Sales* Net sales from
products 70.2 % 72.8 % Net sales from services 29.8 %
27.2 % Net sales 100 % 100 % Costs of products
sales 47.0 % 45.6 % Costs of services sales 61.0 %
64.3 % Costs of sales 51.2 % 50.7 %
Gross margin 48.8 % 49.3 % Selling, general
and administrative expenses 22.3 % 23.1 % Research and development
expenditures 12.7 % 12.5 % Other charges 0.9 % 0.5 % Intangibles
amortization 0.3 % 0.3 % Operating earnings
12.6 % 12.9 % Other income (expense): Interest
expense, net -1.5 % -0.7 % Gain on sales of investments and
businesses, net 0.0 % 0.1 % Other -0.5 % -1.2 % Total
other expense -2.0 % -1.8 % Earnings from continuing
operations before income taxes 10.6 % 11.2 % Income tax expense
(benefit) -1.8 % 2.9 % Earnings from continuing
operations 12.4 % 8.2 % Earnings from discontinued
operations, net of tax 0.0 % 0.2 % Net earnings
attributable to Motorola Solutions, Inc. 12.2 % 8.5 %
* 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, 2013 June 30,
2012 Net sales from products $ 2,860 $ 3,007 Net sales from
services 1,220 1,097 Net sales 4,080
4,104 Costs of products sales 1,346 1,370 Costs of services
sales 750 701 Costs of sales 2,096
2,071 Gross margin 1,984 2,033
Selling, general and administrative expenses 930 968
Research and development expenditures 530 523 Other charges 30 20
Intangibles amortization 12 12
Operating earnings 482 510 Other
income (expense): Interest expense, net (57 ) (30 ) Gain on sales
of investments and businesses, net 7 20 Other (3 )
(16 ) Total other expense (53 ) (26 ) Earnings from
continuing operations before income taxes 429 484 Income tax
expense (benefit) (25 ) 148 Earnings from
continuing operations 454 336 Earnings from discontinued
operations, net of tax - 3 Net earnings
454 339 Less: Earnings attributable to noncontrolling
interests 4 - Net earnings attributable
to Motorola Solutions, Inc. $ 450 $ 339
Amounts attributable to Motorola Solutions, Inc. common
shareholders Earnings from continuing operations, net of tax $ 450
$ 336 Earnings from discontinued operations, net of tax -
3 Net earnings attributable to Motorola
Solutions, Inc. $ 450 $ 339
Earnings per common
share
Basic: Continuing operations $ 1.66 $ 1.11 Discontinued operations
- 0.01 $ 1.66 $ 1.12
Diluted: Continuing operations $ 1.62 $ 1.09 Discontinued
operations - 0.01 $ 1.62 $ 1.10
Weighted average
common shares outstanding
Basic 271.9 302.1 Diluted 277.7 308.1
Percentage of Net Sales* Net sales from
products 70.1 % 73.3 % Net sales from services 29.9 %
26.7 % Net sales 100 % 100 % Costs of products
sales 47.1 % 45.6 % Costs of services sales 61.5 %
63.9 % Costs of sales 51.4 % 50.5 %
Gross margin 48.6 % 49.5 % Selling, general
and administrative expenses 22.8 % 23.6 % Research and development
expenditures 13.0 % 12.7 % Other charges 0.7 % 0.5 % Intangibles
amortization 0.3 % 0.3 % Operating earnings
11.8 % 12.4 % Other income (expense): Interest
expense, net -1.4 % -0.7 % Gain on sales of investments and
businesses, net 0.2 % 0.5 % Other -0.1 % -0.4 % Total
other expense -1.3 % -0.6 % Earnings from continuing
operations before income taxes 10.5 % 11.8 % Income tax expense
(benefit) -0.6 % 3.6 % Earnings from continuing
operations 11.1 % 8.2 % Earnings from discontinued
operations, net of tax 0.0 % 0.1 % Net earnings
attributable to Motorola Solutions, Inc. 11.0 % 8.3 %
* Percentages may not add up due to rounding
GAAP-3 Motorola Solutions,
Inc. and Subsidiaries Condensed Consolidated Balance
Sheets (In millions) June 29,
December 31, 2013 2012 Assets Cash and cash
