Motorola Solutions, Inc. (NYSE: MSI):
- Fourth-quarter sales up 3 percent from
a year ago; flat for the full year
- Fourth-quarter Government sales up 4
percent from a year ago; up 1 percent for the full year
- Fourth-quarter GAAP earnings per share
(EPS) from continuing operations* up 11 percent from a year ago; up
38 percent for the full year
- Fourth-quarter Non-GAAP** EPS from
continuing operations up 52 percent from a year ago; up 48 percent
for the full year, including a one-time tax benefit of $1.25
- Generated $741 million in operating
cash flow during the quarter; $944 million for the full year
- Repurchased $362 million of shares in
the quarter; $1.7 billion for the full year
Fourth
Quarter Full Year 2013
2012 Change
2013 2012
Change Total sales ($M)
$2,504
$2,441 3%
$8,696 $8,698 0% GAAP
operating earnings ($M)
$413 $423 -2%
$1,215 $1,256 -3% Non-GAAP operating
earnings ($M)
$519 $476 9%
$1,527 $1,503 2% GAAP EPS from continuing
operations
$1.31 $1.18 11%
$4.06 $2.95 38% Non-GAAP EPS from continuing
operations
$1.67 $1.10 52%
$4.73 $3.20 48%
Click here for printable press release and financial tables.
Motorola Solutions, Inc. (NYSE: MSI) announced today its
fourth-quarter and full-year 2013 results highlighted by
fourth-quarter sales of $2.5 billion, up 3 percent from the fourth
quarter of 2012, and full-year sales of $8.7 billion, flat compared
with 2012. For the fourth quarter, Government sales were up 4
percent and Enterprise sales were up slightly.
“I’m pleased with the way we finished the year,” said Greg
Brown, chairman and CEO of Motorola Solutions. “In Q4, we had
revenue growth in both our Government and Enterprise businesses. We
also had strong cash generation, expanded operating margin, grew
backlog in both businesses, and continued to return capital to
shareholders.”
The fourth quarter was led by strong growth in Government
infrastructure and deployment services while Enterprise posted its
second consecutive quarter of growth. Backlog ended the year at a
record $6.2 billion, primarily driven by large multi-year projects
in Government.
GAAP operating earnings in the fourth quarter of 2013 were $413
million or 16.5 percent of sales, compared to $423 million or 17.3
percent of sales in the fourth quarter of 2012. GAAP earnings per
share from continuing operations were $1.31, compared to $1.18 in
the fourth quarter of 2012. For the full year 2013, GAAP operating
earnings were $1.2 billion or 14.0 percent of sales, compared to
$1.3 billion or 14.4 percent of sales in 2012. GAAP earnings per
share from continuing operations were $4.06, compared to $2.95 in
2012.
Non-GAAP operating earnings in the fourth quarter of 2013 were
$519 million or 20.7 percent of sales, compared to $476 million or
19.5 percent of sales in the fourth quarter of 2012. Non-GAAP
earnings per share from continuing operations were $1.67, compared
to $1.10 in the fourth quarter of 2012. Non-GAAP financial
information excludes after-tax charges of approximately $0.36 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. For the full year 2013, Non-GAAP operating
earnings were $1.5 billion or 17.6 percent of sales, compared to
$1.5 billion or 17.3 percent of sales in 2012. Non-GAAP earnings
per share from continuing operations were $4.73, compared to $3.20
in 2012. These GAAP and Non-GAAP earnings results include the
favorable impact of $337 million or $1.25 per share of net tax
benefits 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.
During the fourth quarter of 2013, the company generated $741
million in operating cash flow from continuing operations. The
company ended the year with total cash*** of $3.2 billion while
returning $442 million to shareholders through share repurchases
and cash dividends during the quarter. The company repurchased 5.6
million shares of stock during the quarter and 28.6 million shares
for the full year.