equivalents $ 1,457 $ 1,468 Sigma Fund and short-term investments
1,759 2,135 Accounts receivable, net 1,707 1,881 Inventories, net
498 513 Deferred income taxes 641 604 Other current assets
779 800 Total current assets 6,841 7,401
Property, plant and equipment, net 830 839 Investments 142
144 Deferred income taxes 2,530 2,416 Goodwill 1,502 1,510 Other
assets 315 369
Total assets $
12,160 $ 12,679 Liabilities and
Stockholders' Equity Current portion of long-term debt $ 4 $ 4
Accounts payable 597 705 Accrued liabilities 2,193
2,626 Total current liabilities 2,794 3,335
Long-term debt 2,452 1,859 Other liabilities 4,095 4,195
Total Motorola Solutions, Inc. stockholders' equity 2,791
3,265 Noncontrolling interests 28 25
Total liabilities and stockholders' equity $
12,160 $ 12,679 Total cash* $
3,216 $ 3,603 Net cash** 760 1,740 *Total cash = Cash and
cash equivalents + Sigma Fund + Short-term investments **Net cash =
Total cash - Current portion of long-term debt - Long-term debt
GAAP-4 Motorola
Solutions, Inc. and Subsidiaries Condensed Consolidated
Statements of Cash Flows (In millions) Three
Months Ended June 29, 2013 June 30, 2012
Operating Net earnings attributable to Motorola Solutions,
Inc. $ 258 $ 182 Earnings attributable to noncontrolling interests
4 - Net earnings 262 182 Earnings from
discontinued operations, net of tax - 5
Earnings from continuing operations 262 177 Adjustments to
reconcile earnings from continuing operations to net cash provided
by operating activities: Depreciation and amortization 57 54
Non-cash other income (4 ) (2 ) Share-based compensation expense 34
52 Gains on sales of investments and businesses, net - (3 ) Loss
from the extinguishment of long-term debt - 6 Deferred income taxes
(143 ) 66 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable (68 ) 121
Inventories 16 (17 ) Other current assets 75 23 Accounts payable
and accrued liabilities (158 ) (134 ) Other assets and liabilities
11 (89 ) Net cash provided by operating
activities from continuing operations 82 254
Investing Acquisitions and investments, net (11 ) (25
) Proceeds from (used for) sales of investments and businesses, net
2 (12 ) Capital expenditures (43 ) (52 ) Proceeds from sales of
property, plant and equipment 15 9 Proceeds from sales of Sigma
Fund and short term investments, net 489 114
Net cash provided by investing activities from continuing
operations 452 34
Financing Net
proceeds from issuance of debt - 747 Repayment of debt (1 ) (411 )
Contribution to Motorola Mobility - (73 ) Issuance of common stock
60 33 Purchase of common stock (550 ) (439 ) Excess tax benefits
from share-based compensation 9 11 Payment of dividends (71
) (64 ) Net cash used for financing activities from
continuing operations (553 ) (196 ) Effect of
exchange rate changes on cash and cash equivalents from continuing
operations 6 (40 ) Net increase (decrease) in
cash and cash equivalents (13 ) 52 Cash and cash equivalents,
beginning of period 1,470 1,720 Cash
and cash equivalents, end of period $ 1,457 $ 1,772
Financial Ratios: Free cash flow* $ 39 $ 202
*Free cash flow = Net cash provided by operating activities -
Capital expenditures
GAAP-5 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Six Months Ended June 29, 2013
June 30, 2012 Operating Net earnings attributable to
Motorola Solutions, Inc. $ 450 $ 339 Earnings attributable to
noncontrolling interests 4 - Net
earnings 454 339 Earnings from discontinued operations, net of tax
- 3 Earnings from continuing operations