Government segment sales were $1.8 billion, up 4 percent
from the year-ago quarter. GAAP operating earnings were $332
million or 18.8 percent of sales compared to $346 million or 20.3
percent of sales in the year-ago quarter. Non-GAAP operating
earnings were $398 million or 22.5 percent of sales compared to
$373 million or 21.8 percent of sales in the year-ago quarter.
For the full year 2013, Government segment sales were $6.0
billion, up 1 percent from 2012. GAAP operating earnings were $979
million or 16.2 percent of sales compared to $965 million or 16.1
percent of sales in 2012. Non-GAAP operating earnings were $1.2
billion or 19.4 percent of sales compared to $1.1 billion or 18.5
percent of sales in 2012.
Government highlights:
- Secured multimillion-dollar contracts
with U.S. customers such as the cities of Charlotte and Greensboro,
N.C., and Grand Prairie, Texas; Los Angeles Department of Power and
Water; the state of Ohio/Schools; San Bernardino County in
California; Cobb County in Georgia; Hamilton County in Indiana;
Harford and Prince George’s counties in Maryland; Camden County in
New Jersey; Albany County in New York; Florence County in South
Carolina; Milwaukee and Waukesha counties in Wisconsin; Tennessee
Department of Safety; and the U.S. Navy
- Secured multimillion-dollar contracts
with international customers such as the Military Police of São
Paulo State in Brazil; Royal Brunei Police Force; Shandong Police,
Chongqing Metro, Qingdao Metro Police and Wahan/Fuzhou airports in
China; Israel Fire Brigade; Bundang Metro in Korea; Latvian
Ministry of Interior; Myanmar Police; Belle Grande Casino in the
Philippines and Sentosa Development Corp. in Singapore
- Acquired Twisted Pair Solutions to
accelerate push-to-talk (PTT) over broadband inter-operability with
our MOTOTRBOTM radio network; also announced new PTT application,
Unified PTT, that extends the reach of ASTRO™ 25 networks by
allowing users with smartphones to connect to Project 25 (P25)
users and talkgroups
Enterprise segment sales were $736 million, up slightly
compared to the year-ago quarter. GAAP operating earnings were $81
million or 11.0 percent of sales compared to $77 million or 10.5
percent of sales in the year-ago quarter. Non-GAAP operating
earnings were $121 million or 16.4 percent of sales compared to
$103 million or 14.1 percent of sales in the year-ago quarter.
For the full year 2013, Enterprise segment sales were $2.7
billion, down 2 percent from 2012. GAAP operating earnings were
$236 million or 8.9 percent of sales compared to $291 million or
10.7 percent of sales in 2012. Non-GAAP operating earnings were
$358 million or 13.4 percent of sales compared to $395 million or
14.6 percent of sales in 2012.
Enterprise highlights:
- Secured contracts with key customers
such as retailers Walmart, David Jones in Australia, Yonghui
Superstores in China and Jumbo Supermarkets in the Netherlands; as
well as China Healthcare; Xcel Energy; and couriers TNT Express,
Poste Italiane, Correos in Spain and APC Overnight in the U.K.
- Launched TC55 touch computer, which
combines the best features of a traditional enterprise-class mobile
computer with the form factor and functionality of a smartphone
running the Jelly Bean version of the Android operating system
supported by new Extensions (Mx); also introduced MC55HC rugged
mobile computer, MC75AO-HC rugged enterprise digital assistant and
ET1 tablet customized for healthcare use, delivering one of the
industry’s broadest healthcare portfolios of mobile computer
products
- Earned CRN’s Product of the Year and
Most Innovative Products of the Year designations for SB1 Smart
Badge, and received prestigious GOOD DESIGN™ awards for MC40, MC45
and VC70 and mobile computers
First-Quarter and Full-Year Outlook
Motorola Solutions’ outlook for the first quarter of 2014 is for
revenue decline of 4 to 6 percent compared with the first quarter
of 2013 and Non-GAAP earnings per share from continuing operations
of $0.46 to $0.52 per share. For the full-year 2014, the company
expects revenue growth of flat to 2 percent compared with 2013 and
Non-GAAP operating earnings of approximately 18.5 percent of sales.
This outlook excludes stock-based compensation, intangible
amortization and charges associated with items typically
highlighted by the company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
Fourth
Quarter Full Year
2013 2012
2013 2012 Net
sales ($M) $2,504 $2,441 $8,696 $8,698
Gross margin ($M) 1,214 1,229 4,241
4,348 Operating earnings ($M) 413 423 1,215
1,256 Earnings from continuing operations ($M) 343
336 1,099 878 Net earnings ($M) 343
336 1,099 881
Diluted EPS from continuing
operations $1.31 $1.18 $4.06 $2.95
Weighted average diluted common shares outstanding 261.2
284.4
270.5
297.4
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 for
the fourth quarter of 2013.
Fourth Quarter (per
diluted common share)
2013
GAAP Earnings per Common Share from Continuing Operations*
$1.31
Highlighted Items: Reorganization of
business charges 0.16 Tax expense related to Sigma termination 0.08
Total Highlighted Items 0.24
Stock-based compensation expense 0.10 Intangible assets
amortization expense 0.02
Stock-Based Compensation
Expense and Intangible Assets Amortization Expense 0.12
Total Non-GAAP Adjustments 0.36
Non-GAAP Earnings per Common Share
$1.67
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call
beginning at 7 a.m. U.S. Central Standard Time (8 a.m. U.S. Eastern
Standard Time) on Wednesday, Jan. 22. 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 first quarter and
full year of 2014, 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 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 newsroom 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. ©2014 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 December 31,
2013 December 31, 2012 Net sales from products $ 1,776 $
1,789 Net sales from services 728 652 Net sales 2,504
2,441 Costs of products sales 832 791 Costs of services
sales 458 421 Costs of sales 1,290 1,212
Gross margin 1,214 1,229 Selling,
general and administrative expenses 471 510 Research and
development expenditures 272 290 Other charges 52 (4) Intangibles
amortization 6 10 Operating earnings 413
423 Other income (expense): Interest expense, net:
(28) (20) Gains on sales of investments and businesses, net 3 -
Other 3 4 Total other expense (22) (16)
Earnings before income taxes 391 407 Income tax expense 48
71 Net earnings attributable to Motorola Solutions, Inc. $
343 $ 336
Earnings per common
share
Basic $ 1.33 $ 1.20 Diluted 1.31 1.18
Weighted average
common shares outstanding
Basic 257.5 279.3 Diluted 261.2 284.4
Percentage of Net Sales* Net sales from
products 70.9% 73.3% Net sales from services 29.1%
26.7% Net sales 100% 100% Costs of products
sales 46.8% 44.2% Costs of services sales 62.9% 64.6%
Costs of sales 51.5% 49.7% Gross margin 48.5%
50.3% Selling, general and administrative expenses
18.8% 20.9% Research and development expenditures 10.9% 11.9% Other
charges 2.1% -0.2% Intangibles amortization 0.2% 0.4%
Operating earnings 16.5% 17.3% Other income
(expense): Interest expense, net: -1.1% -0.8% Gains on sales of
investments and businesses, net 0.1% 0.0% Other 0.1%
0.2% Total other expense -0.9% -0.7% Earnings before
income taxes 15.6% 16.7% Income tax expense 1.9% 2.9%
Net earnings attributable to Motorola Solutions, Inc. 13.7%
13.8% * 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)
Years Ended December
31, 2013 December 31, 2012 December 31, 2011 Net
sales from products $ 6,118 $ 6,363 $ 6,068 Net sales from services
2,578 2,335 2,135 Net sales 8,696 8,698 8,203
Costs of products sales 2,852 2,844 2,723 Costs of services
sales 1,603 1,506 1,334 Costs of sales 4,455
4,350 4,057 Gross margin 4,241
4,348 4,146 Selling, general and administrative
expenses 1,838 1,963 1,912 Research and development expenditures
1,055 1,075 1,035 Other charges 107 25 141 Intangibles amortization
26 29 200 Operating earnings 1,215
1,256 858 Other income (expense): Interest
expense, net: (113) (66) (74) Gains on sales of investments and
businesses, net 40 39 23 Other 3 (14) (69)
Total other expense (70) (41) (120) Earnings
from continuing operations before income taxes 1,145 1,215 738
Income tax expense (benefit) 40 337 (3)
Earnings from continuing operations 1,105 878 741 Earnings
from discontinued operations, net of tax - 3
411 Net earnings 1,105 881 1,152 Less: Earnings (loss)
attributable to noncontrolling interests 6 -
(6) Net earnings attributable to Motorola Solutions, Inc. $ 1,099 $
881 $ 1,158 Amounts attributable to Motorola Solutions, Inc.