454 336 Adjustments to reconcile earnings from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 109 106 Non-cash other income (5 ) (1
) Share-based compensation expense 79 95 Gains on sales of
investments and businesses, net (7 ) (20 ) Loss from the
extinguishment of long-term debt - 6 Deferred income taxes (154 )
93 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable 132 262
Inventories 11 (8 ) Other current assets - (77 ) Accounts payable
and accrued liabilities (575 ) (383 ) Other assets and liabilities
7 (87 ) Net cash provided by operating
activities from continuing operations 51 322
Investing Acquisitions and investments, net (15 ) 68
Proceeds from (used for) sales of investments and businesses, net
21 (67 ) Capital expenditures (89 ) (101 ) Proceeds from sales of
property, plant and equipment 15 9 Proceeds from sales of Sigma
Fund and short term investments, net 376 1,277
Net cash provided by investing activities from continuing
operations 308 1,186
Financing
Net proceeds from issuance of debt 593 747 Repayment of debt (2 )
(411 ) Contribution to Motorola Mobility - (73 ) Issuance of common
stock 100 63 Purchase of common stock (907 ) (1,804 ) Excess tax
benefits from share-based compensation 18 17 Payment of dividends
(143 ) (134 ) Distribution to discontinued operations -
(11 ) Net cash used for financing activities from
continuing operations (341 ) (1,606 )
Discontinued
Operations Net cash provided by operating activities from
discontinued operations - 2 Net cash provided by financing
activities from discontinued operations - 11 Effect of exchange
rate changes on cash and cash equivalents from discontinued
operations (13 ) Net cash provided by (used for)
discontinued operations - -
Effect of exchange rate changes on cash and cash equivalents from
continuing operations (29 ) (11 ) Net decrease in
cash and cash equivalents (11 ) (109 ) Cash and cash equivalents,
beginning of period 1,468 1,881 Cash
and cash equivalents, end of period $ 1,457 $ 1,772
Financial Ratios: Free cash flow* $ (38 ) $ 221
*Free cash flow = Net cash provided by operating activities
- Capital expenditures
GAAP-6 Motorola Solutions, Inc. and
Subsidiaries Segment Information (In millions)
Summarized below are the Company's Net sales and Operating
earnings by segment for the three and six months ended June 29,
2013 and June 30, 2012.
Net Sales
Three Months Ended June 29, 2013
June 30, 2012 % Change Government $ 1,451 $
1,459 -1 % Enterprise 656 689 -5 %
Company Total $ 2,107 $ 2,148 -2 %
Six
Months Ended June 29, 2013 June
30, 2012 % Change Government $ 2,797 $ 2,760 1 %
Enterprise 1,283 1,344 -5 % Company
Total $ 4,080 $ 4,104 -1 %
Operating
Earnings Three Months Ended
June 29, 2013 June 30, 2012 % Change
Government $ 215 $ 197 9 % Enterprise 51 81
-37 % Company Total $ 266 $ 278 -4 %
Six Months Ended June 29, 2013
June 30, 2012 % Change Government $ 395 $ 347
14 % Enterprise 87 163 -47 % Company
Total $ 482 $ 510 -5 %
Operating
Earnings % Three Months Ended
June 29, 2013 June 30, 2012 % Change
Government 14.8 % 13.5 % 10 % Enterprise 7.8 %
11.8 % -34 % Company Total 12.6 % 12.9 % -2 %
Six Months Ended June 29,
2013 June 30, 2012 % Change Government
14.1 % 12.6 % 12 % Enterprise 6.8 % 12.1 % -44 %
Company Total 11.8 % 12.4 % -5 %
Non-GAAP-1 Motorola
Solutions, Inc. and Subsidiaries Non-GAAP Adjustments
(Intangibles Amortization Expense, Stock-Based Compensation Expense
and Highlighted Items) Q1 2013
Highlighted Items Statement Line PBT
(Inc)/Exp
Tax
Inc/(Exp)
PAT
(Inc)/Exp
EPS impact Intangibles amortization expense