common shareholders Earnings from continuing operations, net of tax
$ 1,099 $ 878 $ 747 Earnings from discontinued operations, net of
tax - 3 411 Net earnings attributable to
Motorola Solutions, Inc. $ 1,099 $ 881 $ 1,158
Earnings per common
share
Basic: Continuing operations $ 4.13 $ 3.01 $ 2.24 Discontinued
operations - - 1.23 $ 4.13 $ 3.01 $ 3.47
Diluted: Continuing operations $ 4.06 $ 2.95 $ 2.20
Discontinued operations - 0.01 1.21 $ 4.06 $
2.96 $ 3.41
Weighted average
common shares outstanding
Basic 266.0 292.1 333.8 Diluted 270.5 297.4
339.7
Percentage of
Net Sales* Net sales from products 70.4% 73.2% 74.0% Net sales
from services 29.6% 26.8% 26.0% Net sales
100% 100% 100% Costs of products sales
46.6% 44.7% 44.9% Costs of services sales 62.2% 64.5%
62.5% Costs of sales 51.2% 50.0% 49.5%
Gross margin
48.8%
50.0% 50.5% Selling, general and
administrative expenses 21.1% 22.6% 23.3% Research and development
expenditures 12.1% 12.4% 12.6% Other charges 1.2% 0.3% 1.7%
Intangibles amortization 0.3% 0.3% 2.4%
Operating earnings 14.0% 14.4% 10.5%
Other income (expense): Interest expense, net: -1.3% -0.8% -0.9%
Gains on sales of investments and businesses, net 0.5% 0.4% 0.3%
Other 0.0% -0.2% -0.8% Total other expense
-0.8% -0.5% -1.5% Earnings from continuing
operations before income taxes 13.2% 14.0% 9.0% Income tax expense
(benefit) 0.5% 3.9% 0.0% Earnings from
continuing operations 12.7% 10.1% 9.0% Earnings from
discontinued operations, net of tax 0.0% 0.0%
5.0% Net earnings 12.7% 10.1% 14.0% Less: Earnings (loss)
attributable to noncontrolling interests 0.1% 0.0%
-0.1% Net earnings attributable to Motorola Solutions, Inc.
12.6% 10.1% 14.1% * Percentages may not
add up due to rounding
GAAP-3
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions)
December 31, December 31, 2013 2012
Assets Cash and cash equivalents $ 3,225 $ 1,468 Sigma Fund and
short-term investments 2 2,135 Accounts receivable, net 1,920 1,881
Inventories, net 522 513 Deferred income taxes 584 604 Other
current assets 767 800 Total current assets
7,020 7,401 Property, plant and equipment, net 810
839 Investments 251 240 Deferred income taxes 2,076 2,416 Goodwill
1,509 1,510 Other assets 185 273
Total assets
$ 11,851 $ 12,679 Liabilities
and Stockholders' Equity Current portion of long-term debt $ 4 $ 4
Accounts payable 814 705 Accrued liabilities 2,402
2,626 Total current liabilities 3,220 3,335
Long-term debt 2,457 1,859 Other liabilities 2,485 4,195
Total Motorola Solutions, Inc. stockholders' equity 3,659 3,265
Noncontrolling interests 30 25
Total
liabilities and stockholders' equity $ 11,851
$ 12,679 Total cash* $ 3,227 $
3,603 Net cash** 766 1,740 *Total cash = Cash and cash
equivalents + Sigma Fund and 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 December 31, 2013 December 31, 2012
Operating Net earnings attributable to Motorola Solutions,
Inc. $ 343 $ 336 Adjustments to reconcile Earnings to Net cash
provided by operating activities: Depreciation and amortization 60
57 Non-cash other income (3) (1) Share-based compensation expense
37 45 Gains on sales of investments and businesses, net (3) -
Deferred income taxes 11 39 Changes in assets and liabilities, net
of effects of acquisitions and dispositions: Accounts receivable
(95) (108) Inventories - 48 Other current assets 28 29 Accounts
payable and accrued liabilities 372 121 Other assets and
liabilities (9) (2) Net cash provided by operating
activities 741 564
Investing Acquisitions and
investments, net (38) (170) Proceeds from sales of investments and
businesses, net 13 - Capital expenditures (66) (47) Proceeds from
sales of property, plant and equipment 51 47 Proceeds from sales
(purchases) of Sigma Fund and short-term investments, net
1,167 (375) Net cash provided by (used for) investing
activities 1,127 (545)
Financing Repayment of
debt (1) (1) Issuance of common stock 56 54 Repurchase of common
stock (362) (326) Excess tax benefit from share-based compensation
5 3 Payments of dividends (80) (73) Distributions from discontinued
operations - - Net cash used for financing activities
(382) (343) Effect of exchange rate changes on
cash and cash equivalents 18 13 Net increase
(decrease) in cash and cash equivalents 1,504 (311) Cash and cash
equivalents, beginning of period 1,721 1,779 Cash and
cash equivalents, end of period $ 3,225 $ 1,468
Financial
Ratios: Free cash flow* $ 675 $ 517 *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)
Years Ended December 31, 2013 December 31,
2012 December 31, 2011 Operating Net earnings
attributable to Motorola Solutions, Inc. $ 1,099 $ 881 $ 1,158
Earnings (loss) attributable to noncontrolling interests 6
- (6) Net earnings 1,105 881 1,152 Earnings from
discontinued operations, net of tax - 3 411
Earnings from continuing operations, net of tax 1,105 878 741
Adjustments to reconcile Earnings from continuing operations to Net
cash provided by operating activities: Depreciation and
amortization 228 208 366 Non-cash other charges (income) (12) 11 34
Share-based compensation expense 153 184 168 Gains on sales of
investments and businesses, net (40) (39) (23) Loss from the
extinguishment of long term debt - 6 81 Deferred income taxes (231)
242 63 Changes in assets and liabilities, net of effects of
acquisitions and dispositions: Accounts receivable (66) 81 (250)
Inventories (10) (3) (14) Other current assets 51 (118) 61 Accounts
payable and accrued liabilities (201) (162) (191) Other assets and
liabilities (33) (220) (188) Net cash provided
by operating activities from continuing operations 944
1,068 848