Intangibles amortization $ 6 $ 2 $ 4 $ 0.01 Stock-based
compensation expense Cost of sales, SG&A and R&D 45 14 31
0.11 Reorganization of business charges Cost of sales and Other
charges (income) 11 3 8 0.03 Tax benefit for prior period R&D
tax credit Income tax expense 12 (12 ) (0.04 ) Reduction in
deferred tax asset valuation allowance Income tax expense 11 (11 )
(0.04 ) Reduction in deferred tax liability for undistributed
earnings Income tax expense 25 (25 ) (0.09 )
- Total continuing operations impact $ 62 $ 67 $ (5 )
$ (0.02 )
Q2 2013 Highlighted
Items Statement Line PBT
(Inc)/Exp
Tax
Inc/(Exp)
PAT
(Inc)/Exp
EPS impact Intangibles amortization expense
Intangibles amortization $ 6 $ 2 $ 4 $ 0.01 Stock-based
compensation expense Cost of sales, SG&A and R&D 34 10 24
0.09 Reorganization of business charges Cost of sales and Other
charges (income) 28 6 22 0.08 -
Total continuing operations impact $ 68 $ 18 $ 50 $ 0.18
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries Non-GAAP
Segment Information (In millions) Net
Sales Three Months Ended
June 29, 2013 June 30, 2012 % Change
Government $ 1,451 $ 1,459 -1 % Enterprise 656
689 -5 % Company Total $ 2,107 $ 2,148 -2 %
Six Months Ended June 29,
2013 June 30, 2012 % Change Government $
2,797 $ 2,760 1 % Enterprise 1,283 1,344
-5 % Company Total $ 4,080 $ 4,104 -1 %
Non-GAAP Operating Earnings Three Months
Ended June 29, 2013 June 30,
2012 % Change Government $ 256 $ 240 7 %
Enterprise 78 110 -29 % Company Total $
334 $ 350 -5 %
Six Months Ended
June 29, 2013 June 30, 2012 %
Change Government $ 473 $ 424 12 % Enterprise 139
216 -36 % Company Total $ 612 $ 640
-4 %
Non-GAAP Operating Earnings %
Three Months Ended June 29,
2013 June 30, 2012 % Change Government
17.6 % 16.4 % 7 % Enterprise 11.9 % 16.0 % -26 %
Company Total 15.9 % 16.3 % -3 %
Six Months
Ended June 29, 2013 June 30,
2012 % Change Government 16.9 % 15.4 % 10 %
Enterprise 10.8 % 16.1 % -33 % Company Total
15.0 % 15.6 % -4 %
Non-GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Operating Earnings after Non-GAAP
Adjustments Q1 2013
TOTAL Government Enterprise Net
sales $ 1,973 $ 1,346 $ 627 Operating earnings ("OE")
$ 216 $ 180 $ 36 Above-OE non-GAAP
adjustments: Stock-based compensation expense 45 30 15
Reorganization of business charges 11 7 4 Intangibles amortization
expense 6 - 6 Total
above-OE non-GAAP adjustments 62 37 25
Operating earnings after non-GAAP adjustments
$ 278 $ 217 $ 61
Operating earnings as a percentage of net sales - GAAP 10.9 % 13.4
% 5.7 % Operating earnings as a percentage of net sales - after
non-GAAP adjustments 14.1 % 16.1 % 9.7 %
Q2 2013
TOTAL Government Enterprise Net sales $
2,107 $ 1,451 $ 656 Operating earnings $ 266 $
215 $ 51 Above-OE non-GAAP adjustments:
Stock-based compensation expense 34 23 11 Reorganization of
business charges 28 18 10 Intangibles amortization expense 6
- 6 Total above-OE non-GAAP
adjustments 68 41 27
Operating earnings after non-GAAP adjustments $ 334
$ 256 $ 78 Operating
earnings as a percentage of net sales - GAAP 12.6 % 14.8 % 7.8 %
Operating earnings as a percentage of net sales - after non-GAAP
adjustments 15.9 % 17.6 % 11.9 %
Media ContactsNick SweersMotorola Solutions+1
847-576-2462nicholas.sweers@motorolasolutions.comorTama
McWhinneyMotorola Solutions+1
847-538-1865tama.mcwhinney@motorolasolutions.comorInvestor
ContactsShep DunlapMotorola Solutions+1
847-576-6899shep.dunlap@motorolasolutions.comorJason
WinklerMotorola Solutions+1
847-576-4995jason.winkler@motorolasolutions.com
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