Investing Acquisitions and
investments, net (65) (109) (32) Proceeds from (used for) sales of
investments and businesses, net 67 (38) 1,124 Capital expenditures
(191) (187) (186) Proceeds from sales of property, plant and
equipment 66 56 6 Proceeds from sales of Sigma Fund and short-term
investments, net 2,133 1,075 1,514 Net cash
provided by investing activities from continuing operations
2,010 797 2,426
Financing Repayment of debt
(4) (413) (1,219) Net proceeds from issuance of debt 593 747 -
Issuance of common stock 165 133 192 Repurchase of common stock
(1,694) (2,438) (1,110) Excess tax benefit from share-based
compensation 25 20 42 Payments of dividends (292) (270) (72)
Contributions to Motorola Mobility - (73) (3,425) Distributions
from (to) discontinued operations - (11) 64
Net cash used for financing activities from continuing operations
(1,207) (2,305) (5,528)
Discontinued
Operations Net cash provided by operating activities from
discontinued operations - 2 26 Net cash used for investing
activities from discontinued operations - - (8) Net cash provided
by (used for) financing activities from discontinued operations -
11 (64) Effect of exchange rate changes on cash and cash
equivalents from discontinued operations - (13)
46 Net cash provided by discontinued operations -
- - Effect of exchange rate changes on cash
and cash equivalents from continuing operations 10 27
(73) Net increase (decrease) in cash and cash equivalents
1,757 (413) (2,327) Cash and cash equivalents, beginning of period
1,468 1,881 4,208 Cash and cash equivalents,
end of period $ 3,225 $ 1,468 $ 1,881
Financial
Ratios: Free cash flow* $ 753 $ 881 $ 662 *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 Year Ended
December 31, December 31,
December 31, December 31, 2013
2012 % Change 2013 2012 % Change
Government $ 1,768 $ 1,708 4% $ 6,030 $ 5,989 1% Enterprise
736 733 0% 2,666 2,709 -2% Company
Total $ 2,504 $ 2,441 3% $ 8,696 $ 8,698 0%
Operating Earnings
Three Months Ended Year Ended
December 31, December 31,
December 31, December 31, 2013
2012 % Change 2013 2012 % Change
Government $ 332 $ 346 -4% $ 979 $ 965 1% Enterprise
81 77 5% 236 291 -19% Company Total $ 413 $
423 -2% $ 1,215 $ 1,256 -3%
Operating Earnings %
Three Months Ended Year Ended
December 31, December 31, December
31, December 31, 2013 2012 2013
2012 Government 18.8% 20.3% 16.2% 16.1% Enterprise
11.0% 10.5% 8.9% 10.7% Company Total 16.5% 17.3%
14.0% 14.4%
Non-GAAP-1 Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense,
Stock-Based Compensation Expense and Highlighted Items)
Q1 2013 PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp
Inc/(Exp) (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 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 impact on Net earnings $ 62 $ 67 $ (5 ) $ (0.02 )
Q2 2013 PBT Tax
PAT Highlighted Items Statement Line
(Inc)/Exp Inc/(Exp) (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 28 6 22 0.08
Total impact on Net earnings $ 68 $ 18
$ 50 $ 0.18
Q3 2013 PBT Tax
PAT Highlighted Items Statement Line
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS
impact Intangibles amortization expense Intangibles
amortization $ 8 $ 2 $ 6 $ 0.02 Stock-based compensation expense
Cost of sales, SG&A and R&D 37 12 25 0.10 Reorganization of
business charges Cost of sales and Other charges 32 10 22 0.08 Gain
on sale of investment Gains on sales of investments (23 ) (8 ) (15
) (0.06 ) Result of tax rate change in foreign subsidiary Income
tax - (6 ) 6 0.02 Total impact on Net
earnings $ 54 $ 10 $ 44 $ 0.16
Q4 2013
PBT Tax PAT Highlighted Items
Statement Line (Inc)/Exp Inc/(Exp)
(Inc)/Exp EPS impact Intangibles amortization
expense Intangibles amortization $ 6 $ 2 $ 4 0.02 Stock-based
compensation expense Cost of sales, SG&A and R&D 37 11 26
0.10 Reorganization of business charges Cost of sales and Other
charges 63 21 42 0.16 Tax expense related to Sigma termination
Income tax (expense) benefit - (20 ) 20 0.08
Total impact on Net earnings $ 106 $ 14 $ 92 $ 0.36
FY 2013 PBT Tax
PAT Highlighted Items Statement Line
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS
impact Intangibles amortization expense Intangibles
amortization $ 26 $ 8 $ 18 0.06 Stock-based compensation expense
Cost of sales, SG&A and R&D 153 47 106 0.39 Reorganization
of business charges Cost of sales and Other charges 133 39 94 0.35
Gain on sale of investment Gains on sales of investments (23 ) (8 )
(15 ) (0.06 ) Tax expense related to Sigma termination Income tax
(expense) benefit - (20 ) 20 0.08 Result of tax rate change in
foreign subsidiary Income tax (expense) benefit - (6 ) 6 0.02
Reduction in deferred tax asset valuation allowance Income tax
(expense) benefit - 11 (11 ) (0.04 ) Tax benefit for prior period
R&D tax credit Income tax (expense) benefit - 12 (12 ) (0.04 )
Reduction in deferred tax liability for undistributed earnings
Income tax (expense) benefit - 25 (25 ) (0.09 )
Total impact on Net earnings $ 289 $ 108 $ 181 $ 0.67
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries Non-GAAP
Segment Information (In millions)
Net Sales
Three Months Ended Year Ended
December 31, December 31, December
31, December 31, 2013 2012 %
Change 2013 2012 % Change
Government $ 1,768 $ 1,708 4 % $ 6,030 $ 5,989 1 % Enterprise
736 733 0 % 2,666
2,709 -2 % Company Total $ 2,504 $ 2,441 3 % $
8,696 $ 8,698 0 %
Non-GAAP Operating Earnings
Three Months Ended Year Ended
December 31, December 31,
December 31, December 31, 2013
2012 % Change 2013 2012 % Change
Government $ 398 $ 373 7 % $ 1,169 $ 1,108 6 % Enterprise
121 103 17 % 358
395 -9 % Company Total $ 519 $ 476 9 % $ 1,527
$ 1,503 2 %
Non-GAAP
Operating Earnings %
Three Months Ended Year Ended
December 31, December 31, December 31,
December 31, 2013 2012 2013 2012
Government 22.5 % 21.8 % 19.4 % 18.5 % Enterprise 16.4 %
14.1 % 13.4 % 14.6 % Company Total 20.7 % 19.5 %
17.6 % 17.3 %
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 %
Q3 2013
TOTAL Government Enterprise Net sales $
2,112 $ 1,465 $ 647 Operating earnings $ 320 $ 252
$ 68 Above-OE non-GAAP adjustments:
Stock-based compensation expense
37 25 12 Reorganization of business charges 32 21 11 Intangibles
amortization expense 8 1 7
Total above-OE non-GAAP adjustments 77 47 30
Operating earnings after non-GAAP adjustments
$ 397 $ 299 $ 98
Operating earnings as a percentage of net sales - GAAP 15.2 % 17.2
% 10.5 % Operating earnings as a percentage of net sales - after
non-GAAP adjustments 18.8 % 20.4 % 15.1 %
Q4
2013 TOTAL
Government Enterprise Net sales $ 2,504 $
1,768 $ 736 Operating earnings $ 413 $ 332 $
81 Above-OE non-GAAP adjustments: Stock-based
compensation expense 37 25 12 Reorganization of business charges 63
41 22 Intangibles amortization expense 6 -
6 Total above-OE non-GAAP adjustments 106 66
40 Operating earnings after
non-GAAP adjustments $ 519 $ 398 $ 121
Operating earnings as a percentage of net
sales - GAAP 16.5 % 18.8 % 11.0 % Operating earnings as a
percentage of net sales - after non-GAAP adjustments 20.7 %
22.5 % 16.4 %
FY 2013
TOTAL Government Enterprise Net
sales $ 8,696 $ 6,030 $ 2,666 Operating earnings $ 1,215
$ 979 $ 236 Above-OE non-GAAP
adjustments: Stock-based compensation expense 153 103 50
Reorganization of business charges 133 86 47 Intangibles
amortization expense 26 1 25
Total above-OE non-GAAP adjustments 312 190 122
Operating earnings after non-GAAP
adjustments $ 1,527 $ 1,169 $ 358
Operating earnings as a percentage of net
sales - GAAP 14.0 % 16.2 % 8.9 % Operating earnings as a percentage
of net sales - after non-GAAP adjustments 17.6 % 19.4
% 13.4 %
Media ContactsNick SweersMotorola Solutions+1
847-576-2462nicholas.sweers@motorolasolutions.comorKurt
EbenhochMotorola Solutions+1
847-576-1341kurt.ebenhoch@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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